ALLEGED THEFT.

New Zealand Times, Volume LXVII, Issue 3441, 24 May 1898, Page 3

ALLEGED THEFT.

JOHN CRAIG BEFORE THE COURT. EVIDENCE OF AN ACCOUNTANT. At the Magistrate’s Court yesterday, before Mr H. Eyre Kenny; S.M., John Craig, on remand, was charged with the theft of various sums of money amounting to .£BIO, the property of To Aro House, there being two charges, embracing £7OO and £llO respectively. Mr Young; for the accthed, asked that the charges should be particularised and the various sums which made up the total set out in detail. Mr Ollivier, who appeared to prosecute, handed a long list to His Worship, on which were set out the auh-sections under tho major charge. Counsel also intimated that there was another offence to be investigated, namely, with reference lo a cheque drawn by the accused on the 15th November, 1895, upon the banking account of James Smith and Co. for £4O. The amount was stated to have been entered in the books by accused in his own handwriting under the denomination of “ duty ” paid to the Customs, but had really been devoted to the purchase of a buggy from Messrs Rouse andHUrrell, ooaohbuilders, of Courtenay place. The first witness called was William Campbell; chief of the Ideal detective force, who testified to arresting accused at the office of Mr Young. Craig made no reply in answer to the warrartt when, that document was read over to him. In reply to ■ Mr Young the detective admitted that the accused had been originally apprehended for stealing money the property of the Bank of New Zealand, but although pressed refused to state the nature of the information (or from whom received) he had been furnished with.

Sidney Cooper Leary; accountant, of the firm of Barr, Leary and Co;, explained that he had been engaged to. Audit the books of Smith and Co; Found certain entries which required explanation and had accordingly made out a list of such discrepancies. A number of these might be grouped under the heading "salaries accounts;” there being 54 instances in which the amount of tho cheque drawn by Craig for the firm was in excess of the payments due or mad?. The wages book was produced and the witness explained the four columns of figures kept. Those in the first had reference to the gross amount of salaries due; the second to premiums allowed the hands on their sales; the third to contra for goods procured, and the last having the net total, which should be the difference between the first and second added together; less the amount in the third. There wore frequent errors of addition. In one case, as an example, there was a total shown in the first column of £219, which should have been £2o9—a difference of £lO. The other two columns were correctly added, but the total column contained an error j showing £217 9s 4d instead of £207 9s 4d, the cheque being drawn for tts former amount. Another instance; In the cash book an entry appeared; “cheque No. 1808, salaries and premiums, £230 11s,” and on that date the amount of wages paid was £220 lls. There was no trace of the error ever having been corrected. On November 28th, 1895, the salaries accordin'? to the book amounted to £l7O 10s, but in reality to only £l6l. The premium credits and contra-debits ware correctly added; but the total, £l7O 19a 9d, was £9 in eioess of tho legitimate requirements. This was carried into the cash book as follows: —“November 28th; salaries £lßl 2s 5d ” —or another £9 in excess of the erroneous total shown in the salaries book. Witness was examined at length by Mr Olliyier with regard to tho alleged falsification of the pay sheets, the amounts unaccounted for at various periods ranging from £lO to £4O; On February 18th, 1897, a cheque was taken from the end of tho cheque book (No. 317489), but the block had not been filled in. The cheque was dated February 19 th, and paid into Craig’s private aooiuut at the Bank of New Zealand.

Mr Young; I submit that this is not evidence.

Mr Kenny: Well, I will receive it. The witness went on to explain that he had been satisfied by the banking authorities that the course indicated was adopted with regard to this cheque) and Mr Kenny held it was desirable to hear all the witness had to say. If the case went to trial in the Supreme Court the matter could be decided there;

Mr Leary proceeded to show that this cheque was passed through the cash-book for “salaries” on February 19bh, the handwriting being that of accused. The cheque for the actual wages was drawn a week afterwards (.£192 13s Id), but there was nothing in the books to justify the appropriation of this £IOO for such a purpose as set down. Mr Ollivier (producing cheque for .£100) : la that the cheque ? Witness : Yes.

