CHAOS REVEALED.

Star (Christchurch), Issue 12284, 5 April 1918, Page 6

CHAOS REVEALED.

COMMONWEALTH DEFENCE.

Royal Commission’s Report.

[From Our Correspondent.] S\DNEY, starch 25. Further reports furnished hr the Royal Commission on the working tf the .Defence Department have been liberated by the Government after being kept secret for several months. These reports deal in detail with the accountancy and paying system of the Department and, as was the case with the findings relative to the business management of the Department, disclose wholesale irregularities. The net result of the Commission’s work has been to show that in respe.ct to the operation of this Department, spending millions a year of public money, we have been adrift on a shoreless sea of bungling and folly. Tiie public has received the reports with dazed resignation. No more damning series of revelation has ever been made in Australia of official ineptitudeA PRECIS OF TEE FINDINGS.

'Hie Commissioners point out that so hopeless is the muddle in the stores accounts they felt compelled to recommend, as the only solution of the impassec, that the Department should cut, its losses and make a clean start, with new ledgers. The absence of a pioper system of control in regard to Departmental accounts has opened the door to all manner of frauds and irregularities, and it is impossible to estimate the extent „to which the Department and, incidentally, the public generally, have suffered in consequence. The Howell Price frauds alone resulted in a loss of nearly £60,000. In a report furnished by Messrs J. Brontnall and A, E. Barton, advisory accountants to the Commission, reference is made to the Howell Price frauds, and further serious allegations aro made concerning chaff deals which ex-Licntcnant Howell Price carried out on behalf of the Department. The Commission, in directing attention to the Howell Price case, expresses the opinion that the present position in regard to ilia defalcations which took place in New South AValcs is not satisfactory. Elements of suspicion attach to other persons. and, in justice to all concerned the Commission recommends that proceedings should bo taken in respect of all the charges preferred against Howell Price.

Tlie advisory accountants’ report, which is incorporated with that ot the Commission, also deals fully with a most serious irregularity in the pay office in New South Wales., A large sum of money, amounting to about £IO,OOO, was found in cash, notes and cheques in the district paymaster’s office- The money had apparently been accumulating there tor some months before it was discovered by an officer of- the Auditor-General’s department early in 191b. No proper record was available to show from what source the money had been received, and the accountancy advisers, remark that, in their opinion, had the district paymaster misappropriated any of the moneys the crime could not have been discovered. No dishonesty is alleged in regard to the matter. The accountants, however. adversely comment on the tact that', although this very serious position was reported immediately on discovery, the district paymaster concerned was allowed to retain his office as district paymaster for about eighteen months thereafter, and in August, 1910, was transferred to the position of camp paymaster at Liverpool at his full salary. He has since been charged by llie Department with neglect and other serious irregularities. Attention is directed by the Commission to the fact that in the earlier days of the war great laxity was shown by ihe district pay officers in procuring acquitted paysheets from the camps. These paysheets are valuable documents, ns they represent the only evidence the Department can produce of the proper application of the moneys handed over to the various officers entrusted with the payment of the troops- Many of these sheets' are, however, missing. At one period the amount represented by outstanding paysheets was in excess of £150,000. but this has now been reduced to £117,000, It is further pointed out that the books and other records in the oversea section of the pay offices reveal that overpayments involving large sums of money have been made to the dependents of soldiers and to other persons. .Many of these overpayments, it is stated, were the outcome of fraud, but a considerable portion was the result of carelessness and lack of ordinary business foresight on the part of the departmental officials. Whore it was found that the overpayments had been made to persons in straitened circumstances, who had already spent the money, the Department decided not to press for recovery. In other cases efforts are being made to obtain repayment of the amounts in question. In Victoria and New South Wales alone these overpayments amount to over £40.000. A revised form of declaration and certain essential alterations in the system have now been adopted as a practical check against a recurrence of these overpayments. The commissioners remark that the safeguarding of public funds and Government property should he the sacred duty of the responsible officers concerned, but they mention, with regret, that their investigations revealed failure on the part of many officials to appreciate the important nature of their trust. They emphasise the imperative need for the exercise of extreme care by making reference, to the fact that the estimates of the Defence Department for the current financial year provide for expenditure approximating £10‘2,C00,000. MUDDLED STORE ACCOUNTS. Regarding the ordnance service, the Commission brings to light a staggering state of muddle and confusion. There has been no adequate checking of stores, and departmental laxity has resulted in a condition of affairs that seems to hare left the commissioners gasping. Fur instance, it is mentioned in the report that tip to the date of the appointment of the Royal Commission, the last complete official stocktaking of the ord-

