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Lowe, Bingham and Matthews, accountants and auditors of Hongkong. On the evening of September 2nd the defendant left the Shameen. Before he left he obtained no official permission to go, nor did he officially notify anybody that he was going except in such a manner that it only reached his superiors after he left. not suggested that the defendant made any secret of his going, because it was not known in Canton days before that he was going. It would be established further that a few days prior to his leaving he had a conversation with Mr. Power, the sub-accountant. during the course of which he mentioned that he was. going to Japan for his health. Mr. Power suggested that it was rather an awkward time to while the accounts were being audited, as
go the defendant was the only man who knew any- thing about them. Mr. Wright replied that he had to go, and he did go. On Thursday, September 2nd, Mr. Grove asked the defendant if he was going away, and he said he was. Mr. Grove told him that he should first of all get His Excellency's permission, and leave the ac- counts written up and in order. Defendant promised to do this, and said he expected to leave Shameen on Friday evening. He left his office at 2.30 p.m. on Thursday afternoon and did not return. He, however, sent a letter to H. E., the managing director, informing him that he was obliged to leave, and en- closed in the envelope a doctor's certificate.
Mr. Looker said the charges were of such a serious nature that the case should be sent to
the Supreme Court at Shanghai to be tried before a jury. He submitted that it was a case in which the ends of justice necessitated that the defendant should be sent for trial.
Do you know that Mr. Grove was instru- mental in having the interest account opened in Canton ?--I don't know anything about it.
I believe I'm right in saying that the agree- bank than the Hongkong and Shanghai Bank ? ment prohibits accounts being kept in any other
[October 2, 1909.
THE HONGKONG WEEKLY PRESS AND
Was it not jan arrangement with the Apart from payments witness was directly re- defendant ?--Yeş
sponsible for, there were payments made to His Excellency in connection with the purchase of land. Some of the accounts for construction and equipment were payable in Hongkong, and some in Canton currency. The amount paid in Canton currency has lately averaged about was started in the Hongkong and Shang $100,000 a month. A construction account
hai Bank, and later an interest Proceeding, witness said that the British and account vested in the name of the chief Chinese Corporation had expressed an opinion accountant. Witness understood the interest that funds should be kept in the Hongkong and account was started for the purpose of paying Shanghai Bank.
local accounts in Canton
-Yes.
I believe you always paid for purchases of land from the construction account at the Hongkong and Shanghai Bank That is so.
You asked the accountant from time to time for so much money for land purchases ?- Yes.
And
you got from him in cheques fairly large sums ? Yes,
Do you remember the largest ?-$100,000. Where was that put ?--In the bank. In whose name ?—In mine.
Have any of those sums ever been transferred to any other person or account than the vendor of land ?-No.
I put it to you that this system of getting money in advance was done for convenience
-What do you mean by convenience ?
Convenience in working.-It was the only way of working.
1.
was
The
were
handed 21
currency. I'll put it to you the account in the Interna-difference in exchange between Canton and tional Bank was not strictly speaking a railway Hongkong currency averaged about six per account at all? How can you say that?
cent. in favour of Hongkong. All his estimates were made in Hongkong currency, and he also estimated that as far as payments
four to concerned
five million dollars would have to be paid in Canton currency. Assuming that the total expen- diture was 4,000,000, six per cent, on that would be $240,000, which
roughly the saving on the estimate. The suggestion to audit the accounts emanated from witness to the Corporation. He made the suggestion con-
the fidentially in early part of 1909, not in the early part of 1908. Various rea- sons led him to recommend this audit, which was finally decided upon at the end of last August. At the the end of June witness asked defendant for the bank balances. He referred specially to the construction in the Hongkong and Shanghai Bank, and believed he mentioned the International Eank. Witness wished to check remittances from England, and to satisfy himself that the work was properly Continuing, the witness said it would accounted for. On September 1st witness heard His Excellency Wei Han was the first be equally inconvenient for Mr. utler a rumour that defendant was going away. On witness. He deposed to being the managing Wright to go to him for his signature the following day he asked defendant if it was director of the Imperial Chinese section of the for each individual amount paid out by him un- his intention to take leave, and defendant Canton-Kowloon Railway, being appointed in der the railway construction account. The ques-replied that it was. Witness raised no objection July, 1907, by H. E. the Viceroy. The railway tious of paying railway accounts were left to so long as he got permission and handed was being constructed by the Chinese Govern and organised by Mr. Wright. Witness was over the books and accounts to the as- ment by means of a loan which was obtained
on good terms with the defendant, and had sistant accountant in a propor manner. through the British and Chinese Corporation,
a satisfactory person to On September 3rd witness was aways found him Mr. Grove's main duties were to supervise the deal with. Witness remembered when they pass book purporting to be Mr. Butler construction details of the railway, and defend-wished to realise £500,000-in London, but they Wright's private account. He found a number ant's duties were to organise the system of ac-
could not come to terms, the reason being that of large credits and payments, the payments counts. Defendant reported to witness on railway the Hongkong and Shanghai Bank would not being especially suspicious in appearance. accounts. A construction account was opened give a T/T, rate. He consulted Mr. Butler Winess referred the matter to the manager of at the Hongkong and Shanghai Bank at Hong. Wright on the subject. With that one excep- the International Bank for an explanation. kong. Cheques on it were signed by witness tion all transfers had been made at T/T Information received afterwards on one of the and defendant. Defendant used to present rate. The railway accounts were balanced payments corrected the impression he had made. various cheques of various amounts for signa- quarterly, and every item drawn from Apart from large payments, there were several ture. Witness did not authorise the defendant the construction account was accounted other payments in defendant's account which to pay cheques to Tai Lee, Mr. E. C. Wilks for in such quarterly account. The In-appeared to be suspicious, having regard to the and Captain Walcott.
