HARBOR BOARD FRAUDS.

Poverty Bay Herald, Volume XVIII, Issue 6060, 6 May 1891, Page 2

HARBOR BOARD FRAUDS.

EXTENSIVE DEFALCATIONS.

At the meeting of the Harbor Board last evening after the transaction of ordinary business the Chairman (Mr Townley) handed in the report of the Finance Committee. Before the report was read Mr Arthur suggested that it might be advisable if the reporters were asked nofc to publish the report fully, because whatever it contained could not be quite final.—The Chairman : I expect they will see that from the report itself, and I think it is advisable to leave it to their own discretion. —Mr Sievwrighb thought it besfc to have the report read. —Mr Arthur said the newspapers might be asked to use their own judgment. The report was then read as follows : — Gisborno, sth May, 1891. The Chairman and Members of the Gisborne Harbor Board. SiKS, —Acting under instructions received from the Board at.its meeting held on the 18th April, we have to report that we have made an investigation of the books of accounts kept by the late Treasurer, and regret to say that these reveal: — Ist. Gross irregularities. $nd. Actual deficiencies that can be ear' marked, and 3rd. Items aggregating large sums that can with almost certainty be reported upon as deficient. We propose dealing with these matters in order, and report :— Ist. As to irregularities in book-keeping. That almost simultaneously with the first payment made in respect of rates, yeur late Treasurer has. made certain entries in the cash book, that upon examination of the Bank pay-in slips, these reveal that cheques drawn by other ratepayers, and which were made evidently in respect of their own payments for rates, have been lodged, and that these corresponding credits have not been made till a later date, the interval of time varying from a few days to many monthn. ' This system has been carried on from 1887 till the time of the late Treasurer's death, and the natural reault ia many payments, which we have sufficient evidence to prove have been made, by the respective cheques having been lodged —to cover other amounts —and by covering letters having been found in the office from the ratepayers interested, have not been credited to them, and now appear upon the outstanding list, which we have prepared, and now attach. Bnd. Actual deficiencies that can be earmarked. A schedule of these is attached with remarks showing what the different items represent. This list totala L 1529 4s 2d. Srd. Items that can with almost certainty bt reported as deficient. A list of these is also attached, and in connection therewith we may remark that for the most part these are for rates which, according to the books, show as outstanding, but which we have good reason to believe are paid. The evidence resting upon the fact that cheques for like amounts, or that can be fairly identified as having been passed through the Board's banking account, to cover other payments. In this connection we may report that we have caused the receipts from the time the first rate was struck to be compared with the rate-book, that lists of all outstanding rates have been made, and that these balance to within a few pounds of the amount as shown by the Board's balance-sheet, as outstanding. Demands aro being prepared for delivery to every ratepayer, and it will be seen that the final deficiency will rest upon the amount of such rates apparently in default, but which will be proved from receipts or otherwise to have been paid. We have communicated with all the parties who have recently purchased plant or material from the Board with the view of ascertaining if all such payments have been duly brought to credit. Answers are nob all received, and the final out-turn of this branch of the accounts is therefore at present uncertain. With regard to the expenditure side of the cash-book, we think that existing checks would prove sufficient to ensure accuracy, and that we have no means other than those used by the auditor for certifying to the correctness or otherwise of such items, With respect to these deficiencies generally, the Board will require to take such steps as may be deemed prudent and necessary to secure the ratepayers from final loss, if possible, and to give such notice as may be requisite to the surety of the late Mr Bourke. Speakfng generally we may say that the exanroation we have been able to make has revealed so many irregalarities, as it appears to us, as to make it a matter of some surprise that the books could have passed the audit inspector without leading to such investigations as would have revealed the true position of affairs. So far as wo can ascertain the rate-books have never been examined, and it seems to us that the same steps which we have taken might and should have been expected from the auditor. We have to make the following recommendations : — Ist. That all rateaup to the 31stDecember, 1890, demands for which have been made out, and which remain unpaid, or outstanding without explanations, on the 19th May, must be sued for immediately thereafter without further notice, in order that the true position of, the Board may be ascertained. 2nd. That hereafter all moneys received be paid into the Board's banking account on the day of receipt. 3rd. That the form of the cash book, ledger, rate and receipt book can with advantage be altered, and we will be prepared to make recommendations involving a complete and as we think improved system of bookkeeping, should your Board request us so to do. 4fch. That a list of outstanding rates corrected up to the night of the Board's meeting be hid upon the table for inspection by the members, ab least twice in every year. sth. That a statement showing the totals of each uncollected rate as well as the Board's financial position be read afa each meeting, and hereafter laid on the table for perusal by members. 6th. That the outstanding list referred to in recommendation No. 4 be put before the auditor at each inspection for his certificate j to be placed thereon. In conclusion the Committee regret exceedingly the circumstances which have rendered the investigation nee«ssary. We have the honor to be Your obedient servants, F. J. SnuLTON, Jno. W. Bright. Mr Bright, then referring to the schedules, said they had prepared a statement showing the amount of rates levied by the books for the different years since 1887, the amount of rates collected, and the amount outstanding. The amounts levied from 1887 to 1890 totalled L 17,060 28 lOd ; the amount collected had been L 13.875 10s 7d ; leaving a balance of L 3184 12s 3d. The balance outstanding by the list was shown to be L322116s 3d, deducting from which Crown and Native rates L7O and L 32 16s which could bo accounted for by errors in alterations in the original rate lists, left fehe total amount outstanding, as stated, L 3184 12s 3d. The total amounts of Native rates wore given, and of course they wera not very interesting: to them. For the three years L 3012 12s 9d had been levied, L 2254 5s (id collected, and L 758 1b 3d was outstanding and had to be collected. The second schedule gave a lists of the items of deficiency which they had been able to gather from the Bank pay-in slips. These were actual deficiencies. They had found that when large items for rates were due cheques for the amounts were received and paid in, but were not placed to the credit of accounts for which they were intended. Those items were :—

