THE AUDIT COMMISSION.

New Zealand Mail, Issue 1756, 1 November 1905, Page 15

THE AUDIT COMMISSION.

FIR SI PUBLIC SITTING OF THE COMMISSION. AIR JELLICOE AND THE COMMISSIONERS. MILD PASSAGES-AT-ARMS. Their Honors Mr Justice Denniston, Mr Justice Edwards, and Mr Justice Cooper, who have been appointed as a Royal Commission to make inquiry into and report to Parliament as to the general working and methods adopted in connection with our system of public audit, held their first public sitting atthe Supreme Court on the 23rd ult. When their Honors appeared on the Bench there were several members of the Bar present who are not engaged in the inquiry, and also a fair sprinkling of the public. Mr C. P. Skerrett appeared as counsel for the Audit, and Treasury Departments; Dr Findlay for Captain Seddon;-'Mr E. G. Jellieoe for Mr F. M. B. Fisher, M.H.R., and Mr W. J. Willis, who is also a party to the case, appeared _in person. Air Justice Denniston (chairman of the Commission) announced that, with his brother Judges, he had sat in Chambers in order to decide what their course of procedure should be. They had determined that Mr Skerrett, as counsel for the Government departments, should open the proceedings by calling his witnesses; after that Mr Jellicoe’s witnesses would be heard, then the evidence tendered by Air Willis, and, lastly that offered by Dr Findlay. The Commissioners would only desire the a.ssistance of counsel and the parties in the examination and cross-examina-tion of •witnesses. They did not wish to hear formal addresses. Mr Skerrett was then called upon. Mr Jellieoe said, before Mr Skerrett called his evidence, he would like to ask whether their Honors were sitting under the original order of reference, or whether that order had been amended, and. if so, to •what extent ? Air Justice Denniston: We are sitting under the Commission directed to this Court, and we decline to answer further questions with regard to it. Air Jellieoe: But may I ask your Honors Air Justice Denniston: No, Mr Jellieoe, we have already intimated that we decline to Air Jellieoe: Will your Houors permit— Air Justice Denniston: No, we wil£ not: please resume your seat. Air Jellieoe: I only desire to know the terms of the Commission. Air Justice Denniston: They are the terms read at the opening of the Commission on Wednesday. Air Jellieoe: But your Honors will permit me to make a reference to your ruling. Mr Justice Denniston: No, we decline to *hear you on the subject. Mr Jellieoe: Then it is useless for me to proceed.

Mr Justice Denniston: Well, please sit down in tlie meantime. _Mr Jellicoe: I have several ajjplications to make, and if I cannot make them I may as well leave the Court. Mr Justice Denniston: Of course, you can do so if you choose; but as to reopening the qxiestion of procedure, we do not wish to hear you. This matter has been decided in Chambers, and you were informed that the Commission was going to 'sit at 10 o’clock in Chambers, and you intimated that you did not propose to be present. Consequently we settled these questions, and we now decline to hear you upon any subject that has been settled in Chamber®, where you had an opportunity of making anv application you thought fit. Mr Jellicoe: But am I not entitled to ask this Court to consider the order of referee voe P Mr Justice Denniston said the only point they would stop argument upon was with regard to what had been decided in Chambers. On any other point counsel would be heard. Mr Jellicoe: No, I beg to differ; your Honor told me to sit down ! Mr Justice Only until I had ntimated- my opinion upon this point. I have told you the point upon which we do not desire to hear you ; ibut any application made by counsel we desire to be put in writing and placed before the secretary. We have decided that every motion must be put in in writing. Mr Jellicoe: But may I ask for an interpretation of this order of reference ? Mr. Justice Denniston: We do . not propose to hear any argument about that at present. Mr Jellicoe: But how. is it possible for me to cross-examine witnesses until I have received at your Honors’ hands an interpretation of this reference ? Mr, Justice Edwards: The Commission ,is in writing, and you are supposed to have sufficient understanding to understand it. If any question arises calling; fpr the interpretation of the reference we are prepared to interpret it;.but not at this time.

A Air Conboy rose from the waiting jurors’ seat, and called th© attention of the Court to a reply he had received from th© secretary of the Commission to a letter he had written. Their Honors intimated that they could not hear this gentleman. AN OFFICIAL WITNESS. Mr Skerrett then called Robert Henry Williams, assistant accountant in the Defence Department, who said he had occupied that position continuously from February, 1903. A voucher for payment by the Treasury for other than salaries was sometimes prepared by the claimant, and sometimes by an officer of the department. It would be forwarded first to the Undersecretary for Defence. Then it •would be returned to the officer Who was authorised to certify to it. It was then numbered on a machine, and an office stamp was attached. In the Registry of Claims was the departmental number of the claim, then the name and address of the claimant, with the date of entry, the nature of the claim, and the amount for which the voucher was received. The general particulars set out the nature of the claim. The voucher having been entered in this manner in the Registry of Claims, it was sent on to witness, who entered the details, the amount for •which it was drawn, and the name of the branch of the bank upon which it was drawn. It then went to the approving officer, and after it was approved it passed through the expenditure hook.

Mr Jellieoe: Are the hooks in evidence ? . „ , ~ Mr Justice Denniston: Iso, nou the books themselves. Mr Jellieoe: Well, your Honor, the cover is of very little use to me. Mr Skerrett: Your Honors, I wish to avoid giving any ground to my lriend for any comment at all, and I produce the books for inspection to be made by him in Court, under proper supervision in the ordinary way. Air Justice Edwards: All the entries? All* Skerrett: Yes, all the entiles, only on the condition that they be examined in Court under proper supervision in the ordinary way, by my learned friend. . u Air Justice Denniston: Then you waive that objection. Mr Skerrett: Yes, unreservedly. Air Jellieoe: I gladly accept even that crumb of comfort. What are the books ? , Air Skerrett: The books are the abstract book and the expenditure book of the Defence Department.

Air Skerrett asked the witness if he had examined the books of the department after Alarch 31st, 1903, for the purpose of seeing whether any payment was made to Captain Seddon for the reorganising of the defence stores. Air Jellieoe: I object, on the ground that the witness is asked to trace the results from the examination of books, which is only secondary evidence, and we are entitled to see the documents and records which he says he has examined ; he may have been mistaken, and there may have been other reasons. I submit that this Court of Justice has to perform that duty, and cannot relegate it to the witness. I am here to show that the system of audit in that department, both in connection with the expenditure and in connection with the registration of abstracts, is simply a farce- —that the door has been open wide for Mr Justice Denniston: We don’t want to hear anything but the legal grounds for your objection. Mr Justice Edwards: Whether there is legal authority Mr Jellieoe : But, your Honor Air Justice Edwards (sternly): Don’t interrupt me, sir. We simply want your legal authority. Mr Jellieoe: I propose to give your Honor that authority. I say, as a matter of law, we are entitled to see these records, and that this Court is bound to' see them before it can arrive at a just conclusion. Mr Justice Denniston: We hold that he is entitled to answer the question. The witness said he had examined the registration of abstract books and the expenditure books, and found no trace whatever of any such voucher in those books. He had also made an examination of the Treasury books in aid of his search of the books of the Defence Department Mr Jellieoe objected that the witness was not an officer of the department, and had no more right to examine their books than he (Air Jellieoe) had. Air Skerrett: But I propose Mr ’ Jellieoe: Oh, this is too much! Every sentence I utter is interrupted! Mr Justice Denniston: Air Jellieoe, we are not disposed to put up with this trifling with the time of the Court. The witness, in answer to Air Skerrett, said he had found no payment of between £7O and £BO to Captain Seddon, nor had he found any payment to him irrespective of the amount, nor any trace of any such payment. Witness’s books agreed with the Treasury hooks, except with regard to some small items; for instance, that which were called “travelling allowances” in the. Treasury books and “travelling expenses” in the books of .witness’s department. He was satisfied that it was not . possible for a payment of between £7O and SBO to have been ftiade with.-