nance stores in the second military district South Wales) was niadc as at June JO, 1909. In May, 1915, an attempt was made to secure a comparison of the stocks in New South Wales uitli the lodger balances, but the cliscropancios were so numerous and large, even after the ledgers had been completely checked up to that date, that the stock shoots were not submitted m accordance with the usual practice to the Commonwealth Treasury. 1 I„ the clothing . section alone surpluses t0 £32 -f™ deficiencies to were disclosed. After the andit of the ledgers, these discrepancies wore reduced to the following rW'T’v i £21 .’ 800; deficiencies. £11.150 Early m 1917 the Dopartment decided to conduct a sectional stock-taking m New South Wales, and subsequent to the Commission’s appointment stock was taken in the clothing section, and a comparison with Snnn I)aI TS s c • ove - aled s ~49,000; and deficiencies, £23,000. AUDITOR-GENERAL CRITICISED. Strong adverse comment is passed l b* the Commission on the work of the Auditor-General’s Department. Mention is made of the fact that queries front the Auditor-General’s office relating to transactions that occurred trora two to three years ago are only now being brought to the notice of the Quartermaster-General. The commissioncrs express the opinion that the Auditor-General has failed in his duty to the public in not strenuously rc r presenting to Parliament that h’is inab ' Ut . y . to J? ccuro n sufficient staff of suitable officers precluded him from conducting nu effective and up-to-date audit, they remark that the fact that ho was content with a mere formal compliance with his statutory duties shows That he did not realise the extent of Ins responsibility ns the direct and independent representative of the peopJe in matters affecting the public I nf'l 6 !- are constrained to sinte, add tho commissioners, “ that the Auditor-General failed at a time when the exigencies of the service necessitated the keenest and most energetic control, and his non-fulfilment of the demands of tho situation establishes the need for reorganisation, involving clrastio changes in the personnel of the Auditor-General s Department.” Dealing with the accounting and paying systems which they found in vogue in the Defence Department, the accountants observe that, looking at tlio matter from a commercial bookkeeping point of view, the Department may ho. regarded as having been carfving ok. as far as its main treasury section is concerned, without keephhooks of accounts at all. They direct attention to considerable • laxity in connection with the issuing of half-fare inilwav passes to soldiers in Victoria going from camp on leave. The forms pi oyidea were loose and apparent!v available for anyone to fill up. They mention that since the appointment of the present finance member in 1915 th-v niethods in certain sections of tho pay office have been gradually improved. Regarding tho staff of the pay office,' they admit that tho Department has been faced with certain difficulties in the selection of suitable men. The Government's policy of preference to unionists is stated to have operated fiisadvautageouslv. and resulted in the Department engaging men whose only apparent qualification, according to the Commission's accountants, was a stronopersonal conviction that; “ the pen is mightier than the sword.” The fallowing list of the puvions occupation® ol some of the staff in the pay offices is quoted in the report to illustrate the strange incongruity of (heir present work:—Jockey, pearl buyer, letter carrier, nail maker, theatrical artist, window dresser, horse dealer. ..blacksmith. • ■tc. Uis also stated that he Department has suffered under the disadvantage of having on its staff a number of incompetent officers who by reason of the fact that they were permanent officials were able to shelter themselves I l oin dismissal. Further it is mentioned that officers responsible for the employment of staff have complained that when men were dismissed for iuoompelency or other sufficient reasons outside influence was brought to hear, in _ many eases successfully, with the object of getting them reinstated. WORK OF GOVERNMENT FACTORIES. The work of the various industrial establishments controlled hv the Defence Department is dealt with ;l t length by the Commission, which reports very favourably upon the conduct and administration of most of the. Government factories. In regard to the woollen doth factory ,at North Geelong, the members of the Commission express the opinion that the product of the factory is superior in many respects to the goods supplied to the Defence Department by outside contractors. The clothing factory in South Melbourne, the, harness factory n< Clifton Hill, a ml tho cordite factory, Maribyrnong. similarly impressed the Commission as wellconducted concerns. In regard to the Government small arms factory at TJthgow, it is stated that the estimate of the cost per rifle, which wns laid down in 1909. has undoubtedly been exceeded to a much greater degree than can be attributed to the natural rise in wages and the cost of raw materials. The investigations of the Commission at I.ithgow led the members to form the belief that a careful inspection by a skilled engineering factory expert should be made before any further capital expenditure was incurred. For (ho your ended June 30. 1917. the published accounts of the factory disclose a loss of £54,29(5 on that year’s outturn, after making an attempt to arrive at an accurate cost for rifles and charges. RECOMMENDATIONS. Tho Commission recommend a scries o( changes calculated to correct the defects and abuses revealed. These, the Minister, Senator Pearce, mrreos with, and it is understood they are to b* adopted. In any exculpatory state, ment the Minister asks the public to recognise that he and the military staff ■'tackled our onerous and responsible task with all our powers." No doubt, they did. But they made a fearful mess of the job.