C—B

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[Details not supplied by Mr. O'Conor.] The full insurance on the vessel, valued at £10,000 or £11,000, was not' entered in that charge. 2,866 tons 11 cwt. of coal is transferred to the mine account at 10s. a ton, but note that it isa deduction of 10s. a ton on the sales of the company delivered at the ports I have named, and which deduction is given to mines account, not being coal sales f.o.b. at Mokihinui. This allowance is made for the purpose of this account to the mine account, taking all the balance to the credit of the boat—namely, an amount varying from to as freight. [Amounts not supplied by Mr. O'Conor.] It does not appear to me that the commissions paid to Johnston and Co. have been deducted from these, but I am not certain upon the subject. lam certain that the coal consumed by the steamer has not been charged as far as I can see by an examination of the book. Her consumption was 10 tons a day, and for sixty days that would be £300. In December the vessel was run upon the rocks at Mokihinui, and damage done to the extent of £500. With great difficulty she was brought over the bar to the Sounds, where some temporary patching was effected, and she went on to deliver coal at Napier on the sth January. On the 7th January, long before the balance-sheet was prepared, she had to be placed upon the slip, and the accounts for repairing that damage are, I think, about £500, an amount which ought to have been charged under the articles, and fairly charged, against the boat, or against the expenditure for the year, for it was a contingent liability which occurred during the year. There is no sum for depreciation or wear-and-tear on the boat. When the boat was put into commission she was then just finished and everything in her was comparatively new, and her depreciation was very rapid. There was no share of the cost of management charged against the boat in that account. There is no interest which figures in the expenditure here —interest on the overdraft, £433 2s. Id., contracted by the company in order to purchase the boat. I think I have shown plainly that the receipts on account of the ship "Lawrence" have been dishonestly stated, inasmuch as they have been added to by the addition of what is really the income of the company, and nothing like fair freight allowed. If the account had been made up in a fair way to show what the boat was earning, I would not have objected. I have shown that was not so, and that the allowances are absurd. I made at the time a calculation which I now give to the committee with regard to the approximate trial for a separate profit and loss on the "Lawrence's" working account for 1890, and also for the gross business. [Details not supplied by Mr. O'Conor.] Johnston and Co.'s commission does not appear to me to be in the account. The advance to the boat, for which I charge the interest, £433 2s. 6d., was for money actually obtained by the company for the purchase of the boat. That is one side of my trial balance. I give credit for the whole of the freights as far as I can get them, from my abstracts taken from the ledger and balance-sheet. This would leave a debit balance as against the boat of £2,684 ss. lid. Now we will pass to the " Terranora," which was chartered by the company or engaged at 15s. a ton to carry coal. The entries here (company's balance-sheet, 1890) are £1,958 10s. 3d., less freights, &c, £1,396 3s. 4d. —£562 6s. lid. That sum is arrived at in the following way : [Details not supplied by Mr. O'Conor.] Last item is for coal delivered at Wellington. I claim that this item has no right to appear in the balance-sheet. The coal was not delivered until the 9th January, and the freight was not due until that date. [See the heading of the balance-sheet and the certificate of the auditors.] I want to know how men calling themselves honest can issue such a balance-sheet, and the auditors append their signatures to such an account. If a balance-sheet can be made out like that, and you take nine days out of the following year, why not take the whole of the year ? It is merely a question of degree. In the first instance the freights are taken as a credit, and in the second instance they are taken as a debit. The next item is the transfer of the " Terranora's " account to the mine account, and forms a part of the fictitious entry for receipts for coal sales f.o.b. Mokihinui. Johnston and Co.'s commission on this £1,958 10s. 3d., at 2J per cent., is £49; insurance on the coal, £9 Is. 5d.; freight on the coal, Mokihinui to Wellington, £114 3s. 7d. The January coal is a deduction also. I have said all I wish to say with regard to this account. I have shown you that there are many misstatements, and I shall show another one which was necessary to carry out the fraud in the balance-sheet. There is an item in the assets, " Railwayand equipment." I will call your attention to this : that, if there is anything a company as trustees are bound to do, it is not to mix the ordinary expenditure with the capital account. The way in which the great frauds in the other colonies occurred is by disguises in this way, making it appear that a profit was made by paying the profits out of capitalaccount. I will call your attention to the way in which this was made up. The steamer "Lawrence" entered in the balance-sheet as plus expenditure less freights, &c, is the next false item. It would be impossible to make that statement as it is if the steamer " Lawrence " was really entered " plus expenditure less freights," because it is shown that the expenditure is [amount not supplied by Mr. O'Conor], and the freights and charges [amount not supplied by Mr. O'Conor]. It is quite plain that that £10,772 19s. 3d. could not be arrived at by any such process as that. I will tell you how it has been arrived at. The "steamer 'Lawrence,' plus expenditure less freight," is arrived at from the expenditure shown in the balance-sheet. I say on the face of it that is a gross misstatement, and it is no wonder that I used the language I did before a meeting of shareholders and a meeting of the directors. I call your attention to only one item that is omitted here that evidently shows that there was no attempt to fairly state the "plus expenditure less freight." There is an item £433 2s. Id. charged by the bank for interest against the boat. That is not charged against the " Lawrence." Is there any share of the management of the company charged against the "Lawrence"? Not a farthing! Therefore I say that the item, "Steamer 'Lawrence,' plus expenditure less freights," is utterly false; The item owing for coals, £1,423 16s. 6d., is also a false item. It takes credit for the amounts 1 have mentioned for coal delivered at Napier on the sth January, and Wellington on the 9th January respectively. The reason why I draw attention to these particulars is because I want to