out an entry appearing in the hooks of the departments. Mr Jellieoe : Will your Honor hear an objection to this evidence ? Mr Justice Denniston: Yes; we always hear objections when they are relevant. Mr Jellicoe: Well, the witness is being asked to answer the exact questions that your Honor’s Commission asks your Honor to answer-. Mr Justice Denniston: We have ruled that the question may be asked. Will you resume your seat. Mr Jellieoe: But, your Hanoi’s, I have risen to state an objection. His Honor Air Justice Denniston: And the objection has been overruled; be good enough to resume your seat. Proceed, Mr Skerrett. Mr Skerrett asked if it was possible for such a voucher to have been issued by the Defence Department. The witness said that, in his opinion, if such a payment had been made, two entries would have appeared in the books of the Defence Department and one in the books of the Treasury. Mr Skerrett asked if any alteration hud been made in the books. Air Jellieoe objected that the books would speak for themselves. To Air Jellieoe: Witness’s office certified abstract vouchers for supplies and contingent expenditure. Claims for public officers would he on similar vouchers. Claims for services by public officers would be different in form. In his office vouchers for one suspense account were passed. This was an Imperial account, recoverable from the Imperial Government. Who were the persons in your office in 1903 and 1904 who certified abstract vouchers? Was the Defence Alinister one ? —Yes. Who were the certifying officers for 1903 in the Defence Office?—Mr T. F. Grey and myself, also the late Acting Under-Secretary (Colonel Porter). Had the Minister no authority to certify?—l presume, from his position, he had. In 1903 and 1904?—Yes. Were the commanding officers of districts certifying officers? —Yes. Was Colonel Porter a commanding officer of a district ?—Yes. What district?—Christchurch. Who were the approving officers in 1903? —Only Mr T. F. Grey. Not the Defence Minister?—No, not whilst Air Grey held the appointment. In 1904, who ?—Colonel Porter. AVas Colonel Porter also an approving officer when he was commanding officer of the district?—Nc, only a certifying officer. I suppose you know that, according to the statutes, no money can be paid cut of the public account in the form of claims, except when sent from your office to the Audit Department?—They can he paid out of Imprest, and afterwards sent to the Audit. The latter department has duties to perform with accounts sent from the Defence Department before sending same on to the Treasury. IMPERIAL PAYMENTS. Do you know that in 1903 there was a large sum—one and a half million pounds—on deposit, in this colony, to the credit of the public account, of Imperial moneys?—l believe there was a large sum. Ido not know how much. Did your office in 1903 and 1904 certify vouchers and claims for payment out of the public account, which you did not send to the Audit Department ? —ln 1903 cheques against the Imperial deposit were not sent to the Audit Department. In 1904 the deposit of the Imperial Government was not under the control of the Defence Department.

Was the Defence Alinister in 1903 also Colonial Treasurer?—Yes. Could the Defence Alinister, as a certifying officer, certify a clainj, and could your department then send that voucher not to the Audit Department

but direct to the same person who was Colonial Treasurer ?—Yes. And could the Colonial Treasurer pay it without sending it to the Audit Department?—He would, send it to the War Office for audit, but the Paymas-ter-General would pay it. Who was Paymaster-General in 1903? —Mr Heywood. The Under-Secretary to the Treasury ?—Yes. How is that the Defence Office, in 1903, in connection with the issue of cheques on public account, in respect of Imperial deposit at the public account, dispensed with tbe Audit Department?—So far as I remember, tbe Imperial Government agreed to waive tbe auditing of payments to men because of the delay and difficulty in getting information as to their accounts in South Africa. That is to say, in the absence of information regarding the position of the soldiers in South Africa no payments could be made to them.. I am not speaking about payments in South Africa, but. about claims certified by the certifying officers of this colony. You were a certifying officer in 1903? Yes. Did you in that year in Wellington certify claims for payment out of the public accoujib from the deposits of Imperial moneys ?—Yes, on receipt of th© papers on the army form from South Africa. These I would send to the Treasury. Without reference to the Audit Department at all?—Yes. You know that the Audit Department must not only investigate the propriety of,claims sent in, but has to check the computation in accounts before authorising payment?—Yes. Do you say that you never, in 1903, certified for supplies for payment out of the deposits of the Imperial account ?—Never—that is. I withdraw that statement. I certified for a feather-duster for office us©. That may be a small y-satter, but it helps to prove what I want from you. How many vouchers passed through your office in 1903 and were certified by your department for supplies which were never sent from your office to the Audit Department?—l could not say. Hundreds? Thousands?—There would be thousands. And the amount? Alillions?—No. Hundreds of thousands? —Hardly. Thousands ?—Yes. By whom were these vouchers —the ones that were not sent to the Audit Department—from time to time certified?—By the officers commanding the volunteer districts in New Zealand. Then there would be no trace whatever in the Audit Office to f the issue of that public money to satisfy any claims that your office chose to certify ? —Not of the private funds of the Imperial Government. I suppose the money was at public account?. —Yes. And you know that public money, under the Public .Revenue Act of 1891 means and includes all moneys belonging to the Crown or to the Government of New Zealand?—The Imperial Government waived that. How do you know?—By the records of the department. You have seen, then, what?—Oh, well—that the Imperial Government wai 'd audit in New Zealand. I ask you to' produce that record.— I cannot. What did you see? A letter from whom? Was it from the Defence Alinister ?.—No. From Air Heywood ?—No. From whom?—From the AccountantGeneral to the War Office in London. This was about 1901. Do you know when, anyone in New Zealand asked the, War Office to dispense with the statutory law of the cole y, so far as claims wo a concerned requiring audit by the Audit Department ?—N o Would you be surprised to hear that the Defence Alinister on February 3, 1902

