STARTING DISCLOSURES.

Dominion, Volume 3, Issue 869, 16 July 1910, Page 6

STARTING DISCLOSURES.

IEHCOIE TAX DEPARTMENT CASES. REPORT OF THE COMMISSION.' "GROSS WPROPRIETY" ALLEGED. STATEMENT BY THE PRIME MINISTER.

A statement was made to the House «f Representatives by the Prime Minister last evening in regard to the recent trouble' in the Taxes Department, and; the resignations of Mr. Peter Heyes, Commissioner of Taxes and ■ Valupr-General, and Mr. Dugdalo, prin-cipal-valuer..' Sir Joseph Ward also read the report of the Commission of Inquiry under the Civil Service Act, which investigated the charges in connection with the Department.,The Prime Minister said-that on a previous occasion he was unable to convey to. the House, matters connected with: the private, affairs of .taxpayer's 'that were referred to in the .report of the two "judges wlio first investigated • the'case.. . After the judges' report was -handed in, Mr. Heyes represented' to him that he had not had sufficient time ..to enable him to put his case properly before.'.the judges. As a .matter of ■ fairness,: therefore, to Mr. ; Heyes, a ■ Civil Service Commission was; set :up under the Act, before which Mr. Heyes was "able to call';witnesses and state his' .-.-case,. The commission consisted, of ..Mr. .Waldegraye ; Under-Secretary for Justice, ..Dr. Fitehett, Public Trustee, and Professor Salmond, Solicitor-General. He:.could.not,; in regard to the report ■ of; the' commission, deal with any 'of the : cases'-affecting private individuals, who , were" not "in any, way responsible for their-'cases' being, before the commission. - He would .read the commission's report on the cases which had called for the action taken by the Government.. In connection with the' taxing Teases, •.'•to-.which.he could not allude, it was : light.. to ; state that the. commissioners ■did not find Mr. /Heyes guilty of either . corruption or-impropriety or dishonesty ' with regard to any of them. He ex- ■- ceedingly.; regretted that a' gentleman who ;had filled a high and responsible positiouveryV'ably had in connection • Tvith. .two cases which he held it his duty to _ place .before the House found himself in the position of' called upon to, tender.;his resignation. '" Sir' Joseph Ward then.'read the fol- ■ lowing, report'of .the commission on the , ' two charges referred to:— . 'A WELLINGTON TERRACE, : • PROPERTY. '. .The. first charge was as " follows:— ; ■That ( the said .Peter Heyes in Septem- : her,. ;1906, made an application to the Advances to Settlers Office, of which he was then Superintendent, for ..a loan.of £1200 upon a,property situated in Wellington Terrace, which he had . agreed i.to purchase for £1561, arid wrongfully procured a special valuation of the property to : be made, so that he; could obtain' the full amount applied for. That in: respect of this ■loan the, said, Peter Heyes claimed and took the;-, benefit of the- rebates provided for' by Section 35 of- the: Government Advances , to Settlers Act, although not legally entitled to them. . On-this the commission reports:— • "In .the year-1906 Mr. Heyes- purchased a property on Wellington Ter-'racpfor-the Sum of £1560. He then requested an officer of tho Valuation Department to send the- city valuer, Mr. James Ames, as to the amount at - which he, the city valuer, would value :the ' property, for the purpose of a loan. The city valuer said ho could not 'go beyond £1600. This conversation was. repeated to Mr. Heyes. The next step was an application from Mr. ■Heyes for a loan of £1200 upon tho ■property, and it must be remarked "■that he could not obtain a loan of <£1200 upon the valuation, which the city valuer had stated he was prepared ■to make.- It is fair, therefore, to assome, other valuations must .;have been in Mi-. Heyes's mind when ; le mado the,application.for-£1200. We should mention that valuations 'for loans.in' the city, of Wellington proper (i.e., excluding tho suburbs) were almost invariably made by the city- valuer. .Mr.. Heyes's application was dated September 29, 1906. The requisition , to the valuer-to make the valuation is dated October 13, and is addressed to • Mr. Dugdale. Mr. Dugdale s vouchers for • travelling allowance and expenses-show that he was absent from Wellington from August 27 to October 11. On October 13 Air Dugdalo came to the public office'of Valuation Department... bringing with him the requisition abov'e-nien-.tooned for signature. It was the practice of the chief clerk .to sign these requisitions on behalf of the Valuer--General, but on this occasion he refused to do so without the consent of the Valuer-General, on the ground that the proceedings wero unusual. To-use his wn; words, 'It was unusual for Dugdale to do Ames's work.' Tho consent'of the Valuer-General was thereupon obtained, by Mr. Dugdale on' a false representation, that there was some special, reason why he should make, this particular . valuation. Mr Dugdale denies all this, and asserts that the instructions to make the valuation were