ternational ank account was fed from the fact that defendant drew the larger part of his construction account. The audit spoken of was salary in London. With the exception of the first directed to take place on the railway. an interest in a patent medicine, witness Witness could not say whether the Hong-had
the knowledge that
defendant and Shanghai Bank kong
refused to had any private means. Witness first referred open an account in local currency.
the matter to the British Consul, and after In re-examination witness stated that when discussing it with him, referred it to the he received defendant's letter stating that he British and Chinese Corporation, who told him to` wished to go away he communicated with take out a warrant. Witness said he was aware Mr. Grove. When he knew that Mr. Grove of the manner in which defendant used to arrive was issuing the warrant for the arrest of at the amounts which from time to time he the defendant he did not repudiate it. balance sheets of railway accounts only showed the Hongkong and Shanghai Bank, and put The drew from the railway construction account în the balance, but did not show details.
into the Hongkong currency account at the International Bank, Canton. A memorandum was prepared of the number of payments necessary, and these were added up and cheques drawn for the full sum or each separate amount. It was defendant's custom to withdraw from the construction account and place in the Hongkong currency account, then to transfer certain monies to the Canton currency account, and proceed to draw for such payments as were necessary in Canton currency. This method would result in profits being made in exchange. Witness stated that for the purpose of supply-
June it was not necessary to have any balance in the local bank paid back to construc-
account. tion
Neither was it necessary for monies to pass from the defendant's private account to the railway account. He regarded such a method of dealing with accounts as an extraordinary one. In a general way witness had taken steps to ascertain the state of the accounts organised and controlled by the defendant; and in his opinion in many directions these accounts were not in order.
case
Mr. Douglas at this stage said he understood that His Excellency's evidence would not be available if the
came on for trial, as he intended leaving China. As it was also the first time on which he had been made acquainted with the charges, he would apply for an adjournment.
The Court rose until after tiffin.
On the Court resuming Mr. Douglas cross- examined H. E. Wei Han. He said that Mr.
Butler Wright's action in leaving the Shameen was a breach of his agreement. When he read the letters written by Mr. Butler Wright in September he believed that they required an answer, but thought the defendant should have awaited an answer before leaving. Witness heard by telephone that Mr. Wright had left,
and called on Mr. Grove to ask him if it was true. Mr. Grove said it was..
What did you do next?—No answer. Who went to the Consul; you or Mr. Grove?
-I don't know.
.
Do you know if anyone went to the Consul that morning or on that day ?-No.
Mr. F. Grove, British engineer-in-chief of the Canton-Kowloon railway, Imperial Chinese section, stated that his duties consisted of look ing after the construction and equipment of the line in as economical a manner as possible! Witness was responsible for the correctness of the amount paid out with regard to contract work, materials, etc. Defendant's duties were to control and supervise the accountants depart ment. As accountant he was in supreme control of that department, under the supervision of His Excellency Wei Han. Defendant was also
no
Then any information laid was not laid with responsible for the clerical correctness of theng him with the bank balances at the end of your authority P-No.
And in its inception this prosecution was Mr. Grove's?—Yes.
Are you aware of Clause 7 of Mr. Eutler Wright's agreement ?—Yes.
After reading that don't you think he's entitled to absent himself from Canton for three or four weeks if sick ?-Yes, but at audit time he should be away only two or three days.
You're told us that it was with your agreement Mr. Butler Wright had funds in the Inter- national Bank at Canton ?—Yes.
accounts. Certain contracts entered into by district engineers, other purchases of material and other payments on loan contracts could be paid by the chief accountant himself in anti cipation of approval. Before paying contracts defendant required recognised authority. The head office was under the supreme direction of H. E. Wei Han, but he allowed witness to have full control of the construction staff and equip ment of the railway. It was necessary for witness to see how expenditure was progressing, having regard to the railway estimates He was responsible for the quantity of construction,
Cross-examined by Mr. Douglas, witness said there was probably a construction account opened
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