wmmrwso Publi

Continued from Page 1. l

I 99911 kept. but were destroyed from

entitled "Th9 Olhldl‘ way-Act." Th, nmountwwhich was slloted to prlncd Edward Island by the Domin- ion Government under this Act, ap- p,“ to have been fully. taken up, Th, city of. Charlottetown and the To" of Bummereide having then been allowed to participate in the p1“, m order to ensure the expan- diture of the full Federal allotment within the Province.

ruaponsibility for hmdry Cash Receipts

m his evidence, Mr. L. B. McMil- lan, Deputy Minister of Public Works assumes full responsibility for cash‘ receipts relative to refunds, returned cement bags, materials sold, etc, and @1115 is borne out by the statements (y! the other witnesses examined. Mr. McMillan also admits responsibility for the lack of records in respect to Highway improvement cash receipts “,4 disbursements, which has result- ed in ens present general confusion m nunnectlfm therewith. No cash

3To___”“ ro-rmsrJcEEFrFc-Trliic-Tr" Market reports fumlshed by Green-

shields a 0o. Montreal, to stews-rt Jane, g 00., 99 Greet George Bl-ffiti-

Charlottetown. MONTREAL Abltlbl ..... 421 ‘erta Pacific Grain inn! stoe ... ... ... ... .... 2%

Bramble ... 40%

n aim I3. C. Power ... . ... 45W Building Products . .--- 37 (fnnada Car . -- 3553 Canada Cement ... 181i Canada Power and Paper .... 19% (lanada Brewng . . 6% Dominion Brldgn . 73’.

Foreign Power Securities . 33 Fmser Company .....‘ 15% General Steel Wares . 14 Home Oil . . . . . . . .. ... 850 ImpcrlaIOLl .. . 29% Industrial Alcohol 8 International Nickel .. 42% International Pctrlocum 22 Ilassey Harris 37 lifonirealPcvwer 150 McColl Frontenac 26%

National Breweries 82's

National Steel Car ... ... 70 CEJX-lflfl. Bro-tic: ... 54 Oarlada Melting 11H Dominlon Tar 2'.) Farrlnus Players . 50% Norancla. .. .. 39H Power Corporation .. . ... ‘av. Price Bros.‘ ...-‘...- ... 83 Quebec Power Z 6‘! Sliawllugan I... ... 78',‘ mrclterc ‘ 2n n rel of Canada ‘... 4s»; si-cl of Canada’ Pidt. as lI,i'ilOll5._. .. {i7 Winnipeg Electric _ ,4:

NEVWIOILK American Can 152 1 American Radiator 38’-

Alleghany 32‘. Atlacmda ... ... ... ..... 75%

llrndix Avlzilon ... 5i

iwnsoliclatcdffras . 129%

I‘-()l1lilll0l‘l Stores ..... 25%

ll' "fictional Harvest . ... 103')‘;

lljicrnational Hydro Elec. ... . 43%

l-irlmcoott Copper ... 05'“-

lilrctrlc Power and Light ..... 92hr

llwntgoniery Ward ... ... 40%

Nagara l-ludson Power .. 2114‘ Pry-amount Players ... ... 73 lrzilck do Ford... ... ... 48% Facr ti: Co. B. ... ... 29's

Fido .. . . . . . . .. 57'; rlanelard Oil oi’ New Jersey .. 79 Fferling securities A 185s Yellnlv Truck ... ... 27 f‘ P. R. 212 Utrirrsl Motors ..‘. ' 511.5 L. sstccl ... 1947b

BANKS

rank of Nova Scotia . ... V927 Bank of Montreal ... 300

395

Jlsmla “Jingle lays!

