26 March, 1924.]

are

22. That is a new figure?-Those are the figures shown in the estimates now before the Committee. The figures to be brought into account after the close of the coming financial year, that is, after 31st March, 1925, estimated at £3,000,000 expenditure and £9,000,000 receipts. The total of those is £11,000,000 and £19,500,000; and, in addition, expenditure and receipts have been brought to account during the financial year which is just closing which would bring the figures in excess of those mentioned by Mr. Samuel.

23. The excess is for the year ending 31st March, 1924. Those are the figures you refer to as being slightly in excess of Mr. Samuel's figures?-The grand total figures are slightly in excess.

Mr. A. M. Samuel.

24. The number of accounts, live cases, which I calculated when I made this report a year ago, was something like 8,000, each of them containing hundreds of items, and, in addition to that we had 3,000 or 4,000 additional accounts of

[Continued.

various descriptions, mainly Voyage accounts?-Those figures are correct.

25. What have you now?-Remaining at the present time, something between 6,000 and 7,000; 6,700 is the figure to-day.

26. They are live cases?-Those are live cases, and, in addition, there are 1,561 voyage accounts; something under 2,000 Voyage accounts in all.

27. Are you experiencing the same difficulty in getting the accounts lodged with you? I think we may say practically all the accounts are now lodged. There were three or four outstanding a few weeks ago, but it is quite possible that even the last account has been lodged.

28. Were those outstanding from nonBritish persons?-No, they were from shipowners in this country.

29. Therefore the position has greatly changed for the better in the last 11 months; you have got your accounts in? -There is a considerable improvement in that respect.

30. What chance is there of your clearing those off either by agreement or arbitration or compromise within, we will say, a year from now? What proportion do you think you can clear off? I think practically the whole of the work which is not subject to proceedings in the Courts will be cleared by the time the accounts are closed for the ensuing financial year.

31. What date will that be?-That means by about October, 1926.

32. That is a great advance?-There will remain at the close of the financial year a large number of cases before the different Courts.

33. What do you call a large number -involving a large amount?-The bulk of the £3,000,000 expenditure I referred to is my estimate of the expenditure that we shall incur in meeting claims of that sort.

us.

34. Claims against us?-Claims against

35. We are resisting claims?—Yes. 36. Fighting claims?—Yes.

37. Do you find it better to fight them in the Courts or by arbitration than to come to some compromise? It is the general rule of the Department to compromise. We compromise everything that it is possible to compromise. Where we are fighting cases, we expect to win in nine cases out of ten, if not more.

38. Who are, for the most part, the persons or firms or Governments making these claims against you? Are they foreign Governments in any great

26 March, 1924.]

[Continued

number of cases? No. The foreign Government cases do not come to legal proceedings.

39. How do you settle them?-There are legal proceedings pending in a few cases where Russian accounts are cerned, but accounts with the Allies are settled by negotiation.

con

a very

40. One point-and it is not important point-about the staff, because I am sure the Committee do not bother much about the staff so long as the work is done properly. Do you think you have got the staff down to the lowest possible dimensions?-I am quite certain the staff has been reduced as much as it is economical to reduce it in view of the large amount of work outstanding and the large sums involved. The total staff at the present time is 142 as compared with 192 at the time you made your investigation.

41. Have you had any help from any official of the Treasury to hasten up the lodging of accounts by people with whom we have transactions?-A good deal of assistance has been given to us by the Board of Trade Solicitor's Department in discussion with Solicitors on the other sides to get in accounts. It has not been necessary to seek assistance from any outside Department.

42. One other point. You remember there was an Act called the Indemnity Act which enabled our Government to be absolved from liability if claims were not put in by a certain date. How has that Act operated?-We have endeavoured to take the fullest advantage of that Act, but, unfortunately, the Claimants have not in all cases taken the same view as to the meaning of that Act that we have, and it has led in certain cases to litigation, and doubtless there will be one or two test cases decided in the near future.

43. Have you any observations to offer to the Committee on the operation of that Act and any recommendations to make in connection with it which might possibly save the Government expense?-I do not think it is possible to do anything at the present time. The view we place upon the Act is the view, we understand, was the minds of those who framed the Act, and we have every hope that the Courts will support the view we take.

Sir Fredric Wise.

nי

44. Was it the Comptroller and AuditorGeneral who suggested the alteration in

your accounts?-The alteration as regards the way in which the receipts are shown? 45. Yes? No.

46. Who suggested that?-That was my suggestion.

47. Does it lead to economy?-Everything which simplifies accounts in connection with the Liquidation Service or saves time in preparing the Estimates regard as being economical.

we

48. When did you prepare these Estimates? These Estimates were prepared at the beginning of November last. They are based on figures then available. Of course there is a considerable amount of work in preparing Estimates of this sort. It was not complete till the end of December.

