AUDIT BOMBSHELL

Wairarapa Age, 9 March 1934, Page 5

AUDIT BOMBSHELL

SERENITY OF TRUST MEETING DISTURBED. LETTER FROM AUDITOR-GENERAL POSITION OF SCHOLARSHIP FUND. The usual even tenor of the Trust Lands Trust was rudely disturbed last night by a letter from the Auditor-General dealing with the Trust's Scholarship Account. Several members described the communication as a bombshell and it gave rise to a brisk and heated discussion between the chairman (Mr. T. F. Watson) and Mr. A. O. Jones. The attention of the Audit Office, stated the letter, was recently drawn to the fact that the credit balance of the -Scholarship Account at March JI, 1933, was not represented wholly by cash at bank or in hand, and the Audit Office referred to its legal advisers the question as to whether the terms of Section 20 of the Master ton Trust Lands A-ct, 1889, restricted the Trustees from keeping the whole of the moneys of the Trust in a common bank account and prohibited the temporary use of any portion of the revenues derived from leasing certain town acres on general purposes of the Trust. The Office had been advised that the revenues derived from the leasing of the town acres mentioned should be paid into a separate account at the bank and applied only to the purposes stated in the proviso to Section 29 and that the temporary use of such revenues for general purposes of the Trust constitutes a statutory breach. It was necessary, therefore, that the present credit balance of the Scholarship Account be funded in a separate bank account. Mr. E. G. Eton: “This is very startling. Where did they get their information from?" “A VERY SERIOUS THING.’'

The chairman, Mr. T. F. Watson: “They do not say." It was, he added, one of the most serious letters they had received since hp had (been chairman of the Trust. No separate scholarship banking account had been kept since the inception of the Trust and a sum of over £2OOO was involved. It was a very serious thing and if it was found necessary to pay the amount back there could be no grants next year.

Mr. D. Caselberg: “It is a bombshell. ’ *

Mr. Watson said he had considered the matter so serious that, accompanied by the secretary (Mr. W. B. Yates) he had gone to Wellington and interviewed the Auditor-General. They had placed the full facts and figures before the Auditor-General, who had later conferred with the Crown Law Office and the balance sheets of the Trust since its inception had been examined. The attitude and reply of the Audit Department was contained in the following leter from the Auditor-General. After cacfirming his statement that moneys held in trust should be banked from the general moneys of the Trust, the Auditor-General said that the balance of £2254 12s lid standing to the credit of the Scholarship Trust Account at March 31, 1933, was wholly rentals from the leasing of the Opera House and that the amount of that balance should ibe apportioned between building rent and ground rent. It was further agreed that the portion of the balance representing building rents should 'be transferred to the general account and that the remaining portion, representing the accumulated ground rents calculated at the rate of 5 per cent, per annum on the unimproved value of the land for the period Apnl 1, 1922, to March 31, 1933, should fee treated as the balance of the Scholarship Trust Account and funded in a separate bank account. The requirement stated in his previous letter therefore, need not be complied with In future, the Trustees should appoiOpera House rentals between building rent and ground rent, crediting the former rent to the General Account and the latter to the Scholarship Account.

MISTAKEN TRANSFER. Mr. Watson said that the Scholarship Account should never have had that money. The minutes of 1922 stated that the money should have been paid into the General Fund. That, however was not done and the money was transferred to the Scholarship Account. He did not know who had made the mistake or how it was made.

Mr A. O. Jones said that he had raised the same question at his first meeting of the Trust. He had contended on that occasion that there was something wrong with the Scholarship Account. He had moved a motion asking that a solicitor’s opinion be secured. His motion, however, had been met with sneers all round the table and had been turned down.

Mr. Watson.- “Well, I would like to tas been writing to the Audit Department?"

Mr. Jones: “I have and I will fie quite candid about it.’’

Matson: “I wish you had been Candid before.’’

Mr. Jones: “I was. I gave you that opportunity when I objected to the estimates."

Mr. Watson: “You gave us no such opportunity. Why did you not tell us you intended to write to the Audit Department?"

Mr. Jones: “1 was not sure of mv Belf “° n and 1 wanted t 0 Protect my-

CIIAIRMAN & MEMBER AT ODDS. Mr. Watson: “Protect yourself! £ think that before any member of the Jrust goes and writes to the Audit DePartment he should tell us what he is going to do."

Mr. E G. Eton: * 4 Hear, hear.'' atrA^y e ? ticised Mr. Jones in terms for “trying to throw such * bombshell just before the end of the fioancial year. We had no idea whatever (he added) of your intention.’’ -wr. Jones endeavoured to state that he had given the Trustees an idea of the he had objected to ed- b , Ut Mr ' Watson r-mark-tell v"T ast June - You did not ‘Mr T YOD “ a " Pass untiJ now.” feoard » Was open and a| bove-

Mr. Watson; “You were not „ to V. V Kra , ha ® en: “I take exception LX I r T arks abont members v 1 resent that word sneer ” Othem V K P ’ e h j " dge Tn ... _ • jYra “Bgen." tfle course of a detailed explana-

tion of some Trust transactions of some years ago, Mr. W. H. Jackson said that the money referred to belonged to the Scholarship Fund. MATTER NOW SETTLED. Mr. Eton complimented Mr. Watson on the action he had taken in the matter. He thought it would have llxsen better had Mr. Jones advised the Trust of what he intended to do. The matter, however, had now been settled once and for all. Mr. Yates said that the Crown Law Office had held that money spent bn the Opera House area was an investment of the General Fund. In future it would be necessary to divert any revenue from the Opera House, less 5 per cent, ground rental, into the General Account. In addition, the sum of £450. which was 5 per cent, ground rental on the unimproved value of £750 for 12 years, would also have to be paid into the fund and a separate bank account opened. The Trust, however, would not be forced to refund the sum of about £2200. The Scholarship Account had over-expended itself by . a very large amount. After some further discussion, Mr. Watson moved that a separate bank account (be opened for the Scholarship Account and that the sum of £450, being 12 years’ ground rental at 5 per cent, from the Opera House, be paid into the account. The motion was seconded and carried, Mr. Watson observing: “I do not think we should get heated over this after all. It has put us right for next year and has cleared up Mr. Jones’s position.” Tn reply to Mr. J. L. Hughes, who said there would now be no money in the Scholarship Account, Mr. Watson said that the Trust could make scholarship grants from the general fund, but' could not use the scholarship fund for general payments. Mr. Jones said he had received a reply from the Audit Department and was not entirely satisfied on one or two minor matters. He had written again asking for further information and details of authorities. He did not know if it would make any difference, but he wanted to be quite clear. a E l° n: “ Bome job proving the Auditor-General and the Crown Law office wrong!" Mr. D Caselberg: “You have been acting illegally all the time you have bees on the Trust, Mr. Jones. You gave notice at your first meeting that von would not have anything to do with the scholarship and school grants but you have been exercising a vote on all grants right along. You should not have, as you put yourself offside from the start." Mr. Jones: “T said I would not be a party to the estimates. I still have till March 31.” Mr. Eton: “Unwittingly, Mr. Jones von have done the Trust a good turn. You tried to throw a bombshell through the Audit Department and you did us a- good turn.” Mr. Watson: “It was a boomerang.” Mr. Jones: “I did it wittingly ” Mr. Watson: “If I had been' going to do anything like that I woifid have told the Trustees."

The discussion then dropped.