T~jl Of this, the total amount for rates was L 1,300 9s 2d, and for cement, plank, and coal, L 228155. All the items were for rates except those specially mentioned a« being otherwise. The grand total was L 1529 4s 2d. The third schedule showed items which were apparently deficiences made up from different amounts which had come to their knowledge in the course of their investigation. They had every reason to believe the amounts mentioned had been paid and nob accounted for. The items were :— Items apparently deficient,hit not fully ■'• < \ ascertained. ';-''- , £s.d. r E.Cameron ... 15 611 J. Cattle ... 10 2 7 A. Campbell ... 9 3 4 T. J. Dickson 15 7 7 E.H.Henderson 6 8 8 - W. J. Hamon ... 214 2 ■ W. Jobson ... ... ... : 5" 4 2; Johnston &Co ... 2 1 8; „ ... » - 2 18H, Loisel 6 18 6" J. W. Matthews... 6 0 10 D. D. McFar-lane ... ;.. 32 16 11 S. Stevenaon , ... 18 4 2 , J5 17 11 „ „ ... 1 5 10 W. O. Skeefc ... „.- ... 5 2 6 F. Skeefc 1 13 4 ■ ■. W. Siaterson ... ... ... 611 .8 £163 2 5 Mr Sievwright: What is the total ;■ estimate of deficiencies ? The Chairman : This is only assumed 5,. -v the L 1529 and L 163. Of course the de-; mands have gone out for the rates which are on the books outstanding, so thafc we shall very soon arrive at the true state;of affaire. Demands have been senfc oufc for .^ L 3184 12s 3d. The Committee prepared a f| ;< lists taking all rates outstanding, and from 1 that list the Clerk has made out all the - demands except a few. . The Chairman : Well, lam vary sorry. .:". That is the report we have to make to you. However, it has cost the Committee a very great deal of time and labor ; and .;, this is the result of our investigations. Ifc/ is now for the Board to consider their /. position. This is a very serious position for the Board to be placed in. It is a large' amouni LI6OO or LI7OO, all money that we had to collect; and which apparently has been received and not accounted for, . In answer to Mr Arthur the Chairman / said the amounts which had been received had been so received by cheques, and paid /; into the account in lieu of amounts whion had" been received according to the crbTi^ book. Those amounts mentioned in the list did not appear in the cash book. Tlie * cash book and bank book agreed. The v ; cash book and lodgments agreed, and it : was only when they got the pjiying-m Blips; ■ that they saw where the arrears cume in. ':■■'}': It was for the Board now that ihey had the position fairly before them, to decide ''>: what was necessary to be done. /, Mr Arthur: Was Mr Bourke in any ;. bonds? Is anyone responsible for his Icarrying oufc his work in an honest manner? > V ; . The Chairman : There is a bond—an ; ■' agreement—in the office. l

Mr Arthur : What is the nature' of it ? To the full extent ?

