THE HEYES CASE.

Auckland Star, Volume XLI, Issue 16, 16 July 1910, Page 10

THE HEYES CASE.

COMMISSIONER'S FINDING. COLLUSION BETWEEN OFFICIALS. (By Telejrapli.—Parliamentary Reporter.) WELLINGTON, Friday. In the House of Representatives tonight the Prime Minister presented the report of the Civil Service Commission -which inquired into the charges brought against Mr. Peter Heyes, Commissioner of Taxes, and head of the Advances to to Settlers Department. In the course of the report it was stated: "Re the advances to Peter Heyes on Wellingtonterrace, tha-t the said Peter Heyes, in September, 1900, made an application to the Advances to Settlers Office, of which he was then superintendent, for a loan of £1200 >upon property situated in Wellington Terrace, which he had agreed to purchase for £1560, and wrongfully procured a special valuation of the property to be made so tha-t he could obtain the full amount applied for; that in respect of this loan the said Peter Heyes claimed and took the benefit of the rebates provided for by Section 35 of the Government Advances to Settlers Act, 1006, although not legally entitled to them.

"In 1906," proceeds the report, " Mr. Heyes purchased a property on Wellington Terrace for the sum of £1560. He then requested an officer of the Valuation Department to send the City Valuer, Mr. James Ames, to report as to the amount at -which he (the City Valuer) would value the property for the purpose of a loan. The City Valuer said he could not go beyond £ 1600. This conversation was repeated to Mr. Kcyes. The next step was an application from Mr. Heyes for a loan of £1200 upon the property, and it must be remarked th-i-t he could not obtain a loan of £ 1200 upon the valuation which the city valuer had stated he was prepared to make. It is fair, therefore, to assume that some other valuations must have been in Mr. Heyes' mind when he made application for £1200. On the 15th October, Mr. Dugdale came to the public office of the Valuation Department, bringing with him the requisition above-mentioned for signature. The chief clerk refused to sign the requisition on behalf of the Valuer-General, without consent, on the ground that 'it was unusual for Dugdale to do Ames' work.' The consent of the Valuer-General was thereupon obtained by Mr. Dugdale on a false representation. Mr. Dugdale denies all this, but we say quite plainly that we do not believe him. Mr. Dugdale valued the property at £2040, and. on his valuation the loan of £ 1200 was granted. Taking all the circumstances into consideration, we cannot have any reasonable doubt that Mr. Heyes and Mr. Dugdale were acting in concert, for on no other supposition can the intervention of Mr. Dugdale be explained. Mr. Heyes denies that he took any action to procure the nomination of Mr. Dugdale as the valuer, and ilr. Dugdale told us that his instruction; reached him in the ordinary course. We are unable to accept this evidence. In this case it was known to Mr. Heyes when he made his application that the city valuer would not value the property at a sum sufficient to warrant tbe amount of the advance applied for, and the inference is irresistible, and we are satisfied that Mr. Dugdaie's appointment on this occasion was directly due to the interference of Mr. Heyes. Mr. Heyes probably thought that in view of an offer of £2000 he had received, he was justified in assuming that the city valuer's valuation did not represent the true value, and that no risk of loss was involved by an advance of £ 1200. We are of opinion that whatever the true value of the property may have been, a consideration of this nature can neither justify nor extenuate Mr. Heyes , conduct. We believe that he entered into an arrangement with Mr. Dugdale to prevent a. valuation 'being roade cyv the proper officer, for the purpose of obtaining from the Board the advance of a larger sum than the Board would have granted had it known the real facts of the case. Mr. Heyes was at the same time the head of the lending Department and the borrower, and we are of opinion that he was guilty of gross impropriety, and that his conduct in the matter was totally without justification or excuse. It is admitted that in respect of this mortgage Mr. Heyes on two occasions took advantage of the rebates allowed for prompt payment of interest, although the interest was not paid in due time. We thi"nk that 'by thus evading the payment of a sum of money lawfully due by him to the Department of which he was the head, Mr. Heyes again utterly failed to realise the responsibilities of hie position. The rebates have since been paid."

ADVANCE TO MR. KEYES ON KARAIIEA PROPERTY.

The report proceeds "That in April, 1909. the said Peter Heyes improperly obtained an advance of £500 from the Advances to Settlers Department upon the security of certain property situate at Karamea, in the Kongatu survey district.' ,

On the 15th December, 1906, Mr. Heyes made application to the Advances to Settlers o&ce for a loan on the security of certain freehold property owned by him at Karamea, on the west coast of the South Island. The property -was on the 14th January, 1907, valued by the local valuer at £674. In making this valuation he took no account of the timber standing on the land, which was of the value of £500 at least, on the ground that timber was not a security on which the Board would make an advance. For some reason, however, which does not appear, he mistakenly reported the property as good for a loan of £600, being £200 in excess of the maximum loan which could be granted on that valuation. The applicant came before the Board on the 29th January, 1907, when a loan of £400 was oft'ered. Mr. Heyes, however, was desirous of obtaining a loan of £500. and, therefore, did not accept the Board's offer. Two days after a letter was written by Mr. Waddell, the assistant-superintendent of the Advances to Settlers office, to the ValuerGeneral, Mr. CampbeJl, pointing out the discrepancy in the values, and asking that the report be referred back to the valuer with the view of increasing the valuation. Although there is no direct evidence we are satisfied that this letter was written at the request or by the direction of Mr. Heyes. The local valuer declined to alter his valuation. Shortly after the receipt of this letter by the Aavances Onice, Mr. J. *.'. Dugdale went to the West Coast with this letter in his possession, and sent for the local valuer to meet him at Westport. An interview took place there between them, at which Me. Dugdale falsely represented -that timber was taken into account by the Board in determining the sufficiency of a security. The value of' the timber was agreed on as £500, and the local valuer's letter was there and then endorsed accordingly by ; both officers. This letter, so-endorsed, was broyght or sent-back i

