THE AUDIT COMMISSION.

New Zealand Times, Volume XXVII, Issue 5728, 25 October 1905, Page 3

THE AUDIT COMMISSION.

SECOND DAY. DEFENCE' DEPA RT-M ENT'S AIETHOD3. THE BENCH AND BAR. Tho Commission sot up to inquire into t,bo colony s system of audit, Air Justice Dcnnmton (President), Mr Justice Edwards, .iml Mr Justice Cooper, sat again yesterday. Thomas Francis Grey, acting for the Undcr-Secrotary for Defence, eaid 1® occupied that position in 1903, and .ip to September, 190-1. During that time witness authorised payments on behalf of tho department. The Defence Alinislor had never during that period acted as approving or certifying officer. During the same period every payment in respect of reorganising defence stores ivould come hefore witness. Ao voucii ■ ers for such payment ever did come before him. He knew of no such service having been given. Would have had cognisnr.co of same. Had searched for voucher of payment to Captain Seddon for reorganising defence stores, and found no trace of it. During 1903 and up to October, 1901. every payment Was authorised solely by witness. To Mr Jollicoc: Had looked for his Authorities from the Minister for payments in ’ 903-199-1. Could produce tho documents by authority of the Minister. Air Jellicoe asked the Court to order (ho production of these documents. Air Skorrett objected. This, he said, was asking too much of the department and tile Commission. Air Justice Denniston said the Court did not propose to make, suck an order in the present instance. AVitncss, in further cross-examina-tion. said the Alinister would not give direct authority to tho Storekeeper for payments. Witness could not assume fraud in the public service of the colony. Air Jellicoe: What! In the face of ivhat is going on in New South Wales to-day, sir?—Yes. Air Justice Donniston ruled that Air Jellicoe’s last observation was irrelevant. ■ Sneli questions must stop. Air Jellicoe (to witness); Did the Defence Alinister ever certify in 1903? ffo.

What tells you so? —My brain. Ob! Your brain? I’m afraid that is too much for mo to investigate. When ton sent claims on to the Audit Department did you send a 'covering letter?—No. Or get an acknowledgment?—No. Tho same receiving clerk always rereived certified claims from "our office? —Yea, I believe so. Did not tho chief clerk sometimes re4oivo tho vouchers?—Yes. And if both were out of the room, might they not be loft with other ekrks?—Yes. ' Without acknowledgment?—-Yes. You would not get a receipt. They were too busy.

Witness knew Mr Hoy wood. In March, 1902, ho was Paymaster-General and Secretary to the Treasury. In that month ho did not interview witness in regard to claims payable out of Imperial moneys. Saw correspondence from tho Agent-General regarding the auditing of expenditure of Imperial moneys by the Defence Department. Saw it tho previous day. Did not know that in February, 1902, tho Minister of Ids department had cabled Homo in tho following terms:—"'Consult War Office os 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 cor- ■ tainly 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 pointbcl out that this inquiry is ‘limited to n. period of two years. Captain Seddon first entered tiro service in 1903. Tho dates am? inquired about were a year varlicr. Air Jcllicoc; 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 books to diow it. Mr Justice Denuiston said the facts as to pro and post audit were proved on the previous day, and admitted throughout. Air Jollicoe’s line of inquiry was not legitimate, and was not to be pursued. Mr Jellicoo asked witness whether in March, 1002, ho knew that tho War Office attached much importance to local audit? Air Justice Dennistou; It is quite plain that you aro obviously trying, Air Jelliooe, to get in something that we have just ruled out of order. That is direct defiance of the Court. Mr Jellicoo: AVhat is? Surely tho Court can’t say that. Air Justice Denuiston: That is a deliberate impertinence, Air Jellicoo. Air Jellicoe: I am sorry you should think that, your Honor. Air Justice Denuiston; I not only think it, I say it. Mr Jollicoe: I am sorry you should either think it or say it, because nothing of the kind was intended. I say so frankly. Air Justice Denuiston: Yes, you say HO.

Mr Jellicoe: And I mean it. Hr Justice Deuniston: Ohl 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 Haywood's door of the "pay officer”! Mr Justice Denniston (heatedly): You are trifling with. the time of the Court. Your conduct indicates an absolute intention to delay and hinder the business of the Court. If this procedure goes on, wo shall have to take very strong measures to stop it. Mr Jellicoe; I am sorry Mr Justice Denniston: We. have warned you, sir. Mr Jellicoe: Xo 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, bub doing so deliberately and intentionally. If this attitude characterises your further cross-examination, we shall take stops to stop you. Mr Jellicoe; 1 am not to ho 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 wo shall prevent this gross

waste r;f time, and this gross abuse of the Court. Now proceed.” Mr Jellicoe- With pleasure. AVitness, continuing, said Ins depart-1 meat never sent books to the Audit Department for inspection, nor had lie known of Audit officers inspecting Jus department's expenditure or abstract books. Thev could do so under the law. AVitness was cross-examined at great length upon details ol the jncthofky employed in his office. Luums cortiM by Colonel Portor had conic to witness’s office; in 1003 and 1001. iho claims would cover many kinds of service. . „ Did lie certify, in 1903, in favour or CU plain Seddon against Imperial .money?—X cannot say. t Did anv such claim pass through your office?—Probably yes, but I would have to look it up. if lie 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 he produced for this Court. Air Jellicoe: That doesn't satisfy me by any means. (To witness.) Have you aiiy knowledge whether, in 1903, a voucher in favour of Captain Seddon, certified hy Colonel Porter, passed through your office?—l cannot say. Or one certified fcy the Defence ALnistor?—l cannot say. After Alarch, 1902, what authority determined upon tho propriety of charges against Imperial money?—The t’ndor-Sccretary for Defence (Sir Arthur Douglas) and Afr 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, winch yon decided was not properly so charged, but should have been charged against Imperial deposit?—Probably. In that case what would you do with tho claim?—Alter it to make it payable against tho Imperial funds.

