SECRET COMMISSIONS.

Otago Daily Times, Issue 14257, 4 July 1908, Page 9

SECRET COMMISSIONS.

It ig to be hoped that Parliament will not be so fully occupied with the performance of other work this session as to be unable to find time to consider and pass the Secret Commissions Bill, which nas been introduced by the Prime Minister. The practice under which payments are secretly accepted by agents from third parties in consideration of business they are able to control on behalf of their principals is, as every person who is engaged in commerce is aware, very widely spread. It is so common that it has come almost to be accepted as a trade custom that an agent who, places an order with a merchant or tradesman on account of the principal he represents is entitled to receive a commission upon the amount of the order. But it does not require much reflection in order to realise that, where the fact of the payment of this commission is concealed from the principal on whose behalf the order is giveu, a distinct elemont pf dishonesty surrounds the transaction. And it is, as the late Lord Russell of Killowen used to point out, when he was leading a orusade at Home against this sort of practice, in their secrecy that the vice of these commissions lies. Tne public company, • of which the eecretary eitracts from those with whom it has business relations a secret discount that is pocketed by himself, on the payments it makes for the goods supplied to it, is in effect beiug defrauded. For it is evident that if tho firms and corporations with which the company has dealings are prepared to pay its secretary a secret discount or commission in respect of the business they do with it, they would be prepared also, if there were no such discount or commission to bq paid, to supply tho company with their goods at the net amount received by them: in other words, tho company would enjov the benefit of the discount appro'priated by its servant. The secret commission system presents itself, however, in many forms. In some cities— perhaps even in our own—a practice prevails under which certain medical men havo a secret arrangement with chemists and druggist.?, whom they recommend to their patients, that they shall receive a commission on the price of the medicines that are made up from their prescriptions. This is an exceedingly objectionable practice, and obviously operates very unfairly upon chemists and druggists whose sense of honour is sufficiently high to deter them from entering into any such arrangement with a medical practitioner. It is chiefly, however, in the form in which a person acting for his employer or for an absent principal exacts a commission from the firms and traders in whose direction ho influences business that the system presents itself. Any transaction under which, in a case of this kind, an agent received a payment or other consideration in recognition of the offices he had rendered in placing business in a particular direction would be illegal in the United Kingdom under ' 4 The Prevention of Corruption Act, 1906," and both the agont who accepted the commission and the person who paid the commission would be liable to be punished by fine or imprisonment or both. The Hill which the Prime .Minister has introduced in tho House of representatives, while it is drafted largely on tho lines of the Home enactment, apparently goes even further than this does. It is, in fact, "quite possible," a memorandum accompanying the Bill says, "that it includes certain practices which in themselves are not open to objection." Among these may probably be included the special discount which auctioneers receive from newspapers on the amount of their advertising accounts. It is a wellrecognised practice under which this discount is paid, and since every licensed auctioneer segureg tie tieaefit

of it there is no injustice involved in the payment. Nor, we suppose, are tho persons upon whose account the auction sales aro held unaware of the existence of the custom. So widely known is the practice, in fact, that, if there should be any question about its validity under the Bill, the auctioneers should have little hesitation in disclosing to their clients tho amount of the discount they receive, and in such a case they would place themselves beyond tho scope of the measure. There are, wo suppose, various other commercial dealings which, though they may at first sight be regarded as approaching closely to the borderline of wliat ; s clandestine and corrupt, are not really of a class that demands statutory regression. Since, however, the Imperial Parliament has experienced no difficulty in legislating to deal satisfactorily with the evil of secret commissions, with this example before it our own Parliament should be in a position adequately to dispose of the question.