UNCLASSIFIED SERVICES, VOTE 3-contd. under Treasury Authority and will be recorded in the accounts for 1925-26. The Treasury have asked that instructions may be issued to ensure that, in future, the exporter should be required to produce not less than two recent balance sheets in every case in which adequate information is not obtained from the reports as to his standing. From the circumstances of the case as now disclosed it appears that the losses were due mainly to the failure of the Department to institute inquiries as to the validity of the Austrian bank's guarantee, and to obtain status reports on the exporters and importers before sanctioning the guarantee. This omission seems particularly regrettable, as there is reason to believe that the importers in this case were intimately connected with the exporting firms referred to in paragraph 62 of my last Report, whose transactions are also likely to involve the Department in heavy loss. UNCLASSIFIED SERVICES, VOTE 5.-SHIPPING LIQUIDATION. Progress of Liquidation. 71. The extended powers granted by the Treasury to the Board of Trade, referred to in paragraph 64 of my last Report, have made it possible to hasten the settlement of many of the accounts of shipping companies and others, and to eliminate a considerable amount of unremunerative work in the examination of old voyage accounts. Under arrangements accepted by the Public Accounts Committee in the earlier phases of the Ministry of Shipping many of these are not supported by vouchers, but are passed, after scrutiny, on the certificates of approved auditors. These voyage accounts record both expenditure and receipts, and consequently, when they are passed and incorporated in the Appropriation Account, which is constructed on a basis of gross accounting, the figures of expenditure and of Appropriations in Aid are alike increased, although no cash transactions have taken place for a considerable period. Thus the settlement of a large group of cases with one shipping company resulted in a charge of some 4,500,000l. to subhead G. in 1924-25, and a corresponding credit to Appropriations in Aid. It will therefore be seen that the cash transactions within the year of account are very much smaller than is indicated by the mere figures of the Appropriation Account. Negotiations with Canada on certain outstanding points are still proceeding. The amounts now outstanding with other Dominions and with Government Departments are small, with the exception of a claim of approximately 350,000l. against the Board of Trade Petroleum Pool Board, which it is understood will be settled shortly. The accounts between the Department and Foreign Governments are, where possible, brought into general agreements between the Treasury and those Governments, several of which have already been arranged. UNCLASSIFIED SERVICES, VOTE 5-contd. Subhead J.-National Shipyards. 72. The general position in May last was explained in the statement submitted by the Department to the Public Accounts Committee (Appendix No. 19). Since that date certain electrical plant, mains, sub-stations, etc., have been sold to a local company for 5,000l., payable within 15 years. Work at Beachley Power House was closed down on 30 June last, and the station placed in charge of a care and maintenance party. Negotiations are proceeding for the disposal of the properties remaining in hand :-Beachley Power House, Chepstow Water Scheme, and certain railway sidings. The Treasury have recently approved of the Office of Works endeavouring to sell the housing properties, which that Department took over on 1 April 1925, any proceeds to be appropriated in aid of the Shipping Liquidation Vote. Sales of Ships on Deferred Payment. 73. The details of subhead M. on page 508 show that 2,551,2571. 4s. 2d. was received for instalments on ships sold. Of this amount, 218,6851. 18s. 11d. represented interest upon outstanding balances. On 31 December 1925 351,6951. was still outstanding from the purchasers of 16 Government-owned ships, other than those which had been foreclosed upon and resold as explained in previous years. The amount realized on this latter group at the close of 1925 was less by 864,000l. than would have been received had the original sales been completed, but further receipts amounting to 38,000l. are expected. During the year a sum of 453,5251. was received on account of the sale of ex-enemy ships taken over under the Peace Treaty on behalf of the Reparation Commission; of this amount 76,5691. was for interest and stores handed over with the ships. On 31 December 1925 there were balances outstanding on 12 of these vessels amounting to a total of 1,415,1701. Difficulties arose in certain cases, in the settlement of which some comparatively small losses on the original sale prices were incurred. Other similar losses are probable in the future, but I understand that these are unlikely to affect materially the balance figure quoted. UNCLASSIFIED SERVICES, VOTE 6.-RAILWAY AND CANAL (WAR) AGREEMENTS LIQUIDATION. 74. The total expenditure to 31 March 1925 arising out of the Government possesion of railways is shown on page 511 of the Account. The expenditure of 195,4941. in the year under review consisted mainly of adjustments of the periodical payments on account which had been made to Railway Companies in previous years in respect of deficiency of net receipts, etc. Further adjustments, which are not capable of precise ascertainment at present, will be necessary as the result of the investigations of the Companies' claims, and a sum of 100,000l. has been provided in the Vote for Railway and Canal (War) Agreements Liquidation for 1925-26 to meet the estimated liability arising in connexion with these claims in that year. UNCLASSIFIED SERVICES, VOTE 5-contd. Reference has been made in my previous Reports to omnibus settlements of outstanding accounts which the Ministry had negotiated with some of the Companies, with the approval of the Government Accountant and the Treasury. Various similar settlements, in increased numbers, have been effected during 1924-25, and in each of these cases I have examined the reports made by the officers of the Ministry who conducted the negotiations. I have no criticisms to offer in regard to these settlements. The normal procedure of investigation, as explained in previous years' Reports, has been followed in connexion with the remainder of the companies' claims disposed of during the year. A scrutiny of the claims, so far as they have been examined and reported on by the Government Accountants, and of the reports thereon, has been carried out by my officers with satisfactory results. SERVICES ORIGINALLY FINANCED OUT OF VOTE OF CREDIT. Exchange Account. 75. I have referred in my previous Reports to the Exchange Account, which was opened to record the transactions connected with the provision of funds to meet the liabilities of the Government in the United States, and was subsequently extended to include other operations for the purpose of providing means for making payments abroad and regulating the foreign exchanges. The capital charged in 1915-16 to the Vote of Credit for the above purposes was 53,075,0491., of which 20,000,000l. was repaid to the Exchequer in 1920-21, leaving a balance of 33,075,0491. as working capital. From information as to the approximate assets and liabilities of the Exchange Account at 31 March 1925, which has been furnished to me by the Treasury, it appears that the estimated value of the assets, which included cash held by the Paymaster-General, a currency balance abroad, and various classes of securities, was approximately 4,100,000l. less than the total liabilities. Exchequer and Audit Department, 6 February 1926. Malcolm G. Ramsay, Comptroller and Auditor General. |