"NOT CASUAL"

Evening Post, Volume CXI, Issue 34, 9 February 1926, Page 7

"NOT CASUAL"

SAVINGS BANK METHODS

WITHDRAWAL OF CHEQUES

ORDINARY PROCEDURE FOLLOWED.

Following on the recent Supremo Court case in which Baume and Smith were prosecuted for defrauding the Poet Office Savings Bank, the Postmaster-General (the Hon. Sir James Parr) last night issued a statement in which he said that the Post Office regulations forbade the withdrawal of cheques until they had first of all been cleared in the customary manner. It was not the system but the human element that had failed, and the negligent officers would be disciplined. "I observe," said Sir James Parr, "that although the Post Office regulations clearly prohibit the withdrawal of money which has ' been deposited by cheque until the, cheque has been cleared by the coinmorcial bank, and although the Post Office Savings Bank takes all the usual precautions of banking to prevent fraud, yet during the recent trial, on more than one occasion, reference was made to the alleged 'defective'system' of the Post Office Savings Bank. LEDGES OLEBK'S DUTY. "So that the people of New Zealand may understand that the methods in the 'People's Bank' are not as casual or as lax as was suggested in Court, I desire to make it known'that when a cheque is credited to a depositor's account there is provision on the ledger card for the insertion of the words 'Cheque . . . .' (followed by the name of the town on which the. cheque is drawn). But this is not all," continued Sir James Parr. '' A further regulation provides that when an application is received to withdraw money from an account to which a cheque has beon deposited, the ledger clerk must satisfy himself that sufficient time has elapsed since the cheque was lodged to permit of notice of dishonour of the cheque being received if payment thereof had, for any reason, been disallowed. In addition, if a ledger clerk has any doubt as to whether a cheque has i been cleared, it is the invariable practice that he is required to refer the matter to the Senior Supervisor, who is always in attendance in the ledger room, and who will then make the further inquires necessary before permitting a withdrawal. Thus the precautions taken in the Post Office Savings Bank are exactly those taken in every commercial bank. But if the ledgor clerk fails in his duty, whether employed by the Post Office Savings Bank or by a commercial bank, no system ever evolved would prevent a fraud of the kind which has been carried out in this ease.

"What happened was that certain cheques were paid in to the credit tof Smith's account. These cheques were posted in the ledger and the entry 'Cheque Inv.' was made in the proper column. Here,'' said the Minister, "was a clear notice to .the ledger-keeper that there was a cheque drajvn on Invercargill, but the ledger-keeper ignored the bank's clear regulations and instructions, and permitted withdrawal to bo made against the amount shown on the, ledger-card without taking note of the words 'Cheque Inv.' on tho line 1 immediately ahead of the one on which he made the withdrawal entry. Such a failure is, of course, .the failure of an individual, not of a system.

"I feel true,',' said the Minister, '' that the strictures passed in the Court on the Post Office system would not have been made if the full facts had been first ascertained, What per-' haps surprised me most is that another officer whose duty it is to check entries in the cards, also failed to notice the wrongful withdrawal before the close of the day's business, although ho actually reviewed the card and the entries thereon.' The negligent officers will, of course, be disciplined. It is unfortunate that most of these men are officers of long service and training. WARNING TO BUSINESS MEN. "The Post Office Savings Bank," the Postmaster-General further said, "can not allow to go unchallenged the statement that any tradesman would be justified in accepting a pass-book as a guarantee that there was an account in credit in the savings bank. Of course, a book is no such gurantee. Frequently pass-books are reported as lost, and the accounts they represent are transferred to other books, so that an original book showing a credit of £1000 or £2000 may be in the possession of » person evilly 'disposed, and yet be of no more value than the paper of wnieh it is made. I can only say," continued the Minister, "that any person willing to sell a 'Rolls-Royce' car or anything else of value on an entry in a savings bank book ought to know that he is takfeg an extremely serious risk. Only a little while ago a depositor, with that object in view, himself entered some fictitious credits ■ in his savings bank book, and presented it to a tradesman as evidence of the soundness of his financial position. A book is in the possession of a depositor, and no business man should accept entries in it as proof of the financial standing of the owner of the book. Finally, the Post Office Savings Bank has a credit of £43,000,000 —as large a sum as the total deposits of the combined commercial banks. There are thousands of transactions in the Savings Bank every day of the year. But frauds are few and far between, as can be seen by reference to the "departmental accounts placed before Parliament every year. I believe that every precaution is taken to safeguard the people's money. In this case, luckily, all the money has been recovered by the bank, less about £80.

"To conclude, I desire to emphasise that the Post Office Savings Bank regulations and practice do not permit the withdrawal of money against an uncleared cheque, although some 'of the commercial banks do permit this occasionally to be done. In Smith'b case it was not tha ayatem but the human element that failed."