Title New Guinea Timber Rights Royal Commission - Report
Source House of Reps
Parliamentary Paper No. 55
System Id publications/tabledpapers/HPP032016007705_61
New Guinea Timber Rights Royal Commission - Report
1948 - 49.
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA.
ROYAL COMMISSION APPOINTED TO INQUIRE INTO CERTAIN TRANSACTIONS IN RELATION TO
TIMBER RIGHTS IN THE TERRITORY OF PAPUA-NEW GUINEA.
Presented by Command, 24th June, 1949.
. [Cost of Paper :-Preparation, not given; 913 copies; approximate cost of printing-and pnbl!shing, £68.]
Pl"ii lU'O aud Published for t he GOVERNMENT of the C OMMONWEALTH OF AUSTRALIA by L. F .• JoHNSTON, ComutO nwealth Government Printer, Canberra. (Printed in Australia.)
No. 55 [GRoUP G.]-F.2874.-PRICE 2s.
ROYAL COMMISSION UNDER LETTERS PATENT DATED THE 11TH DAY OF JANUARY, 1949, TO INQUIRE INTO CERTAIN TRANSACTIONS IN RELATION TO Tll\1BER RIGHTS IN THE TERRITORY NOW KNOWN AS PAPUA-NEW GUINEA.
REPORT OF THE COMMISSI ONER TO HIS EXCELLENCY THE
To E xcellency the Hight Honourable WILLI: :\1 JoHN McKELL, a JJ!Iember of His M aj esty's Most Honoumble Privy Council, Jovemor-General and Commander-in­ Chief in and over the Commonwealth of Austr ;.lia.
MAY IT P L E-\:.:::..; YouR ExcELLEN CY: I, George Coutts Ligertwood, one of His Maj esty's Judges of the Supreme Court of South Australia, the Commist:ioner appcinted by Letters Patent dated the 11th day of January, 1949-to inquire into certain transactions in relation to timber rights in the Tenitory now
known as Papua-New Guinea, have now the honour to submit my report.
This inquiry arose out of a. transaction embodied in two Deeds dated respectively the 19th December, 1944, and t he 20th November, 1945, whereby Raymond Parer, Harcourt Garden, Edward Farrell, and John Smith Garden, as Vendors, agreed to sell to Hancock & Gore Limited, as Pur.::hasn2, exelJ.Eive rigl:.ts to take and expert timber fro m an ar2a cf ab:mt 17,000 acres in the Bulolo 'Valley, New Guinea, containing 200,000,000 super feet of t imber.
The Deeds t hemselves purported to base t he rights, so agreed to be sold, up on a grant alleged t o have been made by "the appropriate authority" to the Vendors or some one or more of them. Collat erally to the Deeds, it was alleged by the Vendors, that " the appropriate authority " was. the HonouraL le E. J. Ward, Minister of St at e for External Territories, and
that t he grant was in the form of an approval by the Minist er of an apJ_.::irn.tion for a licence to take and export t imber made by Raymond Parer. It was said, tha,t the ar: !'Oval of the application had been communicat ed t o Parer in writ ing by J . S. Garden Lmder th direetion of the Minist er.
It was further alleged by J . S. Garden, that the Minister had been induct.·d to make the grant to Raymond Parer by a promise of 20 per cent. of the purchase moneys
The purchase price under the Deeds was £100,000 , of which £50,000, in two swm; of £12,500 and £37, 500, was paid by Hancock & Gore Limited t o Edward Farrell as representing the Vendors. It was alleged by J . S. Garden, t hat on 3rd December, 1945, having received a specific sum of £5,000 from Farrell, he paid it t o the Minist er on account of his share of the purchase
moneys, with a promise that a fllfther £15,000 would be paid, when the MiniE.ter issued a formal licence to Parer, which would enable the Purchasers to go to New Guinea t o commence operations. The matters referred to me for inquiry are the following :-(i) What were the real transactions involved between Raymond Parer, Harcourt
Garden, Edward Farrell and John Smith Garden or any of them, and Hancock & Gore Limited or any of its directors, employees or legal representatives, in relation to timber rights in the Territory now known as Papua-New Guinea ; (ii) Whether the Honourable Edward John Ward, Minister of State for External
Territories, was party to any of the transactions abovementioned ; (iii) ·whether the Minister signed, or authorized John Smith Garden to sign, any notification, that the grant to Raymond Parer of any timber licence in the Bulolo Va ll ey had been, or would be approved by the Minister; (iv) ·whether the Minister-
(a ) was promi sed any financial benefit in relation to any of the transactions abovementioned; (b) received, either directly or indirect ly, any financial benefit in relation to any of the transactions abovement ioned ; and (v) Whether the Minist er-
(a) is or was financially interested, either directly or indirectly, in Sydney Pincombe Pty. Limited ; (b) has received, either direct ly or indirectly, any financial benefit from that company.
The fifth question was submitted because, in the course of certain criminal proceedings against the Vendors, t o which I shall refer later, it was imputed by questions asked of the Minister in cross-examination, that he had concealed t he £5,000 by investing it in Sydney Pincombe Pty. Limited through its managing director, W. M. Urquhart , who it was suggest ed, was his nominee .
Although these imputations were hotly denied by the Minist er, Counsel persist ed in them through two preliminary proceedings before the Magistrates, and through two trials before a Judge and Jury. It is said that great prominence was given t o t hem in t he daily press.
FINDINGS.
I think it will be convenient if I set out at once my findings on t he questions submitted to me. I find:-(1) (a) The t ransaction embodied in the two Deeds was a bare faced ..":-a ud, practised
by Farrell .m d J. S. Garden upon H ancock & Gore Limited, in which, by false preteLces, they induced Hancock & Gore Limited to purchase a non­ existent timber concession, and to pay t hem £50,000 on account of the purchase money. Raymond Parer and Harcourt Garden were involved in the transactions and their conduct is morally censurable, but they have been acquitted by a Jury of criminal complicity. (b) The Working Directors of Hancock & Gore Limited (which expression does
not include Mr. E.. R. Crouch nor Sir William Glasgow) were induced to enter into the transaction by their greed of timber and by their desire to get into Bulolo Vall ey ahead of their rivals . . They were prepared to ent er into a secret tramaction which, having regard t o the position of J . S. Garden as a public servant, was improper on its face. They were aware of the impropriety and were ready to t ake advantage of it , seeking to salve their consciences with t he reflection, that t hey were dealing with t he Syndicate, and were paying full value for the timber, and that the means by which the Syndicate became possessed of t he grant, and what they did with the purchase money, were no concern of theirs. So much did they realize the impropriety of the transaction, that for a pericd of three and a half years, notwithstanding the fact that £50,000 was involved, they were afraid to directly approach either the Minist er or the Department, to see if there was any subst ance in what they thought t hey had purchased. The Company's Solicitor, Mr. E. E. Biggs co-operated wit h the Working Directors in negot iating the tramactic.n wit h similar knowledge of its impropriety, and failed in his duty t o properly advise the Company and to secure it against
loss. The Company's Logging Manager, Mr. H. G. Forshaw also assisted in t he negotiatiOns with knowledge of t he impropriety of the transaction . (2) The Minister was not in any way party to t he transaction or to the fraud. ·(3) The Minister did not sign, or authorize J ohn Smith Garden to sign, any notificat ion
t hat the grant to Raymond Parer of any timber licence in the Bulolo Valley had been, or would be, approved by the Minister. (4) The Minister was not promised any financial benefit in relation to t he transaction, and did not receive, either directly or indirectly, any financial benefi t therefrom
or in relation thereto. (5) The Minister is not and was not financially interest ed, either directly or indirect ly, in Sydney Pincombe Pty. Limited, and has not received, either directly or indirectly, any financial benefit from that Company.
There are, strictly speaking, no parties to a Royal Commission, but the persons most concerned felt that it was in their interests to appear and to be legally represented. The parties so appearing were the Minister, Hancock & Gore Limited, Sydney Pincombe Pty. Limited, and William Maurice Urquhart, Edward Farrell, Harcourt Garden and John Smith Garden.
COUNSEL.
. . Mr. J. B. Shand, K.C. and Mr. J. Smythe were appointed as Counsel to assist me in the mqmry. Mr. E. P. Miller, K.C. and Mr. J. R. Kerr appeared for the Minister; Mr. A. D. McGill, K.C. and Mr. P. W. Henderson for Hancock & Gore Limited; Mr. J. H. McClemens, K.C. and Mr. A. Levine for Sydney Pincombe Pty. Limited and for William Maurice Urquhart; Mr. J. Cassidy, K.C. for Edward Farrell.
On the opening day Mr. S. Isaacs announced that he appeared for John Smith Garden and Harcourt Garden, but only for the purpose of objecting to the competency of the Royal Commission. Shortly after the evidence commenced, an application was made to me for a recommendation, that the Public Prosecutor should be asked to nominate someone to appear
on behalf of the two Gardens at the public expense. The ground of the application1 was that they were without means and could not afford to engage legal representation. The evidence of the means of J. S. Garden was such, that I did not feel justified in making the recommendation. Thereupon Harcourt Garden asked that he be allowed to represent both his father and himself, with the right to examine witnesses and to address me on the evidence. This request I granted and the right was freely exercised by Harcourt Garden, not unskilfully. In addition, Mr. Isaacs at one stage appeared on behalf of J. S. Garden, and for three days conducted his examination in chief. During the course of Mr. Harcourt Garden's final address, I undertook, at his request, to peruse Mr. Isaacs' cross-examination of the Minister and certain other witnesses in the four criminal proceedings, and also Mr. Isaacs' two addresses to the Jury. This I have done. They
covered 1,781 pages of transcript. I had the advantage of full co-operation from all Counsel. The presence of Mr. Shand, K.C. and Mr. Smjrthe was invaluable. They had both been engaged for the prosecution in the four criminal proceedings and were thoroughly acquainted with the subject matter and were alive to every avenue of inquiry. They were efficient and relentless in their examination and cross­
examination of-all the witnesses, including the Minister, and all the releva.nt matters, touched upon by Mr. Isaacs in the criminal proceedings, were thoroughly investigated by their searching questions. As a result of the work and co-operation of all Counsel, I think that every relevant witness and every available document have been placed before me for consideration.
The inquiry could scarcely have been more thoroughly conducted. The Commission sat on 52 days, opening on the 21st January, 1949, and concluding on the 18th May, 1949. Apart from the flrst week, ·whilst Counsel were preparing the opening and a month whilst Counsel were preparing their closing addresses, the Sittings were continuous. Seventy-four
(74) witnesses were examined and there were 172 documentary exhibits, many of them consisting of voluminous departmental files.
THE MAIN PARTIES CONCERNED.
Before attempting an elucidation of the facts, I shall make some observations concerning the principal persons concerned in the inquiry. They ate the Minister, the four Vendors, tho Directors of Hancock & Gore Limited, the Company's Solicitor and its Logging Manager.
(I) THE MINISTER.
The Minister, the Honourable Edward John Ward is now a man of 50. He was formerly an active member of the Tramways Employees' Union. From 1930 to 1934 he was an Alderman of the City Council. In 1931, he was elected to the Federal Parliament as the Member for East Sydney, and since his first election has held the seat continuously. In 1941 he was appointed Minister for Labour and National Service ; but in 1943, pending the investigation into the
" Brisbane Line" controversy, it was arranged that he should not carry on the duties of his office. After t he 1943 General Elections, he was appointed MinistEr for Transport and External Territories. In that Office, he led an exceedingly busy life. Besides attending Sittings of Parliament and Cabinet meetings in Canberra, he had to supervise his two Departments. The head office of Transport was situat ed in Melbourne, and that of External Territcries in Canberra. Mr. J. R . Halligan was the Secretary and permanent head of the latter Department.
The Mini& ter, in the course of his duties, travelled frequently between Canberra, Sydney and Melbourne, and when not occupied with Farliammt or Cabinet, his engagEmEnt bock shows him in conference with officials and with meml:ers cf the public for the greatu part of every day. He had a very large official and personal correspondence, dealing on occasions with as many as
200 letters a day. In Sydney the Minister had a suite of rooms on the 8th Floor of the Commonwealth Bank Building. This was not part of t he Department of External Territories. 'Ihe Sydney Branch of that Department was situated at Australia House in Carrington-street, about half a mile away from the Commonwealth Bank. The Commonwealth Bank suite was used by the Minister for
two purposes first for transacting s vf lis Departments with ?fficials called on for the purpose and secondly for mtervwwmg any member of the pubhc who desued to see him, particularly his own All_the _\y ales members of the
irrespective of Party, were provided with umilar faCilities. Each had a room for mterviews and a Secretary to assist him. The 8th Floor was given up to this kind of ?.nd housed
23 Members and their Secretaries, besides Party and conference rooms, . . . . ,
The suites of Ministers were more elaborate than those of ordinary Members. Mr. Ward's suite comisted cf a long room with a smaller ro om adjoinin g. The long room had been subdivided by partititions into five rooms- making six rooms altogether. His f>taff consist ed of a Private Secretary and an Assistant Private Secretary and his personal and other tyrists.
The Minister encouraged his constituents to communicate wit h him direct in matters requiring Parliamentary or departmental act ion. Whenever he received a letter from a private person, he immediately acknowledged it under his own Eignature. His Privat e Secretary would then minute the letter " by directicn " to the Department concerned, but keer: ing a copy at the
Commonwealth Bank Building, so that the Mini;,ter would not lose sight of the matter. There was a system of "reminders", which were dedgned to prevent delay and to keep the matter alive. The departmental officers were required to send to the Minist er for his information, of minutes and other relevant documents, which appeared on their official files. When some communication had to be made to the person from whom the matter originat ed, a letter was prepared for the Minist er, and signed by him personally. Copies of all such letters were kept at the Commonwealth Bank suite. The system was defigned in the interests of efficiency and to secure to the Minister the credit with his constituents cf personal attention to their affairs.
It was the failure to fully understand this system which led to such lei)giby cross­ examination of the Minister on the departmental files. Looking at any individual file, one would be apt to think that, almost from day to day, the Minister was taking a keen personal interest in its subject matter. But when that file was compared with other file s, the Minister was shown to be taking no more interest in that part icular case than in dozens of other cases, which had originated in a personal letter to him. This became of the utmost importance, when it was alleged, that the Minister took an extraordinary intereEt in the cc mmunicaticns frcm Parer, and that his motive for doing so, was that he was party t o the Hancock & Gore t ram:action. In the light of his system, his interest in those communications is readily capable of the innocent explanation, that, on each occasion, the matter was initiated by a personal letter, and that he
was pursuing his system of seeing that it was brought to fruition, if the policy of the Department so permitted. I should say a word as to the evidence relating to the Minister's financial integrity. Every witness, who had personal knowledge of him, spoke most highly of his standing in this respect. While one's experience in the Law Courts makes one chary of accepting testimonials at their face value-indeed . in this very inquiry three testimonials were produced to me which in retrospect read very ironically-nevertheless, one can fairly quote what J. S. Garden says of the Minister's reputation, he being the person who brings the charge of corruption. J. S. Garden, in his evidence before me, said that the Minister's reputation throughout the community was one of complete personal integrity ; that he was a man who never sought graft ; and that apart from his allegations in the present transaction, he could not point to any matter where the Minister either sought or received or offered to accept any illicit pecuniary gain for himself out
of anything he did or failed to do as a Member or Minister. That, said Garden, was the Minister's reputation .throughout the country. Garden expressed the same opinion in his answers to three of the questions, which were put to him by Wilks on the 22nd December, 1947, only a week after the discovery of the fraud. I quote the questions and answers-
Q. Did you at any time tell Farrell or P arer that moneys would have to be paid to obtain this concession, to certain officials 1 A. No. Q. Did you ever entertain the thought that you. would have to pay Mr. Ward moneys for this concession if
granted?
A. No. Q. Are you satisfied of your own knowledge, after years of association with Mr. Ward, that such a thing as paying him moneys for the issue of a concession is not possible ? A. Not possible under any circumstances. No body could offer him anything under any circumstances, not
even a postage stamp. He is the most conscientious, ho nest and sincere man I have dealt with in my years .. Perhaps the best testimonial to the Minister's integrity in financial matters is to be found in the fact that, throughout the whole of the year 1948, continuous efforts were made to unearth material, which might. be used to destroy his credit. It was of no avail. It would seem that when nothing based upon fact could be discovered, resort was had to rumours and insinuations.
(2) J. s. GARDEN.
John Smith Garden was born at Lossiemouth, Scotland. He is 66 years old. He was ordained in Scotland as a clergyman of the Evangelist Church of Christ. Upon emigrating to Australia, he secured pastoral charges, first at Harcourt in Victoria in the Church of Christ and then at Maclean in New South Wales in the Baptist denomination. In 1913 he resigned his pastorate but continued casual preaching until1919. In the meantime he had engaged in union
activities, and ultimately became Secretary of the Labour Council. In 1919, he formed the Communist Party in Australia and in 1922, having been elected a member of the World Executive of the Communist Party, he attended a Communist Conference at Moscow. In 1923, he was expelled from the Communist Party, because he would not give up his religious l eliefs. In 1926, he became a member of the Australian Labour Party. In 1931, contemporaneously with the Minister, he was elected to the City Council as an Alderman. In 1934 he was elected to the
Federal Parliament as the Member for the district of Cook. He held the seat for only one term, losing the plebiscite for the ensuing elections. He remained, however, actively connected with Federal Labour politics, and was Secretary of the Federal Electorate Council for the district of East Sydney, which was the Minister's seat. He held that office until the prosecutions were
commenced against him. As Secretary of the Electorate Council, he acted as Campaign Secretary for the Minister. In addition to his political activities he w .s half-owner of a newspaper known as Denver Publications which earned him an income of as much as £1,500 a year.
Not long after the Minister accepted the portfolio of Labour and National Service, he created a new office on his personal staff to be filled by a Liaison Officer, whose function would be, to keep in touch with the Labour Unions on the Minister's behalf, and to obtain early information of threatened strikes, so that the Minister could deal with them by way of
negotiation. Garden applied for the position and as he was in close touch with the Unions, the Minister decided to recommend him. In doing so, he was further influenced by the fact that Garden said he was in need of the salary. The appointment was made by the Public Service Inspector, and Garden's salary was fixed at £10 per week. He was given a room in the
Minister's suite in the Commonwealth Bank Building. The Minister said that while he himself was in charge, the office functioned well, and that, through information supplied by Garden, he was able to adjust many difficult situations, which would ot herwise have led to strikes. In 1943, Mr. Holloway became the Minister for Labour and National Service. He
transferred the Sydney Branch of the Department from the Commonwealth Bank Building to the A.P.A. Building, where he had his own rooms. He did not desire to retain Garden's services as Liaison Officer, and arranged for him to be transferred at a reduced salary to the Customs Department, Division of Import Procurement. On tile 19th October, 1943, he wrote
to Garden to that effect. On the 21 st October, Mr. Martens, M.H.R., wrote Mr. Holloway, that he was making a big mistake in losing the services of Mr. Garden as Liaison Officer between himself and the Unions. Garden, he wrote, was well and favorably known to all of them as a man of sound judgment who had known the industrial movement and those who have
represented it for many years in this city and "unless it is too late, I might ask that you reconsider this matter in your own interest, unless of course there is something you know that I do not." On the 22nd October a telegram was despatched from Sydney to Canberra, which read:-
Hon. E. J. Holbway, M.H.R., Minister for Labour and National Service, Canberra. We, the undersigned Members and Senators, desire you to reconsider decision re transfer of Mr. J . S. Garden from his present position, for, during the time he has occupied such position, he has been responsiUe for straightening out many anomalies and averting industrial trouble stop Apart frcm this, he has been of
considerable assistance to Members of Parliament between the several Departments coming under your control and under control of Allied Works Council stop We therefore respectfully ask you, that he still be retained in his present position as Liaison Officer between Members and Department Labour and National Service . . . . Watkins James Falstein Clark Sheehan Amour Mulcahy Williams & Daly.