given in the ordinary ■course;'but'we. say ouito plainly that we do not believe him. Mr. Dugdalo valued the property at £2040, aud on ■ his valuation, the loan of £1200 was granted. - J'ACTING IN CONCERT." "Taking all the circumstances into consideration, we cannot, have anv reasonable doubt that Mr. Heyes anil Mr. Dugdale were acting in concort, for on no other supposition can the 'intervention of Mr. Dugdale be explained. Mr. Heyes denies that ho took any action to procure the nomination of Mr. Dugdale as the valuer on this particular occasion, and Mr. Dugdalo told us that the instructions "to make tho •valuation reached him in tho ordinary course. Wo'are unable to accept the -evidence. The usual procedure was to instruct the city valuer to make tho valuation. In this case, it was known to Mr.. Heyes when ho mado his application that the city valuer would not value the property at a sum sufficient to warrant tho amount of tho advanco applied for, and, therefore, that his application could not- be granted unless'ho could obtain a higher valuation by the nomination of some other valuer! The inference is irresistible, arid wo are' satisfied that Mr. Dugdalo's appointment on this occasion was directly due to tho interference of Mr. Heyes. "It was proved, on behalf of Mr. Heyes, that immediately, after tho purchase of the' property, ho was offored £2000 for it; wo are also satisfied that he had an offer of a loan of £1500 from a private lender. Mr. Hev.es probably.

thought that under these circumstances he -was justified in assuming that the city valuer's valuation-did not represent the true value of the property, and that no risk of loss was involved by an advance of £1200. We are of opinion that whatever the true value of the. property may have been, a consideration of this nature can neither justify nor extenuate Mr. Hoyes's. conduct. We believe that he entered, into an arrangement with Mr., Dugdale ,to prevent' a valuation being made by ■ the proper officer, with the purpose of obtaining from the board the advance of a larger sum thai the board would have granted had it known the real facts of the case. Mr. Heyes was at the same time the head of the lending: Department and the borrower)- • and -we- are<-of B opinion that he was guilty of gross impropriety, and, that his . conduct in tho matter was 'wholly without justification or excuse. '■'• ' ■ "It is admitted that in respect of this mortgage Mr. Heyes, on two occasions, toot advantage of the rebates allowed for prompt payment of interest, although .the interest was not. paid in due time: Wo think that by thus evading the payment of. a sum of money lawfully due by him to the Department of which he' was the head, Mr. Heyes again utterly 'failed to realise the responsibilities of his position. The rebates[■■•have'. since been paid." \ THE KARAMEA PROPERTY. Tho next charge was:—, "That in April, 1907-, tho said Peter Heyes improperly' obtained an advance of; £500 from the Advances to Settlers Department upon the security of. certain property, situate.'at .Karamea, in tho Kongahu Survey District." • '■_. The commission reported.'-on this charge as follows:— . '"On December. 15, 1906, Mr. Heyes made application to the Advances to Settlers ' Office for a loan on the security of certain freehold; property owned by him at. Karamea, on ' the West .Coast of the South Island... For the purposes of this application ■ the property was, on January . 14, 1907, valued, and.-roported on by the local valuer,. who valued'. the property ■ at £674.. In making'this valuation he toobno account of the timber standing on the land (which was of the value.of £500 at least),- on the ground . that timber was not a security on which tho board would- make an advance. For some reason, however, which does not appear, he mistakenly reported tho property as good for a loan of £600, being £200 in excess of the maximum loan which could bo granted on that valuation. The application'came before tho board on January 29, 1907, when a bail of £400 was offered. Mr. Heyes, however, was .desirous of f obtaining a' loan, of £500, and therefore.did not accept the board's offer. "On ■ January 31, two days after the meeting of ill© board, a letter was written by Mr. Waddell, the AssistantSuperintendent of the Advances office, to the. Valuer-General, Mr. Campbell, pointing out' the discrepancy between the local valucr'.s valuation of £674 and his recommendation of £600, and asking tliat the report be referred back to the valuer, with the view, of itibioas-. ing: the' valuation. : Although, there is no direct evidence on the point,_ wo are satisfied from the contents of this letter that it was written at the request orby the direction of Mr. Heyes. _ The letter!was forwarded by the ValuerGeneral "to the local valuer, who, on February ,9, 1907,, replied .declining to alter, his: valuation. The reply - was received, by the Valuation Office on February 28, and was forwarded to the. Advances .to'. Settlers Office, : where .it was received on March 2- Shortly after the receipt .of the letter by the Advances Office, Mr. J. P. Dugdale, the Inspecting Valuer of the Valuation Department, went from Wellington to tho West -Coast, '.with this letter hvhis possession, and sent for the local valuer to meet' him.at Wostport. ■ An. iaterview took place there between-them on . March 7, 1907, at'which the.