Mullins llll rolls and unealiaiea». i

We bale the lnaetfead faeyoa-

n l

5°“! V" "M. nor record of empty! blsl returned. materials sold, m. Temporary melnoranda relatiagto these matters-were alleged to have

tlmefotime. it ia said as what Mr. Mdllilllh Chill hll "lllbflity" for the corresponding funds was disposed of. In any event it appears that nn pgf- manentrecords of such transactions were made, or at least.- none were brought to light during the present enquiry. ‘There was consequently lit- tie that could be audited, in the sense in which the term fa generally und- crstood; all that‘ could be done in respect to theseyarious transactions was‘ toiry to piece them together from such sources of information as were available-a. rather unsatisfac- tory and possibly not _ very reliable proceeding. .

Books of Account and General Method‘ of Handling Expenditure i and Receipts

Expenditure relating to Highway Improvement Account began in June 1,920. with the commencement of op- erations by the Department of Pub- lic Works; and lie/order that the ex- penditure in‘ respect thereto, subject to “Federal-Aid? might be clearly distinguishable from the Depart- ment's ordinsryactlvities by the Do- minion Government Auditors. a eel): arste Bank Account was opened at the Bank of Montreal.

Evidently the intention was that all payments should be made by means ofwheques, which were to be. charged or entered in s special jour- nsl ledger kept for the purpose in _thc Public Works Department. It would likewise seem to follow that if the records were to be kept clearly and accurately all credits or receipts pp- pllcable to Highway Improvement Account should have been similarly reflected in the same ledger, or at

therefore, and the corresponding funds deposited intact in the Bank. It is} matter ofrecord that dur- ing the first year or so this method of dealing with expenditures and re- celpts appears to have been consist- ently adhered to. In fact there seems to have been no variation in this re-

least in e. special revenue account -

slwct at any time. 1n so far as what filly be described as regular or rou- "119 "Ilenditures or receipts were concerned. ‘rliat ls-to say, Qlpggdit. urec relative to the ordinary opera- tions of Highway Improvement Ac- count were pald by cheque, and re- eeipte on account of "Federal Aid," sales of debentures, Treasury cheques, etc., were all deposited intact.

~.- -- w...‘ ._.

i Itlseems to have nctvinfrequently hI-Pllened, nevertheless, that cheques received by the Public Works Department‘ for miscellaneous items. such as payments for empty cement sacks, materials sold, refunds, etc, were not deposited by Mr. McMillan, who apparently received and was re- sponsible for all such funds. In some cases cheques of this nature, payable M! the Department, were cashed by Mr- McMillan and portions of the Proceeds retained by him, as he now states, for the purpose of making certain payments, which, it is alleg- ed, it was considered inadvisable to pass through the records in the usual way. In other instances, notably cer- tain cheques received from Canada Cement 00.. Ltd, in 1929 and 1929, cash was obtained therefore from the Bnk for the full amount of eseh cheque and retained by Mr.‘ McMil- lan; one such cheque. amounting to $485.90 not having been accounted for until considerably more than a year had elapsed afteriit had been cashed. Apparently there were charg- es to be ‘met for cleaning and prepar- ing bags for shipment, and it is stat- ectthat it was for this purpose that the practice of so retaining such funds‘ first - originated, although it would appear that some, at least, of these funds were later on applied to otherdepartmental uses, viz: bonus- es paid to Miss Hogan and Mrs. Gal- lant.

Funds Received and not Accounied for within Reasonable Period

‘these various cheques received from time to time from Canada Ce- ment Co., Ltd., are referred to in de- tail in the evidence taken under The Audlt Act by the Provincial Auditor. but for convenience I shall summar- ize them as follows, giving particulars of the manner in which each was

Date of Cheque Amount l. 2.’ March - m:

March ‘sin. 192s . . . . . S

V~l

_ , s June 14th. I929

March lstf 1024 ‘January'l9th.' ms _ February 14th. i925 .

April, 12th. 1920.. Novf27th, mo

t

. February 10th. 1929 .. ‘ e

12. February 10th. 1929 .

13. February 1st, 1929 . 6 -

Regarding cheque number 12 in the foregoing list, ‘ questions relative thereto and Mr. McMillan! replies will be found in copy of the evidence, principally on pages ‘I. l2 and l4.