Six of the signatories had rooms on the eighth floor of the Commonwealth Bank Building. In his evidence before me, the Minister frankly admitted that he, too, asked Mr. Holloway that Garden's services be retained. Mr. Holloway yielded to these persuasions and Garden remained the Liaison Officer.
If Garden had been simply a Liaison Officer with the Unions, he would no doubt; have been given accommodation at the A.P.A. Building, to which the Department of Labour and National Service had been removed, but apparently his duties were such .that he was useful to the Federal Members as well. He was allowed to remain on the eighth floor of the Commonwealth Bank Building, and was assigned a room across the passage from the Minister's
suite. This proximity of his office to Mr. Ward's suite had several effects which proved most unfortunate in relation to the Hancock & Gore transaction. In the first place Garden having previously been a member of the Minister's personal st aff, was ab le to continue his friendship
with the Minister's secretaries and stenographers. He had free access to the staff rooms and was accustomed to t ake morning and afternoon tea with the employees. If he wanted letters typed, he was allowed to use the services of the Minister's typists. The opportunity was thus afforded to him of doing what he in fact did, namely, of stealing the l\Iinister's departmental
paper, for the purpose of giving to fraudulent letters the appearance of being official. Further
his own mail was delivered with the Minister's mail to one of the inner offices, and in the early morning he frequently sorted out his own letters. I am convinced that, on the only occasion upon which Hancock & Gore addressed a letter direct to the Minister, Garden was able to intercept it. Again from a close study of the exhibits, it seems to me that Garden, through his friendly intercourse with the Minister's staff, was occasionally able to glean snatches of
information which he and Farrell put to good use in staving off t he discovery of the fraud. Finally Garden was left in his office without direct supervision by his Minister or the permanent head of his Department. Consequently Farrell was able to visit him whenever he wished, and Garden's room at the Commonwealth Bank Building was available for their secret conferences.
I set out these facts by way of narrative only. They are necessary to a full understanding of how Farrell and Garden were able to work the fraud. I am not in a p osition to criticize them, and I refrain from doing so. To do justice in any such criticism would require a separate inquiry as to Garden's work as a liaison officer and as to how far the exigencies of the military and industrial position required the retention of his services. One can be pardoned, however, for doubting the efficacy of Garden's work as a liaison officer durmg the three and a half years in which he was engaged in this fraud.
(3) EDWARD FARRELL.
The evidence did not disclose Farrell's early antecedents, but in 1928 he was convicted in the Supreme Court of Queensland of fal se pretences and sentenced to three years' imprisonment. He had obtained a sum of money by falsely pretending that he had an option over some land belonging to the Brisbane City Council. He admitted that, on another occasion, he had obtained £400 by falsely pretending that he was an officer in the Customs Department; but he said that a charge in respect of that pret ence was withdrawn by the Crown when he was convicted of the first mentioned offence. He served his sentence in the Boggo Road Gaol, Brisbane. There he met a fellow prisoner named J. J. Petrie. After his release he 'Seemed to have lived by his wits, and his peregrinations took him t o New Guinea and to the Bulolo Gold-fields. While in New Guinea he met Parer. He also became aware of the stands of pine in the Bulolo Valley.
In 1935 he approached Mcintyre and Sly, Queensland timber merchants, and suggested to them that they should endeavour to secure timber rights in t he Bulolo Valley. He persuaded them to enter into an agreement giving him one-third interest in the venture. He and Mr. Sly journeyed to Port Moresby. Leaving Farrell at that town, Mr. Sly flew to the Bulolo Valley and
was tremendously impressed with the magnificence of the pine forEs ts. He mw a stand of trees, which he estimated to contain 150,000,000 super. feet of pine. This figure becomes of great significance wh en t he facts of the fraud are examined. On Mr. Sly rejoining Farrell at Moresby, the two took ship back to Brisbane and on the way they prepared two applications for licences to cut timber in the Bulolo Valley-one by Sly for 5,000 acres and another by Mcintyre for 1,500 acres.
During his negotiations with Mcintyre and Sly, Farrell carried on a correspondence with Mr. J. D. Hunter, Assistant Minister for Health, whom he sought to use as a channel of with Sir George Pearce, the Minister in Charge of the Territories. Mr. Hunter,
however, made inquiries about him from the Criminal Investigation Branch. They reported that he was "no good". Information to this effect was conveyed to Mcintyre and Sly, who severed their connection with Farrell. Having learnt of Mr. Hunter's action, Farrell threatened him with proceedings for libel, but getting into other difficulties he had to leave Brisbane.
Mcintyre and Sly's applications were lodged with the Administrator but were refused because no forestry policy had been laid down for the Bulolo timber. In 1938, however, applications for the allotment of licences were called for by public tender and Mcintyre and Sly were among those who submitted tenders. For good reasons, no tender was accepted.
The evidence did not show Farrell's movements after the Mcintyre and Sly episode until May, 1944, when he is found in negotiation with Parer in connexion with his gold leases.
(4) RAYMOND
Raymond Parer first became famous in the nineteen twenties, when, in company with another airman named Mcintosh, be made a hazardous journey from England to Australia. Subsequently he and one or more of his brothers went to New Guinea, where they took up two gold claims in the Bulolo Valley. They also interested themselves in running an aeroplane service from Salamau and Lae to the gold-fields and in establishing a newspaper in New Guinea known as The Morobe Times.
When the Japanese War broke out, Raymond Parer first enlisted in the Royal Australian Air Force. Then he joined the American Navy, and was employed on their "small ships" operating in the waters of New Guinea and the adjacent islands. Early in 1944 his ship was sunk and he suffered great privations. He was granteci six months' sick leave, which he spent in Sydney, carrying on bus4tess at Bellevue Hill.
In October, 1944, he rejoined his" small ships" in the New Guinea waters and remained with them until 26th March, 1945. On 23rd April, 1945, he obtained his discharge from the American Navy. From April, 1945, to about April, 1946, he was in Sydney. In April, 1946, he went north and did not return to Sydney until April, 1947 . The last six months of that period he spent in Queensland hospitals, returning in April, 1947, to the vVahroonga Sanatorium, Sydney, to recuperate. He was still convalescing when the Hancock & Gore transaction came to light in December, 1947.
(5) HARCOURT GARDEN.
Harcourt Garden is the son of J. S. Garden. He is about 40 years of age. In his youth he commenced a law course, but upon securing a position with the broadcasting station 2KY, he gave up his legal studies. He became the Production and Assistant Manager. He was with the station for seventeen years. In 1946 he resigned his position to take over a business, which traded in small goods. In June, 194 7, he sold all his effects in New South Wales and went to
New Zealand. He hoped to find suitable employment there, but was not successful, and, after the commencement of the proceedings against his father, he returned to Sydney.
{6) HANCOCK & GORE LIMITED AND ITS DIRECTORS AND OFFICERS. Hancock & Gore Limited is a company dealing extensively in timber, both as merchants and manufacturers. The business was commenced by J. H. Hancock over 40 years ago, and, from a small concern, was built into a. flourishing undertaking, employing over 2,000 persons. At the relevant t ime its share capital consisted of 144,748 ordinary shares ::11:.d 55 ,000 pref8rence shares.
The ordinary shares were very largely held by members of the Hancock family. The preference shareholders had the right to elect their own Direct or and since 1926 Mr. E. R. Crouch, a respected Brisbane Solicitor, had held the office continuously. Mr. J. H . Hancock was the Chairman of Directors and the dominating personality in the Company. 'rhe other members of the Board
were his two Mr. Roy Hancock and Mr. E. S. Hancock and also Mr. A. B. Hawkins, the Company's Accountant and Mr. E. S. Sinclair, its Secretary. Mr. J. H. Hancock died on 24th April, wherc:..pon Mr. Roy Hancock became the Chairman. At the Annual Meeting held on the 14th December, 1945, that is after the execution of the Deed of the 20th November, 1945, Sir -William Glasgow was elected a Direct or. The facts in re lation to the transaction were never revealed to him and he did not hing with refe rence to it, except t o inquire from time to time how
"the New Guinea proposit ion" was progressing and urging that something ought to be done towards commencing production. Throughout the inquiry the Directors other than Mr. Crouch and Sir William Glasgow were referred to as " the Working Direct ors ". I shall retain t he t erm.
Mr. Crouch, in addition to being the P reference Director, had formerly been the Solicitor to the· Company, but in the year 1940, Mr. J . H. Hancock had changed tl1e solicitorship and had transfcr:ed the legal work t o Mr. E. E. Biggs, a Solicitor, about 40 years of age, who carried on business under the name of Biggs and Biggs . He bas been a qualified Solicitor for 20 years and is in quite a large way of practice.
The Company has a Logging Manager named Henry George Forshaw. He is a man of little formal education but possesses a great deal of natural sagacity. He left school at the age of thirteen, and, after engaging in various lli"lskilled occupatiom , he enterrd the service of Hancock & Gore, where he gradually rose in importance until he finally became their Logging Manager.
His particular duty was to inspect growing timber and to advise the Directors upon its purchase, and generally to see to t he supply of raw material for the Company's purposes.
Those being the main persons concerned in the tramaction I next consider two important matters, which are of such significance, in t hey are almost sufficient to expose
the falsity of the story t old by Garden agamst the Mm1ster. The fir st relates t o the legal powers of the Minister, and the second to the policy of the Commonwealth Government in relation to the timber in the Bulolo Valley.
THE MINISTER'S LEGAL POWERS.
The Territory of New Guinea was placed under the control of the Commonwealth of Australia by a Mandat e of the J:eague of To carry out the Com:t;J-onwealtb
Parliament passed the N ew 4ct 1.920, whiCh directed the appomt:nent of
an Admini:strator, charged with the duty of adm1mstermg the Government of the Terntory on behalf of t he Commonwealth. He was to and perform all the powers and functions of his office according to the tenor of his commission, and t o such inst ructions as should from time to t ime be given to him by the Governor-General.
In due course an Administrator was appointed and, under the direction of Cabinet, he set up a number of departments analogous to the Departments of State, which exist in British self-governing communities. Among them was the Department of Forestry with its Secretary and · officers.
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By the Statute, the Governor-General was given power to make Ordinances for the peace, order and good government of the Territory. In the course of time, many Ordinances were enacted, which established an extensive system of law for the Territory. They were published in annual volumes. They included Ordinances relating to forestry.
The first Forestry Ordinance was made in 1922, but in 1936 it was repealed by the Forestry Ordinance No. 46 of 1936, which, as slightly amended in 1937, was the Ordinance in force at all relevant times. The obj ect of the 1936-37 Ordinance was to provide for the conservancy and management of forests growing upon "administration lands". This t erm broadly meant Crown lands as taken over from the Germans, unoccupied land which had been declared to be "administration land" and also land in respect of which the timber rights had been acquired from the natives. If the timber had not been purchased from the natives, the land on which it was growing was not "administration land", and the timber was not subject to disposal under the Ordinance. ·
Provision was made in the 1936-37 Ordinance for the Administrator to grant " licences " and "permits ". A "licence" was a right to take timber from an unspecified area in common with others. It was limited to a period of one year. A "permit" conferred the exclusive right to take timber from a defined area. It was limited to a period of ten years. The extent of the area to be granted under a "permit " was in the discretion of the Administrator. This use of the terms " licence " and " permit " was a reversal of the terms as used in the 1922 Ordinance. Under that Ordinance "licence" was used for the exclusive right and "permit" for the right in common.
The 1922 " licence " was limited to fifteen years as against ten years in the 1936 " permit ", and a 1922 " licence " could not be given over an area in excess of 5,000 acres as .against an unlimited area in the 1936 "permit". Under the 1922 Ordinance the " licence" was subject to such royalties as the Administrator should fix in the grant. Under the 1936 Ordinance minimum royalties were specified by regulation at 2s. per 100 super. feet for pine and 3s. 6d. per 100 for cedar.
Upon the outbreak of the Japanese War, National Security Regulations were passed, which suspended the powers of the Aministrator and his officers, and vested them in the Minister of External Territories and his delegate, and also in the General Officer Commanding the New Guinea Force of the Australian Army. This meant in practice that, so long as the Army was in occupation in New Guinea, powers in respect of civilians would normally be exercised by the General Officer Commanding. The powers whether of the Minister or the General Offic er Commanding were not dictatorial. They had to be exercised according to law­ that is to say in accordance with the Ordinances. The National Security Regulations did not repeal or abrogate the Forestry Ordinance.
The Territory of Papua was an Australian Dependency. It had its own Act, its own Administrator and its own Departments and Ordinances, including a Forestry Ordinance, in which incidentally the term " licence " was used for the exclusive right to t ake timber and "permit" for the right in common. The National Security Regulations effected the same change in the Papuan Administration as in the case of the New Guinea Administration.
The Japanese having been defeated, the Commonwealth Parliament, on 3rd August, 1945, passed the Papua-New Guinea Administration Act, whieh was proclaimed to commence on 30th October, 1945. It set up a single syst em of administration for both Papua and New Guinea, but provided that the existing Ordinances with respect to each Territory should continue in fo rce. There was only one Administrator for the two Territories. He was appointed by the
Governor-General. In relation to the powers of t he Administrator, the only diffe rence between the new organization and that existing prior to the War, was that the Administrator was 1equired to exercise his powers according to instruct ions given to him by the Minister instead of t he Governor-General. In other words the Administrator took his instl uctions from the Minister fJr External Territories and not from the Governor-Gene -al in Council. Such instructions could
not, of course, override the Ordinances. Upon the proclaiming of the 1945 Act, the National Security Regulations ceased to apply. Power to grant licences and permits in respect of timber in New Guinea were no longer vested in the Minister but in the Administrator. A grant by the Minister wo uld be of no legal effect.
The importance of this review of the law is that on 20th November, 1945 , nearly two months after the proclamation of the 1945 Act, the Minist er is said to have granted to Parer or agreed so to do, a "licence " t o ta.ke timber in the Bulolo Valley f rom land which was native owned, for a period of 25 years, royalty free. His alleged action was ultra vires and illegal. It was t he Administrator alone who had power to grant licences and permits. Even if the Administrator had purported to do what t he Minister was alleged to ha ve done, his action wo uld have been illegal. He had no power to grant timber which was native owned; no grant could exceed ten years ; and no grant could be made royalty free. It is almost inconceivable that a responsible Minister of the Crown could have been party to an act so obviously illegal and so certain of exposure.
DESCRIPTION AND HISTORY OF THE BULOLO TIMBER. The Bulolo Valley is situated in the mountains of New Guinea about 50 miles from the eastern coast, at a height of from 2,000 to 3,000 ftJet above sea level. Prior t o the war, except fJr a native fJot t rack along the river gorges , the only access was by air. During the war, a road
which roughly fJllowed t he native t rar}c was built from Lae. The distance was about 80 miles. The road was const ruct ed at great cost. Apart f rom the deterioration wh ich it suffered under war conditions, it is subject in many places to landslides and washaways. To make it commercially usable will necessitat e either large reconstruction costs or heavy annual maintenance. The
main induc;t ry in the valley is dredging fJr gold carried on by the Bulolo Gold Dredging Co. Ltd., wh ose enterprise has resulted in the establishment cf two towns, Bulolo in the centre of the valley, and Wau towards the southern end. Each has a substantial white population. There are also a number of native villages.
The valley contains extensive stands of trees of the species of hoop and klinkii pine, said to be particularly suitable for ply-wood peeling. The total quantity of pine timber approximates 500,000,000 super. feet. Other varieties cf timber are scattered through the f0rest s, including 50,000 ,000 super. feet of red cedar. In 1944-45, f )rests containing 200,000 ,000 super. feet of pine had become administration land, made up of 10 ,000 acres on the east side of t he river,
containing 135,000 ,000 super feet acquired from the natives, and 5,000 acres on the west Eide of the river, containing 65,000,000 super. feet, declared to be unoccu:ried land. The balance of the t imber, amounting to 300,000,000 super. feet was subject to native rights. The land on which it was grown was not " administ ration land " for the purposes cf the Forestry · Ordinance.
About 1935, Mr. Lane Poole, the Chief Inspector of Forests at Canberra had reported upon the Bulo1o Valley. He advised against the granting of concessions, until a forestry policy had been laid down. It was in consequence of his advice, tbat the applications of Mcintyre and Sly, to which I have previously referred, were refused. It was on his advice, also, that the Forestry Ordinance of 1936 was made fixing royalties and giving the Administrator more
extensive control over the manner in which timber concessions should be worked. In 1938, the 10,000 acres on the east bank of the Bulolo River were advertised for allotment by public tender. A number of tenders were received, but they were on such diverse bases that no decision could be made. While the matter was still under consideration the war
intervened. . In 19 14 after the Japanese had been defeated in New Guinea, applications for permits again began to reach the authorities. Some were addressed to the Prime Minister, some to the Administrator and some to the Minister for External Territories. All were forwarded to the Department of External Territories and duly file ] . Quite a volume of correspondence developed concerning them. Many communications were addressed to the Minister .himself and were
acknowledged and discussed by letters under his own signature. Having been in correspondence since the 20th January, 1944, with Mr. C. C. Innes, one of the applicants, the Minister on the 19th May, 1944, during a rush trip to Melbourne, made time for an interview, in which he discussed with Mr. Innes the question of the best means of making the timber available to the Austr_ .lian
market. Further correspondence with Innes ensued under the signature of the Minister an:l on the 8th November, 1945, at the very time when the Minister was supposed to be granting this huge concession of 200,000,000 super. feet of timber royalty free to Parer, he wrote under his own hand to Innes :-
The question of the grant of further timber rights and the matter of the export of timber from the Territo ries cannot be detennined until the policy that is to be followed is decided.
On the 17th September, 1945, again right in the middle of the alleged negotiations for Parer's royalty free concession, there was a personal letter Mr. N. J. Harvey, written on behalf of certain timber interests whom he represented, askmg for a concession over the whole of the Bulolo timber, and offering royalties, together with a contribution towards re-afforestation, and a toll of 2s. 6d. a ton for the upkeep of the Lae-:-W au road. The Minister himself replied to the letter, promising to give the matter his consideration.
With the restoration of civil administration on 30th October, 1945, the Administrator re-established a Forestry Department for Papua-New Guinea. Mr. McAdam, an expert forester was appointed Acting Secretary. He immediately took up the question of exploiting the Bulolo timber on scientific lines, having particularly in mind the necessity for a policy of re-afforesta tion.
On 16th May, 1946, he made a written report to the Administrator recommending that all existing applications for concessions be refused, and that, in future, all concessions should be allotted by private tender. He wanted the concession to contain conditions, providing for re-afforestation and for the establishment of a mill in the valley for the manufacture of plywood.
He hoped by this means to effect the industrial education of the natives.
In the meantime all the manufacturers of plywood in Australia had become .interested in the possibilities of the Bulolo timber, and on the 19th March, 1946, Mr. J. F. Brett of Brisbane, who was the Chairman of the Australian Plywood Manufacturers' Association sent a letter to the Prime Minister suggesting a joint undertaking between the Crown an i the Australian plywood manufacturers to open up the areas, transfer the logs to Australian ports and embark upon a co-operative profit sharing scheme between the two interests. A copy of this letter was sent to the Minister.
