CASE OP ME. MACANDEEW.

21

D.—No. 1,

considerable balance of Education Funds in his hands, the Superintendent's warrant for £600 for Education purposes was issued to the Provincial Treasurer. The whole of these circumstances are against the conclusion which the Superintendent seeks to establish, that the £600 was lent to him from private funds. The Superintendent states in explanation that the Treasurer, whenever he required money on account of education, sent in a slip of paper, stating that the sum named therein was required by him as Treasurer of Education Board, and, as a matter of course, a warrant was invariably issued without further inquiry. The fact of the Treasurer having lent him a sum of money of the same amount and on the same day (if it was so) is a singular coincidence, but nothing more. The Superintendent further states, " As to my reasonably supposing that the Treasurer was in a position to advance this money at the time out of his private funds, it certainly does seem improbable now that the whole facts and circumstances of the case are disclosed; at the same time, however, I did not give the matter much consideration, being aware that he had private funds passing through his hands. Among others, I may state, that he showed me an authority to draw on a client in Edinburgh for, I think, £500, which I offered to negociate, but which, I presume, he negociated otherwise. I also understood that moneys were being lent at mortgage by Mr. McGrlashan on behalf of clients. One person, who, if I recollect rightly, told me that he had been in treaty with Mr. McGrlashan in this way, was Mr. .Tones, of Jones and Williamson." The evidence as to the mortgage and the power to draw on Edinburgh is not contradicted by Mr. McGrlashan, except that he explains that in neither of the cases did any money pass through his hands.

Next, as to the facts which have been ascertained relative to the charge made by the Provincial Council, that the Superintendent was for a considerable time aware of there being a deficiency in the public funds without having made the members of his Executive acquainted with it. The Superintendent admits that when, prior to the June audit, Mr. McGrlashan revealed to him, as he says, the state of affairs, he ought to have taken action on the matter ; but his excuse is, that his regard for Mr. McGlashan prompted him to shield him from ruin ; that Mr. McGrlashan has a large and helpless family dependent upon him for support; that his zealous and laborious services in Britain towards the interests of the Province, as the Secretary of the Otago Association, gave him strong claims for protection. In connection with this part of the inquiry, the Superintendent seems anxioxis to put it in evidence that on several occasions he had made good Mr. McGrlashan's deficiency. But if he had done so, he was the more bound to protect the public chest by issuing instructions for the whole of the public moneys being simultaneously verified quarterly by a Board of Survey, seeing, as he states, that the Treasurer would be likely to use the Boad money and the Education money rather than allow his deficiencies to be exposed. Instead of doing so when he came into office, we find him borrowing large sums of money from the Treasurer. In reference to the deficiency on the 30th June, 1860, reported by the Auditors on the 4th September following, and to the official letter of the 20th September, 1860, it appears in evidence that on and after the 28th October the Superintendent states officially in his memorandum on the Auditors' Beport the deficiency of the 30th June, 1860, is easily accounted for, from the mode in which many payments in the country and at Invercargill had hitherto been made. Tet, at the time he wrote this, he knew that the Provincial Treasurer was a defaulter. The Provincial Treasurer had, in the official letter of the 20th September, 1860, accused him of having the deficient balance in his own hands. The Superintendent in his explanations endeavours to clear himself of an attempt to mislead, by asserting that his authority for what he stated was the Provincial Treasurer. But it is manifest that this, if true, could be no palliation, for it was impossible to mislead him as to the facts that the deficiency was real, and that he himself had been compelled, from the course taken by the Treasurer, to refund large sums of money to make it good. These facts are beyond all controversy, and the evidence shows that the Superintendent had an overwhelming interest in concealing them; and that his own pecuniary embarrassments alone prevented him doing so. He writes in one of his notes, " I think I will manage by hook or crook to get Proudfoot's bill cashed on Monday. I have made a great sacrifice in order to close this to me more unpleasant business than it can be ever to you, and it will certainly be strange if the sum named cannot be realized." The notes in the handwriting of Mr. Macandrew are important, and place his conduct in a peculiar light, and manifestly show that he was actuated by other motives than a mere desire to shield the Provincial Treasurer. Unless he believed himself seriously mixed up with the Provincial Treasurer in the defalcation, he could never have used the expressions or would have taken the course he did. Thus, when he learned that the Provincial Treasurer had disclosed the affair to the Auditor, he writes, " What a pity it was that you did not entrust the whole of that affair to me. I could have polished it off as smoothly as you please. I spoke to Morris" (one of the Board of Audit, the appointee of the Superintendent) " and found that there was not the slightest necessity for all the stew in which you nave placed both you and myself. There is no intention of reporting anything detrimental to you." Adverting next to the official letter of the 20th September, in which the Superintendent is openly accused of having the deficient balance, it appears that the Superintendent neither suspended the Treasurer nor brought his conduct under the notice of the Executive Council. The Superintendent's explanation is, that the letter referred to was written in a fit of indignation; that, knowing this, he put the letter into his pocket for a couple of days, until the writer should have time to cool down. That he then took the letter to Mr. McGrlashan and pointing out the paragraph in question, asked if he intended that to be his official answer to a letter which he (the Superintendent) would address to him, calling for explanations on the various topics alluded to in the Auditors' report. Mr. McGrlashan said it was not his official answer, and that it had better be withdrawn ; that, when called on, his explanation of that part of the report would be " the payments at the South." The 6