49. Have you been fairly accurate in the past? The Appropriation Accounts rendered have agreed fairly well with the Estimates particularly as regards the grand total, but that is perhaps luck as much as anything else, because it is absolutely impossible to forecast with any degree of accuracy the amount which will be charged to the Vote. As a matter of fact, the total cash expenditure to be brought to account in this Estimate is about 25 per cent. of the amount shown on the claims rendered to the Department. 50. I notice your Appropriations-in-Aid are £8,000,000 odd, and at the foot of the page you say: "The total receipts in 1924-25 are estimated at £10,000,000 odd "?-£10,500,000.

51. What is the reason for altering that amount?

Sir William Mitchell-Thomson.

52. That is to bring out the £10?That is all, simply that there may be a net sum to be voted by Parliament in order to give Parliament an opportunity of discussing the Estimates.

53. You will probably have £2,500,000 profit? Yes, and it may interest the Committee to know that we anticipate having an excess on receipts though not on expenditure in the accounts for the year now being closed.

Chairman.

54. In excess of £10,500,000?-No, in the accounts for the present financial year closing on the 31st of this month.

Sir Fredric Wise.

55. None of these accounts include money owed by Russia?-No.

26 March, 1924.]

56. How much does Russia owe?-[ think there is due on Shipping Service approximately £5,000,000. That, of course, forms part of a very much larger sum outstanding on Treasury account. 57. Could you explain J., " Purchase and building of vessels, shipyards, etc."? —The description of all these Vote heads coincides as closely as possible with the description in prior years, so that it may be possible to compare approximately the expenditure year by year. The £150,000, the last item, is an entry marking the conclusion of some long negotiations with the Belfast Corporation for the cost of a power station that they built during the War. The Government obligation was to pay the difference between the actual cost of that station and the cost at which it could have been erected two years after the termination of the War. These negotiations have been conducted in the last twelve months, and that amount of £150,000 has been provisionally agreed with the Belfast Corporation and is only subject to the sanction of Parliament now.

55. I notice above that there is an item in respect of National Shipyard Scheme: which National Shipyard is that? The general heading there is :—“ Outstanding liabilities in respect of National Shipyard Scheme, including housing, and shipyard extension schemes, £260,000 ”. That amount of £260,000 is our estimate of the probable expenditure in connection with certain schemes now before the Courts.

59. Which National Shipyard is it?-It does not relate to National Shipyards at all. There are several claimants, and the claimants allege that the Government Departments made certain promises during the War which they have not carried out.

60. Why is it headed "National Shipyard Scheme "?-The greater part of that £260,000 is proper to the words "Shipyard Extension Schemes ".

61. Cannot you state which shipyard it is? I think the proceedings of this Committee are published. I should be happy to give information to any Member of the Committee on the subject.

[Continued.

66. Are claims against us still coming in? No, there are no new claims, but unfortunately we find sometimes there have been claims which were sent in in 1918 and 1919 and were mislaid, and on satisfactory proof of that we have received a certain number of duplicates. You understand, during the later stages of the War in particular, accounting work was a secondary consideration and accounts had to pile up, and they did pile up in many tens of thousands, but no new claims in any considerable numbers are coming in now. We do receive a small number of claims which we return to shipowners as barred by the Indemnity Act.

Chairman.

67. What do you do with them?-We tell shipowners or other claimants in such cases that we regard those claims as barred by the provisions of the Indemnity Act.

Sir William Mitchell-Thomson.

68. I understand that some of the claimants at all events do not share your view as to the operation of the Indemnity Act? There have been a few such cases, yes.

69. Mr. Samuel asked you whether you did not think something could be done, and, if I understood your answer to him aright, you said you had not anything in particular to suggest. Does not it occur to you, if there is this doubt about the precise scope of the Indemnity Act, that possibly an Act for the resolving of

26 March, 1924.]

[Continued.

72. Is the large increase in the Estimate for this year due to the fact that you are expecting to bring to account liabilities accrued in previous years?Yes. That increase is solely due to a large block of unexamined accounts. The balance due on those accounts was paid over in cash some considerable time ago and brought to account. This amount is 98 per cent. paper, depending on the completion of the examination of the accounts.

73. Does that represent the last of it? -That should be the last of it.

74. You hope it will?-I hope it will.

Chairman.

75. What is your percentage of bad debts? Have you formed any opinion? -In relation to the total turnover of the Ministry of Shipping, I should think it must be 01, and perhaps one or two other noughts.

76. Much less than 1 per cent.?—Yes, very much less than 1 per cent.; but there will be included under this Losses subhead cases where small amounts cannot be recovered possibly owing to the failure of a Company, it having gone into liquidation some years ago, and it will be necessary to put such cases to the Treasury and obtain sanction to write them off, charging the amount to the Losses sub-bead.

Mr. Mackinder.