McAdam's recommendat ions of 16th May were forwarded by the Administrator to the Minist er for consideration . The Minister approved the recommendation that alJ previous applications be refused, but deferred the question cf the mode and terms of future grants. The matt er was exceedingly complic .::tted. At least :five problems h1d to be solved. First, there were the obligations of the Commonwealth to the natives under the Mandat e; second, the reconstruction and maintenance of the Wau-Bulolo road ; third, t he provision of shipping ; fourth, the adjustment of the Customs Tariff because manufactured timber entering Australia was subject to a heavy duty; and fifth, the pacification of t he Australian labour unions upon the question of plywood, manufactured in New Guinea by cheap coloured labour, competing
with the Australian-produced article. Every one of these problems involved consultation with a different Commonwealth Department. A sub-committee of Cabinet was deputed to consider the questions and they set up a Plywood Advisory Panel to fully investigate the matter. It was constituted at the end of July, 1946, and consisted of a Chairman, who represented the Secondary Industries Division of the Department of Post-war Reconstruction, two representatives appointed by the Plywood Manufr1cturers' Association, a representative of the saw milling employers, a representative of the State Depar tment of Lands, Queemland, a representative of the Timber Workers' Union and a represent ative of the Furnishing Trades Union of New South ' ¥ales. McAdam was also a member, repres
On 14th March, 1947, af cer having visited t he Bulolo Valley, t he Plywood Advisory Panel made a report, recommending that the timber be developed by a composite company, in which 51 per cent. of the share capital would be held by the Government and the other 49 per cent. by a company to be formed by the timber interests in Australia on a co-operative basis. This report was considered by various Departments and came up for review before an Inter­ depar tmental Committee for the Co-ordination of Plans for the Development of Papua-New
Guinea. The Advisory Panel's report did not find favour with the Committee and in August, 1947, they recommended " that the available stand should be exploited wh olly by private enterprise on the basis of public tender." McAdam in the meantime had submitted a new proposal that a private company which already had experience of milling timber in New Guinea for its own purposes should be asked to join with the Government in developing the milling industry in the valley.
The files relating to the various investigations are very voluminous. The Minister was kept fully advised and copies of all the proceedings of the various bodies and of all their reports came before· him. On occasions he was called in for consultation. When the Inter-departmental Committ ee made its report in August, 1947, he was in England and a copy of the report was sent overseas for his information. Throughout the deliberations of the various l:Jodies there is no sign of any interference on his part-and this notwithstanding the fact that he himself favoured the establishment of a milling indust ry in Bulolo, conducted entirely by the
Government. In October, 1947, after his return to Australia, having two contradictory reports before him, he considered Mr. ·McAdam's new proposal of co-operation with a single private company. He decided that as far as he was able to do so , he would adopt it and carry it into effect. On 5th December, 1947, he and Mr. Lemmon, the Minister fer Works and Housing, decided that McAdam should be directed to approach the private company concerned. They signed a joint minute to that effect. Tle minute was in the course of being implemented, when the events occurred whir.h led to the exposure of the H a.ncock & Gore tranmctic n.
A perusal of the files upon the exploitation of the Bulolo timber throws into sharp relief the inherent improbability of Garden's story. It was said that having made a huge grant of royalty free timber to Parer, the Minister throughout 1946 and 1947, while all these departmental investigations were in progress, was making frequent promises to Garden, that Parer's grant would be implemented by a formal licence and permission to commence operations.
DURCHER'S PROPERTY.
This property became involved in the Hancock & Gore transaction. Although it was referred to throughout the inquiry as Durcher's Lease, it was not in fact a Lease. It was a licence issued by the Administrator of Papua to Marguerite May Durcher to fell, cut, remove and dispose of timber within an area of 5,408 acres situate on the Mambare River in the northern division of Papua.. The licence was granted under and subject to the provisions of the
Papua Timber Ordinance 1909-1920. It was to endure for a term of ten years commencing on the 1st April, 1941, at a yearly rental of £27 lOs. It was subject to a condition that the licensee within a prescribed time should erect on the property a sawmilling plant capable of turning out 30,000 super. feet of timber per month. Two-thirds of the property is covered with a forest containing 20,000,000. super feet of millable timber of the species of dipterocarp, a valuable
commercial wood. The for .,;st is reasonably accessible by the Mambare River.
On the 29th November, 1945, Farrell agreed with Mrs. Durcher to purchase the property for the sum of £4,000 and paid her £1,000 on account of the purchase money. On the 9th January, 1946, Mrs. Durcher and Farrell applied for the Administrator's consent to a transfer of the licence pursuant to the s _ de. There was considerable delay in connexion with the
application, but on the 2nd December, 1946, the departmental requisit ions having all been complied with, the Acting Administrator formally consented to the transfer.
On the 3rd July, 1947, Farrell, in consideration of the sum of £5,000 which was then and there paid to him, gave to Biggs as trustee for himself and others a nine months' option to purchase the property at £60,000. The option was not exercised and, subject to the terms of a modifying agreement, the consideration moneys were forfeited. Out of the £5,000 Farrell
paid the balance of the purchase moneys due to Mrs. Durcher.
Neither Mrs. Durcher nor Farrell had fulfilled the condition relating to the erection of a sawmill on the. property, but on lOth April, 1948, Farrell succeeded in obtaining from the Administrator an extension of the time for compliance with the condition until 31st December, 1948. In October, 1948, Farrell and Biggs were again in communication over the property and it was arranged that Biggs should apply on behalf of Hancock & Gore for still a further extension
of time. Biggs thereupon wrote a disingenuous letter to the Forestry Department, in consequence of which the Acting Administrator, out of sympathy both for Hancock & Gore and Farrell, granted an extension of the condition until the 31st December, 1949.
If the Acting Administrator had been aware of the facts as they have been disclosed to this Commission, I think it is unlikely, that he would have been sympathetic either towards Farrell, or Hancock & Gore, and would not have granted the extension.
'fHE ARMY INVENTIONS DIRECTORATE. The Army Inventions Directorate was a temporary Department of the Commonwealth, created to investigate inventions which might prove useful in the war effort. There was a Board of Directors in Melbourne, with Dr. Woolley as the Chief Executive Officer. There were
branches of the Directorate in each of the capital cities.
The officer in charge of the Sydney branch was Royden Murray Servic e. He claimed t o be a qualified engineer. He had been appointed to the Inventions Direct orat e from the Optical Section of the Munitions Department. As head man in the Directorate in New South ·wales, he seemed to have been left very much alone, and there appeared to be little supervision over his daily activities. He said that Dr. Woolley had the utmost confidence in him. Indeed, on
leaving the Directorate, he was given an excellent testimonial from the Board of the Directorate highly commending the work he had done.
Farrell introduced himself to Service in 1944 in connexion with an invention of an aeroplane locater. He quickly had Service in his t oils and was able to use him as a ready t ool in carrying out the Hancock & Gore fraud. Service allowed Farrell to use his rooms at his pleasure and to have the use of his staff for typing documents. The original conference between
Farrell, Biggs and Forshaw, when t he fraud first assumed definite shape, was held in one of t he rooms of the Directorate. He witnessed the signatures to some of t he fraudulent documents, in one case subscribing a statutory declaration as a Justice of the Peace. Quit e a number of the do cuments used by Farrell in carrying out the fraud were typed in the office of t he Army
Inventions Direct orate.
Service's chief function, however, was to arrange air travel for Farrell between Sydney and Brisbane. At a time when no one was allowed to travel int erstate without a permit, and when passages were booked in accordance wit h pricrities, Farrell was able to fly backwards and forwards with the greatest of ease. Service arranged the priorities ostensibly on behalf of his
On the 9th August, 1946, Farrell lent Service £200 free of interest repayable on demand. It was said to have been repaid shortly afterwards. The evidence of t he repayment was suspiCIOUS.
The head officer of the Inventions Directorate m Brisb
business and had to arrange for it t o be carried on by others.
In October, 1914, Crammoml went to SyJney to utteud a cou.f..:rence of the Army Inventions Directorate. S.:Jrvi_;e introduced him to Farrell. After Farrell had left, Service told Crammond that Farrell was holding a most important and secret position with the Government. Crammond fJrmed the impresciJn that Farrell was " a kind of glorified King's Messenger " and was occupying a par ticularly int3resting and very secret set-up with the Government in New Guinea.
Crammond returned to Brisbane and some t l ree weeks later he received a telephone message from Servi.Je s•:t;ring that, in connexion with the secret project mentioned to him in Sydney, it was absolutely essential, that Mr. Roy Hancock, Mr. Forshaw and Mr. Biggs should be in Sydney upon a cer tain date, to attend a Government conference in connexion with timber, which
was urgently required for the building of ships and planes in Australia. Service asked Crammond to arrange priorities for them to travel. Crammond did so. At the same time Service mentioned that Farrell would be vi3iting Brisbane quite frequently, and he asked Crammond to make the facilities of his office available to him. Crammond extended t his courtesy to Farrell as an ordinary inter-office business matter. H e made a table available to him in his outer office and his secretary did quite an amount of typing for him.
At this point Crammond's evidence is worth quoting in the first person. He was asked whether he thought Farrell was connected with the Government. He said-Definitely so we all believed that. I was never asked to arrange travel priorities for Farrell. As a matter of fact he t old me on one occasion be could travel to any part of Australia he wished ar;.d see any of the Ministers immediately. I believed him at the time, because I beli eved that he was on a very big Goverr_ment project. I had no reason to disbelieve him. He had a most extraordinary way of putting these things over. It was really hard not to believe him.
A little over three months after I first met Farrell, I visited Sydney again and I saw Farrell at the Army Inventions Directorate. I had morning tea with him in the Board Room. Service was there too but he was ca lled out. I n the course of the conversation Farrell said to me, " How are you fix ed for time this mornir.g 1 " I said " Qui te all right, I am not going back till tomorrow". He said," I would like you to meet a very important personage here who wields an enormous amount of power in Australia". I said, "That sounds most interestir:g Mr. Farrell, come along we will go ".
We went to the Commonwealth Bank Chambers. vYe went to an open door and Mr. Farrell just waved and said," Rullo Jock" and I was introduced to Mr. Garden. That was the first time I had met him. I might mention t hat Mr. Farrell knew by this time we had arranged priorities for these people, and given them office facilities and he t old Mr. Garden I had been of very great assistance to them in Queensland and he asked Mr. Garden to assist me in any way Mr. Garden told me that if I had any difficu lties at this end in transp ort matters, he would be only too glad to assist me in any "ay and not to be afr aid to cBll Uj:On him.
When we got back from the Bank to the Army Inventions Farrell and I were left alone for a few minutes. We used to use the Board Room for odd matters such as writing notes and so on because the other officers were fairly busy with submissions and secret inventions and so on. We were served with a very nice cup of tea again ar:.d Mr. Farrell during the discussion said, " I have often wondered with the rather wonderful name you have in Queenslar:.d and New South Wales why your business has not branched out " My reply was, "We have worked up a very good connexion over the last twenty years and it means of course that we have not opened out more in branches because it means money." Farrell immediately turned to me and said, "Well, in my experience, ar:.d you will fiz;.d this in time too, th ere is no more trouble in developing or operating a £50,000 proposition than there is in operatirg a preposition for £200 or £300." I said, "I am afraid I cannot say very much in that direction. I have never seen £50,000 all at once and I would not like to say that". He said, " I have a great deal of loose money lying about and for advancing your bu r.iness I would be very happy to make you an interest-free loan of £2,000 or even more and you could return it when you liked ". I was absolutely aghast as you can imagine. I had never had anybody make me an offer from the blue like that. I said, "I am afraid I do not get you Mr. Farrell. This sort of thing has never happened to me before. What is the reason for this 1" He said, ''It is just a matter of this "-I think he called me Cram by this time-" when I meet people and I like them as I like you, it is nice to have the money to help them." I said," At present of course there would not be any possibility of extending a business in any case." At that Farrdlleft.
I remember very distinctly going out to Mr. Roy Service's office and saying," Roy, what is actually the strength of this Farrell chap, is he a very wealthy man 1 " Service said, " Oh yes, why Cram 1 " I sa id, "He has ju st made me an offer of a £2,000 loan free of interest. It just simply knocked me off my feet and I was wondering if be was a little off his rocker". He said," No, he has the money all right, he must have meant it." ,
Needless to say Crammond did not accept the loan.
I have set out Crammond's evidence at length, because it is a very good illustration of Farrell's methods, and goes a long way to show how he was able to hoodwink the working Directors of Hancock & Gore and their Solicitor and Logging Manager. If they had given me as frank an account as Crammond of their conversations and conferences with Farrell, the telling of the story of the fraud would have been much simpler. As it was, they had strange gaps in their memories of what Farrell said to them.
THE SALE TO HANCOCK & GORE LIMITED. THE MAKING OF THE DEED OF 19TH DECEMBER, 1944 (1\L\.Y, 1944, TO DECEMBER, 1944).
The story commenced with several meetings between Parer and Farrell in May, 1944, when Parer was on sick leave from the American Navy. They discussed Parer's gold leases and Farrell undertook to form a syndicate to raise money for the construction of a water race, which was necessary to work the property. By some means, Farrell brought Garden's name into the discussion. The upshot was that Parer gave Farrell an option over his gold leases
and also short powers of attorney to both Farrell and Garden. None of these documents were produced to me and the evidence relating to them was very unsatisfactory. There is no evidence as to the use which Farrell sought to make of the alleged documents, except that he said he visited Melbourne in an endeavour to raise some capital. In October, 1944, he met
J. J. Petrie, with whom it will be remembered he had been in the Boggo-road Gaol, Brisbane. Petrie, not long before, had sold a motor car to Hancock & Gore through Forshaw and, in the course of the deal, Forshaw told Petrie that on account of the timber shortage in Queensland, he was looking for logs wherever he could get them. Petrie reported this to Farrell, who reacted swiftly. Remembering Sly's estimate of the 150,000,000 super. feet of pine in the Bulolo Valley, he conceived the scheme of selling this timber to Hancock & Gore by means of a
gigantic confidence trick. The scheme was to represent Parer as a resident of New Guinea who had rendered signal service in the war, meriting the favour of the Minister, and to represent Garden as a powerful Government servant, enjoying the confidence of the Minister to such an extent, that his word could be accepted as that of the Minister. According to evidence, which was again
unsatisfactory, Farrell's first step was to get Parer to extend his powers of attorney to cover timber as well as gold. Next he purported to form a syndicate consisting of J. S. Garden, Harcourt Garden, Parer and himself to exploit Parer's non-existent timber rights. He then approached Forshaw telling him that Parer had made an application for 4,000 acres containing 150,000,000 super. feet of timber and that it was receiving favorable consideration. He asked Forshaw if Hancock & Gore would consider purchasing the licence if Parer was successful in
obtaining it. Forshaw introduced Farrell to J. H. Hancock. After a journey or two between Sydney and Brisbane, Farrell was able to enlarge on his story. He probably told J. H. Hancock that the Minister had complete power over the grant of concessions, and that Garden was in a position to influence the Minister. J. H. Hancock was impressed and consulted Biggs about it and asked him to look into the legal position. Biggs deputed his managing clerk, Rigby, to search the relevant law. Rigby was unable to find copies of the New Guinea Ordinances in Brisbane, but he noted that under the National Security Regulations the powers of the Administrator were vested in the Minister. He made extracts from the Regulations and reported to Biggs. It was there that Biggs made his first mistake. He should have insisted on seeing the Ordinances. Throughout the whole of the tmnsaction he was ianorant of the legal requirements in respect of the grant of a concession. J. H. Hancock next sent Forshaw and Biggs to Sydney to negotiate with Farrell, and also to go to Canberra if, for the purposes of investigating the title, Biggs should think it necessary.
A conference was held on the 29th November, 1945, at the offices of the Army Inventions Directorate, Service obligingly placing a room at their ditposal. The conference was a lengthy one. It commenced with Farrell. After a luncheon adjournment Garden · was bro ught in. It is impossible to ascertain from the evidence all t hat was said, but I am satisfied that Garden and Farrell represent ed that, on account of Parer's distinguished war service s, the Minister had granted
him a licence for 4,000 acres in the Bulolo Valley containing 150,000,000 feet of timber ; that the Syndicate had been formed t o exploit it ; that the licence was not in the ordinary departmental f )rm because the Minist er, in his det ermination to cut t hrough red tape and get t hings done, had grant ed it behind the back of the Department ; and that a formal legal licence would be issued at an opport une moment. They asked £75,000 for the concession with a deposit of £1 0,000 and said they were indiffe rent whether Hancock & Gore accepted, because they could dispose
of the licence in America. They further told Biggs and Forshaw that the transaction must be kept secret, because if the permanent officials heard of it, they would oppose the Minist er­ consequently no approach was to be made either to the Minister or t he Department. I find, that it was for this reason that Biggs did not go t o Canberra to further investigate the legal position.
On returning to Brisbane, Biggs reported to J. H. Hancock. He was uneasy about the transaction and warned J. H. Hancock of its risks ; but Hancock was anxious t o proceed, if Biggs could draw an agreement to secure to the Company, whatever rights the Syndicate either had or would acquire in the future. Against what I think was his better judgment, Biggs carried out his instructions. On the 4th December, 1944, he wrote to Farrell to come to Brisbane and
asked him to bTing with him "the licence already issued and any maps or photographs applicable to the particulal' locality." This reque ... 0 put Fanell into a fix, because there was no "licence already issued". But he equal to the occasion. He forthwith had a Power of Attorney prepared from Garden to himself in the following terms :-
I, John Smith Garden of Commonwealth Building, Pitt Street, Sydney, give to Edward Farrell of Epping this my Power of Attorney for the specific purp ubl! of negotiatiug, selling entering into agreements, receiving monies and paying monies in relation to all licences to cut and export timber from Bulolo Valley and the Mandated Territory of New Guinea. Th at is any licences t o cut and export timber at present held by Raymond Parer, Harcourt Garden, Edward Farrell or J. S. Garden , or any applications to be made for an area totalling not less than 4,000 (four thousand) acres.
The said Edward Farrell having full power for this my Power of Attorney granted this fifth day of December, 1944. JOHN S. GARDEN. Witness: R. .M:. SERVICE, J.P.
ATmed with this he went to BTisbane on the II th December, to conclude the negotiations. How he explained the absence of "the licence already iesued" I was unable to ascertain. The magic of Garden's signature, even if only to a Power of Attorney, seemed sufficient. All the witnesses said that in fact Fanell did produce a document in the natUTe of a licence. Biggs, Forshaw, Fanell and Garden said he pi'oduced it in Sydney as well. No one could give its tel'ms or say with any cel'tainty by whom it was signed. On the circumstantial evidence, I find that there was no such document. Biggs kept possession of the Power of Attorney and if there had been anything in the nature of a licence he would have kept that document also. He did not note it in his instructions and yet it would be the very t hing which his clients were purchasing.
On receiving Biggs' letter of the 4th December, Farrell realized that Hancock & Gore were taking his earnest. He thereupon schemed to improve on the price which he had quoted in Sydney. I infer from the documents that, at t he conference in Brisbane on the 11th December, he told the Working Directol's that in addition to the 4,000 acres which had been promised to
Parer, Garden could probably get another I,OOO acres with an additional 50,000,000 feet of timber. If that eventuated, the price would be £1 00 ,000. In any case the deposit would have to be £12,500. The Working Directors agreed to these terms and Biggs was instructed to draw the Deed of Sale and Purchase. Biggs again warned J. H . Hancock against parting with £12,500
" without tangible security". Nevertheless he proceeded with the preparation of the document.
The recitals in the Deed concerning the subject of the sale are significant in that no reference is made to the licence, formal or otherwise, said to have been issued to Parer. The recitals are-Whereas the vendors or some one or more of them have or has t aken up or obtained or has become entitled to t ake up or obtain certain licences leases rights or concessions from the appropriate authority to fall and win and when so fallen and won to export or otherwise deal with as they shall think fit timber situated
in the Mandated Territory of New Guinea hereinafter called "the Timber Rights" and whereas such rights relate presently to ·an area of not less than 4,000 acres and whereas as it is intended that the vendors or some one or more of them will take up and obtain timber rights in respect of certain further areas in the said Territory and that such rights to such further areas shall also be included in the said term" Timber Rights".
It can be inferred, I think, from these recitals that Biggs had no clear idea of what Hancock & Gore were purchasing and that he had not been able to pin down Farrell to a definite representation. In accordance with his instructions and still warning J. H. Hancock, he did the best he could in the circumstances.
