PETROL.

Star (Christchurch), Issue 11671, 11 April 1916, Page 5

PETROL.

ALLEGED CORRUPT PROPOSAL ROYAL COMMISSION. MR HALL'S EVIDENCE. SYDNEY, April 6. Mr Justice Pring opened the sittings of tho lloynl Commission, with which ho lias boon charged to inquire into certain allegations of corruption in connection Ayith the proposed Government monopoly of petrol supplies, in the No. 1 Jury Court yesterday. The scopo of the inquiry with which his Honour is charged was set out in the Royal Commission in the following terms:— "Tho negotiations, arrangements, or proposals made, instituted, or proposed on behalf of tho Government South "Wales for the acquisition of the works, plant, and business of tho British Imperial Oil Company, Ltd., and more particularly the proposals made by one Henry Alfred Morgan as to the amount or price or consideration to bo fixed for the purchase of such business, and as to tho amount or price or consideration to b'e paid for future supplies of oil, spirit, petrol, and the like. "In connection with the aforesaid matter, whether the demands or requests of tho said Henry Alfred Morgan wore promptod or instigated, authorised, or endorsed by any Minister of tho Crown or person. "And, in so far as you may deem it essential, to inquire generally into tho said matters, having regard to> any public interest involved, and the conduot of any official or person connected therewith." Tho Attorney-General, Mr Hall, was the only witness examined yesterday, tho balance of the sitting being taken up with Mr Shand's opening statement of tho facts. Towards the end of the day's sitting, his Honor intimated that he proposed to take care that the inquiry was a very thorough one in every respect. MR SHAND OPENS THE CASE." " So that your Honor may appreciate tlio particular matters which your Honor has to determine/ 1 said' Mr Shand, in opening tho case, "it will bo necessary shortly to go into the facts which led up to the particular matter- referred to in the first heading of tho inquiry under the commission. "Somewhere early in 1914 certain questions were discussed in Cabinet as to what were suitable commodities for nationalisation. Among others, Mr Griffith, who was then Minister for Public' Works, mentioned petrol. The Cabinet instructed the Minister to make inquiries and to submit a scheme. On March 11, 1914, wo find Mr Reed, who occupied the position of superintendent of stores, Public "Works Department, making an application to tho head of his department to bo relieved of his duties for a month, to enable him tb investigate this matter of the nationalisation' of petrol. Leave was granted on March 14, and from that onwards inquiries wore made from a number of people interested in the oil .industry and carrying on business in New South Wales or abroad. There were two proposals(l) To import petrol in bulk,-and to erect factories to .make the cans and oases to hold tho oil; and (2) for the supply of crude oil and- the installation of. machinery and plant to refine it into petrol and other of its products. . "Then, apparently, some inquiries were mado of a firm trading in Sydney as Frank Saunders," Limited. Tho letters from this firm ■« ere signed by Morgan as salesman and engineer of Saunders, Limited. This firm represented that tliey were acting in conjunction with Messrs Fraser and Best, and they professed to be in a particularly advantageous position for making inquiries and getting offers for the Government, and that they were intimately connected with the firm of Markt and Hnmicker, of New York, who, in their turn, had access to and control of particular supplies known as tho Anglo-Mexican Oil Company—an English company, having stores of supply in various parts of the world. Negotiations went on with that company (Fraser and Best) tor a considerable time, and before the middle of 1915 they had got so far that these people submitted a definite offer to the Government for the supply of what Reed estimated as tho present requirements of the State, viz., 5,000,000 gallons of petrol, or gasoline, per year, and 12,000,000 gallons of crude oil per j year. ••• ' j

BROUGHT BEFORE THE CABINET. "A formal offer was made," cou'tinued Mr Shand, "and then the matter was submitted to the Cabinet by Mr Griffith. The Cabinet considered tho report by Reed and the statement by the Ministr, only ono or two days before the time when the offer would expire. Reed recommended that the petrol supply be accepted forthwith, but that with regard to the offer to supply 12,000,000 gallons of crude od, he recommended that he be authorised to obtain a ninety-days' extension or time, because ho had not yet , completed his investigations. Mr. Griffith expressed the opinion that the offer made was an advantageous one, and he said he was in favour of its acceptance^

