H—3B

perhaps, part of the atmosphere was the need to maintain revenue-producing units in operation. We realize also that the Comptroller suggested a reference to the SolicitorGeneral, that the Minister very properly acted on the suggestion, and that the SolicitorGeneral supported the Comptroller's recommendation that the Minister should exercise his discretion under section 244. We think that both the Minister and the Comptroller are fully entitled to .rely on the Solicitor-General's opinion. 798. The comment we feel justified in making at this stage is this : We think that a search warrant should have been executed on the company's premises before any decision about acting under section 244 was reached. At a subsequent stage monthly manufacturing statements were produced, which indicated, prima, facie, that the secretarymanager knew that the revenue was being defrauded. If these sheets had been before the Solicitor-General, he might have made a different recommendation. 799. The decision having been made to effect a settlement under section 244, further investigations took place, and the amount of duty short-paid was determined at £9,500. This amount, with the penalties of £l,OOO, £5O, and £25, made a total of £10,575. By letter of the 23rd June, 1941, the Comptroller informed the company's counsel that the Minister had decided under section 244 that he was prepared to accept in full satisfaction of all the penalties incurred by the company and by George and Charles Murtha the sum of £1,075, provided that deficient beer duty, amounting to £9,500, was first paid up. This amount of duty was subsequently reduced, after further discussion, to £9,000. 800. On the 14th August, 1941, the company wrote to the Comptroller, forwarding £3,000 in settlement of all the fines and on account of the duty. The letter asked for certain concessions, including a spreading of payments over three years, though the company stated it proposed to liquidate the debt as soon as its finances permitted. On the 18th August the Comptroller proposed to the Minister a settlement which involved a postponement of the payment of the balance of duty and fines amounting to £7,075, without interest, until October, 1943. On the 22nd August, 1941, the Minister approved this settlement, which was then communicated to the company's solicitors. 801. The company then proceeded to seek a refund of income-tax and obtained in all £1,915 13s. sd. The company also made inquiries for two new brewers because the Murthas were to be dismissed. 802. The company proceeded with arrangements to enable it to pay the amount due in full. The request for postponement had been made because the manager of the Bank of New Zealand was not at first disposed to recommend increased accommodation. When, however, the bank was asked to join in a bond to secure the extended payments, the Head Office of the bank, after being urged, towards the end of September, 1941, by a director of the company to expedite the matter, agreed to increase the overdraft. Notice of this decision was received by the company's solicitors at Greymouth on the 2nd October, 1941, and, on the same day, they sent a cheque for the balance in one amount to the Customs Department. This letter was received by the Customs Department on Saturday, 4th October, 1941. 803. On the same day (4th October, 1941) George Murtha interviewed the Minister of Customs in Wellington. The Minister informs us that he has no record of the interview, but that he recollects advising Murtha that he would not alter his decision as to Murtha's dismissal, and that he then referred Murtha to the Comptroller and requested the Comptroller to interview Murtha with regard to any other matters which he wished to raise. 804. Murtha produced to the Comptroller copies of monthly manufacturing statements, prepared at the Reefton Brewery, and subsequently forwarded to the company's head office at Greymouth. These documents of the company were found by the Comptroller to constitute prima facie evidence that the secretary-manager of the company knew that the company was defrauding the Customs. 805. On the 6th October, 1941, the Comptroller acknowledged the company's letter of the 2nd October, and sent a receipt for the balance of duty and fines.

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