The Deed provided for a purchase price of £IO O, OOO which was to be reduced to £75,000 if the Vendors did not obtain the extra 1,000 acres. 'I'he dep osit was £12, 50 0, to be paid on the execution of the Deed. A further £12,500 was to be paid on the commencement of operations and the balance by quarterly payments equal to 15 per cent. of the gross profits or at t he Vendors' option 4s. per hundred superficial feet log measurement. The Vendors undertook that a licence would be vested in t he Purchasers to the 4,000 acres within four months and that the Purchasers would be able to inspect the property within six months. They guaranteed that the 4,000 acres contained 150,000,000 super. feet of timber and that t he extra 1,000 acres, if obtained, would contain 50,000,000 super. feet. The purchase was subject to royalties but the Vendors guaranteed that the royalties would not exceed Is. per IOO super. fe et for certain sizes of timber and 9d. per 100 super. feet for other sizes. There were covenants for title and further assurance.
The Deed was engrossed in triplicate. It was signed by the two Gardens in Sydney­ J. S. Garden purporting also to sign as Attorney for Parer. To save Stamp Duty it was arranged that the Company's Seal should be affixed in Canberra. Roy Hancock, Forshaw and the Company's Secretary, Sinclair, carrying the Seal with them, went there for that purpose.
Farrell accompanied them. A Canberra Solicitor was employed to supervise the final execution. It is significant that he was not asked to search the New Guinea Ordinances or to advise on the title.
On the Deed being completed £12,500 was paid to Farrell. With this sum Farrell opened a Trust Account with the Queensland National Bank in Sydney and forthwith drew a cheque upon it for £5,000 which he paid to Garden, insisting however, that Garden should repay him £500 on account of his expenses.
As I have mentioned, Parer was absent from Australia with his "small ships" from the 27th October, 1944, to the 26th March, 1945. He knew nothing of the Hancock & Gore negotiations. But about January, 1945, while at Thursday Island he received a letter from Farrell, saying that he had formed a syndicate, and that the Minister had promised to grant
Parer a concession to cut and export from Bulolo as soon as he put in an application. When Parer returned to Sydney at the end of March, Farrell told him that an agreement bad been fixed up and that a syndicate of five had been formed. Farrell offered him a cheque for £2,500 which he said was on account of the timber concession. Parer had some qualms of conscience about
accepting such a sum and he consulted a solicitor. I am chary of accepting his evidence as to what he told the solicitor or as to what the solicitor a:lvised him. He ultimately accepted the money and on the 3rd April, 1945, he paid it into his account with the Queensland National Bank, Sydney.
The balance of £12,500 was disbursed by Farrell in various directions, which it was impossible to trace fully. Without discussing the voluminous evidence relating to the division of the money, I find, that out of the first £12 ,500-Garden received £5,000, Farrell £5,000 and Parer £2,500: that is to say in the proportions of two-fifths, two-fifths and one-fifth. No
portion of J. S. Garden's £5,000 was traced to Harcourt Garden. There was a memorandum endorsed on the £5,000 cheque paid to Garden to the effect that £2,500 was for himself and £2,500 for Harcourt Garden. On another cheque there was an ambiguous memorandum which t ended to indicate, that, with Gaden's approval, Farrell had pai:l £2,500 to a mysterious fifth
person. I think these memoranda were concocted by Farrell and Garden for use in case Parer should inquire as to the disposition of the moneys. Parer in fact made no inquiry.
THE MAKING OF THE DEED oF 20TH NoVEMBER, 1945. (JANUARY, 1945 TO DECEMBER, 1945.)
By March, 1945, Hancock & Gore were inquiring of Farrell and Garden, as to when they could exercise their right of inspection. When paying Parer the £2,500 Farrell told him that it would be necessary for him to go to New Guinea with a representative of Hancock & Gore to mark out the timber they required. The Army, however, was still in occupation of New Guinea
and it was necessary to get a military permit before the journey could be made. The Army proved The ,applications for permits for and were l!lade by letters
signed by or m Parer s name, addressed to the Mimster, and mmuted by him through the Department of External Territories. The letters carefully concealed the real object of the journey, and the Minister and the Department were led to believe that the sole purpose for Parer's wishing to go to the Territory was to inspect his goll leases; first it was said to ascertain
their condition and later to assist him in settling his claim for vVar Damage. Forshaw was put forward as his technical adviser. The permits were not granted until the 25th July, 1945. During this period J. H. Hancock died and Roy Hancock became the Chairman of Directors.
The departmental :file which grew up around Parer's application for permission to travel was prodigious and a trEmendous crJss-examination was directed towards the Minister and his officers upon almost every word in the file. I am satis:fi.ed that part taken by the Minister in obtaining permits was m ::>re than he custo.manly took m departmental matters which
bad been origmated through him. He was led to beheve that there was no real reason why Parer and Forshaw should not be allowed to go. He was infJrmed that other groups interest ed in mining had previously and he .thought that Parer should be treated on the
same basis. Even so, he did not lnmself mterfer.e with the Departments. At the end, when the matter had been argued from one officer to another, he expressed his own opinion that the permits should be granted, and that, as as possible, resi.dents of New Guinea should be given permission to make temporary to the. Terntory to mspe?t. any property they had there.
There is no doubt that Garden s 1mportumty, both to the .M:mist er and to the depar tmental officers was a factor in overcoming the resistance of the Army, but there is no thing in the files nor in what the Minister did, to indicate that he was aware of the real object of the intended visit of Parer and Forshaw. He merely followed his usual practice of seeing that a matter, initiated by
a personal letter to him, was carried to fruition if the circumstances would so permit. F.2874.-2
ForEhaw and Parer left for New Guinea on the 27th July, 1945. They were away unt il the 5th August. Each of them said that at no time during tt ... e journey did t hey discm:s the Hancock & Gore t ransaction. I find it hard to give credence to this piece of evidence, but it may be that Parer was still in a confused state as t o what it was all about and that Forshaw
thought it was no business cf his to enlighten bim.
In due com·se they arrived at the Bulolo Valley. Forshaw saw at once that there wel'e not 150,000,000 super. fe et of timber on 4,000 acres nor 2C O,O OO,OOO super. feet on 5,000 acres. The two climbed to the top of Mount Money where they could survey the whole of the fJrest. They had with them an official military map of the valley. On it they drew a rectangle to enclose an area of about 20,000 acres, which ForE:haw thought would be necessary to obtain 150,000,000 or perhaps 200,000,000 super. feet of timber. The timl::;er was on the West side of the river and was native-owned. Forshaw made the area a little large1· than was absolutely necesmry, because he had in mind the provision of space for an aerodrome. They returned to Australia and Forshaw reported to Roy Hancock in Brisbane, Parer to Farrell in Sydney. Parer took the map with him
Twenty t housand acres was an entirely different proposition to 4,000 acres or even 5,000 acres, and further negotiations with Farrell were necessary. On the lOth August, 1945, Forsbaw was sent to Sydney to see FarrelL Before leaving, be had a conference with Biggs who impressed upon him t he necessity cf obtaining an actual concession.
While Parer and Forshaw were away in New Guinea, Farrell had obtained a copy of the New Guinea Forestry Ordinance Gf 1922. He probably secured it through Garden from Mr. Downing of the Sydney office cf the Department of External Territories. Thinking that it was the Ordinance then in force, a new scheme of fraud occurred to him. He noticed that specific royalties were not prescribed in the Ordinance or Regulations, but were to be fixed by the Administrator, when making t he grant. This gave him the idea cf representing the concession as being royalty f ree, and thereby getting further moneys out cf Hancock & Gore. To add an air of reality, he told Forshaw that the Minister had the plan, but could not grant a
concession for the whole area because it included a village. The area would have to be reduced to about 17,000 acres. Forshaw said be altered the plan as asked by F arrell and obtained the approval of t he Werking Directcrs to the alteration. McAdam's evidence showed that the 17 ,000 acres would contain about 200,000,000 super. fe et of timber.
Farrell's next step was to get Garden to write a letter on the official paper of the Minister's Department addressed to Roy Hancock and reading-
Mr. Roy Hancock, Brisbane. Dear Sir,
Commonwealth of Australia.
Minister for Transport and External Territories, 13th August, 1915.
I have to inform you that Mr. Ray P arer has made application for Timber licence as per enclosed plan and will be duly registered in Mr. P arer's name. Under the present r t-gulations thue is no provisions for royalties othu than the fee payable with this application. Yours faithfully,
JOHN S. GARDEN.
This was in Garden's handwriting. Farrell also had a Power of Attorney prepared in favour of himself and signed by the two Gardens and Parer. It authorized him to enter into negotiations for the sale of certain rights and licences to cut and export timber now held or to be obtained by them or by Edward Farrell, and to effect any sale or sales of such rights licences and applications for licences, and for that purpose to sign and seal documents and to receive and give discharges for purchase moneys.
Garden's letter and the Power of Attorney were both dated the 13th August. Taking these documents with him Farrell went to Brisbane and on the 14th August, interviewed Roy Hancock and Forshaw. He told them the f_ood news, that under the terms of the Mandate, the Commonwealth Government was prohibited from charging royalties, and that the concession
would consequently be rJyalty free. For that reason, and because of the increase in the area from 5,000 to 17,000 acres the syndicate now required the deposit to be made up to £50,000 by the payment of a further £37,500. He asked for immediate settlement.
Roy Hancock hurriedly called a special meeting of Directors, when the new proposition was put to the meeting and agreed upon. Biggs was consulted ; but he was not to be caught so easily. Garden's letter was clearly not a concession. It was addressed to Roy Hancock,
and merely said that Parer had made an application. Before Biggs would let the Directors complete, he wanted a grant of the new concession. Thereupon the working Directors, acting no doubt on Farrell's suggestion, asked Biggs if he would hold the £37,500 on Farrell's behalf pending the production of the concession. Biggs refused to do so. The working Directors then made some new arrangement with Farrell. What were its terms was not disclosed to me ; but Biggs on the 26th September in fac t received £37, 500 and paid it into his Trust Account. Biggs kept a close copy of Farrell's Power of Attorney, but the original power and Garden's
letter of the 13th August were returned to Farrell. Biggs also had the Mandate searched and a copy taken. It is extraordinary that his suspicions were not aroused when he found that the Mandate said nothing about royalties.
Biggs' requirement of an actual concession made Farrell and Garden again put on their thinking caps. Not only was there no concession, but there was not even an application. By this time Parer had gone back agitin to his "small ships". Farrell accordingly signed Parer's name to an application for a licence fox the area comprised in Forshaw's plan. The application
read as follows :-
The Secretary, Department of External Territories, 52 Carrington-street, Sydney.
Stanford X -ray Co. Pty. Ltd., B.M.A. House, 135 Macquarie-street , Sydney.
With the Provisional Administrative Service about to resume civil control in Papua and part of New Guinea, I wish to make application under the New Guinea Timber Ordinance of 1922 for a timber licence for export milling purposes within the area specified in the attached plan and description. As no forms are available, and that shown at t he end of the Ordinance (Form C-Regulation 5) may have been amended slightly since the original Ordinance becarr.e law, I am here SUfPlying detailscoveiir: g the requirements uLder license and trust you will accept same as a formal application.
Name of applicant : Raymond Parer. Period for which license is required: Fifteen years. Nature of timber for cutting: All millable timber. Name: Raymond Parer.
Address: Stanford X-Ray Co. Pty. Ltd., B.M.A. House, 135 Macquarie-street, Sydney. Occupation: Aviator. Situation of land: (See Plan.) Yours faithfully,
RAY PARE R . RAYMOND PARER.
It should be noted that the application was undated and was addressed to the Secretary of the Department, and not to the Minister. It purported to be under the 1922 Ordinance, and the period asked for was fifteen years, the maximum term allowed thereunder. By the 1936 Ordinance the maximum term was t en years. The applic ..ttion W d S lodged not at the Minister's suite, but at the Sydney Office of the Department. It was stamped there as being received on
the 6th September, and was forwarded immediately to the head office in Canberra, where it was stamped as being received on the 7th September, 1945.
In passing it should be mentioned that Parer's application was duly filed in the Department along with applications which had been received from other persons. On 12th July, 1946, in accordance with McAdam's general recommendation, a departmental letter was sent to Parer refusing the application. It was in similar terms to letters sent to other applicants. Farrell
had authority from Parer to pick up Parer's official letters at the Stanford X-ray, and he probably received the letter of refusal addressed to Parer.
To resume the narrative, after a decent interval Garden and Farrell renewed their approach to Hancock & Gore. On 19th October, Garden wired Roy Hancock-Minister instructs me application granted, necessary papers will be completed first week November. J. GARDEN.
On the 22nd October, Farrell wired to Biggs-Have received official notification from Minister granting application. Do you require my presence in Brisbane for drafting agreement.
Biggs replied on 24th October-News very satisfactory your presence Brisbane unnecessary at present will probably finalise Sydney.
In the meantime Garden and Farrell had manufactured still another letter. It was typed on the official paper of the Minister of Transport and External Territories. It read as follows:-Commonwealth of Australia. Minister for Transport and External Territories,
Commonwealth Bank Building, Sydney, 22nd October, 1945.
To Mr. Ray Parer, Stanford X-Ray, B.IVI.A. House, Sydney.
Dear Sir, I have been instructed by the Minister to inform you that your application for timber licence for export milling purposes within the area specified in the attached plan and description has been granted and will 0c duly registered in your name.
Please note that the Administrator for New Guinea shall have first priority for any building timber in New Guinea
JOHN S. GARDEN, (J. Garden).
This letter was sent to Biggs by Farrell under cover of a letter dated 24th October, which said (inter alia)-Please inform Roy Hancock that they can commence operations over there after the first week in November. I am enclosing notification received from the Minister. Please note that the Administrator will hold first priority on building timbers and let me know by return when you expect to be in Sydney. Best wishes.
Biggs submitted a copy of Garden's letter to the working Directors and was given instructions to prepare a Supplementary Deed and also a Declaration of Trust by Parer that he would hold the concession on behalf of Hancock & Gore. The object of this last document was to keep the grant of the concession secret. The Supplementary Deed substituted the area in Forshaw's plan for the 5,000 acres referred to in the original Deed. It provided for the immediate payment of a further £37,500 on account of the purchase money. It bound the
Vendors to the representation that the concession was royalty free. Crouch, who had been largely, if not entirely, in ignorance of the 1944 Deed and of the payment of the first deposit of £12,500, was suspicious of the proposition submitted by Farrell on the 14th August. He urged caution. He became more suspicious as time went on, and very suspicious indeed, when Garden's letter of the 22nd October, 1945, was submitted to the Directors as the title to the concession. On 1st November, he wrote a long letter to Roy Hancock. The whole of the letter is interesting, but the most important part consists of a series of questions, which he asked about the proposed transaction.
He. said-What I want to know is-what steps have been taken to ascertain-(1) the power of a Government Department to grant a concession in Territory which I was yesterday told was "Mandated". Under what Act treaty or power is the concession granted 1
(2) how Parer became possessed ofthe Concession, and for whom is he really acting 1 (3) the nature and extent of the Concessicn-whether it is assignable and under what conditions 1 (4) who are the parties really interested-this is necessary to know so that one can feel assured that a proper price is being asked for the Concession and as to who is going to share in the purchase price.
Is there a rake off or commission going to anyone 1 -
(5) what official reports have you received-(a) as to the extent of the timber area ? (b) the cost of working it 1 (c) the means and cost of exporting 1 (d) labour conditions 1
On the 3rd November, Roy Hancock replied in evasive phrases. Crouch's very proper requisitions having thus been raised and left unanswered, Roy Hancock, Biggs and Forshaw on the 4th December, left by car for Sydney. They took the !3ngrossed Supplementary Deed and Declaration of Trust with them. They had conferences
with Farrell, who brought his Solicitor, J. J. Lynn into · the discussion. Farrell took strong exception to the clauses of the Deed requiring the Vendors to warrant that there were no royalties. He said it indicated a lack of trust in him and he wanted to call off the deal and repay the £12 ,500. Lynn agreed with the Purchasers that if, as he was assured by Farrell, there were no royalties, thue could oe no harm in having the warranty in the document, and he finally pacified the indignant Farrell. There was so much argument about the warranty, that at one stage Lynn, in his innocence, suggested that they all go along to the Minister for confirmation of the position. Biggs and Forshaw did not accept the invitation. Their excuse
was that Biggs had to hurry back to Brisbane, and that Hancock was waiting for them in his car. Of course, if they had been willing to accept the invitation, Farrell would never have let them see the Minister. He probably knew from Garden that the Minister was not in Sydney. The meeting closed Biggs handing Lynn a pencilled memorandum of requisitions­
(1) that a concesswn should be produced under the hand of the Minister himself. {2) that it should state that the concession was royalty free. {3) that it should specify the period of the concession. (4) that Parer should sign a document addressed to the Administrator notifying him
of the purchase of his rights by Hancock & Gore. The Deed was left with Lynn to obtain the signatures of the Vendors. On the return of the party to Brisbane there were further protests by Crouch. Nevertheless, the working Directors held to their guns.
Garden and Farrell, by way of complying with Biggs' requisitions again set to work on a false document and produced the following :-Commonwealth of Australia. Minister for Transport and External Territories,
Ray Parer, Esq., Stanford X-Ray C9mpany, B.M.A. House, Sydney, New South Wales. Dear Sir,
This will serve to inform you that your application for Timber Licence in the Bulolo Valley New Guinea to log, export and mill timber within the area specified in the attached plan, has been approved by the . Please note that the Administrator for New Guinea has first priority for all building tirr.bers required for New Gum ea.
This concession is for you and your nominees and assignees. There is no royalty under the New Guinea Forestry Regulations. Mr. McAdam has been appointed as Forestry Officer and he will take over immediately, and will make the necessary arrangements as early as possible for you to commence operations.
This concession will endure for a period of twenty-five years (25 years).
Yours faithfully, E . J. WARD, per J. S. GARDEN, Minister.
The letter was dated the 20th November, 1945, and was on official paper of the Department. It was typed in Lynn's office where the carbon copy was ultimately found. It was signed in Garden's handwriting. On the same day- Lynn wrote to Biggs.
Messrs. Biggs & Biggs, Solicitors, Queen -street, Brisbane, Queensland. Dear Sirs,
Re : Raymond Parer with Hancock and Gore Limited. I refer to the recent interview held at my office by your Mr. Biggs and Mr. Forshaw with Mr. Farrell and myself. The supplementary Agreement has now been duly executed in duplicate by Messrs, H. and J . S. Garden and Messrs. Farrell and Parer.
The clause relating to the royalties has been left intact in the agreement as the four signatories named have been satisfied that the timber concession is on a royalty-free basis. 'l'here are no royalties required under the regulations which are in force, and I havE' been assured by Mr. J. S. Garden that no royalties are contemplated. In any event by their signatures the four signatories show they are satisfied that there will be no royalties in the future
anrl they are content to allow the clause relating to royalties to remain in the agreement as e.cgrossed by you. I enclose herewith a copy of a letter received by me from Mr. J. S. Garden on behalf of the Minister. . I have satisfied myself of Mr. J. S. Garden's authority to sign on behalf of the Minister. His appointment 18 a Ministerial appointment.
I have been informed that in due course all necessary arrangements to work the timber concession will be made by Mr. McAdam, who has been appointed as Forestry Officer of the Department. .
You should now be able to settle with Mr. Farrell as arranged and he will arrive in Brisbane shortly after h1s return from Canberra. If you require my presence in Brisbane will you wire me by return. Yours truly,
J. J. LYNN.
Lynn is open to severe criticism for writing such a letter and also for permitting what purported to be an official departmental letter to be typed in his office. He admitted that ]'a:n:ell used to avail himself of the services of his typists.