The Chairman : I don't know. It can be produced if you want id. Mr Arthur : I think it ought to be produced. ". , • .. : '." -'

The Chairman : Is that necessary now ?. Would it not be better to deal definitely with the Committee's report first? Our duty will be to consider how to save the Board from any loss it m*y appear to hate sustained ; the details we shall' consider further on. First let us deoide what steps, the Board shall take to prevent the deficiency being lost altogether. ■ In answer to a question the Chairman/ stated the bond was to the Borough , Counoil, and Mr Bourks was secretary/ both to the Borough Council and Harbor Board. < '.;'..

Mr Shelton suggested that ihey go into committee to consider the bond.— The Chairman thought they should deal with the report first. ,• ■; Mr Arthur : Hare you any suggestions to make, Mr Chairman ? .

The Chairman : Well, up to the presenk the position has been this. As soon as- it ; was ascertained— Mr Warren was the first -:{:■ to discover an apparent discrepancy-^ we then thought it was a very small aniount. .. I then saw Mr Peter Bourke, and wq all thought it was an oversight of the late/; secretary, • and that ifc would be a very - small item, and ifc would have been reefci^ tied at once had its rested- there. As the' question waß opened up and looked intoj' it began to assume startling proportions.' I then had an interview with Mr P. Bourke v . and the Finance Committee met, and ifc , y was then thought probable that we should \ recover a certain amount of the loss and place it to credit of the account it appeared . ' - to be from. That idea was before ua for some time, in fact until to-day. To-day ,- = at an interview Mr Bourke withdrew from : any position assumed till the present, and has sent a letter, which I suppose will., disclose the position probably more fully . than anything else. It reads :— '« Sir,-^ On careful consideration after our conver- v sation yesterday, in which I was asked if I were prepared to commit myself to the "_,- payment of any deficiency which may bi found to exisb when the final balance ia struck, I can only at present, say that ;" v until the exact amount of auoh . deficiency './;■ ".,.•'; is ascertained beyond Any doubt,; I think : ■ •-."'. it a littla. unfair to press /thft in»ttar. : ; There is a limit to the amottnt. within. \/.;-: ; which it is within my power : 'to ;.fig.d v Nßnfi ; - :^. it rausfc be plain that ho. liability' exists^i;/;^ and though we have every idea'that'a suj^:v^ , that is fair can besettled when th« fltate|^^;i mentis prepared, we can state no amounfe ' until the amount is ascertaia^vli^^-^fi:.. the nooountß W9 complete Km fcS^S

AfijA-s'if-.fMM

; state whafc position we will take up." It 4 "will be some time before the amount can : ; ' be stated definitely, aa it depends upon Iv the returns we get; It was made an urgent :; /'■■■;'• "request that the report read should be prepared to show the amount which was actually beyond dispute short. So that is the position. We have to define the discrepancy, and then they will be prepared to consider what position they may take up. Mr Sievwright : It may be taken for granted thafe there is a very large deficiency, and therefore some steps should bo taken by the Board to secure themselves as best they can. The Chairman : We are certain of this, that there is a deficiency, and that what ever the deficiency is we should secure the Board against loss. Mr Arthur : The only thing would be to call upon the people who are sureties for Mr Bourke for what they are bound for. What other possible steps can you fcake to get the money 1 The Chairman : We should require to get some legal advice on that matter. Mr Arthur : What is the good of a Government auditor if those accounts are wron^ since 1887 ? The accounts have been audited each year.

The Chairman : Oh yes, and all these audits have been made by the Government auditor. All the balance-sheets have been audited, and, it has taken weeks and weeks to get little petty styles of keeping the accounts rectified to meet the vibws of the Government auditor,— this little thing did not please him nor that,— and then they.have been certified to as all correct, and he has been paid his feo. If a public body cannot rely ou the Government auditor, I do not know what is the Use of the audit.