-'uluation of Mr. Hcyes's property for the. purpose of the loan was discussed between them. ALLEGED FALSE REPRESENTATION. "Mr. Dugdalo falsely represented to the local valuer that timber was taken into account by the board' in determining tho sufficiency of a security; tho value of. the'timber was agreed on as ''£500, and tho Jocal,valuer's letter was there and then.,endorsed, as follows :— ",!Tho. timber estimated at 15,000 feet per acre,' Worth sixpence per i 100 feet, royalty, is not included; in the valuation. 1 was under tho impression that- timber was not a security under , the ■ Advances to. . Settlers' Act.'.:. ;' " '(Signed) MEYPvICK■■' JONES, "Valuer. "'March 7, 1907/\ '"I agree with Mr. Jones. Add £500 to value.'. '" (Signed) 7 JOHN P. DUGDALE, "'. Inspecting Valuer, . "'March 7, 1907.' '.'This letter so endorsed was brought or. sent back to Wellington, and on April 10, 1907, in accordance therewith, a fresh certificate of tho entry of the property in tho valuation roll was issued for the Valuation Office, as follows:— Unimproved | - Value. Improvements. Owner's Owner's ' Capital value. ■ interest. interest. £1174 £536 £138 Timber £500 "Thereupon Mr. Heyes mado a new j application to tho board for a loan of £500. on. the' property. Tho meeting.of the board took place on April 9, 1907, and the loan was granted. Tho agenda paper prepared for the meeting and distributed among the members stated that the capital valuo of tho property as valued by the local valuer was £1174, and that he recommended the property as good for a loan of £600, but mado no mention, of-the fact that timber to the value of £500. was included in the valuation. This circumstance did, indeed, appear on tho document known as tho 'board paper,' which is prepared for the purpose of every such application, but this paper was in tho possession of Mr. Heyes himself at tho meeting.. Wo are satisfied that Mr. Heyes did not call the board's attention to the fact that tho valuation included timber, and that in this manner ho obtained an advanco which would not otherwise have been mado. ' Wo aro . also satisfied that. Mr.. Heyes himself

procured Mr. Dugdalo to go to Westport for tho purpose of inducing tho local valuer to alter his valuation by including tho timber. It is true that tho. value of the timber ought, to have appeared on the valuation roll (since it was 'material for rating and taxation purposes), and in omitting it altogether tho local valuer was in error. But the purpose and result of tho interview which Mr. Dugdalo had with the local valuer was to include the timbor for tho purposes of a loan, and this was wholly contrary to the established practice of tho Advances to Settlers Office. THE COMMISSION'S FINDING. "Wo find accordingly that Mr. Hoyeb, mi co-operation with Mr. Dugdale, knowingly procured an improper loan from the Advances Office by misleading tho local valuer, and by failing to inform tho beard of material circumstances which would have induced tho board to refuse to make the advance. Wo aro of opinion,, as in the last preceding case,. that in sv, acting . Mr. Heyes was guilty of gross impropriety, and that his .conduct was without, justification or excuse." CALLED ON TO RESIGN. The Prime Minister read letters addressed by himself and the Hon.' D. Buddo to Mr. Heyes and Mr. Dugdalo respectively, briefly requesting thera to send in. their resignations as tho result of tho commission's report. Mr. Heyes wrote in reply that ho had no option-but to comply with the request, but that Jiis doing so was not to be taken as an admission, by -Mm of any conclusions arrived at by the commission. Mr. Dugdalo wrote forwarding his_ resignation, without comment. The Prime Minister again expressed his very deep regret that an officer holding, a high position should have had to be called on to resign under such circumstances. Ho moved that the correspondence should be laid on the table -of the House.. DISCUSSION IN THE HOUSE. CABINET AND PARLIAMENT. A BOAED TO BE APPOINTED. Mr., Massey (Leader of tho Opposition) said the Prime, Minister had followed a proper co,urse in laying on the table the papers he had. He asked iftho Prime Minister would lay. on, the table the report of the judges appointed to inquire into tho irregularities that wero supposed to have taken place in. connection with the Income Tax Department. ; Sir Joseph Ward said he could n<it do that, because it .dealt, with the private affairs of taxpayers'. He read a letter from Mr. Waldegrave setting, out that view. \ - 1 . Mr. Massey asked if . the matters dealt with by : the second commission wero before the Judges ol.the Supremo Court. ' • Sir Joseph said some of them