Biggs was absent from his office on a week's holiday when Lynn's letter arrived. It was handled by Rigby, who fussed over its contents, and when Farrell arrived on the 23rd with the original letter of concession, he sent him back to get Garden to sign the plan which was annexed to the letter. On the 25th, Farrell returned with the plan signed "E. J. Ward per J. S.
Garden " as required by Rigby. He also brought the Supplementary Deed signed by the Vendors and the Declaration of Trust signed by Parer and witnessed by Service. On the 26th, Biggs having returned from his holiday, everything was ready for settlement. Although in his requisitions Biggs had stipulated for a concession signed by the Minister, he did not query the signature "E. J. Ward per J. S. Garden". He said that, in refraining from doing so, he acted on the assurances contained in Lynn's letter, and on the conviction, that a man in Garden's position would not sign for the Minister, if he did not have authority to do so. Apart from the question of the signature, one is amazed how Biggs could possibly have accepted the letter as a title for a transaction involving £100,000. The most that it said was that an application by Parer had been approved. Biggs did not know the contents of the application and did not ask for a copy. Yet the application was the very foundation of the alleged title. If Biggs had asked to see a copy, h :l would have noticed that it applied for a licence for fifteen years, whereas the letter purported to be the approval of a licence for 25 years. And if he had troubled to search the Ordinances, he would have found that neither the application
nor the approval was in order, because under the 1936 Ordinance, "a permit", which was the kind of title he thought he was buying could not be granted for more than ten years. On the same day, the 26th November, there was a meeting of Directors at which, against the protests of Mr. Crouch, Roy Hancock was authorized to affix the Seal to the Supplementary Deed. Settlement was effected in Bigg's office and Farrell was handed a cheque fJr £37,500. The only matter left outstanding was the letter from Parer to the Administrator, notifying him of the assignment of his rights. This was duly obtained under date 28th November, 1945.
It was never presented to the Administrator.
THE DISTRIBUTION OF THE £37,500.
Farrell returned to Sydney with his cheque. He deposited it in a new Trust Account in the Collaroy Branch of the Bank of New South Wales. Repaid a cheque fJr £6,500 to Parer who seemed to have accepted it without question. Farrell fJrthwith entered into an agreement with Mrs. Durcher to purchase her property f .:>r £4,000 and he paid her £1,000 on account of the purchase money. He had in mind, I think, that he might subsequently pass off the property to Hancock & Gore in place of the Bulolo pine. vVhat he did with the balance of the £37,500 could not be ascertained by cross-examination, except that it was established that he paid two sums of £1,000 to Garden, one of which was paid by Garden to his son, Harcourt, by way of loan. Large sums were drawn from the Trust Account in cash, generally in £10 notes. One such drawing amounted to £16,000, which Farrell alleged he paid to Garden. vVhatever he did with the money, Farrell, by some means or other, induced the two Gardens and Parer to sign a paper purporting to be a Statutory Declaration in the following form :-
We the undersigned do hereby solemnly and sincerely declare as follows :-That we have received from our Attorney, Mr. Edward Farrell all moneys due to us in respect of a supplementary agreement dated the twentieth day of November, one thousand nine hundred and forty-five between the parties hereto and Hancock & Gore Limited of Brisbane with the exception of the sum of Ten thousand pounds (£10,000) each payable to us at the Bank of New South Wales, Port Moresby Branch under the terms and conditions of the said agreement.
And we make this solemn Statutory Declaration conscientiously believing same to be true by virtue of the Oaths Act 1900. Declared at Sydney this twenty-seventh day of} HARCOURT M. GARDEN. November, 1945- RAY PARER.
Before me- JOHN S. GARDEN.
R. M. SERVICE, J.P. Witnessed three signatures 28th November, 1945. R. M. SERVICE, A Justice of the Peace.
Bef.Jre leaving the matter of the distribution of the £37,500, it should be mentioned that on the 29th November, 1945, Farrell paid Forshaw in Sydney £4,000 in £10 notes. Forshaw took the notes to Brisbane and did not bank them. His explanation was that it was an interest­ free loan voluntarily offered to him by Farrell. He said he signed an I.O.U. for it repayable on
That he knew that the transaction was improper, is shown by his conduct in not
loan to his employers, and in keeping the notes loose in a drawer in his house, and
m disbur_mg the money secretly. He had both a bank account of his own and an overdraft account with his company. He said he spent the money on renovating his house and on furniture.
Mter the settlement, Crouch continued his protests about the transaction, and demanded of the original After conside!able and ev.asion, the originals were lent
to and he took copies. ThereafG er he remamed qmescent until January, 1948, when, upon learnmg of Forshaw's secret loan and upon the working Directors refusing to dismiss Forshaw he resigned. '
During the addresses of Counsel there was some severe cf Crouch's fa,ilure to take more vigorous measures to fmstrate the transaction. I think his attitude was that he had made his protests. He was first kept in the dark and then over-ruled by the working Directors at every point. The preference shareholders whcm he represented wue fully secured,
and he thought he had carried out his duty on their behalf. Where he f<:tiled was in not more fully appreciating the impropriety cf Garden signing the concession on the Minist er's behalf and making a profit out of it . He should either have insisted on his queries being satisfa0t orily answered or he should h:1Ve resigned. If he h ad been a m:m, I think he would have
done so; but he was over 75 years of age and perhaps not as alert as he would otherwise have been. In the circumstances it would not be fair to make any refl ection on his honour. He knew only a small portion of the fact s and did not seem t o be aware of the representations made by the Vendors as to Garden's position with the Governm ent.
HANCOCK & GoRE's ATTE MPTs To IMPLEMENT THE DEEDS (JANUARY, 1946, To SEPTEMBER, 1946). The Supplement al Deed having been executed and t he £37 ,500 paid, the working Directors were no doubt convinced t hat t hey had a valid concession. On the 11th J anuary, Garden wrote a lett er t o R oy Hanccck, saying that-
The :Minis'-,er has informed me that you an d your party can to New Gu inea to make arra ngements to He has informed me that you will have no difficulty in getting machinery in New Guinea·
I would strongly advise you to tllke some stores with you as food may be difficult to obtain.
Although this letter is dated 11th January, 1945, I feel convinced that Garden m1de a mistake in the year, and that it should have read 1946. In January, 1945, J. H. Hancock was still alive, and it was most unlikely that in his lifetime Garden have addressed a letter to Roy Hancock.
Having receiYed the letter, the Directors agreed that Hancock and Forshaw should proceed to New Guinea immediately to make a preliminary survey for plans to work the timber. This decision must have been communicated to Farrell and Garden. About the 30th January, Farrell instructed his Solicitor, Lynn, to apply for the necessary permits to travel. Declarations were necessary in connexion with the application. Farrell signed these in the
names of Hancock and Forshaw, and gave a false reason for their desire to go to New Guinea, namely that they desired to attend sales by the Disposals Commission of surplus plc.:1t in New Guinea. I do not think that either Hancock or Forshaw knew of the false applications, or took any part in obtaining the permits. ·with the inter-departmental procedure, the permits were not granted until 20th April. As Lynn's original letter had been addressed direct to the Minister, there were the usual minutes and reminders from his Secretary to the Department and
the usual copies for his information. This brought forth a long cross-examination of the Minister in an endeavour to show that his actions presupposed a knowledge of the Hancock & Gore transaction; but nothing was elicited other than that he acted in accordance with the system I have described.
Forshaw left for New Guinea on the lOth May, two days ahead of Hancock. I think that, before they left, they must have been warned by Farrell, that the Administration had not yet been informed of the grant of the concession. However that may be, the fact remains that Forshaw spent two days in Port Moresby, awaiting Hancocki's arrival, and had a long talk with
the Secret:Hy of t he F orestry Department, McAdam. Although the letter of concession itself said, that " McAdam will make the necessary arrangements as early as possible for you to commence operations", Forshaw did not say a word to McAdam about the concession. He told McAdam they were going to Bulolo to inspect the stand of timber already surveyed, with a
view to tendering for it, when it was thrown open for application. Hancock reached Moresby on the 12th May and was joined by Forshaw at the aerodrome. Hancock made no attempt to see McAdam. On arriving at Lae they were conducted to Bulolo by Cavanaugh, who was ?fficer .. Ostensibly went to inspect the
surveyed timber on the east side of the nver with a VIew to tendermg. Cavanaugh, however, overheard some of their conversation, from which he gathered the impression, that their real interest was in the timber on the west side. He taxed Forshaw with it, whereupon Forshaw produced a copy of the letter of_ with the plan. The letter was t.he
signature. Cavanaugh was horrified. Someone m Sydney must have gone mad he smd. Forshaw and Hancock were apologetic about it, and said they would sooner deal with the Department than with Parer, but they had to have the timber. Cavanaugh asked if they
minded him communicating with McAdam. They could not very well say no, and Cavanaugh sent a wireless message to McAdam to meet them at the aerodrome at Port Moresby and followed it with an indignant letter letting McAdam know of his converstaion with Hancock and Forshaw. In several other letters Cavanaugh made similar references to the concession and asked for an explanation. There was a break-down in the wireless telegraphy at Lae and Cavanaugh's message was not despatched. McAdam was about to leave Port Moresby and he said he did not receive either the message or Cavanaugh's letters until he reached Canberra towards the end of the month. He said he then searched the files, found no record of the
approval of Parer's application, and came to the conclusion that the alleged concession was a bluff on the part of Forshaw. He said he dismissed it from his mind. At first I was inclined to give full credence to McAdam's evidence ; but he left me in a state of suspicion, when it transpired that he had all of Cavanaugh's letters in his possession, and had withheld them both from me and from the other tribunals which had investigated the matter. The important point on this inquiry is that he did not disclose either to Halligan or to the Minister his knowledge of the alleged concession. Why he did not do so, I do not understand.
Hancock and Forshaw left Lae on the 17th May, to return to Queensland. They were expecting McAdam to meet them during their temporary stay on the aerodrome at Port Moresby, but Cavanaugh's message having miscarried, he was not there. One would have thought that the position was serious enough for them to have waited for the next plane. But they did not do so.
"'When they arrived back in Brisbane, Roy Hancock gave the Directors a written report,
with a glowing and detailed account of the journey, but he did not say a word about his intervie_w with Cavanaugh or the doubt which had been thrown on the title to the alleged concessiOn. Still another shock awaited him. He was a member of the Board of the Plywood
Manufacturers' Association, and just at that time, the Board had commenced the negotiations with the Government, which resulted in the formation of the Plywood Advisory Panel to investigate the whole of the Bulolo timber. Hancock had to take part in the deliberations of the Board with the secret knowledge that he had obtained, as he t hought, this irregular
concession from the Minister of 200,000,000 super. feet of timber, out of a total of 500,000,000 super. feet. He was greatly embauassed-as well he might be. For a time .he did nothing, but in August he despatched Forshaw to Sydney to discuss the matter with Farrell and Garden. Forshaw came back with a message that Garden was doing all he could, but the Minister was
very busy and had not been able to give much time to Garden. Roy Hancock was not satisfied and felt he should do something himself. On the 4th September, 1946, he addressed a letter to the Minister in the following terms :-Dear Sir,
Some months ago we were successful in securing the rights to act as Mr. Ray Parer's nominee to work a block of pine held by him iu Bulolo Valley. The main difficulty in our working this block at present is the uncertainty of permits to enter. the Mandated Territory. It will be necessary for us to send in our crew to do the ground work, but we can only do· this if permits are obtainable on a business basis, so as to have the minimum amount of delay in the transport of men.
We would be very pleased if yon would inform us when permits will be available on a business basis. Hoping you will give this matter your immediate attention.
This letter did not reach the Minister. It was intercepted by Garden, who on the 19th September, 1946, replied to it in his own handwriting on departmental paper as follows:­ Commonwealth of Australia.
Mr. Roy Hancock, Cjo Hancock & Gore, Timber Merchant, South Brisbane. Dear Mr. Hancock,
Department of Labour and National Service, Prudential Building, 39 Martin-place, Sydney,
19th Sept{;mber, 1946 .
I am receipt of your letter with request that applications be granted for certain persons re the Timber. . I have discussed the matter wit h the Minister, and am doing everything possible to see that the matter i11 finalised before the end of next month; but I am hoping it will be finalised much sooner. You can also inform Mr. Forshaw a new permit be granted to him on the expiration of his present one.
. It be also necessary for you to forward to me the name and address of the persm..s for whom the permits w.Ill be reqmred. Regret regarding delay but the Minister being in great demand all over Australia it is difficult for hilll to settle down to administrative work at the moment. Yours faithfully,
JOHNS. GARDEN.
Hancock made no further attempt to get into direct touch with the Minister or the Department until 1947,
117'1
THE BRINGING OF PARER's APPLICATION TO THE NOTICE OF THE MINISTER (DECEMBER, 1946, TO 10TH MARCH, 1947).
Although there is no direct evidence on the point, I think that Hancock, after receiving Garden's letter of 10th September, 1946, must still have been dissatisfied and must have informed Farrell, that he had to do something to enable them to work the concession. About this time, there was considerable ::1etivity by various who wanted to get the right to
cut and export timber from New Guinea and there were direct communications with the Minister on the subject. On 12th November, he caused Halligan to wire the Administrator as to what progress McAdam was making with his surveys and for an indication as to when could be given for the export of timber to Australia. Garden, I think, must have
learned of these activities and his knowledge inspired a hope that he might be able to get something for Parer. At this time the Plywood Advisory Panel was still considering the Bulolo timber and there was the possibility that the Panel would report in favour of development by private enterprise. On 3rd December, 1946, Farrell composed and signed a letter in Parer's
nam e, which he sent to the Minister reading-With reference to my previous application for licence to cut and export timber from Bulolo Valley as per plan enclosed with my -application, I beg to inform you that I have made all the necessary arrangements to cut and export to Australia logs and timber to be sawn and distributed at the main cities in Australia as soon as I have obtained the necessary permission from you to commence operations. Trusting this will meet with your approval.
I remain, Yours faithfully. RAY PARER.
This, I find, was the first intimation to the Minister that Parer had made an application. The Minister acknowledged the letter under his own hand and minuted it to the Department for "urgent attention". The Department sent a cable dated 16th December, 1946, to the Administrator very much on the lines of the previous cable of the 12th November, but referring
specially to Parer's application. The Administrator wired in reply that McAdam would shortly be in Canberra and would be available fJr consultation. In the meantime, the Department prepared a reply which, under the signature of the Minister, was sent to Parer's address on the 18th December, 1946. It was as follows:­
Sydney, New South Wales. 18th December, 1946.
Dear Mr. Parer, I refer again to your lett-er of 3rd December, 1946, relative to your application for a licence to cut and export timber from the Bulolo Valley, New Guinea. Since the restoration of Civil Administration in the Territory of Papua-New Guinea consideration has been given to the policy to be adopted in relation to the development of the timber industry. It has been decided that in fu ture individual applications for timber permits will not be accepted, but from time to time, as land ownership
questions are determined, forest areas will be offered to the public by tender. These sales will be advertised as widely as possible and the advertisements will specify location, topography and size of the particular areas, the types and estimated quantities of timber, and the general conditions of sale. For the time being, and until such time as the Forestry Department in the Territory has completed necessary
preliminary surveys to determine the forest areas suitable for cutting, permission to cut timber is restricted to persons who are the holders of timber licences granted prior to the war. To date the whole output has been absorbed in meeting local reconstruction needs of the Territory. I regret, therefore, that it was not practicable to grant your request for an individual licence to cut and export
timber from the arra in the Bulolo Valley specified in the plan submitted with your application. However, I am arranging for you to be notified when tenders for available forests areas are being advertised. Yours sincerely, E. J. WARD,
Minister for External Territories.
If the Minister had been a party to the Hancock & Gore transaction, it is inconcdvable that he would have put his signature to a letter to Parer in those terms. It destroyed the very foundation of the alleged concession. In spite of this letter, Garden pressed Parer's application upon the Minister. He stressed the unfairness of the policy of tender in relation to a "small man" like Parer. In January, McAdam arrived in Canberra, and being consulted about Parer's application, be advised that
the application could not possibly be granted, at present, because the area was embraced in the scheme under discussion by the Plywood Advisory Panel, and further the area was subject to native rights. The Minister personally communicated this to Garden, but when Garden persisted in
urging Parer's claims, the Minister instructed first Halligan and then McAdam to interview him and explain the position. Halligan discussed the matter with Garden on the 12th February, and explained to him the departmental policy and that Parer could not get a concession unless the area was thrown open for tender. McAdam told Garden the same thing on the 3rd March,
194 7. Both Halligan and McAdam had the curiosity to ask Garden what was his interest in Parer's application and they were told that if Parer were granted a concession, he had promised to give Garden's son, Ian, a position in his organization and thereby assist in his rehabilitation after war service.
In the light of the discussions with Garden, the Minister asked McAdam to see if, in relation to the possibility of the timber being thrown open to tender, he could devise a scheme by which "small men" who had previously been residents of New Guinea could be given a preference. McAdam considered the problem but was unable to devise any solution.
The files containing the forged letter of the 3rd December, 1946, the Minister's minutes thereon and the memoranda as to the discussions with Garden were the subiect of pages and pages of cross-examination in all the proceedings, including the inquiry before me, in an endeavour to show that this indicated a knowledge on the part of the Minister of the Hancock & Gore transaction. For this purpose the cross-examination was abortive. What is significant is that neither in the forged letter of the 3rd December, 1946, nor in any of the discussions was any reference made to the Hancock: & Gore transaction.
PROPOSALS FOR A SuBSTITUTE PROPERTY (MARcH, 1947, TO OcTOBER, 1947).
On the 14th March, 1947, the Plywood Advisory Panel made its first interim report recommending the exploitation of the whole of the Bulolo timber by a composite company. As a member of the Board of the Australian Plywood Manufactmers' Association, Roy Hancock learned of the report. Things were now very difficult indeed. How could Parer possibly get his formal licence? Forshaw was despatched to Sydney to confer with Farrell. The time was ripe for Farrell to put into execution the plan which he had prepared as far back as November, 1945. He went to Brisbane and interviewed Biggs. It would seem that he told him th
of the J>lywood Advisory Panel and it would greatly the Miuistcr if Hancock & Gore would consider some other property. He suggested that iltc company should purchase Durcher's property from him. Biggs admitted that Durcher's property was brought to his notice in May, 1947, but he denied that it was by way of substitution. I prefer, however, the inference I have drawn from the circumstances. Biggs did not state what his reaction was to the prop0saJ. Presumably, he communicated it to Roy Hancock. It would seem that they made so:ne demur to the proposition, and as at that time it had been announced that the Minister was proceeding abroad, they seemed to have pressed Farrell and Garden to get some intimation from the Minister regarding the Bulolo proposition before his departure. Garden thereupon asked the Minister for a letter which he alleged he wanted to show to Parer, to indicate that there was still a possibility of his getting his timber. He did this just when the Minister was about to depart. Upon the Minister promising to give him a letter, Garden, on the 2nd June, wired to Forshaw-
The Minister stated this morning that matter not altcgether finalised He will wire you later.
Amid the rush of departure, it was not until the very last minute that the Minister was able to dictate the letter which he had promised to Garden, and he left before he could sign it. It was signed in his name next day by Balmer, one of his Secretaries, and was handed to Garden. The letter which is dated 2nd June, reads-Dear J ock,
I regret to advise you that I am not yet in a position to let you know anything more at this juncture regarding the desire of Mr. R. Parer to secure a timber lease in New Guinea. . The whole question of Government policy regarding the timber resources of New Guinea is at present being reviewed.
As you are aware, I will be absent from Australia for the next few months, but expect to be in a position to furnish you with further advice shortly after my return. Yours sincerely, E. .J. WARD.