It will also be noted that cheque numbered l3 in the foregoing list was held by Mr. McMillan from early in Ftbflllfyflli", until-he cashed it on May 6. The Bank of Montreal then called attention to it, as the Highway Improvement Account had been clos- ed since iiebruary, 1929, and the Bank was apparently in doubt astoMr. Mc- Mcldlllan’: right to endcreeon behalf of the Government. Enquiries fol- lowed, with thrresult that Mr. Me- Mlllan ‘refunded $827.14, represent- ing some four cheques thathe had ‘previously received but had not sc- counted for, as fellows:

Canada‘ Cement Oe- L“- chequedalted‘ ma. to.) 1m 9-11 cheque dated Rb. i9. 192d 468.80 cheque-dated Nb. i. 192i 449-90

Belicia Ina. Ltd». ch09!" ' relating to 192'! 5000"!“ -but. apparently received

j..." in m; ma:

. _ $1,042.14 noes amen disbursements < gtgted to have been made out-of IWNQQI "3 PW"? cheques but for which no vouchers have been subl- l 218.09

Amount refunded 997.14

.1. will thus be mirtmtneaiou naW Lid" (Q1: $102.22‘ ‘ll also retained by Mr. McMillan: and

“mounted for until more thana

dealt with:

How Dealt with by Mr. McMillan ‘

Dec. 5th, I921 l,'l'l4.00-'Deposited in full Feb. 4, 1992. botmDepoalted April 2i. 1922. assoc-cashed May 26, 1922, and lllll de- posited Nov. $112.07 said to have been paid out for cleaning and shipping bags. 2,5A‘i.00—-Cashed March l7. 1923. and $220.00 deposited, balance said to have been retained to pay sundry expenses of

18. 1922.

hipment.

lilac-Cached July 12 and $100.00 deposited. Balance said to have bccn retained to

pay sundry charges and expenses.

Lllllbfl-Dcposlted April 5. 1924. -l3.50-No record.

p l,5'l5.20—Cashed March 13, 1925 and 81,093.09 deposited. Balance said to have been

_ retained to meet sundry expenses. IAIZBO-Included in deposit of’ May 2s. 19:6. ‘ 2,646.20-—-$2,5’70.00 deposited Dec. .‘i, 1920, _the bslance~$76.20 having been retained, it is said, to pay certain charges in

his shipment of bags.

oil-Cached March 3. 1929. and account-

d for in refund of $827.14 made in

May 1929. canto-cashed March a, ma. and accounted _ for in refund made in May, 1999. 448.00—cashed May 6, 1929 and accounted for in refund made in May 1929.

cheques above noted were so retain- ed will be found in the evidence, which, briefly, is to the effect that he considered the Bank Account in- correct and was awaiting an oppor- tunity of having it. checked.

Ha disclaims any intention of hav- lng planned to retain thteso funds permanently, stating positively under oath that he would have accounted for them in any event.

It is likewise claimed by Mr. Mc- Millan that unexpended portions of moneys retained by him out of the foregoing cheques were later deposit- ed in the Bank, which may possibly account for some of the unexplained deposits, to which reference will lat- er be' made.

In addition ib the amounts receiv- edjrcm the "Canada Cement 00-. Ltd, further cheques and cash ply- menta appear to have been received by Mr. McMillan in respect to H1811- way Improvement Account from oth- - aourcea-some whlchwem deposited intact and in‘ other ina retain- se. u he states. to reple. the wh fund. which-it ll Allard it w m- sidered necessary to ‘maintain in the. office, from which to make sundry disbursements from time to time. Whether or not all such receipts are fully accounted for in the statement referredtowit-ia impossible to say. ithasbeencheokadascarefullyaa pang“, butcwlng to unfortunate 4mg of departmental 890"” W11- gagging all ‘these items. oomph}! Wr- iiloation at this time cannot be made.