Continuing, Mr Leary pointed out that on April 24th, 1897, cheque (No. 316741) was drawn by the accused for salaries for £IOO, but there was nothing in the wages book to -justify this. The cheque was cashed in the office, and subsequently paid into Smith and Co.’s account. Again on August 19th of the same year tha cheque for wages was £39 13s in excess of the correct requirements, and nothing could be found in the books to show what became of the amount. la November, 1893, a cheque for £4O was drawn which appeared in the cash-book as “ duty,” having been written in the handwriting of accused. There was nothing to account for such entry, and nothing to show that such an amount had been paid for Customs purposes. Had a persona] interview with Craig at the latter’s private lesidenoe on April 28th last, having never seen him before, Mr W. Simm also being present. Explained that as he (witness) was unable to obtain certain information from the books he would like accused’s assistance. Craig replied “ I will be only too pleased to afford you any information.” Witness produced a balance-sheet of 28th February, 1897, and asked accused if he considered tha document represented the correct condition of James Smith and Co.’s affairs at that date, the reply being in the negative. Then asked him which items were incorrect, and he pointed on the liability side to “trade creditors, £7393 0s 2d,” as being too small, and on the assets aide to “stock-in-trade, £50,230 9s 3d," and “ boob debts, £14,483 15s 7d," as being too large. Accused also said that the materials from which the balance-sheet were compiled were “in Mr Smith’s room,” further saying that full particulars were given in the ledger. Afterwards made a search, but could not find either papers or boobs that would give reliable information. Craig said in addition that the London accounts prior to 28th February, 1895, were in Smith’s custody, but ou searching the latter’s desk and private safe they could not bo discovered. Further, accused said that no bills receivable book was kept, bills being simply entered in the cash-book, and also that the last balancesheet he completed was the one bearing the same date as the one under discussion. Witness asked for the blocks of several old cheque-books and was told that they were at Te Aro House. A few had since been found, but a number were still missing. Craig explained that the cash-book had not been added up or balanced for 12 months, owing to pressure of work. After accused had again asserted that he would afford assistance the interview ended. Craig broke into tears.

Mr Ollivier: Were you aware of any criminal charge ponding ? Witness: No. Mr Kenny: Who appointed you ? Witness: I was appointed under a resolution passed at a meeting of creditors in the estate of James Smith and Co.

Mr Ollivier: On resuming your investigations after this interview what did you find? Witness: I discovered the books to be in a state of hopeless confusion, and also the defalcation that have been indicated. After luncheon Mr Leary continued his evidence. He went on to say that entries were brought to light which rendered a second interview desirable. Asked Craig why he had paid a cheque for XIOO drawn on Smith and Co. into his private account, and explained that the cheque (February ISth, No. 317489) had been charged to salaries. Accused explained that the money had been used to meet a draft by J. W. Smith and Co., of Lyttelton, saying" that he held a power of attorney from Mr Carter, of London, who was interested in Te Aro House, and for whom he did outside business. Understood that it was in connection with Smith and Co. that the transaction took place. Asked why the salaries account had been debited with the cheque, Craig’s reply being that he could not give an answer unless he were allowed to inspect the books. Invited him to do so, and though it was arranged that accused should meet witness at To Aro House a few days later the appointment was not kept by the former. Accused’s solicitor, however, wrote forwarding an explanation. Went on to ask accused for particulars of cheque on 27th April, 1897 (No. 316741 and paid into Smith and Co.’s account, having boon previously cashed in the office). Told him also that the usual cheque for salaries was drawn and paid two days later. Accused’s reply was as before, that it would be necessary to inspect the books. Afterwards asked for an explanation of the fact that the amounts drawn for salaries exceeded the amount shown in the salaries book. The answer was that “ only regular hands were entered in that book,” but accused did not reply to the question of how many casual hands there were employed in any one month. Craig, however, agreed that there would not be more than two or three at the outside. Accused several times expressed a desire to see his private letter book, in which were copies of his communications sent to Mr W. H. Carter, of London. Accused also stated that the amount

of a cheque, £lO4 9s, drawn on August 6th of last year, had been remitted to Carter, saying the reason of the private affairs of Carter being confused with Smith and Co. was that Carter owed him money, and adding that it would be found he was a creditor of Te Aro House. Craig assured witness that he did not intend to leave the colony, concluding : “ If I have done wrong 1 will remain and receive the punishment. 1 This concluded Mr OlUvier’s examination of the witness. All the cheques (54 in number) in connection with the alleged salary defalcations were handed into the Court,

