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you had, up to the 31st May, 1904, failed to collect. I accordingly send you the attached formal notice that you are surcharged with the amount. I am, &c, J. ft. Warburton, Controller and Auditor-General. Mr. Alexander Aitken, Manager of the Waimea-Kumara Water-race, Kumara. Copy of Section 32 of " The Public Eevbnues Act, 1891." 32. It shall be the duty of the Audit; Office to surcharge every receiver or other accountant with any sum of money which he shall have wilfully or negligently failed to collect, or for which he shall have failed to account as provided by this Act, and every imprestee who shall have expended any public money without the authority of the Minister administering his Department or of the officer duly appointed to authorise such expenditure ; and every sum so surcharged shall, except as hereinafter provided, be deemed to be a debt to the Crown due by the person against whom such surcharge is made. It shall be lawful for any person so surcharged to appeal to the Minister administering his Department, who, upon hearing the grounds upon which such surcharge has been made, and the objections thereto, shall confirm or disallow the same. In every case in which any surcharge shall be disallowed by a Minister on appeal a report of the circumstances shall be transmitted by the Audit Office to the Speakers of both Houses of the General Assembly within fourteen days after the then next sitting of the same. Audit Office, Wellington, 30th August, 1904. Mr. Alexander Aitken, Manager of the Waimea-Kumara Water-race, Kumara. You, being a receiver under section 21 of " The Public Revenues Act, 1891," are hereby surcharged, as provided by section 32 of that Act, in the sum of one thousand four hundred and thirty-three pounds and three pence on the account mentioned below, and are directed to pay the same into the Public Account forthwith, forwarding the bank receipt for the same to this office. On account of amount owing for water supplied on credit from the Waimea-Kumara Waterrace. J. K. Warbubton, Controller and Auditor-General.

No. 14. The Hon. the Minister of Mines. Audit Office, 15th July, 1905. Bevenue uncollected for Water supplied on Credit from the Waimea-Kumara Water-races. The Controller and Auditor-General, adverting to the memorandum of the 29th October, 1904, in which he intimated that this matter, being that of revenue outstanding in consequence of failure to observe the requirements of the law, should be reported to Parliament, has the honour now, before making such report, to transmit for the Minister's information the appended copy of statements signed by the Manager of the Water-races and the Audit Inspector, showing that the amount due to the revenue on the 22nd March last for water unlawfully supplied on credit was :— For water supplied from— £ c. d. Kumara Water-race ... ... ... ... ... 1,634 3 11 Waimea Water-race ... ... ... ... ... 146 4 9 Callaghan's Water-race ... ... ... ... 347 10 3 Total ... ... ... ... ... £2,127 16 4 The Audit Inspector reported on the 18th April last that the Manager " has now been instructed and has placed the arrears in the hands of the Crown Solicitor to sue for or obtain security for the amount due. The Manager's latest instructions are to stop supplies of water to all who fail to pay at each washing-up." J. K. Warburton, C. & A.-General.

No. 15. Mines Department, Wellington, N.Z., 20th July, 1905. The Controller and Auditor-General. Revenue, uncollected for Water supplied on Credit from the Waimea-Kumara Water-races. The Minister of Mines desires to acknowledge receipt of the memo, of the 15th instant from the Controller and Auditor-General transmitting copies of statements signed by the Manager of the Water-races and the Audit Inspector showing that the amount due to the revenue on the 22nd March last for water supplied was £2,127 16s. 4d. In reply the Controller and Auditor-General is informed that, in the opinion of the Minister, in giving credit the Manager of the races did not commit any breach of his duty, as he was authorised by the Government, and that in authorising the giving of credit the Government performed an administrative act within its power. Of course, the Minister does not question the action of the Audit Office in surcharging, as in so doing that office is performing the duty imposed on it by section 32 of the Public Eevenues Act. At the same time, having regard to. all the circumstances, the Minister thinks the case is one in which he should exercise the power of disallowance conferred on him by that section. As regards the arrears, the Government propose to sue where there is any reasonable prospect of recovery, and to ask Parliament for a vote for the residue. Jas. McGowan, Minister of Mines.

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