.'•'One Minister apparently," ho went cm, '"' stated that under this contract the Government would be paying more for the oil than the garages of the city were paying at that time. Mr . Hoyle suggested that there was some firm with whom he (Mr Hoyle) was in, touch who would apparently make a more advantageous offer to the Government than the one then before them. The Cabinet, however, refused to entertain the offer for the present, and asked the firm for an extension of the- offer for thirty days. This vas refused, and nothing more was dono in the matter until about December, 1915. A NEW SCHEME. Then, continued counsel, Mr Hoylq got into communication with a Mr Gibson, representing tho National Oil Company of Australia,, and an entirely different scheme was propounded. However, Mr Griffith apparently represented that Mr Gibson did not control the supplies he professed to have. The question as to which was the better scheme was then referred for inquiry to Mr Reed, representing Mr Griffith, and MY Williams, superintendent of explosives in Mr Tloyle's department.. MR MORGAN'S ENTRANCE. On December 20, a letter was sent by Mr R«ed to Mr Morgan, asking Mr Morgan to get into touch with the British Imperial Oil Company, Ltd., rath reference to the purchase of tho company's installation. Mr Morgan's instructions, according to the records, did not, extend beyond that. On [December 22, continued counsel, | Mr Black, the New South Wales manager of the Imperial Oil Company, was waited upon by Mr Morgan, who sug-j gested the purchase of the company's! New South "Wales business, and said that if the company would not sell the Government would put up nn installation of its own, and, having a monopoly, the company would have to go out of business. Mr Black being somewhat doubtful as to whether the Government was really in earnest in this lnaiter. Mr Morgan recounted to him the various negotiations tl-at. had

taken place. Mr Blaok pointed to a photograph of tho company's works. " Tho Government surely would never deprive us of this property," he said. I "It cost between £BO,OOO and j £90,000." I When they began to discuss the question of price. Mr Morgan _ represented to Mr Black that to any price arranged | for tho purchase of the installation, it ' would bo necessary to add £IO,OOO or I £15,000 for tho Minister, and this would have to bo provided for. lie said that he himself was not getting any payment in this matter, and that provision would be wanted for at least £2OOO for himself. Mr Morgan also said that, if tho Government bought the installation, a contract would have to be made for supplies, and tho Imperial Company might have a chance. He said that negotiations were already proceeding with the Anglo-Mexican Company for a contract, and he did not know what stag© they had reached. Mr Morgan said, however, that Mr Black could rest assured that the company that "sprung the highest" in this illicit commission would get the supply contract. He said that this would have to bo at least id per gallon on any contract entered into, and the supply required would bo about 5,000,000 gallons ■ p. year. THE MINISTER'S AUTHORITY, j Mr Black then communicated with Mr Wagstaff, the company's general manager, in Melbourne. He left here on December 22, told Mr Wagstaff what had taken place, and returned on December 24. He told Morgan that he had decided to notify his board in London, but before doing so he must be officially informed by the Minister in regard to the negotiations. Wagstaff telegraphed to Black, insisting on any authorisation which was acted upon being signed by the Minister. A letter was received from tho Minister authorising Morgan to act as his agent in rega*d to installation. Though signed by the Minister, the phraseology of tho letter appeared to be Reed's. A meeting in Melbourne of Morgan, Reed, Black and Wagstaff was then arranged. Wagstaff asked Morgan if there was any commission t& be paid in connection with the purchase of oil, Morgan replied: "One per cent for brokerage." On January 7 Wagstaff met Morgan without Reed or Black. The question of commissions was again discussed Wagstaff asked Morgan for an estimate of what might have- to .be paid. Morgan said that he wanted his brokerage, and, in addition, a sum which was spoken of ns "lost money." The estimate for this part of the commission was 2£ per cent, or, at the outside, 3 per cent. Wagstaff invited Morgan to dinner on the evening of January 7. On being called aside and asked to explain the 3 per cent, Mor-' gan said it would be on supplies and installation. Morgan added, that any question of brokerage would have to be put before the Government and that he would probably be appointed to receive it. .Wagstaff, m reply, told Morgan that he (Wagstaff) would have to put the whole matter before his London board. "TO SOFTEN OPPOSITION." A meeting took place on February 2S. In accordance with instructions, Mr Black was also present. After the crude oil proposition had been gone into, the question of commission and "lost" money was introduced. Reed said: "This does not interest me, and I propose to retire." Reed was asked to remain, and the whole question was then gone into. It was explained by Morgan that proposals of the kind had to go through many hands-. Some one might have to be placated, and opposition in Parliament might be softened by suitable provision. Wagstaff said he desired to be more fully informed. On March 2 Wagstaff sent registered lotters to Griffith, Reed, and Morgan, conveying the contents of the cable message which liad .been received from London. Mr Griffith acknowledged the receipt of the letter on March 7 without comment. It was a formal acknowledgment. " As far as are aware," said Mr Shand, "the breaking off of the negotiations and the threat to publish the proposals was not communicated to the' Cabinet as a body, or to any member of the Cabinet, other than Mr Griffith." ATTORNEY-GENERAL EXAMINED. David Robert Hall/ Attorney-Gen-eral, stated that the question ,of a State petrol monopoly was mentioned first to the Cabinet by Mr Griffith early in 1914. Mr Griffith was deputed to make inquiries. On June 8, 1915, the matter camo definitely before the Cabinet, when the definite offer for the supplv of petrol and crude oils was brought ou as a matter of urgency, poiaiting out that tho option would ex-,j pire the next day. The estimates put forward bv Mr Griffith were disputed by other Ministers. The matter came •ar> again in December, at which meeting of the Cabinet Mr Hoyle put forward a rival scheme, drafted by Mr Gibson, of the National Oil CompanyCabinet then asked Messrs Griffith and Hoyle to consider the two schemes, and I bring up a further report. That was ' the fast the Cabinet hoard of the mat- , ter. "I do not know anything about the negotiations with the British Imppvial Conmanv" said Mr Hall. "I never heard their name mentioned m connection with fhe scheme." STRANGE RUMOURS. Proceeding, Mr Hall said that he met Mr Waxman, solicitor for the British Imperial Oil Company, in connection with an endeavour to effect a settlement of a strike on the wharves, in which oil belonging to the Imperial Companv was affected. Later, on March 13, ho and Mr Waxman travelled together to Melbourne, and, in the course of conversation, some questions arose about the Government's complicity in the strike. "I s>aid," continued the witness, " that,' having seen the difficulties with which the oil companies had to contend, I was losing my enthusiasm for the proposal to nationalise the industry." Mr Waxman said: "Oh, are you going on with that?" " I said that we were. " Mr Waxman said that there were strange reports about this strike; that it had been organised by the Government. , n ■• , , ~ " 1 naked why the Government should organise 'the strike. "Mr Waxman said: 'To injure the company and advance the nationalisation proposal, in which, rumour says, certain persons connected Avith the Government' have nn interest.' " T said that j.n these days one should not take anv notice of such rumours. "Mr Waxman said that this was more than a rumour, and he had seen original documents Avhich showed that there had been corruption in tins matter- , -, " I said that if I could sec these documents I would certainly take action in regard to them. Mr Waxman said : 'T have them here. They have been burning a hole in my pocket all tho morning.' "Then," continued Mr Hall, Mi Waxman produced a letter, dated December 24, from Mr Reed, appointing Mr Morgan to net as his apent m negotiations "with the Imperial Company; n telegram, dated December SO. from Mr Wagstaff to Mr Black, declining to rccoemse the appointment made by an official; and saying that the appointment must V mnde by the Minister; a letter, dated December 31, from Mr Griffith.' appointing Mr Morean: and nn extract from a private and confidential letter rlntwl Jnnunry 12. wrtton bv Mr Wacstaff to bis directors in England oivi»< T an account of the proposals mnd- to I'iTn bv Mr Morgan. " Mr Waxman told me also that a cableernm bad been received from the directors of the British Imperial Oil Company refusing tho proposal, and