Cross-examined by Mr Young, witness said it was perfectly reasonable that accused should desire to see the books. Recollected a meeting of Messrs Ollivier, Young, Smith, Summerville, Dr Findlay and witness. It was arranged that Crain should furnish certain information. Accused attended at the office and was about to answer questions when Detective Campbell appeared and made the arrest. If the officer acted under the instructions of anyone present at the meeting it was a distinct breach of the arrangement. Had only promised to regard Craig's statements as confidential on one particular point—and that had nob been referred to. Had been given every facility by the bank to get details of Mr Smith’s private aecotints. Mr Young: Is not that disgraceful; I mean on the part of the bank to give information as to the transaction! of a private customer ? Witness: I would prefer not to express opinion. It is the bank’s business. Continuing, he, ceiid that on arrival in Wellington on the ifibh in obedience to a, telegram; he saw Mr Lang (of Sargood; Son and Ewen) and Mr Somraerville (manager of the Bank of New Zealand) from whom he got certain instructions. Could not say why Craig was originally, charged with appropriating moneys of the Bank of New Zealand, and as it was questionable to whom the money really belonged, did not desire to give an opinion upon what, was really a legal point. The old ledger of the firm showed a balance due from Smith to Craig of £433 Is; the amount carried on to the new ledger being £2OO. Mr Young; Doss not that appear as if Craig had been credited with £233 Is short ? Witness: On the face of it it looked to be so.

The witness further said there was also a deposit account, from which it appeared that Craig had deposited and drawn moneys at different periods. The system of bookkeeping was by no means up to date in character, and was possibly responsible for mistakes—of a certain class. Knew that Carter and Smith were partners in Te Aro House, Craig being the former’s representative, his salary being £SOO a year. Was also told that he had an extra £IOO per annum after the first year. The statement produced, covering a period of three years, was made out on the basis of £SOO a year, and showed that Craig’s legitimate drawings had been £l3 in excess. Of course; if his salary Was £BOO he would have under-drawn. From the books it appeared that Smith and Carter were credited with £IOOO on account of the business <and a balance was annually divided. The private ledger produced contained copies of balance-sheets for 1895, 1896 and 1897, also Carter’s and Smith’s account. The former was credited with £B7 every month during 1895 regularly with Craig’s salary (£4l), almost regularly in 1890 and irregularly last year. The result was, then, when the salary was unpaid Craig established a credit; Garter’s account was occasionally debited with disbursements made on his behalf by Smith and Co. If Carter owed Craig money there would be nothing Unusual in the latter being paid by Smith and Co; charged to Carter—limited, of course, by Carter’s right to draw and Craig to receive. Also, there would be nothing improper in Smith or Carter having their debts paid by the firm’s cheque, provided their accounts were subsequently charged with the amount.

Mr Young: Now, has not Smith been drawing in excess of the £1000?

Witness; He drav about £IOOO in the first year (1895); from Ist March, 1896, to February 28, 1897, £3129 13s, on 2nd July, 1896, £SOO being refunded, the net amount therefore being £2629 13s. Mr Kenny ■ I hardly see the use of this line of cross-examination.

Mr Young : "What I wish to show is that Smith, and Carter were severally indebted to Craig for a very much larger extent than be has drawn.

Mr Kenny: Yes 5 but if he were a creditor, why should his drawings be hid away under the title of salaries, as, for instance, when .£llO is drawn and only JIOO paid away ?

Mr Young : But ho had authority. Mr Kenny: Who from, Mr Smith ? Mr Young : Yes, I think you will find that so, your Worship. Mr Young continued his examination at great length upon the management of Te Aro House and transactions with regard to certain branch businesses.

At this stage the Court adjourned until 10 a.m. to-morrow.