A GRIEVANCE. Mr Skerrett (interrupting): I submit, tour Honors, that this is purely a warte of the time of the Commission. The question ir irrelevant. Mr Jellicoe: Good gracious! Mr Skerrett: My learned friend’s demeanour is such as to indicate that he cesires to make a grievance against somebody. I submit I am justified in contending that his question is irrelevant. Mr Jellicoe: I presume that if my friend’s objection is taken their Honors ■will near me ir reply. Mr Justice Denniston: I do not understand you. I wish you would not endeavour to “dive into our thoughts.” Mr jellicoe: X have quite enough to do vithout doing that. Mr Justice Denniston: What is your point, Mr Jellicoe? Mr Jellicoe: I am endeavouring to show (I have no grievance, but am .simply here in the performance of my duty—-that disposes of my friend’s observation) —I am here to show that in all orobability the voucher—the notorious voucher—we are inquiring about was a voucher for one of these illegitimate payments out of the Imperial moneys That is what lam proceeding to Tvrovej —a voucher that was never audited. Mr Justice Denniston : In what way do you suggest that comes under the terms of the Commission? Mr Jellicoe read from the terms of the Commission in support of his contention. He said he would on this branch of the case be frank at once. Hie wished to prove that a certifying officer (the Defence Minister), under the Public Revenues Act, 1891, took active steps to prevent any audit in the colony, either before or after the payment of any abstract claims which he or his department had certified. ; Mr Skerrett: This is absolutely outside the scope of the inquiry. These payments out of the Imperial account were all for Imperial services connected with the contingents. Mr Justice Cooper: Were they paid by cheque on the public account of this colony ? Mr Jellicoe: lam going to show that they were. Mr Skerrett: My learned friend is going too far. He is going into the question, not whether Captain Seddon received a payment, hut as to the action of the Government as to pre and post audit. I am not going to burke any inquiry as to whether Captain Seddon received a payment, hut I submit it is improper of my friend to comment upon, or cross-examine upon, arrangements made between the New Zealand Government and the Imperial Government as to services in South Africa. Mr Justice Denniston: We have got the fact of the dispensing with the preaudit. . What is the evidence now directed at ? Mr Jellicoe: I propose to show that payments of the Defence Office were paid by cheque on the public account. If I can show that a voucher for between £7O and £BO, purporting to be paid to Captain Seddon, did in fact exist, it is important that I should also show -whether or no a sum of money corresponding with that voucher was taken out of the public account. Mr Justice Denniston: The question is whether a voucher could disappear without leaving a trace. Mr Jellicoe: I am endeavouring to show that a certain system existed in the Defence Office, so far as Imperial monevs were concerned. We may find the voucher.

Mr Justice Denniston: We do not object to your asking what process is gone through, hub you should confine yourself to that. Mr Jellicoe: This is not a question of dispensing with audit, hut whether the law has been broken. Mr Justice Denniston: No. As to whether that process (breach of the law or not) resulted in what you have indicated. It is not for us to say whether the system is right or wrong. Mr Jellicoe : Oh, yes ! (To witness) : In the case of supplies or allowances for additional services, could a claim be certified by the Defence Minister in the Defence Office and sent to him as Treasurer, and paid out of the public account without the claim being first approved by the Audit Department, or being sent to the Audit Department afer payment?—A claim against the Imperial Department would he sent to the Paymaster-General (the officer appointed by the Imperial Government to approve payments out of Imperial moneys), and afterwards audited by the War Office accountant in England. Mr Justice Edwards said what Mr Jellicoe had to get from witness was a statement of facts.

Mr Jellicoe: That is what I am trying to do. • . MV Justice Denniston: This is a waste of time.

Mr Jellicoe: I don’t think so; your Honors may he satisfied. (To the witness): Have you any knowledge of any request made by the head of your department for dispensing with audit duty in connection with your office? Mr Skerrett objected. Mr Justice Denniston said the question was not a proper one. Mr Jellicoe (to witness): Can you, by your books, tell me the amount which claims were passed and certified, by your department (not sent in to the Audit Department) in 1903? —No. The books are under the control ot the officer in charge of the Imperial Pay DePa Where are these hooks ?—ln the hands of an Imperial officer. Where in Wellington ?—ln the Government Buildings. .... 0 Where in the Government Buildings. Mr Mabin is the officer m charge. Mr Jellicoe asked: Supposing a claim came into your office for oats supplied to the Imperial Government, and the price charged was 4s per bushel and you knew that the market price of oats was 3s, who would be the person who would approve of that amount or claim ? —The witness said Mr Heywood would be the gentleman to whom the matter would be submitted, and he would be a better judge and more competent to decide as to the values. Mr Jellicoe: You see, if I can show that the door has been opened to gross Mr Justice Denniston : Really ! Really, Mr Jellicoe Mr Jellicoe: But if I show it I wont withdraw a word of it. Mr Justice Edwards: You see, the point is, we want to get at the facts; you can draw any inferences you choose from them; hut we want the facts. Mr Jellicoe asked the witness if he were brought face to face with a claim which he knew to be fraudulent, what he would do with regard to it? Witness: I would “hold it up.’

DEPARTMENTAL PROCEDURE. In answer to further questions by Mr Jellicoe, the witness said he was satisfied that no such cheque was paid, and that all cheques issued by the Defence Office and paid by the bank were traceable. No doubt the bank paid cheques in favour of Captain Seddon; but he would not say that a cheque had been paid for which there was no corresponding voucher. He might- have drawn money from the Imperial pay branch without any record in the books of witness’s department ; but the record would appear in the books of the other department. He had not inspected those other books. They were not in his department. The vouchers that would pass through witness’s office would be found in the Treasury, but he had not examined them. He had recorded Imperial service claims in his alphabetical register from April to November, 1903. After November of that year his office had ceased to have anything to do with these matters. He thought there were allowances or expenses to Captain Seddon for field service, but hot for the reorganisation of stores. The expenditure book contained no such records, as these matters had gone to the Imperial pay branch. It was in Mr Mabin’s office, and he was a subordinate of Mr Heywood. The greater part of the vouchers which passed through witness’s office between February, 1903, and November of the same year for payment in respect of Imperial service and supplies were now in England, to be audited by the War Office. Many of these vouchers were audited here, but many of them were audited by the War Office. Mr Jellicoe asked their Honors to order the production of the books relating to this matter. Mr Skerrett: Any book that the Commission thinks will be relevant will be supplied. Mr Jellicoe asked if any of the documents of the Defence Department disappeared since 1902. The witness said lie knew nothing of any such disappearance. No moneys that he was

aware of had been twice paid in regard to the Defence Department. There had been double payments made in South Africa, but it arose merely from ignorance l of what had taken place in New Zealand and South Africa, and was not due to remissness of the department in New Zealand. In his office they had repeatedly refused to* pass vouchers for amounts which were larger than the amount due, hut these were in cases where mistakes had been made, and where amounts had been wrongly computed. The Court expressed the opinion that the witness should not be asked any more questions with regard to departments other than his own. Mr Jellicoe asked the witness if he had ever seen in his department, a voucher purporting to be signed by A. 8., which was not signed by that person, paid and cashed. The witness said he was not aware who signed vouchers. From his knowledge he was of the opinion that it was impossible, for it would infer roguery on the part of at least three persons, in eluding the Paymaster-General. It was possible for one voucher to be substituted for another, £s a man might claim for something outside the regulations and claim perhaps for interest more than should he paid. Captain Seddon’s signature was known to- wit ness for some three years, and he did. not think it had varied appreciably during that period. It did not vary so much, probably, as did that of the Minister for Defence. Mr Willis: Would it not he possible for a voucher to be prepared by a claimant and sent direct to the Treasury without passing through your department?—Not unless entered in our books.

