GRAFT SCANDAL IN AUSTRALIA

Dominion, Volume 12, Issue 78, 27 December 1918, Page 5

GRAFT SCANDAL IN AUSTRALIA

DISMISSAL OF A FEDERAL MINISTER

STORY OF THE SIIAW WIRE-

LESS PURCHASE

f'l'he scandal attached to the purclniso of tjie Shaw \Vireiws by the Australian Federal Uoveinmcut culminated (as was stated in a cablegram some day* ago) in the enforced imirement of Mr. Jensen, Minister inJJharge of the Uavy Department. Tlio story of the purchase, as told ih a report presented to the federal House makes interesting reading.] The report on tho Shaw Wireless purchase stated that on December 8, 1914, lather Archibald John Shaw,, on behalf of the Shaw Wireless Company, offered tho plant, works, and land of the campany at Bandwick to thd Postmaster'Gcneral's Department at a valuation, stating that the company had spent ■£78,000 on tho works. On December C, 1915, leather Shaw stated he was authorised by his company to offer the works to the Department lot ,£55,000.- The Department on March 21, 1915, declined the offer. On November 1, 1915. tho control of the radio service was transferred from the Postmaster-General's to the Navy Department, Father Shaw, oil May 12, 1916, informed Mr. Cuates, one of tha directors of tho Shaw Wireless, Ltd., that ho thought lie had n good chance cf selling the works to tho Government, and obtained, on May 15, 1916, an option of purchaso of the company's interests for ,£20,000. On tho satuo day Father Shaw wroto to tho Miuister for tho Navy (Mr. Jensen), offering the whole, of tha plant for .£'57,000. This offer was drafted lor Tather Shaw by Sector J. J. Ijong, On Juno 9,1916, lather Shaw furnished an inventory of tho workshop, land, and all property of tho company, placing a value thereon, exclusive of goodwill and patent right, of .£63,401 12s. Id., \ adding that the goodwill and patent rights of tho,Shaw wireless system 6tood in the books of the company at .£II,OOO, making in all.a total of ,£74,461 12s. id. The Minister on June 19, 1916, wired to I'ather Shaw asking whether ho had authority to dispose of tho works. On tho same day Father Shaw obtained from the company an extension if his option, and on the following day forwarded n copy of the extension to the Minister. The correspondence was placed pn tho official file. No inquiry was madi as to tho amount of tho option. On June 21, 1916, Engineor-Lieutonant Oesswell reported that ho had visited I!ib works for the purpose of making a preliminary inspection of tho workshops, vitli a view to purchase by tho Government. He stated that tho workshops were too expensive to bo taken over as wirolesS telegraphy shops alone, hut ho was of opinion that they should be taken oyer by the Government/for oxtensivo activities embracing the manufacture cf motor cycles and machine-guns. EearAdmiral' Clarkson minuted the report, disapproving of tho proposal. On June 29 tho Acting-Prime Minister wroto to the Minister for tho Navy stating that the Cabinet had approved of his recommendation that ho should obtain <i filiation of tho works for Cabinet consideration. ' Tiio Minister instructed Mr, H. E. Boss, of Messrs. Eoss and Eowe, of Sydney, to supply n valuation. Mr. Boss's valuation was set down at ,£16,496 for the plant, tools, and stores. Ho pointed out that the stares had been accepted at the values fliown by the stocksheets prepared by tho Shaw Wireless, Ltd. In the meanl'imo the valuation by the Department of Home Affairs had been received, setting out tho value of tho buildings at ,£10,560, and of the land at ,£3860. a total Of £14,240.

Cabinet Approves £55,000. On .liily If, 191(i, the Cabinet approved the Minister's recommendation that tho works be purchased for d£55,000.

Tho Minister stated in evidence that Admiral Ciarkson's adverse report and Commander Crcssweil's favourable report. were both before Cabinet when tho decision to> purchase was made. It appears, however" (hat neither Cabinet as n whole nor any individual Minister was informed ur uiado aware that Commander Cresswell had altered his report'. The examination of Commander Cresswe'll and Mr. F. W. Thomas,' an Chief Clerk, before the commission showed that the opinion expressed by Commander Cresswell as to tho earning power of the worlcs was founded on an entirely unreliable basis.

On August 18, 1918, the settlement had taken place, and .£55,000 was paid into the London Bank of Australia, Ltd., Melbourne. Next day Father Shaw withdrew from the bank tho following sums, being part of tho ~£55,000 paid in on the previous day, namely, .1125,000, i 5300, JS7OOO, and ,£17,000. The commission had ascertained in what manner each of the foregoing accounts was disposed of, with the exception of «£S3(JI). On August 19 Father Shaw called on Senator Long.

Senator Long's Evidence. ... Senator Loii£, in his evidence before the commission, stated that Father Snaw handed him a bundle of notes to the value ol' .£1290 as a gratuity in recognition of their friendship and of certain hospitalities which had. been from time to time extended by him to Father Shaw. He also said ho had at various times lent Father Shaw small sums of money. Father Shaw took seriously ill on the Monday following and died on August 2(i. Senator Long paid into his account on September 4, 1910, cffilOO, which the commission believes was received by him from Father Shaw as consideration for political influence. Mr. A. E. Cornwell, the present manager of the works, who was also tho manager for Father Shaw at the time of the purchase, stated in evidence that Senator Long on August 15, 191S, told him that Father Shaw on August IS), 191G, handed him (Senator Long) four separata packets of money, one of which was for Sonator Long, the others for persons named or indicated by him. Senator Long in his evidence denied this. The commission found that the evidence did not discloso that the Minister or any person other than Senator Long received any portion of the i£5300 referred to. The Minister's explanation of the reason for the purchase was that it was the policy of the Government to have industrial works of that description. Ho did not refer it to the full A'nval Board becauso ho had already obtained the opinion of the expert member, Renr-Admiral Clarkson, and, in his opinion, Admiral Clarkson's objections were mainly on questions of policy, and the policy of the Government had already been determined on such matters.

Summary of tho Report. fho report summarises (he salient facts of the transaction as follows:—(a) Father Shaw was confulcnt before the offer was made that the sale would be effected; (b) Senator Long drafted the order; (c) the Minister disregarded the advice of Ilenr-Admiral ClailcSon, and acted on the advice of ail inexperienced ■ subordinate officer; (d) after an interview with tho Minister Commander Cresswell withdrew his recommendation to offer .£IO,OOO, and substituted an opinion that Father Shaw's offer of ,057,000 was I'easonablo; (o) the alteration of Commander Cresswell's .report was not disclosed to Cabinet when the purchase was being considered; (f) neatly .£3OOO of the purcliaso money paid to Father Shaw hag not been accounted for. Tho commission recommends that thb Randwick workshops be removed from tho control of the radio officer, Melbourne, and transferred to Garden Island and placed under the general supervision of the genoral manager of the Naval Dockyard. With regard to tho putchaso oE tho EmeraM and tho Togo or Phillip, tho commission reported that tho vessels were unsuitable for the Department at the time of purchase, and that proper trials wero not made until after the purchase was effected.