A SAD STORY.

Gisborne Standard and Cook County Gazette, Volume IV, Issue 604, 7 May 1891, Page 2

A SAD STORY.

SERIOUS POSITION OF RATEPAYERS. DEFALCATIONS IN THE HARBOR BOARD’S AOOOUNTS. It has tor some weeks past been an open seore: that the accounts of the lata Secretary ot the Harbor Board had bean discovered to be in an inaccurate state, but up to a certain point it was possible to give various explanations ot the deficiencies, and until an exhaus tive investigation bad bean made it would have been unfair to oast any aspersion on the memory of the deceased. Directly the ActingSecretary, Mr Warren, made a discovery of irregularities the members of the Board were communicated with, and when the serious nature of the thing was made manifest a special meeting ot the Board was held, and Messrs Shelton and Bright were appointed a Committee to hold an investigation, with power to engage the necessary clerical assistance, The accounts were then gone into minutely, and night after night the work steadily proceeded, the nature of the irregularities making it very difficult to trace their course. On Tuesday night the report ot the Committee was ready for presentation, sod it could be observed that members keenly felt the painful nature of their duty, as the report camo up in the ordinary course of business. Mr Arthur began by wanting to know if it would not be advisable to ask the reporters to refrain from publishing the report in extenso, evidently being unaware that any such attempt at dictation would be promptly resented by those upon whom the affront had been put, The Chairman supposed the reporters would themselves see that the report was not final, and he thought it as well to leave the matter to their own discretion. Mr Sierwright said he did not yet know what the report was. Mr Arthur again urged that the newspapers be asked to use their consideration and , judgment, andnot report the mattertoofully. The Chairman said the matter might be safely left to themselves—at any rate the Board could decide afterwards whether they would allow the full report to be perused. Tho report was then read, the reporters taking shorthand notes of it in case it should subsequently be refused them. The Committee reported that the books revealed : —lst, Gross irregularities ; 2nd, actual deficiencies that can be earmarked ; and 3rd, Items aggregating large sums that can with almost certainty be reported upon as deficient. We propose dealing with these matters in order, and report:—lst. As to irregularities in book-keeping. That almost simultaneously with the first payment m ide in respect of rates, your late Treasurer has ' made certain entries in the cash book, that upon examination of the Bank pay in slips, reveal that cheques drawn by other ratepayers, and which were made evidently in respeot of their own payments of rate?, have been lodged, and that these corresponding credits have not been made till a later date, the interval of time varying from a few days to many months. This sys’em has been carried on from 1887 till the time of the late Treasurer’s death, and the natural result is many payments, which we have sufficient evidence to prove have been made, by the respective cheques having been lodged—to cover other amounts—and by covering letters having been found in the office from the ratepayers interested, have not been credited to them, and now appear upon the outstanding list, which we have prepared, and now attach. 2nd, Actual deficiencies that can be earmarked. A schedule of these is attached with remarks showing what the different items represent. This list totals £1529 4s 2d. 3rd, Items that can with almost certainty be reported as deficient. A list of these is also attached, audio connection therewith we may remark that for the most part these are for rates which, according to the books, show as outstanding, but which we have good reason to believe are paid the evidence resting upon the fact that cheques for like amount;, or that can bo fairly identified as having been passed through the Board's banking account, co cover other payments. In this connection we may report that we have caused the receipts from the time the first rate was struck to be compared with the rate-book, that lists of all outstanding rates have been made, and that these balance to within a few pounds of the amount as shown by the Board’s balance-sheet, as outstanding. Demands are being prepared for delivery to every ratepayer, and it will be seen 1 that the final deficiency will rest unon the amount of such rates apparently in default, but which will be proved from receipts or otherwise to hove been paid. We have communicated with all tho parties who have recently purchased plant or material from the Board with the view of ascertaining if all such payments have been duly brought to credit. Answers are not all received, and the final out-turn of this branch of the

accounts U therefore at present uncertain. With regard to the expenditure side of the oash-book, we think that existing checks would prove sufficient to ensure accuracy, and that we have no naeans other than those used by the auditor for certifying to the correctness or otherwise of such items. With

respect to these deSoienoiee generally the Board will require to take such steps as may be deemed prudent and necessary to secure the ratepayers from final loss, if possible, and to give such notice as may be requisite to the surety of the late Mr Bourke. Speaking generally we may say that the examination we have been able to make has revealed so many irregularities, as it appears to. us, as to make it a matter of some surprise that the books could have passed the audit inspector without leading to such investigations as would have revealed the true position of affairs, So far as we can ascertain the rate-books have