This .letter and its surrounding circumstances were the subject of cross-examination in al1 the proceedings; and in his evidence before me, the Minister was induced to say, that when the letter said that the whole question of Government policy regarding the timber resources in New Guinea was being reviewed, it was not strictly correct, and if he had had time to settle the letter he would have omitted the word "whole". If the Minister had refreshed his memory from his files, he would have found that no qualification of the sentence was necessary, because
the Plywood Advisory Panel's report, at that very moment, was under review by the Inter­ departmental Committee, which, while the Minister was away, rejected the Plywood Advisory Panel's report and recommended that the Bulolo timber be offered to private enterprise through publicly advertised tenders-the very thing which, if Parer had been a genuine applicant would have given him a chance to secme the timber.
Apart from this, the cross-examination was quite otiose. Garden did not want the letter for Parer. He wanted it to stave off Hancock & Gore. For that purpose it was useless. He did not forward it to them, but on departmental paper wrote to Biggs as follows :­ Commonwealth of Anstralia.
Minister for Transport and Ext.ernal Territories, 3rd June, 194:7 .
Dear Mr. Biggs, I had a conference with the Minister before leaving for Europe. He suggested the following-(]) If the matter re Bulolo Lease is urgent, either take up another similar area, which will be granted immediately-this I am not in favour of-or wait until he returns, when the area in question will be granted.
The reason for delay is as follows :-In view of the documents yon sent us some time ago; it was necessary that the matter be dealt with by Cabinet. Therefore a Sub-Committee was appointed from the Territories and Post­ War R econstruction Department to consider scheme and submit a report to both Ministers concerned. This report had not come to hand prior to the Minister leaving, and it would not be policy for the Minister to finalize it to our satisfaction while this was under review, as it would leave the Minister open to an attack, that he had squashed the
scheme before same had been considered by the two Ministers concerned, in favour of granting the area to Ray Parer. The area in question will be definitely granted to Ray Parer. If you consider it necessary, I am prepared at any time to see you in Brisbane. Yours faithfully,
This letter, specious as it was, failed of its purpose. The signature "J. S. Garden" and the official paper, were losing their magic. Roy Hancock and Biggs seem to have realized that the chance of the Company getting Bulolo was becoming very remote. The Vendors, of course, were se riously in breach of the provisions of the two Deeds and were liable to repay the £50,000.
Hancock and Biggs saw a ray of light. Farrell was asking £60,000 for Durcher's property. l.f it were wcrth the price they could apply the £50,000 towards the purchase money, and for pAyment of another £10,000, they could get a sound proposition for the Company. On the receipt of Garden's letter of the 3rd June, Biggs brought Durcher's property to the notice of the Board, with the suggestion that the Company take an option over it. He did
not propose it as a substitute for Bulolo, but as a timber stand which might be useful if the Company established a mill at Lae. The Minutes would seem to indicate that the Directors agreed to this proposal; but according to the evidence, when they found that the option would cost £5,000, they would not go on with it.
Biggs and Roy Hancock then made a bold move. They decided to take the option themselves. Th ey persuaded E. S. Hancock and Biggs' brother, who was a doctor, t o join with them in providing the option moneys. Each of the four subscribed £1,250, making £5,000 in all, which on the 3rd July, 1947, was paid to Farrell for a nine months' option over Durcher's
property at a price of £60,000. An option agreement was drawn up between Farrell of the one part and Biggs as trustee for himself and the others of the other part. On the 1st September, 1947, Forshaw and Roy Hancock flew to New Guinea to inspect Durcher's property. It was found not to be suitable for purchase. The possibility of getting
out of the Bulolo tangle by substituting Durcher's property disappeared. Nature, however, provided a respite. On the way back from Durcher's property, the plane in which Forshaw and Roy Hancock Wfl'e travel'ing was caught in a st crm and made a forced landing on an aerodrome in Waria Valley. There they found an excellent stand of pine and it so commended
itself to F orshaw that he exclaimed in the presence of the pilot, "Here is all the pine we want, why are we worrying about Bulolo 1 " With hope again in their hearts they returned to Sydney. It was not, however, a hope which they could communicate to the full Board of Directors. Upon reaching Sydney, Roy Hancock made a written report upon the journey to Durcher's
property. He said that 100,000,000 feet of timber could be obtained from it, but unfortunately a cyclone bad recently swept through the property and had created such logging difficulties that the property was unworkable, and he could not recommend its purchase. I do not think that Roy Hancock was making a true report. A survey made by a forestry
officer in 1948 revealed that there were only 20,000,000 super. fe et of commercial timber on the property. Forshaw must have realized this and must have known that the property was not worth anything approaching what Farrell was asking for it. Farrell had represented that the stand contained 60,000,000 super. f2et. There is another significant thing about Roy Hancock's
report. Although be gave a detailed account of the journey-how they chartered a plane from Lae to lorna and then made an arduous inspection of the property by means of canoes and walks through the tropical fJrest-with all this detail, he did not mention his dramatic descent into Waria Valley to dit"cover a new forest cf pine. He and Forshaw were preserving that useful
piece of knowledge fJr fu.ture use. They disclosed the discovery to Farrell and to Garden and to the other working DirectorB, but not to Crouch or William GlaE"gow. Until the present inquiry, neither Crouch nor Sir William GlaEgow had ever heard cf Waria Valley. The option was not exercised and the £5,000 was forfeited to Farrell. He very generously
agreed in writing that he would repay the £5,000 to Biggs out of any moneys becoming payable to him in the future by Hancock & Gore. One is appalled by the irony of it. Farrell without
giving anything in return had extracted another £5,000 from his victims. £3,000 of it he used to complete his purchase from Mrs. Durcher. He had led Biggs into reimbursing him the full pUl'chase price of Durcher's property and £1,000 to boot.
THE UNMASKING OF THE FRAUD (7TH OCTOBER, 1947 TO 15TH DECEMBER, 1947.) While the Durcher negotiations were being conducted, the Minister was abroad. He returned on the 6th October, 1947, and there followed a series cf events which led to the un­ masking of the fraud.
Garden saw the Minister on the 7th October on various matters, and took the opportunity of again bringing up the subject of Parer's application. He asked the Minister if he would see Forshaw, Parer's t echnical man, who he said could help him with some valuable info-rmation regarding the t imber resources in the Territories. The Minister agreed to see Forshaw.
As part of the duties of his office , the Minister proceeded to study the progress made by the various Committees which in his absence had been considering the Bulolo timber. On the 4th November, he, Mr. Dedman and Mr. Lemmon signed a joint minute recommending that the Bulolo t imber be worked by a wholly Government organization to be formed for the purpose. This meant that Parer could not get any timber from the Bulolo Valley and, if he were to be given a concession, it would have to be in some other part of the Territories. A conference with Forshaw was arranged for the 8th November. Very early in the conference, if not at the very commencement, the Minister said "Bulolo is out". A great deal was sought to be made of this statement as indicating that the Minister knew of the Hancock & Gore transaction. But
having regard to the minute of the 4th November, only four days before, the natural meaning of the words was, that Parer could not get a concession in the Bulolo Valley. For .shaw then proceeded to outline to the Minist er considerations with reference to other areas which might with advantage be made available for application and he mentioned among such areas Waria Valley. The Minister cut the interview short by asking Forshaw to put his views into writing. No reference was made during the discussion to the Hancock & Gore contract but Forshaw admits that Parer's name was mentioned.
After leaving the meeting, Forshaw had discussions with Farrell and Garden and on returning to Brisbane, he reported to Roy Hancock. In the Minister's request that Forshaw should write him, Roy Hancock and his fellow working Directors saw an opportunity of ascertaining whether the Minister was really in the transaction. Forshaw, with their assistance, composed a careful letter to the Minister. It was
dated lOth November, 1947, and commenced-Dear Sir, Further to our conversation of the 8th November, I am forwarding to you per letter particulars of the logging situation in the Mandated Territory of New Guinea.
As directed by you I am forwarding this letter to Mr. J. S. Garden, and I hope it reaches you by Wednesday, 12th November, 1947, the time you stipulated.
For the remainder of the first two pages the letter dealt generally with proposals for exploiting the timber in the Islands. The third page then continued-As you know Mr. Ray Parer entered into a Contract with Hancock & Gore I,imited for the logging of Bulolo Pine. As there was a considerable sum of money paid over on this Contract the Company in accordance with the terms of the contract expect to go in there and work.
Tb e Company as you are aware has been notified that there has been some hold up in the Title of this Concession, although it cannot credit this in view of the documents it holds, and the written assurances given. The only other stand of timber that I have seen which would warrant working immediately is the stand in W aria Valley. I understand that it was sought to substitute a block for Bulolo Pine, and it was to help you find such a stand of tiwber that I made the trip to Sydney on the 8th instant. The area at W aria which I hope might prove acceptable to Hancock & Gore is the area defined in the accompanying map.
Although the Waria Valley appeals most it has its difficulties. In the first place there is no road in or ont, and the timber is scattered over a wide area, which means that there is only one method of logging, and that is by the use of planes. To compensate for the difference between the two propositions, the only grounds on which the Company is prepared to make a change would be (1) by securing a Licence to erect a sawmill in Lae, with a cutting capacity of 20,000 feet per day for at least a period of ten years (it would not be a paying proposition to put a mill in there for less) and (2) by receiving a Concession in respect of the area defined in the accompanying map.
These two grants would be of great service to the I slands ; the sawmill would prcduce the much needed sawn timber and in the Waria Valley logs would be brought out that would otherwise have remained in there for many years. As you know the demands for timber in Australia is growing more every day and the position is more acute than it has ever been.
If anything is going to be done with this proposition it is urgent that Mr. Parer be notified quickly as Hancock & Gore have delayed their Annual Meeting until the first week in December to give Mr. P arer a chance to clarify the position. If it is not clarified by that time the Company will be forced to take immediate action as far too much is involved and too much time has already been loRt to allow the position to deteriorate any further.
I would be pleased to have your comments hereon at your very earliest convenience. Yours faithfully, H. G. FORSHA W.
Forshaw sent a covering letter to Garden also dated lOth November, 1947, as follows:-Personal.
J. S. Garden, Esq., 8th Floor, Commonwealth Bank Building, Pitt-street,
Sydney.
Major-street, Manly, Brisbane, lOth November, 19-17 .
Please find enclosed letter for The Minister for External Territories as directed by him when he met you and myself in his office on the 8th instant. I have tried to outline the details for Mr. Ward pretty clearly and we will be waiting for some news from you by the end of the week.
As I mentioned to you in Sydney this matter has now become very serious and we leave it to you to get us the appropriate notifications from Mr. Ward over his official signature. I mentioned to you just what time you had at your disposal to clean this matter up, and I have no doubt that the Company will t ake drastic action if this matter is delayed any longer. I am telling you the position here as I see it, and I can only hope that you will act on it quickly.
Needless to add the terms of the Concession in respect of the new area must be the same as the terms in respect of B ulolo. Yours faithfully,
H. G. FORSHA W.
I think that the two letters embodied a scheme by Roy Hancock and his fellow working Directors to put Garden to the test. By this time they were all highly suspicious, if not convinced, that the Minister was not in the transaction. They said in effect to Garden :­ "Either you get us Waria Valley or you disclose our letter to the Minister. If you don't get us
Waria Valley and if you fctil to disclose the letter, we will know you are fraudulent and this letter will provide the evidence." 'What they did not anticipate was the manner in which Garden proceeded to deal with the letter to the Minister. He detached the third page and had it retyped omitting all reference to the Hancock & Gore contract and signed Forshaw's name to it. The
third page as altered read-The only other stand of timber that I have seen which would warrant working immediately is the stand in Waria Valley. I understood that it was sought to substitute a block for Bulolo Pine, and was to help to find such a stand of timber that I made the trip to Sydney on the 8th instant.
Although the Waria Valley appeals most it has its difficulties. In the first place, there is no road in or out and tlliJ timber is scattered over a wide area, which means that there is only one method of logging, and that is by the use of planes. We suggest further that a licence to erect a sawmill in Lae, with a capacity of 20,000 fe et per day for a period.
If this was done, it would be of great service to the I slands. The sawmill would produce the much-needed sawn timber, and in the Waria Valley logs would be brought out that would otherwise remain in there for years. As you know, the demand for timber for Australia is growing more every day, and the position is more acute than it has ever been.
I would be pleased to have your comments hereon at your earliest convenience.
H . G. FORSHAW.
I do not accept the theory advanced by Counsel that the ·working Directors and Forshaw intended that the third page should be altered. ·
The letter as altered by Garden was delayed in reaching the Minister and he did not acknowled_5e it until the 19th November. Having done s? , he sent it to the Department for attention. Meantime Farrell and Garden l:.my keeprg Working Direct ors quiet and buoying them up with the hope that they might still get Waria Valley.
On the 6th December, Garden was able to secure an interview with the Minister at which he Forshaw and McAdam were present. McAdam made it quite clear that Parer could not get Waria Valley whether by tender or otherwise, because the timber had not been acquired fro m the natives. A reference to the map sh ows that there were quite a large number of native
villages scattered through tl;e Valley and McAdam estimated that it would take at least two years to adjust the native rights. Thereupon Garden became very angry and accused the Minist er of shilly shallying with his requests on behalf of Parer. The Minister told him not to be silly.
On the lOth December, the Minister, at Garden's request and, I suppose to pacify him wrote a further letter to Forshaw-Commonwealth of Australia.
Dear Mr. Forshawe,
Minister for Transport and External Territories, Sydney, New South Wales, lOth December, 1947 .
Regarding the int€rview which you had with me on Saturday last, concerning the desire of your firm to commence timber-getting operations in the External Territories, I desire to advise you that the matter has been receiving my attention. ·
I have now decided to leave it in abeyance until I visit the Territories early next year, when I shall be able to make enquiries on the spot.
Mr. M. H. Forshawe, Cjo Hancock & Gore, Timber Merchants, Brisbane, Queensland.
Yours sincerely, E. J . WARD.
Farrell made one more attempt to delay matters. He was in Brisbane when the Minister's letter of the lOth December arrived and he told Forshaw that the Minister would wire him on the 13th. The wire did not come. The working Directors instructed Forshaw to go direct to the Minister and confront him with the letter of concession and other papers. Forshaw saw the Minister on the morning of the 15th December and produced a copy of the letter of concession
with the signature left blank and asked him if he had seen it before.
For a moment the Minister was struck dumb with amazement. Then he asked Forshaw how the letter was signed and who signed it. Forshaw said it was signed "E. J. Ward per J. S. Garden". There was further conversation in which the Minister learned that Hancock & Gore had paid £30,000 on t he letter. The Minister callE:d Garden in and asked him who signed the letter and Garden said he did, adding that he thought it would be all right. The Minist er dismissed Forshaw and Garden saying he would put the matter in the hands of the Commonwealth
Investigating Officers. He immediately communicat ed with the Crown Law Authorities. After a conference with the Deputy Crmvn Solicitor, he had another interview with Fcr.sl::aw and then in company with the Deputy Crown SoliG i tor and F orshaw, he saw the Attorney-General, Dr. Evatt, who at that time was Acting Prime Minister.
Forshaw made an immediate report to the working Directors by telephone. The Annual Meeting of the shareholders of the Company was fixed for three o'clock on the 15th December. With the knowledge of Forshaw's t elephonic communication and of what had gone before rai3ing the gravest suspicions that all was not well, Mr. Roy Hancock made these remarks to the
Operations under the Timber Rights obtained by the Company in New Guinea have not yet commenced. This is a pioneering job of great magnitude and plans, perfect in detail, must be fin alised before our operatives can commence work in this area. These plans are being formulated but this work is of necessity slow as the detail is voluminous and must be carefully considered from every point of view.
Negotiations for the commencing of milling operations in the Territory are in progress with the Government and it is felt that these negotiations will be successful. I feel confi dent that when perfected our plans will assure an adequate supply of raw material for this Company for many years to come.
Hancock's excuse was that his Report was already prepared and he felt that there must be some explanation forthcoming in relation to the news which Forshaw had given him.
What was really operating in his mind was shown by his statement to the Board on i2th January, 1948-The present position is that the Company has in its possession a Lease purchased in good faith but now alleged to be given in breach of authority. If the action by the Government against Garden is unsuccessful the Lease is valid and has a good title. If, however, this action is successful the Company will have to negotiate with the Minister concerning it. It is thought that if the Company acting in good faith purchased a lease with a defective title the defect being caused by the dishonesty of a senior Federal Official, the Government who have been guilty of the grossest negligence in the matter cannot fail but to make good the loss sustained by the Company without even considering our legal rights to force them to do so. At this stage, however, I can only say what has crossed my mind as being
the action the Government will take.
If Roy Hancock really thought that the working Directors purchased the alleged concession "in good f.:tith ", I am afraid that he could not have understood the meaning of those words. It is true that the Directors were deceived and that they paid full value for the timber they thought they were purchasing and that they acted on legal advice. But in the circumstances these three factors were not sufficient to constitute " good faith " . The working Directors knew that the transaction was a secret one ; they believed that the Minister was acting behind
the back of the Department ; they knew that whatever title the Company was acquiring was derived through Garden ; they believed that Garden was a high Government official and they knew that he was receiving a large sum from the transaction. With these element s of suspicion befJre them, they refrained frcm communicating either with the Minister or the Department.
The events from the 7th October, 1947, to 15th December, 1947, were the subject of a most intense cross-examination in all the proceedings including the inquiry before me. The witnesses were called upon to give their recollection of even minute circumstances, occurring in the cour3e of an ordinary day's work, which were of the kind that would be fJrgotten almost as soon as they occurred.
A great deal was sought to be made of the statement in Forshaw's letter to the Minister of l Oth November, 1947, that the Mini.ster had directed him to send the letter to Garden. I have con -idered the cr oss-examination very carefully and also the submissions made thereon by Mr. Isaacs in his addresses to the Jury in each of the trials. I accept the Minister's evidence that
he gave no such imtruction to Forshaw. ·whether the instruction originated with Gardm or was manufactured by Forshaw, it is not necessary to determine. There is such a lack of candour in the letter and such evidence of deep scheming, that the letter may be the true explanation. I can find nothing in the material elicited by the various cross-examinations, which can lead
to an inference that the Minister knew anything of the Hancock & Gore transaction until it was disclosed to him by Forshaw at the interview of the 15th December.
THE PROSECUTIONS (15TH DECEMBER, 1947 TO 22ND DECEMBER, 1947). The investigation of the fraud was entrust ed to Inspector Wilks who proceeded to Brisbane and took statements from Forshaw and Biggs and from the Directors and finally questioned Garden.
Garden was charged before a Magistrate, and, on 4th February, 1948, he was committed fvr trial on three counts. His trial commenced before a Judge and Jury on the 5th May, and was concluded on the 21st- May, 1948. For technical reasons, only one count reached the Jury, namely a charge of fJrgery of Forshaw's letter of lOth November, 1947. He was fJund guilty
and was sentenced to three years' imprisonment. On the 17th February, 1948, a charge was laid against Farrell, the two Gardens and Parer fJr conspiracy to deffaud Hanco;:;k & Gore Limited. This led Fanell to exploit his hold over Forahaw. On the 19th February, he sent a Capt ain Lusk to Brisbane with a letter demanding immediate payment of the £!,000 which he had lent Forshaw on the 29th November, 1945.
Forshaw took the letter to the ·working Directors, who, while prcfessing to be astonished at the impropriety of Forshaw accepting a loan from Farrell, nevertheless within two hours, after consulting Biggs, advanced Forshaw £4,000 in cash to go to Sydney to pay off Farrell. This was Farrell's fJurth extraction from the working Directors of Hancock & Gore :­
£12,500 on the making of the 1944 Deed; £37,500 on the making of the 1945 Deed; £5,000 on Durcher's property; and now £4,000 in respect of Forshaw's loan; a total of £59,000 . He is surely a prince among confidence tricksters. The advance of the £4,000 to repay Forshaw's loan was made without reference to Crouch
or Sir \ iVil:iam Glasgow. When they learned of the loan, they demandEd that Forshaw should be inst antly dismissed. The vV crking Direct crs, however, thought that For.,haw had merely been fvolish and not criminal in acce_r;ting the loan and, having regard to his past services to the Company, they decided not to dismir:s him. Ano ther possible mctive suggests itse lf. It may be that Forshaw knew too much and that the Working Directors could not afford to dismiss him.