The approving mark of your department is merely a rubber stamp ?—Yes. If the claimant could obtain the approving officer’s signature and that stamp, could it not go through your books? —It could be possible if the approving officer was a rogue. In reply to further questions, witness said that in 1903 and 1904 Colonel Bauchope was commanding officer in Christchurch. There was a new defence store built in Christchurch in 1903, or thereabouts. Witness knew of no vouchers going through for inspection of stores removed at that time. He would know of any such services through claims sent in. The removal of stores from one building to another' would not be termed reorganisation of stores. There was not at present any money lying to credit of a suspenc© account. About twenty or thirty “ exceptional ” vouchers were sent Home. By “ exceptional ” vouchers he meant claims such as those for reorganising defence stores. Where payment of such a claim was asked for out of Imperial deposit it might he sent Home. Mr Jellicoe: Might he? To Mr Willis: Witness’s department only asked for initials in the making out of claims. If such a voucher as the one mentioned had been made out, witness’s department would have had nothing to do with receipts. Had the voucher referred to gone through during witness’s absence he would have noticed- the entry on his return. It must have appeared in his hook. It would ncib have been paid without the approving stamp. To Dr Findlay : A claim against the Defence Department for the reorganising of defence stores of Wellington could not he for Imperial service. Suppose that a voucher came in against the Defence Department for the reorganising of defence stores of Wellington, witness would first refer it to the Minister for approval, and then send it to the Defence Storekeeper at Wellington for his certificate. He did not know of any case in which the Defence Minister had ever certified payment. Colonel Porter was approving officer from December 25th, 1904, to January 31st, 1905.

Mr Jellicoe: Was he during that time TJnder-Secretary for Defence? —Yes. Where ?—ln Wellington. This concluded the examination of the witness. The Court adjourned until 10.30 next morning. ' SECOND DAY. DEFENCE! DEPARTMENT’S METHODS. THE BENCH AND BAR. The Commission set up to inquire into the colony s system of audit, Mr Justice Denniston (President), Mr Justice Edwards, and Mr Justice Cooper, sat again on the 24th ult. Thomas Francis Grey, acting for the Under-Secretary for Defence, said - he occupied that position in 1903, and up to September, 1904. During that time witness authorised payments on behalf of the department. The Defence Minister had never during that period acted as approving or certifying officer. During the same period every payment in respect of reorganising defence stores would come before witness. No vouchers for such payment ever did come before him. He knew of no such service having been given. Would have had cognisance of same. Had searched for vouchev of payment to Captain Seddon for rooi ganising defence stores, and found no trace of it. During 1903 and

up to October, 1904, every payment was authorised solely by witness.

To Mr Jellicoe: Had looked for hia authorities from the Minister for payments in ■’.903-1904. Could produce the documents by authority of the Minister. Mr Jellicoe asked the Court to order the production of these documents. Mr Skerrett objected. This, he said, was asking too much of the department and the Commission. Mr Justice Denniston said the Court did not propose to make such an order in the present instance. Witness, .in further cross-examina-tion, said the Minister would not give direct authority to the Storekeeper for payments. Witness could not assume fraud in the public service of the colony. Mr Jellicoe: What! In the face of what is going on in New South Wales to-day, sir?—Yes. Mr Justice Denniston ruled that Mr Jellicoe’s last observation was irrelevant. Such questions must stop. Mr Jellicoe (to "witness): Did the Defence Minister ever certify in 1903? No. What tells you so?—My brain. Oh! Your brain? I’m afraid that is too much for me to investigate. When you sent claims on to the Audit Department did you send a covering letter?—No. Or get an acknowledgment?—No. The same receiving clerk always received certified claims from office? —Yes, I believe so. Did not the chief clerk sometimes receive the vouchers?—Yes. And if both were out of the room, might they not be left with other clerks ?—Yes. Without acknowledgment ?—-Yes. You would not get a receipt. They were too busy. Witness knew Mr Heywood. In March, 1902, he was Paymaster-General and Secretary to the Treasury. In that month he did not interview witness in regard to claims payable out of Imperial moneys. Saw correspondence from the Agent-General regarding the auditing of expenditure of Imperial moneys by the Defence Department. Saw it the previous day. Did not know that in February, 1902, the Minister of his department had cabled Home in the following terms': —“Consult War Office as to position taken up by Controller and Auditor-General, who considers his duty audit pay and claims chargeable Imperial funds for war expenditure. In my opinion local audit such expenditure unnecessary, as must certainly be audited subsequently by Imperial authorities. If War Office concur local audit unnecessary, cable instructions very fully.” Dr Findlay: I think it would, save this ghastly waste of time if I pointed out that this inquiry is limited to a period of two years. Captain Seddon first entered, the service in 1903. The dates now inquired about were a year earlier.

Mr Jellicoe: lam trying to show that in 1903 a system was established, in defiance of the law. This voucher may have been paid and passed without any record, in the departmental hooks to show it.

Mr Justice Denniston said the facts as to pre and post audit were proved on the previous day, and admitted throughout. Mr Jellicoe’s line of inquiry was not legitimate, and was not to he pursued. Mr jellicoe asked witness whether m March,' 1902, lie knew that the War Office attached much importance to local audit? Mr Justice Denniston: It is quite plain that you are obviously trying, Mr Jellicoe, to get in something that we have just ruled out of order. That is direct defiance of the Court. Mr Jellicoe: What is? Surely the Court can’t say that. . _ Mr Justice Denniston: That is a deliberate impertinence, Mr Jellicoe. Mr Jellicoe: I am sorry you should think that, your Honor. Mr Justice Denniston: I not only think it. I say it. , Mr Jellicoe: I am sorry you should either think it or say it, because nothing of the kind was intended. I say so frankly. Mr Justice Denniston: Yes, you say

so. Mr Jellicoe: And I mean it. Mr. Justice Denniston: Oh! Kindly proceed, Mr Jellicoe. Mr Jellicoe put a question as to the voucher for “the painting.” Mr Justice Denniston: What painting? Mr Jellicoe: The painting in gilt letters over Mr Heywood’s door of the “pay officer” ! Mr Justice Denniston (heatedly): You are absolutely trifling with the time of the Court. Your conduct indicates an absolute intention to delay and hinder the business of the Court. If this prooedure goes w<3 slisll li&vo to very strong measures to stop it. Mr Jellicoe: I am sorry Mr Justice Denniston: We have warned you, sir. Mr Jellicoe: No warning was necessary.

Mr Justice Denniston (with emphasis): Hold your tongue! You are forcing us to conclude that you are not only wasting our time, but doing so deliberately and intentionally. If this attitude characterises your further cross-examination, we shall take steps to stop you.