AA’ould you communicate with tho certifying officer or claimant, pointing out the mistake?—No.

So you would have received a vouchor charged against a particular vote by a certifying officer and claimant, you would alter it, and ict it pass tho Treasury, not as tho claim was made, hut charged to another vote, not contemplated by either the claimant or tho certifying officer?—We would only alter tho_ 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 tho voucher brought in tho vote against which it is chargeable? Do yon exclude tho possibility of such a thing happening in a case where audit lias been dispensed with by your office?— A T es. It could not be done.

No one could possibly bo guilty of fraud P—How could be fraud with only one fund. AVitness said he had sent a memorandum to tho Defence AXinistcr on August 3rd last to the effect that a careful search of the Defence and ail 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 be found. That was in answer to a memorandum from Air Seddon asking whether a vouchor for between £7O and £BO in favour of Captain Seddon had been passed through. Air Jollicoe: But could not a forged voucher be passed through as a genuine one?—l could not say, but I don’t think so.

Did yon compare the entries in that book with any other book?—No. Did you compare your books in the Defence Office with any other records? —I personally searched, under the Alinister.

Say the voucher for which we are looking was substituted for some other vouchor in your books?—lt would be impossible. Tho voucher wo aro talking about is supposed to have been in the possession of the countersigning officer in Christchurch ? A r es.

Well, cotikl 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 yon have to compare tho entries in your hooks with this?— AVoli, the Treasury books might have to bo examined.

A'es; but if there is a fraudulent person in the Treasury, their books might not correspond with yours, and a fraudulent voucher might exist?—ln such circumstances perhaps so. Well, iiow could you get at that without a comparison ?—We would have to look at tho vouchers to see if there was a forgery or not.

And such an examination could bo easily made?—Yes. Mr Skerrett: It has been already made by another officer. Cross-examined by Mr Willis, tho witness said Captain Seddon joined the department on March 31st, 1903. A voucher to obtain tho signature of tho authorising officer would have to pass through witness’s department, because he (witness) was the authorising officer; but if all the officers were fraudulently acting in collusion i twouid, of course, bo possible for fraudulent vouchers to bo passed through, but it would be discovered ere long. There was a mobilisation store erected in Christchurch during 1903, and tho goods' passed into that place would not bo 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. Ho had boon away on five weeks’ leave of absence on one occasion, but if such a document had passed through his department ho 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 tho character suggested. To Dr Findlay: If a voucher were seen in the Christchurch office it would bo entered, certified, approved, and sent on to the Audit. Tho voucher was for reorganisation of the defence stores in Wellington, and could not bo made payable against Imperial money. Witness never entered into any conspiracy or fraud to have a voucher paid. Had been oyer twenty years in tho service. In order for such a vouchor as tho one alleged to have got through it would have required fraud on tho part of witness himself, tho accountant, assistant accountant, Audit and Treasury Department. A forged vouchor would, in any case, appear in tho Treasury books, and the fraud would thus bo disclosed. Witness had investigated the books for 1903, 1901, 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 services. Frederick Silva, assistant Defence Storekeeper, examined by Mr Skerrett, said lie was familiar with tho records of the department for 1903 and 190-1. There had been no reorganisation of defence stores during that period.

AVould have known of such. No payment was made lo Captain Seddon lor supplies to, or services in connection with, defence More.;, in his opinion, if such a service had been rendered b? Captain Seddon, it would have been eniered in witness's books. To Air Jellicoe: AVitness did not certify claims against tho department. His superior (Air O'Sullivan) did. In 1993 witness bad 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 Ins store for work that had to he done there. There was only tho usual transfer of stores from one district to another in that period. His books would .show what these transfers were. Had not tho necessary books in Court. (It was intimated that tho books would ho produced.) In tho case of transfer of stores from Christchurch to AVellington, the officer in charge would not have to come to witness for authority for extra allowance in connection with same. Had never heard of such allowance being applied for.

To Air AVillis: A vouchor for services in connection with defence stores would bo sent by the Defence Office to witness’s department to note. Such a voucher as tho one being inquired after would not necessarily go through his department. Re-examined by Air Skerrctt: AA’itncss had records of all reimbursements in connection with supplies and services in ro defence stores throughout tho colony. These were tho records he had searched. They contained no payment whatever to Captain Seddon. To Air Jellicoe: Received tho information for his records from vouchers supplied by officers commanding districts.

Tho Court adjourned until 10.30 today.