to Wellington, and a fresh certificate of the entry of the property in the valuation roll was issued from the valuation office. Thereupon Mr. Heyes made a new application to the Board" for a loan of £500 on the property, and this loan was granted. The agenda paper for this meeting states that the capital value of the property was £1174, and that he recommended the property as good for a loan of £600, but made "no mention of the fact that timber to the value of £300 was included in the valuation. We are satisfied that Mr. Heyes did not call the Board's attention to the fact that vie valuation included timber,, and that in this manner he obtained an advance which would not otherwise have been made. We are also satisfied that Mr. Heyes himself procured Mr. Dugdale to go to Westport for the purpose of inducing the local valuer to alter his valuation by including the timber. We find accordingly that Mr. Heyes, in co-operation with Mr. Dugdale, knowingly procured an improper loan from the Advances Office by misleading the local valuer, and by failing to inform the Board of material circumstances which would have induced the Board to refuse to make the advance. We are of opinion, as in the last preceding case, that in so acting Mr. Heyes was guilty of gross impropriety and that his conduct was without justification or excuse.

After reading this report the Prime Minister read the correspondence which passed between himself and Messrs. Heyes and Dugdale respectively, after consideration of the report by the Government, Messrs. Heyes and Dugdale being called on to resign their positions. To this request from the Prime Minister Mr. Heyes replied that he had no option, and, therefore, resigned, but this step of his was not to be deemed any concurrence on his part with the conclusions of the Civil Service Commission. The two loans referred to, continued the Prime Minister, which had placed Mr. Heyes in this unfortunate position, were both repaid to the Department some time ago, and the country had lost nothing whatever over the transaction. He could only express his deepest regret that an officer who held a high' position had to be called upon to resign under such circumstances. It was only right to say that after the judge's report had come in it was intimated to the House that an officer had been put in charge of the Taxing Department, and detailed to make full investigation. Mr. Heyes did not regard this inquiry as giving him a proper opportunity of proving his case, and aeked that fuller inquiry should be held. A Civil Service Commission was set up, and Mr. Heyes had the opportunity of going before that Commission, of calling witnesses, and of being represfnted by counsel. As the outcome of their investigations the Commission sent the report just read, and the Government came to the conclusion that the course which had been followed was the only one open to them under the circumstances.

Mr. Massey said he did not wish to refer further to this unfortunate incident than to say that the Prime Minister had adopted a right and proper course in laying the report of the Civil Service Board before Parliament, and the correspondence as well. Would the Prime Minister adopt a similar course in connection with the report of the judges who inquirer! into the irregularities in the Income Tax Department?

The Prime Minister: I can't do that; it would be an improper thing for mc to do. In that inquiry the private concerns of the taxpayers wore before the judges. A number of people whoso affairs were before the judges and the Commission had nothing whatever to do with the troubles and difficulties of the Department, and it would be a very regrettable precedent. (Hear, hear.) It was a course he could not follow. The Prime Minister added that a request had been made by a Wellington newspaper that the Commission's report should be published, and on this the Commission sent him a communication stating that the report had been framed on the assumption that it was not to be published, and they stated that they woul dhave been seriously embarrased in their work had it been thought that the report would be published. The Prime Minister continued that he would not accept the responsibility of exposing people's private affairs. The judges found nothing against Mr. Heyes' personal honour, and the Commission that inquired into the cases found the same thing. They did not find him guilty of corruption or dishonesty, or anything of that kind. He thought Mr. Massey would see that he could not table a report dealing with the affairs of people which were gone into during the inquiry.

Mr. Massey: Were the matters dealt with by the second Commission the same as were dealt with before the judges of the Supreme Court? The Prime Minister: Some of them, certainly. Mr. Massey: I am speaking of these cases. The Prime Minister said his impression was that these particular cases had not been before the judges , . These two properties had not formed any part of the inquiries held before the judges. Mr. C. Hall spoke strongly against the manner in which Mr. Heyes had been treated, and asked what crime Mr. Heyes had committed that he should be so peremptorily dismissed. He contended that that officer had been the victim of a grave injustice. Messrs. R. B. Ross and G. Laurenson spoke very strongly against the treatment meted out to Mr. Heyes.

Mr, T. E. Taylor held that it could be truly said that there wis no systematic corruption in the public service of thie country, but if they wanted to keep it equally clean in years to come, members must not get up in the House and apologise for an officer who had been so unfortunately involved in a transaction respecting the sum of £200. Mr. Luke held that the Court could have come to no other possible decision under the circumstances. Mr. J. Vigor Brown wanted to know where the wrong came in. It was a matter of auction valuee. He could inform members that "when lie was a very young man he bought a house for £750 at auction, and straightway went to his bank and raised £800 on it. He did not consider that a wrong action on his part. The Prime Minister, in reply, said he was so anxious to keep the Taxing Department above suspicion that he intended to aek Parliament this session to provide for the setting up of a Board (of which the Taxation Commissioner would be a member), to which every taxpayer could take a request or an appeal, and demand an exhaustive investigation. The papers were then tabled.