Mi’ Jellicoe: I am not to be intimidated. Mr Justice Denniston: Don’t insult me, sir! Mr Jellicoe was proceeding to make some retort when his Honor again ordered him to hold his tongue. “I intimate that we shall prevent this gross waste of time, and this gross abuse of the Court. Now proceed.” Mr Jellicoe: With pleasure. Witness, continuing, said his department never sent books to the .Audit Department for inspection, nor had he known of Audit-officers inspecting his department’s expenditure or abstract books. They could do so under the law. Witness was cross-examined at great length upon details of the methods employed in his office. Claims certified by Colonel Porter had come to witness’s office in 1903 and 1904. The claims would cover many kinds of service. ' Did he certify, in 1903, in favour of Captain Seddon against Imperial money ?—I cannot say. ‘ Did any such claim pass through your office?—Probably yes, but I would have to look it up. * If he did certify for payment of Imperial money to Captain Seddon, that ought to have passed through your hands ?—Yes. Dr Findlay: Every voucher for every payment made to Captain Seddon will be produced for this Court. Mr Jellicoe: That doesn’t satisfy me by any means. (To witness.) Have you any knowledge whether, in 1903, a voucher & favour of Captain Seddon, certified by Colonel Porter, passed through your office ?—I cannot say. ; Or one certified by the Defence Minister?—l cannot say. After March, 1902, what authority determined upon the propriety of chai’ges against Imperial money ?—The Under-Secretary for Defence (Sir Arthur Douglas) and Mr Hey wood. Did any claims come into your office after October Ist, 1902, duly certified by the certifying officer, charged against a definite vote or fund, wh : ch you decided was not properly so charged, but should have been charged against Imperial deposit ?■ —Probably. In that case what would you do with the claim ?—Alter it to make it payable against the Imperial funds. _ Would you communicate with the certifying officer or claimant, pointing out the mistake?—No. So you would have received a voucher charged against a particular vote by a certifying officer and claimant, you would alter it, and let it pass the Treasury, not as the claim was made, but charged to another vote, not contemplated by either the claimant or the certifying officer ?—We w'ould only alter the heading of the voucher. And make it chargeable against another fund altogether?—Certainly. ' Is such a thing possible in the public service as to alter improperly on the voucher brought in the vote against which it is chargeable? Do you exclude the possibility of such a thing happening in a case where audit has been dispensed with by your office ? Yes. It could not be done. No one could possibly be guilty of fraud ?—How could there be fraud with only one fund. Witness said he had sent a memorandum to the Defence Minister on August 3rd last to the effect that a careful search of the Defence and all Trasury books had been made, and that no trace of a receipt of a claim, or payment to Captain Seddon of any sum whatever for reorganising defence stores could he found. That was in .answer to a memorandum from Mr Seddon asking whether a voucher for between £7O and £BO in favour of Captain Seddon had been passed through. Mr Jellicoe: But could not a forged voucher be passed through as a genuine one ?—I could not say, but I don’t think so. Did you compare the entries in that book with any other book?—No. Did you compare your hooks in the Defence Office with any other records? —I personally searched, under the Minister. Say the voucher for which we are looking was substituted for some other voucher in your books?—lt would be impossible. The voucher we are talking about is supposed to have been in the possession of the countersigning officer in Christchurch ?—Yes. .Well, could not a voucher in the possession of the countersigning officer be substituted for a voucher that had gone through your office?—No, because the Treasury would detect it as soon as it came back to Wellington. But wouldn’t you have to compare the entries in your books with this?— Well, the Treasury hooks might have to be examined. Yes ; but if there is a fraudulent person in the Treasury, their btfoks might not correspond with yours, and a fraudulent voucher might exist?—ln such circumstances perhaps so. Well, how could you get at that without a comparison ?—We would have to look at the vouchers to see if there was a forgery or not. Ahd such an examination could be easily made?—Yes Mr Skerrett: It has been already made by another officer. Cross-examined by Mr Willis, the witness said Captain Seddon joined the department on March 31st, 1903. A

voucher to obtain the signature of the authorising officer would have to pass through witness’s department, because he (witness) was the authorising officer; but if all the officers were 1 fraudulently acting in collusion i twould, of course, be possible for fraudulent vouchers to be passed through, but it would be discovered ere long. There was a mobilisation store erected in Christchurch during 1903, and the goods passed into that place would not be a reorganisation of stores, but merely a transfer of stores, and there never had been any such service performed as the reorganisation of defence stores. He had been away on five weeks’ leave of absence on one occasion, but if such a document had passed through his department he would have been apprised of it. Captain Seddon had been Private Secretary to the Defence Minister .and a captain in the Permanent Forces, and he might, under ' instructions, have performed other duties, but certainly not of the character suggested. To Dr Findlay: If a voucher were seen in the Christchurch office it would be entered, certified, approved, and sent on to the Audit. The voucher, was for reorganisation of the defence stores in Wellington, and could not be made payable against Imperial money. AVitness never entered into any c nspiracy or fraud to have a voucher paid. Had been over twenty yeans in the service. In order for such a voucher as the one alleged to have got through it would have required fraud on the part of witness himself, the acc mntant, assistant accountant, ' udit and Treasury Department. A forged voucher would, in any case, appear in the Treasury books, and the fraud would thus be disclosed. Witness had investigated the books for 1903, 1994, and part of 1905, for entry of payment to Captain Seddon for colonial service. There .was no such payment. To November, 1903, no payment was made to him for Imperialistic sex-vices. Frederick ‘ Silva, assistant Defence Storekeeper, examined by Mr Skerrett, said he was familiar with the records of the department for 1903 and 1904. There had been no reorganisation of defence stores during that period. Woxild have known of such. No payxuent was made to Captain Seddon for f’.upplio-s to, or services in connection with, defence stores. In his opinion, if such a service had been rendered by Captain Seddon, it would have been entered in witness’s books. To Mr Jellicoe : Witness did not certify claims against the department. His superior (Mr O’Sullivan) did. In 1903 witness had at Mount Cook no stores which were appropriated to the Imperial service. Had no knowledge of any stores being charged to the Imperial Government. Got no additional assistance in 1903 at his store for work that had to be done there. There was only the usual transfer of stores from one district to another in that period. His books would show what these trans - fers were. Had not the necessary books in Court. (It was intimated that the books would be produced.) In the case of transfer of stores from Christchurch to Wellington, the officer in . charge would not have to come to witness for authority for exti-a allowance in connection with same. Had never heard of sxich allowance being applied for. To Mr Willis: A voxxcher for services in connection with defence stores would be sent by the Defence Office to witness’s department to note. Such . a voucher as the one being inquired after would not necessarily go through his department. , Re-examined by Mr Skerrett: Witness had recox-ds of all reimbursements in connection with supplies and services in. re defence stores throxxghout the colony. These were the records he had searched. They contained no payment whatever to Captain Seddon. To Mr Jellicoe: Received the infoi*mation for his records from vouchers supplied by officers commanding districts. The Court adjourned until 10.30 next morning. THIRD DAY! FRESH DEVELOPMENT. MR JELLICOE WITHDRAWS FROM THE CASE. MR FISHER, M.H.R., TO EXPLAIN HIS POSITION. Their Honoris Mr Justice Denniston, Mr Justice Edwards, and Mr Justice Cooper, who have been appointed as a Royal Commission to inquire into the system which obtains for the auditing of the public accounts, took further evidence last Wednesday. A WITNESS RECALLED. Frederick Silver, Assistant Defence Stox-ekeeper at Wellington, who had givm. evidence on the previous day, was recalled, and his evidence in chief was concluded. 11l answer to Mr Skerrett, the witness said there had been no transfers of stores from Wellington to Christchurch during the year 1903 to 1904. At Mr Jelliooe’s request he produced his -books. He was cross-examined at some length as to the manner in which the books of the Defence Stores were left. He said docu-