»/

am unla- ulna at in ~ ‘rheliiam of uteri credited initha nlblio Accounts ‘of 19f as "refund

your rue eloondreld 5"‘ ‘m’ guutowhy this andthedfllf.

i‘ , . - .

c! Accountptransactlons. He also states

Balanceorl

time. and a full explanation in re- spect thereto will be found in me not. dmce taken before the Plflvlnglfl

Auditor. I

i Ullfllllained Deposits and "Glfla" of Money '

Ezrainination of deposit slips, which were secured from the Bank, disclos- ed items thereon the exact origin of which it is not possible at present to EXPIB-lll- Mr. McMillan in his evi- dence states that he was in the nab", of cashing outside cheques from the cash funds which he had retained in his office, in the manner already at. scribed, and that some of the item; on the deposit slips referred- to "n. doubtediy refer to cheques whinn came into his hands in this manner, I" lddlf-lvll. Mr- McMillan also claims w have deposited funds which did not belong to the Government, i.e., funds which had come to hiln as presents from friends

and that this latter source or revenue accounts very largely for the apparent surplus receipts in m. 5P9"- W H-ilhwly Improvement Ac- count.

It will, of course, be obvious to you that if extraneous funds, such sa the "presents" referred to by Mr. McMll. lan, actually found their way into the Bank or were placed with funds be- 101191113 t0 Highway ‘Improvement Account, and subsequently deposited to the credit thereof, a surplus of min. celilmeous deposits and disbursements ‘over nllscellaneou receipts would au- i-Omii-iflllly be crested. At the same, time there is no guarantee that there , was not additional receipts from sources of which no information has so far been disclosed, which would ac- count partially at least for the sur- plus which now appears to exist. For instance, lf there were additional sales of cement or gravel, of which nothing is at present known, amount- ing to say $1,000.00, such receipts would at once explain and reduce the apparent surplus or unexplained de- posits by a corresponding amount.

With reference to the gifts or pre- sents of moneywhich Mr. McMillan refers to in his evidence, it will be noted he states they were confined entirely to Highway Improvement

that he turned these monies over to the Government and derived no per- sonal benefit therefrom in any way, .all of which may be as be Iryl. It will be obvious, however, that since Mr. Mcliillian apparently did not de- sire to retain such funds, the better course would have been their non- acoeptance under any circumstances. By the mere fact of his having sc- cepted such gifts, even though the funds were turned over to the Gov- ernment, Mr. McMillan would appear to have placed himself in a rather compromising position, in so far as the donors were concerned. The lat- ter could not be expectedlto know what disposition Mr. lifcMillan war making of these cash presents and consequently were likely to assume that he was under obligation to them.

No Records Kept of Miscellaneous Revenue and Expenditures

As already pointed out and in ac- cordance with statements of witnes- ses examined, practically no records were kept by Mr. McMillan in re- spect to refunds relative to Highway Improvement Account, sales of empty cement sacks, materials, etc, all of which he admits in his evidence. There was no cash book in which tlle receipts of these funds was record- ed, and depositsand cash payments were likewise not. entered, so that there are no departmental records or accounts/which can be examined with a view to ascertaining the ac- curacy of‘ the receipts and disburse- ment contained in Mr. McMillan! statement. It may be that this state- ment is accurate,- but. it is not pos- sible to verify it at the present time.

It is indeed strange that no record was kept of funds which pan into so large s. total within a comparatively few years. True, it is alleged, such funds were looked upon as "extraor- dinary" revenue, which for purposes of the subsidy payable under the "Canada Highway Act," it was con- sldered advisable to deal with spec- ially, but. apart from whatever may be said regarding the motive, it is clear that the receipts and payments in question should have been careful- ly recorded and promptly accounted for. As it is, public funds were re- ceived and paid out, concerning which there is no record in the Public Ac- counts.