On the Working Dir ect ors deciding to retain Forshaw's services, Crouch and Sir William Glasgow immediately resigned from the Board. On the lOth March, 1948, the four defendants were committed for trial on the charge of conspiracy to defraud. The conspiracy trial commenced on the 8th November, and was
completed on 22nd December, 1948. Farrell was not tried. Medical evidence was given that he was suffering from a heart condition which would not allow him to adequately defend himself and the charge against him was adjourned. A nolle prosequi has since been entered. The other three defendants were acquitted of conspiracy. Harcourt Garden's defence,
which he repeated before me, was, that he knew nothing of the transaction ; that he did nothing except sign a few documents at his father's request; believing that he was only the Minister's " dummy " ; that he did not read the documents and did not know their contents ; and that he received no part of the proceeds of the fraud. In the light of his business experience, his
explanation was not convincing but the jury acquitted him. Parer pleaded that he was a very poor business man; that he did not understand the transaction and when he sought for explanations, Farrell told him he had to leave everything to him. The two portions of his evidence which created the most difficulty were his journey to New Guinea with Forshaw and his receipt of £9,000 of the proceeds of the fraud. The jury, however, acquitted him of criminal
intent.
Neither Harcourt Garden nor Parer can escape moral censure for the part they took in the transaction. Both of them admitted before me their responsibility for the repayment of the £50,000. Immediately after the conclusion of the conspiracy trial the Minister asked for a Royal Commission.
I have endeavoured to tell the foregoing story as I have extracted it from the maze of exhibits and the mass of truths and half-truths scattered through two and a half thousand pages of evidence. Where I have thought it reasonable to do so, I have resorted to inferences from indisputable facts.
Apart from Garden, there was not a single witness who gave a word of direct evidence that the Minister was in any way concerned in the Hancock & Gore transaction or participated in the distribution of the tainted purchase money. Nor have I found any circumstance which can only be explained on that basis. Thus the allegation that the Minister was party to the corrupt transaction and received £5,000 on account of his share of the purchase moneys, depends entirely upon Garden. This brings me to his evidence.
GARDEN'S STORY.
I proceed to tell Garden's story. It was elicited by question and answer, but to make it more easy of comprehension I have translated it into direct narrative keeping as far as possible to the words of Garden himself and his examiner. This is what he said-! was first brought into touch with Parer through Farrell. One day Farrell rang me in my office and said he would like to see me. He qaid he had Parer with him and could P arer come along. At that time I did J: Ot know Fam II and had never seen him in my life. I had not met Parer before, but I knew Parer's people through staying at a hotel kept by one of his brothers in Melbourne, when I was attending trade union conferences there. On coming into my room Farrell said, "I am Mr. Farrell who rang you up and arranged an appointment with Mr. Parer". lie did not
say who he was, just that he was Mr. Farrell. Parer said he v.ould like to see the Minister about New Guinea. I went into the Minister's office and told him that Ray P arer wanted to see 4im and that he was Ray Parer of the Mcintosh and Parer fame. The Minister said he would see him and I took him in. Farrell remained outside. I introduced Mr. Parer to the Minister and said, "This is Mr. Parer. He wants to talk about matters I have mentioned previously." Ray Parer said he was interested in New Guinea and desired to have a timber concession there if possible. He also explained about some property he had there, a newspaper and mining interests. He explained where the mining interests lay, near the Bulolo Gold-fields. He mentioned that he desired a permit or a licence for timber in the Bulolo Valley; he said he had been told that the Minister was the right person to go to. He also said that the size of the area he wanted was approximately 4,000 acres. The Minister said that at the present time he could not do anything because of the military occupation, but that he was interested and he recognized Parer's value to New Guinea and his work in New Guinea and his past history and would do anything he could for him. The Minister then shook hands with him. The interview lasted about ten to twelve minutes. Before leaving, Parer gave the Minister his address, which the Minister put down on a pad "Cjo Stanford X-Ray Coy."
Parer told me he was going back to New Guinea and he would leave his authority with me to act for him. I had never discussed a Power of Attorney with him before. Round about August I received a Power of Attorney signed "Ray Parer". It was given to me by Farrell. I could not say what its contents were. When Farrell handed me the Power of Att9rney he said he believed he could sell the concession if granted to Parer. He said he was going away to see what could be done about it and that if he could se ll the concession it would be divided into three parts, one for Parer, one for me and one for him. He told me I would get one-third because I would be in contact with the Min:ate r and would do the work with the Minister.
After Farrell had gone I spoke to the Minister. I told him Farrell had said he could sell Ray Parer's concession and he asked me if I knew the name of the firm and I said "No, he did not tell me. " He said, "Find out the name of the firm." I told the Minister I was getting a third share out of it and the Minister said, " What about me 1 You are the contact but I am doing all the work." I said, " I don't know about that. I will have to see Mr. Farrell about that." I then saw Farrell and said, " The Minister wants to know who are the firm you are negotiating with Farrell said, " Hancock & Gore Limited, Brisbane." I then told Farrell that the Minister had said that be ought to have some interest in it, that he was doing all the work and I was a mere contact and had a third share granted me for that purpose. Farrell said he would consider it. Then he said, " I will give him 10 per cent." Ultimately be decided to give 20 per cent. of the amount received . He told me the price might be around £75,000 or £100,000. I thought the amount was up in the clouds.
I went back to the Minister and told him that the concession would be sold for £75,000 or £100,000 and I told him that the firm was Hancock & Gore Limited and told him Farrell had said first he would give him 10 per cent, and then he agreed to 20 per cent. of the amount received. The Minister said, " Who is going to look after my We talked for a while and I said," What about H arcourt?" He said," Yes, Harcourt can be trusted.
He will be all right, and can act in my place 'as my dummy. Will you see Harcourt about " I said I would. I saw Harcourt and I said, "Harcourt, Mr. Ward wants you to act on his behalf as his representative, would you do so 1 " I did not tell Harcourt what the matter was. Harcourt said, " Yes, I'll act on his behalf." Having obtained Harcourt's consent, I spoke to Farrell and said, " I have arranged that Harcourt will take the place of Mr. Ward and act on Mr. Ward's behalf." Farrell said," It will be altered now, four instead of three of us." That is instead of Parer, himself and myself, there would be four. We were going to have equal shares, barring the Minister, who was going to receive 20 per cent. of the amount received. The Minister was to receive 20 per cent. and the other three were to get a third each of 80 per cent. less expenses which Mr. Farrell had incurred going backwards and forwards to Brisbane and all over the place.
After I had seen Farrell and fi xed up with him I saw the Minister. I told him it was all right and he said, "Right I'll do my very best to see that it is hurried on but there are difficulties in the way because of the military occupation." The things he was to hurry on were arrangements about native labour and other questions which were arising in New Guinea. The Minister said he would reply to Ray Parer on the lines he had in his mind.
About eight or ten days later Farrell showed me a document. It was a letter addressed to Ray Parer on the paper of the Department of Transport and External Territories. It contents were something to this effect­ Regarding the interview you had and your application or your desire to obtain 4,000 acres of timber at Bulolo Valley, I have approved of it and will see that the area you desire will be granted as soon as possible.
Kindly submit application forms , or plans of the area desired. Then Farrell went to Brisbane. Later on. I received a message by telephone from the Army Inventions Board that Mr. Farrell was there and wanted to get in touch with me. They said they had visitors coming down from Brisbane that morning. They did not tell me who they were. They asked me would it be possible for me to come along and see them and I said, "There is no possible chance. There are too many people outside my door to be interviewed. I cannot come." Later I said I would come at two o'clock.
I went to the Army Inventions Board at two o'clock. Mr. Farrell, F orshaw and Biggs were present. Farrell ·showed them the letter he had received, that is the letter I have previously mentioned. He told them the area was a good area in New Guinea, in the Bulolo Valley. He talked about the timber resources of that area. He was asked what amount of timber would be available in the 4,000 acres and he said about 100,000,000 feet with the result that
he and Forshaw entered into discussions about timber and timber reserves and value and everything else. I never opened my mouth. I knew nothing about timber. The price was mentioned, £75,000 to £100,000. Then there was a deposit and Forshaw and Farrell argued about that for awhile. Forshaw said he would have to report back to the Company before he agreed to a deposit of £12,500. The note on which the discussion finished was that Forshaw was to report back to his Company and then Farrell had to go to Brisbane.
After the interview I saw the Minister. I told him Mr. Forshaw was representing the Company and Mr. Biggs was the Solicitor for Hancock & Gore and they had discussed with Mr. Farrell and myself to-day at the Army Inventions Board about the area of timber at Bulolo and what amount of timber would be in that area and also the amount that would be paid or what Farrell was asking ; he was asking £12,500; he also asked £75,000 to £100,000 for the full concession. The Minister said, " That is all right." I said that Farrell was going to Brisbane to see if he was able
to finalize the arrangements he had made with Mr. Forshaw and Mr. Biggs at the Army Inventions. The Minister did not ask me anything about Farrell at all, who he was or what he had to do with this. It was alw ays Parer that is all. Farrell came back from Brisbane and saw me in my office. He said he had finalised the matter and also had
the agreement. He produced a document and said," If you sign this document we can finalise the whole issue." He wanted Harcourt to sign it too. After ringing Harcourt, we went up to 2KY. We saw Harcourt and I said, "We want you to sign this document." Dan Weldon witnessed Harcourt's and my own signature. I also signed it as
Attorney for Ray Parer. I did not read the document before signing it, nor did Harcourt. The process took about two minutes. We just signed it and walked out. Farrell took charge of the document and then he went to Canberra. When he came back from Ca,nberra he came to my office with a cheque for £5,000. He gave it to me. He said they had finalised and agreed on the £12,500 and he had received the £12,500. He said the £12,500 would be divided
between the three of us, Parer, Farrell and myself and from the next £12,500-that is whenever the licence was granted to start operations-then Ward would be given £5,000 out of the next £12,500. I saw Mr. Ward in Lis own office and I told him that the agreement had been completed and that we had received the £12,500 and that Farrell was dividing it up between the three of us. Mr. Ward said, "What about my issue." I said," Well, out of the second £12,500, when they receive the permit or licence for them to start work you receive £5,000." He was a bit dissatisfied
with that, but he said, "Leave it at that." At the time Farrell gave me the cheque for £5,000 he said he wanted £500 back with the result that he and I went to the E.S. & A. Bank, saw the Manager and I made over a cheque for £500 to Farrell and banked the £5,000 cheque I received from him. He did not say what he wanted the £500 for. Harcourt did not receive any part of the £5,000. I told the Minister about the £5,000 cheque. He did not ask me for any of the £5,000. He said he was satisfied.
In January, 1945, Farrell told me that they wanted to go up to New Guinea to define the area and see about the timber, because Mr. Forshaw wanted to see what the timber was like. I immediately got in touch with the Minister and said, "Now they, Mr. Forshaw and Mr. Hancock, want to go to inspect the area so they can define the area and have an idea of it and get a plan." He said there were difficulties in the way with the military but he would do all
he could to assist them to get there as early as possible.
The next part of Garden's evidence deals with the applications made for the permits for Parer and Forshaw to travel to New Guinea in the early part of 1945 . He said that every step in connexion with those applications was taken in consultation with the Minister including all the false statements contained in Parer's letters and Garden's own false statements to Halligan.
Parer and Forshaw returned from New Guinea on the 5th August, 1945. Garden's narrative then continues-After Forshaw had returned from New Guinea I saw Farrell. He said they had gone up and viewed the area and they had also drafted a plan for what they thought would be able to cover the quantity of timber as set out in the agreement . He brought a plan with him. I went in to the Minister and gave him the plan and said, " That is the plan they have decided which will cover the area of timber 4,000 acres." He said to tell them to make application in the usual way with the plan attached. He took the plan away. Later he told me the plan would have to be
altered. He said that the area included a native village and the Department would not agree to an nrep" with a native village. I told Farrell that the plan would have to be altered so that the native village would be tahn out. Farrell next brought me two application forms signed with Parer's name and with the altered plan attached. I gave the applications to the Minister, who said it would be all right.
After the application had been put in, Farrell spoke to me about royalties and said he had been informed th at royalties were not applicable to .the Mandated Territory. He said that if we so desired we could get the information of the Department. I said I didn't know anything about it, but would find out if necessary. I saw the Minister and said I had been informed that there were no royalties applicable to this area. The 1\finister, like myself, said
he knew nothing about it . I said I would get into touch with Mr. Downing, his o-wn officer in the Department, and he said, " Right. Get in touch with Mr . Downing." I went to Mr. Downing's office in Australia House, Carringt.o1r street, but he was not in. I left a message with his office that if he arrived would he kindly give me a ring. When he came back, he rang me up and I said,". "Would you go over. The Minister wants some information regarding New
F.2874.---4
Guinea and royalties." So he came over. He had a volume with him. I brought the book into the Minister and said, "Mr. Downing is outside and if you want any information from him he will be able to supply it." He said he didn't want to see Mr. Downing bpt just to leave the book. I went out and told Mr. Downing the Minister did not want to see him but would peruse the book himself. .
I subsequently saw the Minister and he said, " I have perused this and regarding the Mandated Territories there are no royalties to be paid." He also said that the period of the lease was 25 years. He told me to notify Mr. Parer to that effect. After this interview I saw Mr. Farrell. I told him the Minister had informed me there were no royalties according to information from the Department and that the period could be 25 years. I also wrote a letter of the
13th August, 1945, to Mr. Roy Hancock to notify him that Parer had made an application andthat there were no royalties. I do not know why I wrote the 'letter to Hancock and not to Parer. A little later Farrell told me he had beev in Brisbane and if there were no royalties there was a possibility of his receiving a larger sum than the £12,500 up to about £37,500.
Subsequently I wrote the letter of the 22nd October to Parer as instructed by the Minister. I came to write that letter because the Minister informed me to notify them that the application for a timber licence for export and milling purposes was illegal, the condition being that all timber had to be under the jurisdiction of the Administrator of New Guinea who had first call on all timber and they would not be allowed to export timber unless he said so. The Minister told me that the moment the mi,litary regime was out and he had full control he would at once issue the permit, but up till that time he had no authority as it was under military administration. But whenever he became full Minister in charge he told me everything was all right and to notify them now it was O.K. The letter of the 22nd October, 1945, was the result of that conversation . The Minister further told me that he would deal with all letters on this matter with Parer and that as I was acting on Parer's behalf I would deal with all matters appertaining to this question. On the subject of writing letters, I said to the Minister, " Why don't you write them yourself? " He said, " You are dealing with this and therefore you will deal with all matters in reply to those people yourself. I will give you the information and you can supply the information to them." I did not keep copies of my letters. There was no record in my office · or in Mr. Ward's office of any of the letters. I kept no copies of the letters. I wrote them in longhand. The Minister did not keep a copy but he knew what I wrote. I told him exactly what I wrote. The Minister was instructing me but he was not doing it officially from the Department. There was a plan attached to the letter of the 22nd October.
Mr. Farrell told me about Mr. Biggs and Mr. Forshaw being in Sydney at the Mayfair Hotel in November. He told me that the next afternoon. He told me fi rst that they had been at the Mayfair and there was some diagreement and they went to Mr. Lynn's office and they finalized the matter there. He told me that first there was a disagreement on what he wanted, the amount he wanted and also that Mr. Biggs wanted an alteration to the letter as it was not suitable to them. He said he told them that so far as he was concerned the deal was off and then he calmed down and they made arrangements to see him the next day and they came to an arrangement. F arrell had a rough draft which he presented to me and said that Biggs had drafted it at the conference and it contained Biggs' requirements to be included in the letter; the requirements were that the Minister was to certify that there were no royalties and the period o'f time and the letter was to be signed by the Minister.
I then saw the Minister. I said that the letter which I forwarded to Parer did not cover what they had in their minds regarding the issue and this was a draft of what Mr. Biggs wanted in the letter, the period of time and no royalties. He said," That is all right. I told him that before." I said" They want that and also your signature." He said, "You are handling this matter you do it yourself." I said "But they want your signature on this. They will not be satisfied with my signature. Biggs made it clear to Mr. Farrell." He said, " You are dealing with it. You it."
I wrote the letter. I wrote it in writing and handed it to Farrell in my office. He said he would rather have it typed. I said, " I have no time to type it. I will handwrite it." He said, " If you give me three sheets of paper I will get it .typed for you." I gave him three sheets of departmental paper with Ministerial heading and he brought back three copies to me. I signed one copy. I did not get the Minister to sign it because he had already instructed me to sign it and I did as he instructed me. I showed the Minister my hand written draft. There was the original letter and I kept a copy and F arrell kept a copy. I did not file my copy. I regarded this as semi-personal work I was doing, that is, it. was on instructions from the Minister, but it was through another Department and I could not file correspondence in 'his I did not ask anyone to file the copy. It was an important letter and a
duplicate should have been filed somewhere but it was not. I knew that Par · r's application was official, but I did not put the letter with the application because it was iri Canberra. I could k1ve given a copy to the Minister to send to Canberra, but I do not think t.he Minister wanted it on the fil e. I cannot suggest any reason for that, just that he did not want it. He wanted it to be Parer all the time.
Following upon the handing of the letter and plan to Farrell the plan came back to me. Farrell brought it back to me. He said they wanted the signature on the plan as well as on the letter. I then signed on the plan the same as I did on the letter" E. J. Ward per J. S. Garden." I saw the Minister before I signed the plan. He told me to sign it the same way as I had signed the letter. I signed "E .• T. Ward per J. S. Garden" because they definitely wanted the Minister's signature and I thought it was definite when he said I had to do it myself.
I recall being told by Farrell in December that the matter had been settled in Brisbane. He told me the agreement had been accepted and they had paid him the sum of £37,500. Before that took place I remember signing the supplemental agreement. I signed it in my own office. Farrell was the only one present. He brought the document to me. I did not read it before I signed it. Then Farrell and I went to 2KY and Harcourt signed it there. No one else was present. The signing took about two minutes. It was six or seven days after I signed the document
that Farrell t old me the matter was settled. When he told me the matter was settled, he paid me £1,000 in £10 notes and said, " Whenever we get the licence or the permit you will be paid the full amount." I paid the £1,000 to Harcourt. He wanted that amount to buy a business and I gave ' him the £1,000 as a loan. He paid it back.
When I got the £1,000 from Farrell, I said, "The Minister will be at his office on Monday, therefore you had better come along on Monday." I mentioned the £5,000 which he had agreed should be paid to the Minister straight away, and I also said I would like £1 ,000 for myself. He said it was all right and I received the £1,000 on the Friday.
On the Monday I saw the Minister about 9.30 in the morning. I said , "That is all right. Farrell will be in later this morning with the money." He said, "Right, see me later in the day." Farrell saw me about 11.30. He said, "Here is the £5,000 and also the £1,000 for yourself." He just had a bag and took the money out and I looked at it and counted it-the £5,000 and £1,000 for myself. They were £10 notes . I banked my own £1 ,000 and I waited
until late in the afternoon when t.he Minister was free and saw the Minister relative to the money. The money was in a brown paper parcel. I saw the Minister between 4.30 and 5 o'clock. I could not say the exact t ime. I took in the money in the parcel. I said to the Minister , "Here is the parcel. The amount is here. I have checked it, £5,000. " We opened
it and had a look. He said, "Take it out to Bill Urquhart at Newtown." Then he rang Bill Urquhart and told him I was coming out. I also spoke t o Urquhart and said I would be there at 5 o'clock. Then I went out to Newtown Bridge, met Bill Urquhart and said, " Here is the parcel Eddie told me t o give you." H e said, "That is all ri ght I am going over t o Eddie's to-ni ght." I said, " Do you want a ride He said, " No, I have my own means of conveyance. " I go t to Newtown Bridge just about 5 o'clock and having handed the parcel over to him I came back
to town. I next saw Ward on t.he Saturday morning. He said, " I received that all right . I am putting it in t.he safe deposit." After the money had been paid over I spoke to Ward about the matter of the issue of the licence. I said, "Now that everything has been fi xed up, what about the licence 1 " He said, " I am having diffi culty about the
native rights, but I am appoint ing Mr. McAdam as a F orestry Office r and when he is appointed the firs t job he will have is t o do that job and execut e t he job as far as the licence is concerned." He told me Halligan had said the difficulty with the native rights waR that there were no clearances and there were no records and it would take time and he told me to notify P arer that McAdam would be appointed in February, 1946, and he wo uld see t o it at once.