ments regarding the transfer of* stores might be received from the officer commanding some time befoi-e the goods were put into the Wellington store and the foreman’s receipt given for them.. The books of the office showed all the stores that were in stock, and if no entry were made in the books a check would show if there was any discrepancy. There was not a periodical check made; it was only made as it was required. Witness stated that he could not say how frequently these checks or stock-takings were made in 1903 or 1904. The storeman kept a recoxd of the arms and other materials that were in store. EVIDENCE FOR THE TREASURY DEPARTMENT. Robert Joseph Collins, called by Mr Skerrett, stated that he was AssistantSecretary to the Treasury. He had been in the pxxblic service for forty years, and had been connected with the Treasury for the last twenty-seven years. This witness described the manrer in which voiicliei-s for the payments of xnoney were dealt with in the Treasury, and the examinations and checks that were applied to all requisitions for payments. Once a year they balanced with the branches, took out a list of unpresented cheques, their numbers and amounts, and saw that the balances corresponded with the bank’s returns. Mr Justice Edwards: Supposing the" teller made a mistake and mid a forged cheque?—Well, the hank would discover it, and if they did not we would, immediately ; bxit the bank must discovei- it. Mr Justice Denniston: Then, as I ixnderstand, yoxx say yoxxr system renders a matter of carelessness or negligence in this way to be impossible. Is that so?—Yes, it is, your Honor. The witness, in reply to Mr Skerrett, went on to explain that aftei* vouchers had passed through the office, and had been returned from Audit, they were filed and kept on record. A similar course was taken with regard to payments on the Imperial deposit account, with the exception that these requisitions and payments were not locally axxdited. He had searched the hooks in connection with the Defence Department, including the contingent advances for public works and the Imperial deposit account, and all accounts in which it was possible for paymeixt to be made to Captain Seddon for the reorganisation of defence stores or for any other duty, and found no trace of anything of the kind. It was absolutely impossible for any such payment to have been made without any record appearing in the books—absolutely impossible. Cross-examined by Mr Jellicoe, witness said he had not the control of the pxxblic accounts. That was. in the hands of the Audit Department. In 1903 theve were, he thought, a little over a million pounds of Impei’ial- deposits in the public account of the colony, and that money could not come out of the public account without the authority of the Audit Department. In fact, no money could coixxe out without the a nth ority of wliat was called a “Governoi-’s warrant,” and that was 'issued on the previous authority of the Audit Office. The Imperial deposit could only he withdrawn from the public account by the authority of the Audit Office.

Mr Jellicoe: If £3OO were paid for “tips” for railways and steamers, and that was signed by the authorising or certifying officer, would it he the duty of the Audit Department to see that the computation of the “tips” was correct ?—I should say so—under the act. Well, supposing the Defence Office sent up to the Audit Office a claim approved by the authorising officer for the price of oats supplied to the Government, and the claim was passed on the calculation of 4s per bushel—sav for 40,000 bushels at 4s—and the Audit Offioe knew that the market price in Wellington was only 2s, would the Audit Offioe see that the computation was correct ?—That is really a question for the Audit Office, and I think you had better put it to them. When did you first hear that your Minister was going to do away with the audit., of these Imperial accounts ? That is not the right term. I should say “dispense” with the audit here. Wed, then, “dispense” with the audit here ?——About the first week in March. There was a congestion of the accounts, and the War Office in England was applied to-7 A congestion ! What was the nature of that disease?—A large p umber of vouchers had accumulated referi’ing to large sums of money, and that money was kept out of the Ti'easury on account of the congestion. A WORD OF WARNING. Mr Justice Edwards said it was apparent to the Commission that this form of examination was a gross waste of time, which sooner or later would have to bo put an end to. They had allowed it to go on thus far for reasons that would be obvious to everyone. So far as he was concexmed, he purposed to allow it to continue for that day; but after that day the Commission would consider what steps should be taken to deal with the matter. Mr Justice Denniston : I entirely concur. Mr Justice Cooper: So do I. Mr Jellicoe expressed regret that he

had been understood to be acting with the object of wasting the time of the Commission. He asked the witness whether he had said that he had never sent a receipted voucher to the Audit Offioe. The answer was that this had never been done, and that after the vouchers were received by the Treasury they were filed away* Mr Jellicoe proposed to ask whether the War Office had not been approached with the object of helping someone in this colony to break the law. Mr Skerrett rose in protest. Mr Justice Edwards said (severely) that the Commissioners might surely be relied upon to discriminate between evidence that was, or was not, relevant to the issue. Addressing Mr Jellicoe, he said: “We are all of opinion that you have come here deliberately to waste time, and to cloud the issues which we axe here to consider. We have allowed you to proceed so far in order that there may not be even a pretence that yea have not been allowed free rope; but there will come a time when this soit of thing can no longer be allowed to go on . . Mr Jellicoe: I am not proceeding to do so Mr Justice Edwards: And you may have to be dealt with. Pei'sonally, I believe in dealing with persons who do not regard the rulings of the Court. Mr Jellicoe: I am not disregarding them. Mr Justice Denniston: You deliberately disi'egarded them from the moment you came into Couit until now. Mr Jellioce: I am sorry your Honor thinks that. Mr Justice Edwai’ds: Well, I do not “think” it—l “know” it. Mr Justice Denniston: And so do I* Mr Justice Cooper : I think you have deliberately wasted time on Monday, yesterday, and this morning in asking questions that are quite irrelevant. Mr Jellicoe: But yoxxr Honors see the very difficult task I have before me— Their Honors were understood to say that they did not see it. Mr Jellicoe called for correspondence between the Audit and Treasui'y Department in connection with the dispensation of audit of public accounts. Mr Skei’rett undertook that this should he produced. Witness said that after March, 1902, the Treasui’y was in the habit of receiving vouchers from the Imperial Department, without reference to th© Audit Department; If the claims were in respect of Imperial services, they came from the Imperial pay branch. A document could be produced to this Commission authorising Sir Arthur Douglas to certify to vouchers for Imperial pay. It was customary for all requisitions to pass thi'ough witness’s hands. He passed them on to th© Audit. Witness was subjected to a long crossexamination upon various points—as to the procedure in l’espect of Imperial moneys, and so on —concerning the Audit Department’s system, and th© manner of acting towards vouchers. H© was satisfied no vouchers for Captain Seddon passed through his department. He knew this because he had examined his abstract book. Mr Jellicoe: Upon the assumption that your books are correct, you say that the cooks in your custody contain no entr; in favour of Captain Seddon P —I say that. Mi* Jellicoe wanted certain documents produced.

Mr Justice Edwards said that the point in question had been already {Sled upon by the Court. They could not order 260,000 vouchers of the department to be produced. If necessary, however, steps would be taken to have them searched. Mr Jellicoe (to witness): Would you exclude all possibility of a voucher being sent to the Treasury and being mislaid or lost ?—No. <L Tn what circumstances „ could a voucher disappear P—lt might be mislaid, or put in the wrong place. Mr Justice Cooper: Could a voucher disappear without a record of it appearing'in the departmental hooks? — No.

Witness, continuing, said that a fraudulent voucher could not go through the Treasury. He would not assume a fraud in the Treasury Department because of the check. Supposing that a voucher had passed Christchurch and gone, astray,., witness would not have found it. up here. Mr Jellicoe proceeded to crossexamine witness upon minute points. Mr Justice Denniston: We. had all this yesterday. Mr Justice Edwards: Yes, and we made an intimation. We allowed you » free rope until 4 o’clock to-day. It is now a quarter to four, and you have a quarter of an hour to go. Mr Jellicoe: I don’t want any rope. Mr Justice Denniston: We have allowed nothing of this sort. Mr Justice Edwards: Mr Jellicoe has spent the afternoon in flat defiance of our ruling. .- Mr Justice Denniston: I may say that the Court gives no_ ruling. Mr Jellicoe may go on—until 4 o’clock. Mr Jellicoe: I ask for the production of certain documents. I ask for the postponement of this witness’s examination until those documents are produced.