Mr Arthur : Are the Government liable ?

The Chairman: The Government are never liable -for anything they can get out of. • Mr Sievwright : The Government have •xtraordin&ry povrera. -under the Act which makes it very stringent on them to see that everything is right. The Chairman : If we have any claim on Government for the negligence of their auditor, ao much the better. Mr Sievwright; : I do not wish to give any opinion, but it leaks very funny if we cannot depend on that audit The Chairman : The auditor comes here and looks over every little document that is presented to him,, and bothers about various fads of his how the books should be kept till thb accounts are put into such ft jumble that" no. one can understand them. He never makes a word of reference to anyone. He presents a bill for his fee, and we have to payMr Sievwrighfc read the section of the Act under which Government audit was eampulsory. „ The Chairman : These are questions not for the Board to decide, questions which will crop up probably— Mr Shelton : I think the proper thing would be for a committee to go into the matter and- sea which way the Board can recoup itself. It is a very serious matter. If this money is not forthcoming we may be in default. If we had gob this money we should have got along all right, but if we do not recover it we may be unable to meet our engagements to pay interest. There are several sources from which the money may be got, and ifc will be necessary to consider from which tho Board may expeditiously recoup its loss. Mr Bright : Ido not think ie would be oufe of place to communicate with tho Audit Office to let them knotv the state of things wo believe to exist, and to ask them to send someone on behalf of Government to see whether what we are saying is actually correct or not. If we have any claim on Government, that is another string to our bow. The Chairman : I think a copy of this report should ba SBnt to the Audit Department by next mail, became whatever tho Board may have neglected, they have depended on the audit system of accounts to see that everything is correct* to check the accounts and see that they are correct. So far as the outgoings are concerned, we have endeavored to check them by passing all accounts for payment, but as far as the incoming amounts are concerned, it would be a very great work for me r.bers if they had to look after every amount that is paid in; though if we are going to havo a system of this kind going on, the members of local bodies in f uturo will have to see it is" done. The result, as revealed by this investigation, has broken down every safeguard we thought of. .We were under the impression that a choqu® received here would be paid into the bank and not broken into until drawn out by a cheque signed by the members of the Board and authorised at a meeting of the Board. Instead of that, the- Secretary had a very loose system of accounts, as loose as could be. • He drew. what moneys he liked from the bank; ho had- unlimited cash at his disposal It is very strange how the auditor did not discover and stop it. Mr Sievwright said the Board was with- ' out responsibility. The responsibility was shifted by tho Act to the Audit Department/. • -. Mr Bright: Whatever the auditors powers are, he has not the power to say a thing is right when it is wrong. The Chairman : No, we have simply been blinded by the arrival time after time of the auditor, a man who is supposed to search for .errors and detect any faults, and we have taken his report that everything is correct. Mr-Shelton : The Act provides that all banking of moneys should be done every V three days. If the auditor had done his duty properly he would see that that has not been done,. If he had looked at. the ''• dates he would have seen that all was wrong. When everything is gone into, as wo have done lately, the books on the face of them show errors which no auditor should havo passed. The Chairman read the section of tbo Aofc which provided that all moneys of the Board should be paid into tho banl? evuvy three days, and sooner if L 5 wero in hand, and that no moneys should bo drawn from the bank without tho auMio- - rifcy of a meeting and without cheques si<med by the Ohaiunan and such members as" the Board appointed. That, they thought, was a safeguard. Mr Clark : It seems the Board is in a very tight place. " (The Chairman : Very tight.) Aa Mr Shelton has reraarkod, unless we can get the money there is only one thing to do, and that is to make default. I think we should appoint a committee to try and get tho money. There seem to be two or three ways. Ihe sooner wo pub the matter into the hands of a first-class solicitor the better for the Board. Mr Bright : Until the position of outstanding rates is defined we can do nothing, Mr Clark : The sooner we define our legal position the better Mr Bright : A ratepayer has just informed me that he has received a demand for a large sum, which he says he does not owe, but that he has not got the receipts, - and ho thinks the Board should create gome aystem by which those who are down as defaulters could prove that they have ■' : - paid, and to define what would satisfy the Board. Messrs Arthur and Townley said the Board could not be satisfied with a ratepayer's word that he did nob owe money. There should be some sort of voucher produced. , Mr Arthur : Ifc very often happens that you pay a man and don't get a receipt. Mr Clark : There is' only one way to make a legal payment, and that is to obtain an, acknowledgment for it. If any ratepayer hae ; paid his rates and got no receipt he should have to prove the pay- * jnent in a manner which would wtsisfy the , B,M.,ppurJ^ --■>> "■ ' ■ '■•' -'• •"■ r-"»%/ ."■-■-'■'-•■'.■" .-■".= .