□ever been examined, and it seems to us that the same steps which we have taken might and should have been expected from ths auditor. We have to make the following recommendations Ist. That all rates up to the 31st December, 1890, demanda fur which have been made out, and which remain unpaid, or outstanding without explanations, on the 19th May, must be sued for immediately thereafter without further notice, in order that the true position of the Board may be ascertained. 2nd. That hereafter all moneys received be paid into the Board's banking account on ths day of receipt. 3rd. That the form of the cash book, ledger, rate

and receipt book can wi’h advantage be altered, and we will be prepared to make recommendations involving a complete and as we think improved system of book-keep-ing, should your Board request us so to do. 4th. That a list of outstanding rates corrected up to the night of the Board’s meeting ba laid on the table for inspection by the members, at least twice in every year. stb. That a statement showing ihe to'a s of each uncollected rate as well as the Board’s financial position be read at each meeting, and hereafter lai 1 on the table for perusal by members. 6th. That the outstanding list referred to in recommendation No. 4 be put before the auditor at each inspection for his certificate to be placed thereon. In conclusion the Commitee regret exceedingly the circumstances which have rendered tac investigation necessary. Mr Bright explained the position of the account, and then read the schedule [pence omittedj showing actual deficiencies ascertained :—M. Hutchinson £22 18s, C. A. DeLautour (on account Northern Investment Co.) £lB 18s, 8. Stevenson £ls 15s, Whitmore £4O 6s, Ormond £lO9 9s, Adair £69 7s, DeLautour (for D. lie id) £l9 7s, Land Company £228 10s, J. N. Williams £ll3 14?, P. Barker £95 I2s, W. Couper £2 16s, Caldwell £1 19s, A, Cooper £3 Is, T. Dickson £ls 7s, Cameron £l6 Ils, Hubble £1 3s, Currie and Hogan £2 17s, Nasmith £7 6s, Holford £1 13s, W. Graham £7 15s, Spence £l9 ss, Walsh £4 16s, Partridge £3 14s, King's estate £ll 15s, McLean £2O 15s, Tucker £36 17s, DeLautour (McKenzie and costs) £27 14s, J. N. Williams £lO3 15s, Nasmith £4 18s, Wingate, Burns and Co. (on the cement account) £25 3s, Nelson Bros, (cement) £BO, Napier Harbor Board (plant) £62 6s, Nelson Bros, (ooal) £2l ss, Seymour £6l Is, B. M. Somerville £1 19s, A. F. Somerville £27 7s, W s F. Somerville £7 159, S. Il Cooper £6 4s, T. Goldsmith £2, Mossman £2 7s, Tucker £44, Humphreys (sale of iron) £4O, A. Devery £2O 12s, Tiffen £23 12s, Sundry (per cash book) £BS 12s ; making altogether a total of £1,529 4s 2d. The items apparently deficient, totalling £163 2 4 sd, were [pence omitted]: —E. Cameron £ls 6?, Cattle £lO 2*, A. Campbell £9 Bs, T. J. Diokson £ls 7s, E. H. Henderson £6 Bs, W. J. Hamon £2 14a, Jobson £5 43, Johnston and Co. £4 2t, Loisel £6 18s, J. W. Matthews £6, D. D. McFarlane £B2 16s, b. Stevenson £35 8?, W. 0. Skeet £5 2s, F. Skeet £1 18s, Sisterson £6 Ils.