Mr Justice Denniston: We have not stopped you -■ Mr Justice Edwards: Except that you have spent the afternoon in disobeying the ruling of the Court- that your examination should be confined to relevant matters of fact. Mr Justice Denniston: We have nothing more to say than that you (Mr Jellicoe) will be good enough to proceed with youi- examination of the witness. Mr Jellicoe:! have to say this Mr Justice Denniston: We do not wish you to say anything. MR JELLICOE GOES OUT. Mir Jellicoe: I must state Mr Justice Denniston; You must not! You must proceed, of course, on your own lines. Mr Jellicoe: I desire to state that I shall take no further part in these proceedings. Having regard to the course of this inquiry and your Honor’s ruling, I take this course because we feel that no good object can be served by our taking further part in these pro- - ceedings. . ’ Dr Findlay (jumping up): I ask that Messrs Willis and Fisher be subpoenaed. Mr- Justice Edwards: It remains to be seen whether Mr Fisher is responsible for the gross and improper waste of time this Court has been subjected to, and whether or - no he has been a party to an effort to obscure the issue. The Court adjourned until 10.30 next morning. FOURTH DAY. MR FISHER CONDUCTS HIS OWN CASE. FRIDAY’S PROCEEDINGS. Their Honors Mr Justice Denniston, Mr Justice Edwards, and Mr Justice Cooper, sitting as a Royal Commission to inquire into tire working ancL methods of the Public Audit Department continued their inquiries last Thursday. 0 ! n the previous afternoon, Mr E. G. Jellicoe, who had appeared on- behalf of Mr F. M. B. Fisher, M.H.R., one of the parties to the inquiry, withdrew from the case. When their Honors sat yesterday morning, Mr Justice Denniston, the President of the Court, told Mr Fisher that he •would he given the fullest opportunities for conducting his case in the same way that Mr Jellicoe had had opportunity. His Honor added,: “ The three points referred to the Commission are “ (1) Whether a voucher for payment of an amount by cheque on the public account, signed by the payee, could disappear without any record of its existence or payment being left in the departmental hooks or records. “(2) Whether in the years 1903-4 a voucher was issued in favour of Captain Seddon for payment to him at Christchurch out of the public account of a sum between £7O and ._j £BO (or any other sum) for the reorganisation of defence stores, or for any other service. “ (3) Did Captain Seddon ever claim or receive any such payment or sign any such voucher?” “ These are the only questions the Court has to consider,” concluded Mr Justice Denniston. “ In order to enable your counsel to establish your case on these points, we have repeatedly stated 'that we are prepared to order the production in this Court of any

f document, or writing which may assist it to do so. We cannot order the production in this Court of the whole of the records of any public department without reference to their relevancy; nor can we personally undertake the examination of some 260,000 vouchers in <?4Jer to establish that the voucher alleged to have been seen in Christchurch is not amongst them. Such a proceeding would be quite contrary to all the rules which regulate the proceduce oif Courts of Justice; and, apart from other objections, the want of time wdulli make it absolutely impossible for us t© adopt it. Bearing this in mind, are you prepared to go on with your case now, or do you wish to retain counsel to assist you ? In this latter case, we are prepared to f grant an adjournment of the proceedings until tomorrow morning.” Air Fisher intimated that he would endeavour to conduct his own case, but intimated that it would be necessary that certain books and papers from the Christchurch Post Office should be produced. Mr Skerrett stated that every reasonable facility would be given to Mr Fisher and Mr Willis for the inspection of such books and documents as were found to have any bearing upon the case. Robert- Joseph Collins, who had given evidence o>n the previous day, again took his place in the witness-box, and, in answer to Mr Fisher, said that Captain Seddon signed vouchers made in his favour “R. J. S. Seddon.” Vouchers in favour of him were made out in the name of “Captain” R. J. S. Seddon, and vouchers in favour of the Premier were made out in the name of the 'Right Hon” R. J. Sodden. There were some 260,000 vouchers, and a search was being made through vouchers numbering some 7000 or 8000 parsed through during the years 1903-4. The search now being carried out would be complete, and was the best kind of search that could be devised. The New Zealand audit was dispensed with because there was an accumulation of work in the office, and the necessary information could not be obtained from South Africa. The War Office was asked to dispense with the local audit. He could not* conceive the possibility of a fraudulent voucher passing through the Treasury, Defence, and Audit Departments, even with the connivance of an inspecting officer, without detection. There would be a record in the Treasury books of any document that was passed through, whether that document was false or true. Mr Fisher: Assuming fraud, would it be possible for a voucher to be passed through ? —lt might be passed through, but the fraud would be speedily discovered. But would it not be possible if you choto do so —of course, Mr Collins, I don’t for a moment suggest that you would —but wouldn’t it be possible, if you tried very hard, to get a voucher through?—No, I say distinctly it would not, because it would have to pae3> through too many hands. But, v/? the voucher is false or true, the record of payment is there in the Treasury books all the same. As I understand, these vouchers have to be initialled by the certifying officer. Now, can’t those initials be imitated ? Well, no doubt, there are clever forgers in Wellington, hut I don’t know any one in particular. - Well, if you look here (indicating a voucher), you will see initials that look more like one and twopence than anything else. CLaugfiter.) Mr Justice Edwards (sternly): This place is not a theatre, and we are not here for the purpose of public amusement. People who want to laugh must go to the theatre, and not come here. Tn answer to further questions, the witness said that travelling “allowa;,£tes” were rates paid per day, but travelling “expenses” were charges for cabs and other necessary methods of locomotion. Ho had checked all tlie votes from which moneys for the reorganisation of defence stores could possibly be paid to Captain Seddon, and bad found no trace of any subh payment, and it was impossible that such a voucher could have been seen in Christchurch. The vouchers went through the hands of seven or eight men, and they would all have had to be parties to the conspiracy, if any fraud had been committed. James Charles Heywood, called by Mr Skerrett, stated that he was Secretary to the Treasury, and had occupied his position since 1890. He had also been appointed as Imperial paymaster in respect of payments to be made in New Zealand. He was quite satisfied that the search of the department’s accounts, which he had directed to be made, had been properly made, and did not believe it was at all possible for a payment to be made out of the public account without a record appearing in the hooks of the department. Cross-examined by Mr Fisher, the r: sc,ness said that all the receipts of payments made to Captain Seddon were signed “R. J. Seddon,” and none were signed “R. J. S. Seddon.” Mr Fisher produced a document which bore three signatures “R. J. S. .Csddon,” and asked if that document did not controvert the witness’s statement, and suggest that a voucher had been passed through the department and payment for it authorised without

the authenticity o-f the signature being determined. The Court examined the document submitted, and Mr Justice Edwards naively remarked, “Well, these are signatures, no doubt, but they appear to me to be more like the work of an extremely active spider than anything else.” (Laughter.) Mr Justice Denniston said there were three signatures on the document, and one did not quite resemble the other two. Mr Fisher: Then I suppose, your Honors, that the majority will rule? (Laughter.) Mr Justice Denniston: Oh, no; we don’t rule; we weigh the evidence. (Laughter.) Mr Fisher: I’d like to have an expert to examine these signatures Mi- Justice Edwards: Well, we can examine them as well as anyone, can t we ? Although we may need the aid of a magnifying-glass. , ~ ~ Mr Skerrett: After all, what does it matter ? , Mr Fisher: O'h, I think it is extremely important—- — __ ~ , n _ Mr Justice Denniston: Well, signature is peculiar —the word . received ” is mixed up with the signature. , „ Mr Fisher: Yes, your Honor, and that is the reason why I ask if Mr Heywood can say that ho was right when h© passed this voucher through. (To the witness) : Is it not a fact that Captain Seda on’s signature is so variable that you jould not determine it ? Witness: Well, everyone’s signature varies from time to time, and I don’t think there is anything much in the circumstance of a variation like that. Mr Justice Edwards: You see, Mr Fisher, these papers come to Mr Heywood with departmental approval, and there is no necessity for him to make com'Darisons of the signatures.