77. With regard to debts, I did not gather whether the major portion of these debts are Russian debts, or are some of them British debts?-I was excluding Russian debts in the answer I gave just

row. I was speaking rather of commercial debts. Assuming that £5,000,000 (Russian Government) is included, the figure I mentioned would be appreciably higher. The total turnover of the Ministry of Shipping was about £1,500,000,000, and the Russian part of that is £5,000,000. I have excluded it.

78. So that the British debts would be how much? I do not know of any case except owing to failure to complete payment on a ship that was sold where the amount has run into five figures. Ordinarily the bad debts are small sums under £100.

79. I am not concerned so much about the sums as with the total bad debts.Excluding the Russian Government, I should think they are not more than £40,000.

80. With regard to the Belfast Corporation obligation, I think your answer was that it is the difference between what this electric power station would have cost to build after the war and what it cost during the war?-Yes.

81. If the Estimate had been in 1921 or 1920 would it have borne out this difference of £150,000?-The official termination of the war was 31st August, 1921, and two years after that would bring us to 1923. This figure has been reached after very careful consideration of costs at that time.

82. I was taking the real end of the war. With regard to the Russian debts, will your Department make representations in any negotiations that take place with regard to these Russian debts? Is it part of your duty as Accounting Officer to make representations?—These will be passed to the Treasury, and the Treasury will deal with the whole of the accounts.

83. There is a point on Q.-Losses including unvouched expenditure. I do not understand that.-The unvouched expenditure simply relates to cases where we, unfortunately, have mislaid the vouchers. I referred just now to duplicate accounts. In 1918 and 1919 very many tens of thousands of accounts were sent in to the Ministry of Shipping accompanied by vouchers, and sometimes those became detached and have been lost. When the claimant renews his application for payment, and the vouchers themselves which supported his original claim arə missing, we have to adopt some other means to satisfy ourselves that his claim is a genuine one. We do that either by a test examination of his books, by comparison with expenditure in similar cases,

26 March, 1924.]

[Continued.

and by other means, and having satisfied ourselves that the original claim was received, and that the amount of the claim is in order, we make payment, but we only do so after putting the case to the Treasury and obtaining Treasury approval to pay without the ordinary vouchers. Such amounts are charged to this sub-head.

84. I was interested to hear you say that there were several tens of thousands of claims made which were put on one side. Is it possible that some proportion of those claims, perhaps a small proportion, may have been duplicated?—No, that is impossible owing to the system we adopt. Special steps are taken to see that there is no duplication.

Mr. Buchanan.

85. In the first place I should like to ask you, Mr. Hughes, how many exEnemy ships did your Department dispose of that you received?-Roughly 400.

86. Have you been paid in full for all those 400 ships?-The bulk of those ships were sold for cash, but in a certain number of cases arrangements were made for collection of the balance of anything up to 10 per ent. in instalments, and those instalments are still continuing and will continue for several years.

87. Would I be right in understanding that those 400 ships were bought almost exclusively by British Shipowners or British dealers?-In the large majority of cases.

88. In what percentage of cases have you had to re-sell the ship, that is to say, where the balance has never been paid and you have had to re-sell her? Of ex-Enemy ships there have been comparatively few, seven or eight cases at the most. We have had to foreclose under the mortgage or take other steps. Of course where possible a bank guarantee was obtained, and we simply claim under the bank guarantee. But there have been a few cases where for special reasons we were content with a mortgage on the ship, and we had to foreclose.

89. What is a special reason? I understand you would have a definite agreement as to the selling of those ships between your Department and the person who purchased. Your Department I assume would amply safeguard itself in the event of bankruptcy or other circumstance. What has prevented you from

acting in full in those certain cases?-I might explain, these ships were sold by Lord Inchcape on behalf of the Reparation Commission, and although in all cases we were generally satisfied as to the arrangement he personally in all cases approved of the sale arrangement. In no case have we let anybody off the balance of payment, but we have taken the ship back if there has been a failure to complete payment and resold the ship.

90. Yes, but have you pursued to the full in every case your legal remedy for payment? Yes.

91. You are sure?-I cannot recall any case in which we have not done so. I do know of one case in which the ship was bought by a foreign Company and this Company was in a very low water owing to the slump in freights and values generally, and after consultation with the Consul at the port and obtaining the best legal advice we could in the country, we made a compromise.

92. That is the only case?-That is the only case I know of.

93. Are you sure of that?-I do not know of any other.

94. With regard to G., £275,000 for repairs of vessels. Is this sum accounted for by your people putting vessels into the condition in which they were when they were taken over? What is repairs of vessels? There are a number of claims making up that total of £275,000, but there is nothing included there for putting vessels in order.

66

95. What does Repairs of vessels " mean? These are small balances that are in dispute where we have paid perhaps 95 to 98 per cent. and included in this sum there are small balances on contractors accounts where there have been differences.

96. I understand your Department put a good number of ships you took over back into condition?-That is right.