were. Mr. C. Hall (Waipawa) complained that secret commissioners had, condemned Mr. He-yes in a secret manner! He asked what was the crime on which Mr. Heyes had been peremptorily, dismissed. Any officer of, tho Department had- as much right to go to the' Government' for a loan. Mr. Hall said no collusion had been proved. He objected to the peremptory manner in which the dismissals had been made by a secret commission for a very trivial affair. Mr. Wright (Wellington South), said the only conclusion he could come to after listening to Ma-. Hall's remarks was that that gentleman's heart was bigger than his head. Mr. Wright went on to state that when ho mentioned about the valuation of Mr/ Hoyes's Wellington property on which a loaii was allowed, he was charged with having been guilty of repeating ■'. idle rumours. ,It would now bo seen that his remarks were in accordance with the facts disclosed before tho commission. '■- RUMMAGING DEPARTMENTS. Mr. Ross (Paliiatua) said it was a bad feature that .information from this Department should' be given to outsiders. • ' , ", siders: It appeared as if there was a system of „rummaging in : the office, of the Taxes Department. Various officers seemed to be' spying upon other, officers. With regardto tho property on the Terrace, and the West Coast property, he .contended that the person who laid the, charges had .no right of access to the particulars on the file in the Valua-' tion Department. He had, no' doubt but the commission felt' ..that.- .they were justified in their ! decision, "but Mr. Heyes should hot be allowed to leave the service 'without a word in his favour. Mr. Laurenson (Lyttelton) _ held •that before "this unfortunate incident", thero was no one who could say a word against Mr. Heyes. During his term of offico he had handled, not hundreds of thousands, but millions of tho "public money, and riot a brass farthing had been lost to the Dominion. Now Mr. Heyes was fallen, but how? He got an advance of £200 more than -ho should on a property, and in reg"ard to another property got, say, £200 mortf, as a Tesult of -si wrong valuation with reference to timber..' To members of both sides in politics Mr. Heyes had always been willing to give, his advice. The oifen.ee. through which , ho lost his position- was a paltry- one. It must, have been'a hard thing for his follow officers to have exposed the facts. If his' offence was an offence he trusted that none of the members would be guilty of : a greater one. Mr. Luko (Wellington Suburbs) said that Mr. Dugdale had been an inspecting valuer for the Dominion, apart from the city of AVellington. It was without doubt that the Department relied on tho valuations of Mr. Ames in regard to this city. Mr. Hall: Only for rating.- _ Mr. Luke said he could .not sit in his seat without protesting against some of the remarks mado by Mr. Laurenson. MR. T. E. TAYLOR'S VIEWS. Mr. T. E. Taylor (Christehurch North) said one could say with truth that there was no systematic corruption in any branch of tho public service. But that would not be ablo'to be \ said in tho future if Mr. Laurcnson's .ideas -on this matter became general. He could easily imagine that Mr. Wright got certain information which had been alluded to from sources outside tho Department. He was glad that the verdict was passed by an impartial ■ tribunal. A minor officer m tiio Department must have challenged tho actions of Mr. Heyes. It was a good thing that there -were such oflicials who refused to remain silent m the caso of wrong-doing. There wero always somo who would say that that oour.?.go was characteristic of tho informer, but lie looked upon it in a If their motive ■ wero tho public welfare they should got advancement in tho service. It had beoit common talk since the matter was raised that punishment was going to fall on thoso officials who had haled their superiors before tho Ministry. Sir Joseph: Who said so? Mr. Taylor: Well, I heard it, but replied to thoso who said so that they were'entirely wrong. Continuing, Mr. Taylor said that public officials required to bo "the eyes of tho Ministry." In regard to those men, who took their occupation ic. their hands, if they failed in thoir charges ho declared that the Slate should treat them as a private employer would havo done. It would never do to allow State officials to get such big advances on their properties to enable them to do speculating. To argue as some members had done was to impeach tho decision of tho judgos. Then again some