Mr Bright said the cheques received by Mr Bourke had been paid through the Board's account^ but the amounts had not been placed to the credit of the people who gave them. They having passed through the Board's account, that is how they were ascertained. Mr . Clark : If a man has eonfc in his cheque for rates, and the clerk has used it in another way, the cheque would be a receipt. Mr Bright : In all these amounts that appear on this outstanding list, the payments have been made by cheque and wo

would have had no knowledge of them

but for the cheques, and it is possible many of the outstanding amounts may have been paid in ca3h and treatod jn the

same xray. Mr Clark : It is possible half of the outstanding amount may have been paid in cash and embezzled.

The Chairman : It is possible some of it, a great deal of it, may have been. Mr Arthur : I propose that the report of the Commifeteo bo adopted— that we thank the Committee for the exhaustive way in which they have gone into the matter.

Mr Sievwright : It is a very lamentable duty we have to do, but I think the only course we can take is to adopt the report, and thank the Committee, for they have taken an immense amount of trouble and labor.. I second the motion.

The Chairman Raid that night after night until after 12 o'clock had been occupied by the Committee, Messrs Shelton and Bright, and their assistants. He doubted if they could have got- such a complete statement from anyone else. The Committee deserved the very hearty thanks of the Board for the labor they had taken in bringing the affairs so thoroughly before them.

The motion was carried unanimously,

Mr Bright said his friend Mr Sheltbn* was far more deserving of- thanks than he, as he had devoted far greater time to the work than ho had been able to do.

Mr Shelfco'u said Mr Bright, Mr Towney, and himself had all done their best.

The Chairman said it would be absolutely necessary for a legal opinion to be obtained at once.

Mr Clark suggested that the matter be pub into the hands of competent counsel before communicating with Government. If they had to tights, let them prove thoir position. The statement presented to the Board they might sndeavor to pull to pieces. All sources by which they might be able to claim should be enquired into.

Mr Arthur : There are other sources besides those mentioned. 1 would propose that a committee consisting of tho Chairman and Messrs Clark and Sievwright be appointed with full power to examine into the sources whereby tho Board may be recouped of all deficiencies. — Captain Chrisp seconded. — Carried. Mr Sievw right asked who "was to say whether tho amounts for which demand was now made had been paid. People would flock into the office and say " Wo. have paid." Well, how had they paid.? A committee should be appointed to on-

quire. Air Clark said that all payments would have to be proved beyond a doubt in a way that would satisfy a R. M. Court.

The Chairman suggested that a Com-

mittee be appointed to be present afe the office for a short time each day to examine any proofs of payment that might be brought.

Mr Bright said some of the proofs of payment they might accepts might not be accepted by the persons who would have to pay the deficiency. Mr Shelton said the surety would have the right to challenge any payments which it was said had not been made.

Mr Bright suggested in . all casea it should be " Produce your receipt or chose tho R.M. Court."

Mr Siovwright thought. that they should ask the surety to consent to an understanding as to a satisfactory proof of pay-

monfr

After some further argument as to what would bs recognised as a proof, Mr Bright said in many cases it would be found that both Harbor and Borough Council rates had been paid with one cheque. Mr Shelton : Some of the defaulters on the list have paid their money through the R.M. Court. You could not sue them again. The Chairman : All amounts not paid by the 19th (on which day the Board moots) will be sued for.

Tho Finance Committee was appointed o check tho accounts as they cam« in.

The Cleric reported that Lll in cash was in the cash box ou April Ist, and he cowld nob tell how much belonged to either body, but probably none of it was Borough Council money as the day previous had been that of the Council's half-yearly balance and all funds should havo been ia the bank then.