Apparent Surplus Funds

With regard to the reality of the surplus indicated, there appears to be little doubt of its existence at the present time. In his evidence Mr. McMillan has ldnlittedthe possibil- ity of errors having crept into the de- partmental ledger. butonly a detailed cheek of the entire llpenditure from ill) until the account .waa oloaed would reveal suoh "mistakes, provided any were made. ‘rhea-i are approxi-

lvbeare to relate to the dlfferencelwork of making a re-check of these found in the Bank account at that’

records and duplicating each entry

‘witlrthe Bank statements would fee.

quire s great deal of time and in- volve considerable expense. This can

he done, nevertheless. 11' it. is desired.‘

Meanwhile a. surplus apparently ex- ists, strange as it may seem. That itis not a satisfactory state of affairs ls obvious, as it opens up too many avenues for speculation as to its sc- tual origin and purpose. On the oth- er hand. it may be exactly as Mr. McMillan claims, however unusual his explanation may appear. '

In any event, there apparently is no shortage of funds in so far as re- celpts which came info Mr. McMil- lan‘s hands during the period under review can at present be traced. lie admits quite frankly that he was careless ‘and that he retained. Gov- ernment funds" in his possession long- er' than he should have, but states under oath that there are no monies belonging to the Government for which he has not accounted.

Cash Disbursements

The practice of disbursing cash without vouchers is entirely inexcus- able. Indeed it was highly improper to have paid out cash under any cir- cumstances. All the payments which Mr. McMillan claims to have made should unquestionably have been dis- bursed by cheque in the regular man- ner. That funds were being so paid, out, however, appears to have been known to Mr. Shaw and Mrs. Gallant, and according to Mr. McMillan, by the several Ministers who were suc- cessively in charge of the ‘Depart- ment during the period in question. These cash payments however, are said not to have been known to the Provincial Auditor, the present Pro- vincial ‘Treasurer or the Deputy Treasurer.

Ballent Features

To the writer the most salient features in respect to this whole mat- ter. so far as Mr. McMillan is con- cerned, appear to be-ss follows:

<1) ‘Phat’ he failed to keep proper records of public monies entrusted to an care, with the resultant chaotic condition of these funds:

r2) That he cashed Government cheques, instead of depositing all re- ceipts intact;

i9) The rather irregular manner in which certain disbursements were made; - <4) The failure ‘of Mr. McMillan to disclose the fact that he had $927.14 of Highway Improvement funds in his possession, when the Bank Ac- count was closed in February, I929. which amount was acknowledged by being refunded after enqurlles relat- ing thereto had been commenced in May lest; and

(5) That in his capacity as an of- ficial he has apparently been in the habit“ of. receiving cash presents from unnamed persons or firm from time to time.

These would appear to be the most serious phases of Mr. McMil- lion's conduct... There probably are other features open to criticism but the foregoing summarizes what are perhaps the most outstanding.

It must be admitted, nevertheless, that Mr. McMillan does not seem to have been solely responsible for all these conditions. I-Ie was primarily responsible, it is true, since the funds were personally handled by him, but a. measure of the responsibility would likewise appear attributable to the several Ministers and officials, who were aware of what was beingdone or whose duties required that they should have had such knowledge. The entire matter requires to be studied in the light of the evidence taken before the Provincial Auditor. tinder “The Audit Act." The forego- ing is largely a summary thereof, and as such, together with copy of the evidence, is submitted for your con- sideration. -

Yours very truly, (era) nowALn-s. J. HART Chartered Accountant Charlottetown, Prince Edward Island, June 19th, 1929. Hon. Albert C. Saunders, Premier, and Attorney-General of Prince Edward Island. Dear Bir: Herewith submitted is a supple- mentary report relative to the inves- tigatlon in respect to certain matters concerning Highway Improvement accounts, Department of Public Works. Iliollowing my report dated June 19th last, a further enquiry, in accordance with your request, has been made and a. copy of the addi- tional evidence taken before the Pro- vincial Auditor is =appended hereto for your consideration. , _ The chief matters dealt with in the recent enquiry may be summarised as follows: - ~

(a) Method followed by Mr. McMil- lan in handling departmental cash;

.(b) circumstances relative to the of Canada Cement CUI- panyb cheque for $448.00 on May 6th and the clearing of a number oflink of ‘Montreal bills thmllh the Bank of Nova Beetle-on the following day; (d) Amount of funds on hand when