Mr Fisher: Yes, your Honor; but these men come along and say the voucher wais signed “ R. J. S. Seddon,” and I want to demonstrate that Cantain Seddon’s signature is so variable that it might be mistaken. His Honor: Yes, we quit© understdiid* David Theodore C. Inness, chief clerk in the Audit Office, was called by Mr Skerrett, and examined at some length as to the manner in which the vouchers which came to his department were treated, and the official methods of dealing with such documents. Witness also detailed the searches that had been made for* the voucher which it was alleged had been drawn in favour of Oapcam Seddon in connection with the matter of defence stores. Ten careful searches had bee i made, and the books of the departments closely examined, but there was absolutely no trace of any payment having been made in respect of the reorganisation of defence stores to Captain Seddon or anyone else. THE FIFTH DAY. - A TEDIOUS INQUIRY. Their Honors Air Justice Denniston, Mr Justice Edwards, and Mr Justice Cooper, the 'Royal Commission appointed to inquire into the colony’s system of public audit-, continued their sittings on Friday. Messrs Fisher, M.H.R., and Willis, who are parties to the inquiry, appeared in person. Dr Find lay appealed for Captain Seddon, and Air C. P. Skerrett for the Government departments interested. The first witness called was Richard B. Morris, chief clerk in the Post Office at Christchurch, where he had been for two years. In reply to Mr Skerrett, witness said the clerks in that office who had to do with vouchers during the years 1903-1904 were Messrs West, Lundon, Willis, and Roger. Witness had never seen a voucher in favour of Captain Seddon. In cross-examination by Air Fisher, the witness said no other clerks had access to the vouchors in the Post Office in the course of their duties, unless they went into the Chief Postmaster’s room, which they might do. He remembered a telegram being received by Mr Mcßeth, the Chief Postmaster, from the Premier, Air Seddon, asking whether there had been any payment made in Christchurch to Captain Seddon. Air Alcßeth proceeded at once to write a reply to the effect that he bad never seen Captain Seddon; but witness suggested that that reply should be qualified, as he did not see how All' Mcßeth oa- anyone could remember everyone who came into the office. Mr Mcßeth had not a very retentive memory. In witness’s opinion, Messrs Larcombe, Willis, and Lundon were reliable officers, and, so far as he knew, their memories were good. Bernard Murray Litchfield, manager of the Bank of New Zealand at Christchurch, in answer to Mr Skerrett, stated that he did not know of any payment having been made by Treasury cheque to Captain Seddon. Captain Seddon had no account with witness’s bank in Christchurch, nor had he deposited any moneys to his credit in the bank. The bank had no record of any cheque having been drawn on the bank by him. Cross-examined by Mr Fisher, the witness said he had made inquiries from the tellers in his bank, and most or them did not know Captain Seddon at all. Treasury cheques were not en-

dorsed, and there was no occasion for any endorsement. John F. Mcßeth, Postmaster at Christchurch, in reply to Air Skerrett, gave a description of the manner in which vouchers were dealt with, in hia office. A Treasury voucher record-book was kept by one of the clerks. There was no imprest account with regard to Defence matters. In cross-examination by Mr Fisher, the witness said that Messrs Larcombe, Willis, West, and Lundon were all good, reliable men—as good as the department had on the staff. He never had occasion to reproach them in any way, and would he sorry to lose them. To Mr Willis: The other men had nothing to do with the vouchers. He did not think any of them could “hoax” a voucher. Probably more vouchers in favour of Anderson Limited passed through the Christchurch Post Office than for any other firm in that city. The officers knew Anderson Limited’s vouchers thoroughly well, and would no doubt often see Mr Sneddon coming to and going from witness’s room. On occasions vouchers had been allowed to go out of the office, but witness retained the cheques. The record in the Post Office contained the number of the voucher and the amount for which it was drawn. Cross-examined by Dr Findlay: Captain Seddon had never come to him with a claim for payment. . The “Sneddon voucher” was in the handwriting of Mr Roger. Kenneth AlcKay Roger, a clerk in the Christchurch Post Office, said he had no reason for doubting the truth of the statement ( that the voucher record-book was accurately kept. He had never seen a voucher in favour of “R.J.” or “R.J.S.” Seddon, and if there were such a document he would expect to be able to find trace of it in the record book. In answer to Air Fisher, witness said such a voucher might have passed through the Postmaster’s room without witness seeing it. It was quite possible for a voucher to pass through in this way. . To Mr Willis: Witness had never known Air Mcßeth to pass a voucher through. David T. C. Innes, clerk in the Audit Department, (recalled, stated to Air Fisher that he had not examined the “Sneddon voucher.” He was familiar with Captain Seddon’s signature. On the document produced, there appeared three signatures—two were “R. J, S. Seddon” and one, the last, “R. J. Seddon.” The last was the receipt. To Dr Findlay: He had -examined in all 208 vouchers, and it took about, nine hours. That was the first search. There was a search of some sixty or seventy vouchers made at Willis’s request between certain dates specified by him, which occupied some three hours. The time occupied per voucher was about three minutes. The “missing voucher” was not discovered. There was also a third search made of sixtyfour vouchrs, which took about the same time.

Br Findlay stated that the number of vouchers that had passed through the Christchurch office for sums between £SO and £IOO during 1903-1904 was 8759, and 337 had been*already examined, leaving 8422 to be examined. It was therefore evident that if all these documents were to be inquired into the examination would occupy some forty-five days. Dr Findlay said it had been suggested that Captain Seddon. had made a special visit to Christchurch in order that this money should be paid to him, and asked the witness if there was any reason why this step should be taken —if there was any difficulty in the money being paid in Wellington, without Captain Seddon making a special visit to Christchurch to receive the money. Witness said there was no such difficulty. Mr Skerrett produced a voucher printed on blue paper, which the witness said was made in favour of “Diehard Sneddon,” and was for moneys in regard to a lunatic asylum. Robert Henry Williams described the only erasures that appeared in the books of the Defence Department, and stated that none of these erasures could have any possible reference to the present inquiry. Lieutenant-Colonel Chaytor, of the Commanding Staff, said he had never certified for any payments to Captain Seddon for the reorganisation of defence stores in Wellington or elsewhere. Bertrand F. Mabin. stated that he was the officer in charge of the Imperial pay branch, and was responsible to the Imperial Government alone for the discharge of his duty. They had particulars of every claim for payments from the Imperial funds in their office. The payments made to Captain Seddon since January Ist, 1903, were, “February 27th, 1905, field allowance, £4 ss; June 24th 1905, £22 0s Id, for arrears of regimental pay.” The reorganisation of the defence stores at Wellington could in no sense be a charge upon the Imperial funds. In answer to Mr Fisher, the witness said they had an Imperial audit, which was of a very precise character. The certifying officers were himself and Mr Hey wood and it was certain, that one or other of them would remember any. such payment from the Imperial funds, if it had taken plaoe. ■ * The Commission then adjourned until 10 30 a.m. on Monday, but their Honors will sit in Chambers this mornmer for

till© purpose of deciding what books and Touchers it is necessary to have produced in Court in connection with the inquiry.