Australia, says the London Star, which knows everything, is " simmering with a sorb of sedition— a revolt in fact against snobbery, especially snobbery of the cheaper kind. It will be remembered that Lord Carrington, in his recent address on his Australian experiences, strongly urged that the Order of the Bath should be given to distinguished colonists. Ho did so because, as Governor, ho was aware of the disrepute into which knighthoods of St. Michael and St. George have fallen in the colonies. Twice or thrice a year. Mio Governor lias to sound reprasenfcative colonists as to their willingness to roceivo this particular brand of knighthood, and the refusals are becoming more numerous every year. So something will have to be done."

Church of England Country Services. — Sunday next : Waerenga-o-kuri, 11 ; Makaraku, 3; Waerenga-a-hika, 7.— (Advt.)

Union Literary Society.— Thursday evening, at 7.45, "Impromptu Debate." Full attendance requesto:!.— (Advb. )"

Money ia the root, of all evil. Strange, what a hankering most people have for this etune thing. Its collection ia a rooted conviction with all classes, something like the demand for Hennessy's Boots. Ladica' Evening Shoes, from 83 9d.— (Advt.)

Strangers visiting Gisborno and desiring to know'the best establishment in which to purchase Watches, Clocks or Jewellery will please note that S, McLernon offers special advantages. He imports direct and buys for cash from the leiding manufacturers, consequently he ckdms to bo in the best possible position to survc tho public M'cll. One month's trial givc-n with each Watch repaired by him. If not satisfactory, money returned. — Advfc

V

Ices*

Actual Deficiencies ascertained. 1888. ' £ b. d. Dec. 22 M. Hutchinson ... 22 18 4 Dec. 13 C. A. DsLautour (on aooounb Northern Investment Co.) ... 18 18 3 1889.

- ■ £-B. v '£"' :^ Feb. 12 G. S. Whitmore ... 40 6 2 April 4 J. D. Ormond ... 59 19 .6 June 8 DeL&utour (for D. Reid) .„ ... ig 7 3 June 12 W. Adair 21 5 5 July 22 NZ. Native Laud Settlement Co. ... 228 10 3 , Dec. 11 J. N. Williams ... 99 10 10 >» »> >> >> ... 4 4 11 Deo. 14 P. Barker 95 12 I July 17 W. Cooper .„ ... 216 8 May, 27 T. Caldwell ... .... 119 6 A. J. Cooper „, ... 3 14 T. J. Dickson 15 7 7 May 31 E. Cameron 16 11 11 0. B. Hubble 1 3 10 May 27 Currie and Hogan ... 217 10. June 4 M. Nasmith 7 6 1 T. Holford 1 13 10 June 26 W. Graham ... ... 715 7 G. Spence 19 5 0 W. C. Walsh 4 16 10 T. Partridge „ ... 314 8 W. Adair 48 1 8 King's estate 11 15 11 McLean 20 15 10 Dec. 23 W. H. Tucker ... 36 17 0 1890. Jan. 10 DeLautour (McKenzie and. costs) 27 14 2 J. N. Williams ... 103 15 8 April 12 J. D. Ormond 25 7 0 June 18 M. G. Nasmith .. 4 18 10 June 25 J. D. Ormond ... 24 3 1 July ] 1 Wingate, Burns, and Co. (cement) ... 25 3 4 July 23 Nelson Bros. (ceme.nt) 80 0 0 Aug. 9 Napier Harbor Board (plant) 62 6 8 Oct. 18 Nelson Bros, (coal) ... 21 5 0 Nov. 27 C. Seymour ... ... 61 111 Dec. 12. Somerville, B. M. .„ 1 19. 10 » A. F. ... 27 7 6 „ W. F. ... 715 8 Deo. 28 S. R. Cooper ... ... 64 10 T. Goldsmith... .„ 20 5 : . M. J. Mossman .... 2 710 Deo. 31 W. H. Tucker ... 44 5 0° 1891. Feb. 4 G. Humphreys (sale of iron) 40 0 0 March 18 A. Devery 20 12 8 M arch 1 9 G. W. Tiffin 23 12 9 March3l Sundry, per cash book 85 12 1 £1,529 4~~i