stating that they must decline to treat the negotiations as privato and confidential, and that they claimed the right to publish the correspondence whenever they chose. " I asked Mr Waxman to hold back any publication, for a few days, "and allow the Government to take prompt action in the matter. I returned to Sydney on March 15, communicated with Mr Holraan, and made an appointment with him to see Mr Waxman. PREMIER INTERVENES. He believed the original statement, setting out a record, of "the interview in Melbourne, was in the possession of the Premier. On the following day Mr Holman and uitness saw Mr Black, Sydney manager of the British-Imperial Company, and it was decided to telegraph to Mr Wagstaff to- come to Sydney for tho purpose of a further interview. On the Sunday night Mr Wagstaff met witness and Mr Holman at _witness's house. A conference took place. Up to that time no-thing had been said to Mr Griffith. Later Mr Holman and Mr Cann interviewed Mr Griffith, and on the 2Sth Mr "Holman made a statement in the House. Mr Waxman's intimation on the train was tho first ho had heard of the matter. That was on March 33. No member of the Cabinet knew anything of the details of the negotiations that were proceeding in regard to oil eontracts. £32,000 A TEAR FOR TEX TEARS. I To Mr Lamb: Witness pressed Mr "Wagstaff, and lie stated that the amount involved as secret commission would be about £32,000 a year for ten years. Witness pressed Mr Wagstaff closely as to whether he understood this money was to go to Mr Griffith or other Ministers. Mr Wagstaff replied that the impression left upon his mind was that'all the Mimstners were included. "A GOOD GOVERNMENT JOB." To Mr Boyce: He did not know anything of Mr Morgan before this matter arose. Mr Reed told witness that Mr Morgan's expenses to Melbourne were paid out of a credit paid to cover tho cost of these negotiations. There is no trace of remuneration or payment to Morgan by the Government. Mr Reed had mentioned that if the scheme came off he (Morgan) would expect a good Government job.