In reply to the Chairman Mr Robinson said the demands had nearly all gone out. Ihe Chairman said then they wou d soon know the exact position. He was very sorry that a report of this nature should be necessary. It was a serious position for the Board to face, as they found that some £l5OO or £l7OO which they thought they had yec to collect had apparently been received, but not accounted for. Cheques that bad been received were not accounted for on the books, and it was only by getting at the Bank deposit slips than it oould be seen how the sums were made up. The cash book and bank book did not in themselves show irregularity.

In rep y to Mr Arthur, the Chairman said there was a boud for the honest carrying out of the Secretary's work. After some discussion as to the bonds it was thought better not to deal with them at that stage. The Oh&irman said that on the irregularities first being discovered, the late Secretary’s brothei had been acquainted with the position of things. It was only for a small amount, and it was thought it might have been merely an oversight, and the deficiency would have been at ones made good *, but on farther going into matters they assumed serious proportions. For a time it was thought some means might have been found by the relations to prevent the ratepayers having to bear the deficiency, out eventually Mr Bourke (the deceased's brother) felt that he could not take the responsibility of refunding so large an amount, and sent the following letter:— “On careful consideration of our conversation yesterday, in which I was asked if I was prepared to commit myself to the payment in full of any deficiency that may be found to esist when a final balance is struck' of the state of the Harbor accounts, I can only at present say that until the exact amount of such deficiency (it any) is ascertained and verified beyond any doubt, I think it a litL'e unfair to press the matter. There is a limit to the amount it is within our power to find, and it must be remembered (hat no liability exists, and though we hive every desire that this unpleasant affair should be settled without loss to the Board, we can, not commit ourselves without knowing the exact extent of the deficiency. When this is placed before me and verified, I shall be able to state definitely what position we will take up.—l am, etc., P. H, Boxji4ke.” In reply to Mr Arthur the Chairman said the report gave the actual deficiency sn far as could be ascertained; of course every ratepayer who now appeared as a defaulter, but could prove that he had paid his rates, would increase the amount. He thought they were now compelled to adopt some means to try and secure the ratepayers against loss. They would need to get legal advice in the matter as soon as possible. A discussion arose as to the farce of having a Government auditor. The accounts, it appeared, bad all been audited by the Government Auditor, who came and went without consulting members ol the Board, and whose fees they had to pay, Members spoke strongly on that phase of the subject and there was an idea that if the deficiency was not made good in other ways there might be some claim against the Government, the auditor having certified the acoounte to be correct. Mr Shelton thought the proper thing was for a Committee to go into the whole matter, and ascertain in what way the Board could beat protect itself. If the money was not forthcoming, it placed the Board in the serious position of having probably to make default. There were several sources from which the money might possibly be recovered, and the sureties’ was one souroq. Bright suggested that the Government be communicated with, so that somq one could be sent on behalf of the Government, if necessary, to see if the investigation was properly made, but after further consideration it was deemed batter not to send the report itself in cose it were thought necessary to take action as against the Audit Department. The Chairman said the revelations made showed that every safeguard hid been broken through ; it was a mystery to him how the discovery had not been made by ths auditor. The question was raised bv Mr Bright as to what would be deemed sufficient proof on the part of who claimed they had paid their rates. Mr Clark thought they oould do nothing in the matter if a ratepayer could not produce a receipt or show some such proof as the bptt of his cheque book. After considerable discussion on that phase of the subject it was decided to leave the matter in the bauds of the clerks, who could make memoranda of all affirmations substantiated by reasonable proof. It was pointed out that the Board must act In a manner to satisfy those from whom it was expected the deficiency would be made up. It was decided to adopt the report, thanking the Committee for the great trouble they had taken in the matter. Mr Bright said that Mr Shelton and the Chairman had devoted a great deal more time to the ih-» vestigation than he had been able to do, as he lived In the country. The Chairman aud Messrs Sievwright, Clark, aud DeLautour were app inted & committee to go into the question of ascertaining by what mesas the Board oould be protected, Mr C'ark suggesting that the best legal advice should be obtaiued. Messrs Shilton and Bright were asked to continue to act as a separate committee.