alt-oration was needed in regard to tho Standing Orders of the .House. CHANCE OF SYSTEM WANTED. Ho wanted to know why Cabinet should have the right to intercept documents which rightly belonged to the representatives. of the people. Under the present system tho Executivo was able to say that such a report could not be placed before members. Parliament should have' the power to order such a document to bo placed before, say, a committee of the House. Such documents might, ho continued, impeach the integrity not only of high State officials, but even the Ministry itself. The House could by ■ resolution take to itself the power in question. A private individual could find out how much Customs duties anyone paid,- the value of his properties, and many other details regarding his affairs. To whom did the judges' report belong? Sir Joseph: Let tho Houso pass a re-' solution and tako tho responsibility, and I will lay the documents on the table, j , Mr. Taylor said the Houso might or might not agree to pass such a resolution, but the matter was one which should bo considered. He' believed the reason why the papers were not, put before the House was because harm might be done to private people. But he was satisfied that the time had arrived when, if such documents couldnot come before the Houso as a whole, they should come before a Special Committee.. Mr. Vigor Brown (Napier), combated the arguments of the last.speaker, who he said had last session gone the length of reading a confidential document in the House. . ..--.■• ' Mr. Taylor: I think you're dreaming. Mr. Taylor explained that the telegram he had read* was one from the Crown Prosecutor in Chrisfchurch (Mr. Stringer), and it had been-,previously, read by the member for Christchurch East. The moment Mr. Davey had read the telegram it became the property of tho Houso.: Mr. Brown did not seem to rccogniso. that, neither, had Mr. Davey recognised it at the time. Mr. Davey: I know all about it, I assure you. "A PAINFUL MATTER,", The Prime Minister said this was a painful matter for the parties concerned and who'had suffered in consequence of the investigations of the commission., .It"was the duty of the Government,, however, in all matters of a judicial character to take action and in this case they had done right. They had dealt with the facts as presented to them, and Mr. Heyes had every opportunity of bringing >all the evidence and facts from his point of view before the commission. Ho wished to add that the board had acquitted Mr. Heyes of anything- in the nature of corruption, and there was also the fact to bo considered that Mr. Heyes had put- ihc methods of work in tfie Department on a much better footing than he found them when he took up his position. Regarding 'Mr.. Taylor's remarks, it would not do to place the. House in-the same position as the Executive. .Mr. Taylor: What! said,was that the documents should go ■ before a committee. Sir Joseph; If it were right for them to go to one'committee it would be right for them to go before all the committees. _ Contfuuing, Sir. Joseph said that ifit were right for membersi to see tho documents, logically .it ■'would bo right for those who elected them to see them. He -wished to say that the affairs of no member of tho Government had been the subject of inquiry. If Parliament said that the judges' report and .tho commission's report he laid on the tablo the Government would accept the decision of Parliament. (Hear, hear.) Speaking with a full knowledge of the whole of the facts, he might mention that tho tribunals -. dealt with the affairs of people who were not aware that that was'tho position in order-to settle various points. It would, therefore; bo cowardly on the part of tho Government to divulge the whole of the ovidence, .etc., as many taxpayers were quite innocent in tho matter. \ Mr. Taylor: There are matters which come beforo committees of the Houso and arc not made public ' Sir Joseph said that if the Government, did anything that was improper the people would not stand' it for a single moment. Later in the session steps would.be taken to appoint a board of whom the Commissioner ,of Taxes would be one to settle all; matters in dispute with reference to assessments. There was no truth in the suggestion that any officer \vould be penalised simply because he had done his duty. Before the Government made promotions many things had to come under consideration. Mr. Taylor: They should have in'creased responsibility. Sir .Joseph: ,We will see that, they get proper consideration' and fair play.' It was then agreed that the papers should be laid on the tabic

A special sories of sermons on, tho great subject, "Tho Cross of Christ," will be commonced'to-morrow cvouing at 7 o'clock, in tho King's Thoatro people's Rorvice.. These/includo tho,titles: "Tho Eternal Cross," that of to-morrow's sermon "The Daily Cross," "Paul's, View of tho Cross," and "Our -Need of the Cross." K-ev. E. 0. Blamires will bo in charge, and Mr. T. C. Newton will sing tho solo, "What will you do with Jesus?" ■; -A MISTAKEN MOTION. There is a prevailing opinion that it is dangerous to stop diarrhoea too suddenly. That may bo tho case when an astringent; medicine is used, but'thero is not tho least danger of stopping it too quickly when' Chamberlain's Colic', Cholera, and Diarrhoea Remedy is taken, as it is not an astringent, and stops tho diarrhoea, by curing tho diseasG that' caused it. .As a rulo only two or threo doses are required, but in very sqvere cases a whole . boUlp is sometimes uecded.—Ajlvt, ,