He said McAdam was then in the military and he was making arrangements to get him released from the Army to take on this job." It is not .necessary to go through Garden's story of the events in the years 1946 and 1947. For every happening and for every document he had an explanation which implicated the Minister. It was one long account of how the Minister was promising to implement his approval
of Parer's application and was making excuses for not carrying out his promise. Garden even went so far as to say that the Minister was unaware of the reports of the Plywood Advisory Panel, until Garden showed him the copies which he said Farrell had been lent by Forshaw. He said that by the Minister's direction he had them copied by the typists in the Minister's own suite. The files themselves show that copies not only of all the reports but of all the records of discussions relating to the Bulolo timber were immediately supplied to the Minister for his information.
CRITICISM OF GARDEN'S EVIDENCE. I find it impossible to give credence to Garden's story. It comes from a man who in its very telling confesses himself engaged in a most corrupt transaction. It breaks down at the very inception, in that it is based upon an alleged interview in 1944 between Parer and the Minister. Parer is quite definite and in this I believe him, that he did not see the Minister at any time in 1944. He saw the Minister only once and that was in April or May, 1945, when
he thanked him for interesting himself in his application for a permit to inspect his gold leases. Take away the alleged interview of 1944 and the whole of Garden's story falls to pieces. The story itself sounds fantastic. The Minister was supposed to have known that Farrell and Garden had received £12,500 on the first Deed and to have foregone his share of it on Farrell's promise that he would receive his portion out of a future problematical payment by the purchasers. Again, he wa:s to have accepted £5,000 as allotted.to him by Farrell
without troubling to ascertam that hiS supposed confederates bad rece:ved of
which his share should have been £10,000. The story sounds more fantastic when It IS told in relation to a responsible. _of the qrown who, according to Garden himself, bears an unblemished reputation for mtegnty m financial matters. Farrell was the initiator of the corrupt transaction. The Minister was supposed to have
joined in it without having of Farrell before, without any inquiry 3:nd
without once seeing him durmg the three and a half years whiCh elapsed between the mitlatwn and the unmasking of . The Minister was supposed to have to
not only fixing his share the Ilh?It but also laymg the conditiOns whiCh
it was to be paid and this, notwithstandmg the fact that accordmg to the story, It was th e Minister who held the key position. . The title which the syndicate purported to sell to Hancock & Gore was supposed to be derived from the Minister as the head of a Department of State. The Minister was supposed
to have granted it through the medium of written communications signed by Garden, of which no record was kept, official or otherwise. The communications, when not handwritten by Garden, were surreptitiously typed in. the . of the Army Inventions Directorate or in the office of Farrell's solicitor, Lynn. This Mmister of State was supposed to have been party to such irregularities and to have promised that a formal licence would be issued in pursuance oi
what Garden was supposed to have done on his behalf. Garden's story showed signs ?f been designed to fit in with the factf
and of having been changed from time to time to meet new facts as they came to hght m the evidence called by the Crown in the prosecutions. At many points it is inconsistent with the F.2874.-4
answers given by Garden to Wilks when he was questioned on the 22nd December, 1947, and under cross-examination he made a curious attempt to explain his change of front. In coming to the conclusion that the story could not be accepted I was greatly assisted by the exhaustive analyses of the evidence made by Counsel.
THE MINISTER'S EVIDENCE.
In marked contrast to the evidence of Garden was that of the Minister. He was in the witness box for four days and he gave his evidence openly, frankly and with an air of sincerity and truth. I see no reason to doubt any portion of his evidence. Even in matters which told against him he was frank. For instance, knowing that I was disposed to be critical, as I still am, of Garden being kept in the position of liaison officer in the circumstances I have mentioned he said that he had added his personal request to the written communications received by Mr. Holloway from the Members of Parliament. He admitted that he was over-patient with
Garden's importunity on behalf of Parer and stated frankly that his reason was that he did not want to offend a man who was his Campaign Secretary and had influence with the Unions. It was, however, this relationship between the Minister and Garden, which, both before me and in the criminal proceedings, gave rise to so much of the cross-examination on the basis that his partiality towards Garden called for an explanation. The only motive that Garden suggested was that the Minister was party to the Hancock & Gore transaction. That motive must, of course, be rejected and with its rejection there is no difficulty in accepting the Minister's explanation. No other motive has been suggested. If there had been any other motive going to the Minister's credit, I feel sure that Garden and his advisers would have been quick to suggest it. I should also add that the personal relationship between the Minister and Garden coupled with his office of liaison officer was a factor which enabled Farrell in negotiating the Hancock & Gore transaction to build up Garden as a " very important personage who wields an enormous amount of power in Australia ".
The Minister denied that he was party to the transaction and denied that he received the £5,000 or any sum from Garden, or directed him to pay it to Urquhart. He said that he had not the slightest inkling that the application made by Parer and Forshaw to go to New Guinea in 1945 had anything to do with timber. He accepted the application for what appeared on its face, that Parer and a technical man wanted to go to New Guinea to ascertain the condition of his gold leases. He did not know that Lynn's application for Hancock and Forshaw to go to New Guinea in 1946 had anything to do with timber. It was represented as being in connexion with disposals sales and that is all he knew about it. He did not know until December, 1946, that Parer had made an application for a licence to take timber in the Bulolo Valley. Even then he only knew it as a fact reported to him by his officers. He did not peruse the document.
Garden, he said, "pestered him" in December, 1946, and in January, February and March, 1947, with Parer's desire to get a timber concession in New Guinea. He tried to put him off, and when he still persisted he sent first Halligan and then McAdam to him to explain the departmental policy. He admitted that he never inquired from Garden what was his interest in the matter ; but he learned either from Garden himself or from another quarter that if Parer
could get a concession he had promised to assist in the rehabilitation of Garden's son, Ian, by giving him a position in his organization. He admitted that it was on Garden's importunity that he wrote the letter of the 2nd June; granted the interview of the 8th November with Forshaw; and allowed Forshaw to see him and McAdam on the 6th December. Looking back he thought that he should have questioned Garden as to his interest, and he added that, if he had suspected that there was anything wrong, his conduct towards Garden and towards Parer
would have been very different. He said that he did not learn of the Hancock & Gore transaction until the 15th December, 1947, and that until then he did not know that the company was in any way connected with Parer. ·
. The Minister laid the whole of his financial affairs open to examination by an independent aud1tor. Neither in his nor his wife's bank accounts nor in his property holdings was there a trace of the £5,000 said to have been paid to him by Garden. The same thing applied to his safe deposit. It was shown to have contained only the Minist er's will, the Certificates of Title to his house at Paddington and to five vacant allotments of land at Snthe1·land and elsewhere, his life insurance policies and documents relating to investments he has made in Commonwealth Loans out of savings from his salary. This kind of evidence is, of course, negative, but it is typical of t]Je open and frank manner in which the Minister was prepared to give every assistance in t he inquiry.
The analysis of the facts of the Hancock & Gore transaction, the fantastic features of Garden's story, the emphatic denials of the Minister on oath, and the overwhelming probabilities arising from the circumstances, afford ample material for the findings I have made on the first four questions.
SYDNEY PINCOMBE PTY. LIMITED. The fifth question asks whether the Minister was financially interested in Sydney Pincombe Pty. Limited. l have explained the circumstances in which this question was submitted to me and I have made my find ings that at no time did the Minister have an interest in the Company or receive any benefit, financial or otherwise, from it.
The evidence upon which my finding is based came from Mr. I. W. Kerr, an independent auditor, who made a thorough examination of the Company's finances; Miss Stella Pincombe; Mrs. Margaret Bain, a family retainer; Mr. Urquhart, the present Managing Director of the Company; Senator Courtice; and the Minister himself.
Sydney Pincombe Pty. Limited was a Company founded in 1917 by the late Mr. S. P. Pincombe. At the relevant time the capital of the Company consisted of 52,000 £1 shares, the bulk of which were held by the founder's estate and by the members of his family. Apart from the family holdings, there were 6,500 shares held between three of the Company's executive
officers, Mr. H. H. Austin, Mr. \V. J. Kilpatrick and Mr. B. J. Hyams. Mr. T. K. Pincombe, a son of the founder, was the Managing Director, but he suffered from ill-health and the real business of the Company was conducted by the three officers I have mentioned.
For many years the Company held the Australian agency for " Royal " typewriters imported from the Unit d States of America. In the middle of 1945, the three executive officers resigned fro m the company and started business on their own account. As they had been in direct personal touch with the American manufacturers, they were able to take the agency with them. The Misses Pincombe purchased their shares. Their defection left the Company in a
fix, with no agency and without responsible executive employees to conduct the business.
The Misses Pincombe had a faithful family retainer named Mrs. Bain. She had been in their service for many years and was in their confidence. They talked over their troubles with her. Mrs. Bain had known the Minister from his boyhood days and had watched his career with devoted admiration. She suggested to the Misses Pincombe that he might be able to help
them and might even be persuaded to become a Director. In due course, Miss Stella Pincombe put this proposal to the Minister and when he explained that his life interest was politics and not business, she asked him if he could suggest anyone whom they could approach. Having seen Urquhart's work in the Department of Labour and National Service the Minister had
formed a good impression of his ability and after some consideration, he recommended Urquhart t o the Misses Pincombe.
At that time Urquhart had six months leave of absence due to him from the Public Service. His application for leave having been granted he spent the six months' period with Sydney Pincombe Pty. Limited without salary from the Company. At the expiration of his leave he decided that he could make the Company a success and he accepted the position of Managing
Director at a salary of £1,200 a year and .bonuses. The salary was subsequently increased, and in the year ended 31st December, 1948, he received in salary, bonuses and commissions the sum of £2,066. It was necessary for him as Managing Director to acquire 500 qualifying shares. This he did out of his own moneys. He owns no other shares in the Company.
_ When Urquhart joined them the Company was still receiving "Royal" typewriters under orders placed prior to the resignation of the executive officers ; but they were rapidly running out and Urquhart looked about for some other source of supply. He learned of the "Halda " typewriter made in Sweden. The Swedish Chamber of Commerce in Sydney gave him all the information in their power. He then wrote a letter to Mr. Ward asking him to forward an
application to the Minist er of Customs for leave to import "Halda " machines up to the quota which Sydney Pincombe Pty. Limited had enjoyed in respect of the "Royal" typewriter. Mr. Ward minuted the letter to the Minister of Customs. Sweden at the time was a " hard " currency country and the application could not be granted. The refusal of the Customs Department was communicated to Urquhart through Mr. Ward. Within a short time, however, through financial arrangements made in London, Sweden turned from a "hard" to a "soft"
currency. The Swedish Chamber of Commerce informed Urquhart of the change and he renewed the Company's application. In doing so he wrote to Mr. Ward who minuted his letter as before to the Minister of Customs. The renewed application was considered departmentally and was granted. The approval was given in accordance with ordinary departmental procedure.
Mr. Ward took no part in it except to minute Urquhart's letters to the Minister of Customs.
This transaction was used in cross-examination and in Counsel's addresses to the Jury to suggest an inference that the Minister had secured the Swedish agency for Sydney Pincombe Pty. Limited and that he had done so because he was financially interested in the Company and that Urquhart held his office really as the Minister's representative or " dummy".
Such an inference would not be proper in any case, but in the inquiry before me it was completely disproved. The Auditor's investigations showed conclusively that the Minister had neither put money into the Company nor taken money out of it by way of dividends or otherwise. Urquhart's finances were similarly investigated and showed no trace that any of his earnings from the Company even reached the Minister.
In the cross-examination it was suggested not on ly that the Minister had secured the wedish import licence for Urquhart but also that the licence was granted to Urquhart after it has been refused to another trader named William Barron. This also was shown to be complet ely untrue. Mr. Barron had applied for a licence to import two adding machines from Sweden, not typewriters. His application was refused on the same ground as Urquhart's first application, namely that Sweden was a "hard" currency country. All the departmental fi les relatin g to these matters were produced to me.
OTHER IMPUTATIONS AGAINST THE MINISTER. I have now covered the five questions submitted to me by the Letters Patent, but I was asked to say something about certain other imputations against the Minister which were made in the course of Mr. Isaacs' cross-examination and which it was said were given prominence in the press. These imputations were made in an effort to break the Minister's credit.
The cross-examination suggested that the Minister had been involved in a corrupt transaction with one Mossie Hyams, and had received from him the sum of £6,000 for facilitating travel licences to New Caledonia. This transaction was supposed to have occurred contemporaneously with the alleged receipt of the £5,000 from Garden and it was suggested that in order to cover up the receipt of these two sums the Minister had spread a rumour that his wife had won £11,000 on a horse named Precise, which, the rumour was supposed to have said, had won the Villiers in 1945. No one came forward to support the imputation. The Minister when cross-examined in the criminal proceedings indignantly denied the imputations and again denied them before me. He said his ·wife had never won any sum such as £5,000 at the races. I find them to be disproved. The very structure of the imputations was shown to be without foundation. Hyams did not go to New Caledonia until late in 1946 and Precise won the Villiers in 1944 and not in 1945.
Next there was an imputation in the cross-examination that the Minister had improperly taken 12,000 dollars from Australia when he left for his trip abroad in 1947, and that Mrs. Ward had made such extensive purchases in America that she brought back twelve extra trunks when she arrived in Australia. Again no one came forward to say on what ground this imputation was made. The Minister's financial arrangements for the tour were evidenced by official files , which showed that he did not t ake 12,000 dollars with him. The Minister and his wife travelled quite lightly. They left Australia with four travelling trunks and came back with five, the extra trunk being purchased to carry papers which the Minister had accumulated during his journey and a few purchases he had made. I find the im13utations to be disproved.
The third. imputation in the cross-examination was that the Minister had a secret banlc account under the name of E. J. Brooks, which he might have used for disposing of the £5,000 alleged to have been paid to him by Garden. The Minister was asked to sign the· name " E. J. Brooks", presumably for the purpose of comparing the handwriting. No one came forward to support the imputation and it was emphatically denied by the Minister. I find the
imputation to be disproved. There are still two other matters to which I was asked to give consideration, on account . of the alleged publicity which was given to them during the criminal trials. They arose only incidentally. The first concerns William Maurice Urquhart and the second, Ainslie St. Auburn
Kingsford.
WILLIAM MAURICE URQUHART.
It will be remembered that Garden alleged that on the 3rd December, 1945, by direction of the Minister, he handed £5,000 to Urquhart at Newtown Bridge. In the criminal prosecutions Urquhart was called to deny the receipt of the rri.oney. He was subjected to a severe cross­ examination in which it was suggested that he was not a witness of truth, and that he had been
guilty of corrupt practices. In the present inquiry Urquhart asked my leave to answer the imputations on oath. ·
Urquhart is a man now aged 38. He has known the Minister for twenty odd years. He joined the New South Wales Railway Service in his teens and he said that he sought to qualify himself as much as he could. Among his other attainments, he said, he became a skilled stenographer. In this capacity, he was selected by the Minister for work on a Government inquiry in the Northern Territory. When he returned, he became the Minister's Assistant Private Secretary. From that position he was appointed National Service Officer, first at Glebe
and afterwards at Newtown. \¥hile holding these offices, he gave up three evenings a week to assist the Minister in dealing with the affairs of his constituents. In 1945, in the cirumstances I have ah·eady outlined, he became Managing Director of Sydney Pincombe Pty. Limited. H e said that he found his duties as National Service Officer at Newtown very arduous,
and he sought relaxation on the racecourse," to get away", he said," from people pestering me ." He had a current bank account, which he said he used as his betting account. During 1944 , he said, he commenced betting in a fairly big way. Each Friday he would draw £500 from his account and on the Monday he would redeposit the amount together with his winnings, if any.
On the 19th December, 1944, he said, he had a big win on" Precise" which brought him a profit of over £900. Then he had a lucky run. For thirteen consecutive meetings, he said, he found himself a substantial winner at the end of the day, with the result that over a period he accumulated £3,000. He explained that he bet mostly on two-year-olds "because anybody who follows racing knows that two-year-olds have not learned the tricks of the old horses ". He said he
wagered up to £100 or more with bookmakers on the Flat and in the Leger enclosure. Following his succession of wins, he said, his luck showed signs of receding and after he had suffered a substantial loss or two a good friend suggested that he was being foolish. He said he placed his winnings in various savings banks accounts in the names of himself, his wife and his children. He limited the amount of each account to £500 so that he might get the
maximum interest rate. In the cross-examination in the criminal proceedings, it was suggested that Urquhart was " conducting a racket " at the Newtown National Service and that under him " the prices of man-power releases went up to £45 a time " and that he was banking his "profits" in his
banking account and " sought to conceal these pTofits by showing them as betting wins ". But no name nor circumstance was put to Urquha.Tt to indicate that there was any foundation for Counsel's questions. The imputations were indignantly denied by him in answer to the cross­ examiner and were also denied before me.
In support of his denial, both in the criminal trials and before me, Urquhart produced his race-books in which he said he had made a record of his bets. He told the auditor who examined his affairs that he had made the memoranda and kept the race-books "because he was the National Service Officer in charge at Newtown and he felt that if people heard of his good fortune, they might scoff at any suggestion that he had won it at the races unless he were
able to produce evidence. For this purpose he commenced to keep the race-books. When he started in January, 1946, to supervise the affairs of Sydney Pincombe Pty. Limited he was no longer in the position of a public servant who might be called upon to explain increases in his bank balance so he ceased to keep the race-books." This speaks for itself and indicates Urquhart knew that he was playing with fire when, as a responsible public servant, he was betting so heavily on the races and he can hardly complain if people hearing of his good fortune should have thought the things which he thought they would think. I n the circumstances it would have been better to keep away from the course or at any rate to have bet only in small sums. The good name of the Public Service is surely worth something.
Urquhart was able to give the names of the bookmakers with whom he said he laid bets. Five of them gave evidence before me, which in important details lent support to Urquhart's account of his betting transactions. I judged them to be quite independent and truthful witnesses. Their original betting sheets had been returned to the authorities and destroyed, but in some cases the bookmaker had kept a few duplicate copies in which some of the large winning bets which Urquhart said he had made were found recorded. Urquhart's run of luck may have sounded extraordinary, but I have his oath that it occurred and supported as it is to some extent by the evidence of the bookmakers, I feel t hat judicially I ought to accept his testimony. At the same time I was not greatly impressed by his over-protestations of his good qualities. No foundation, however, has been shown for the imputations of corruption made by Counsel in cross-examination and I find them to be disproved. The imputation that Urquhart was merely a " dummy " for the Ministe:r ,in Sydney Pincombe Pty. Limited I have already found to be disproved.
AINSLIE ST. AUBURN KINGSFORD.
Ainslie Kingsford appeared only upon the extreme fringe of the inquiry. He was an officer of the Bank of New South Wales, where the Minister had his safe-deposit. It became necessary in the course of the criminal proceedings to compile a record of the Minister's visits to the safe from the beginning of 1945 to the end of 194 7. Thousands of dockets had to be examined in order to extract those relative to the Minister's visits. A number of the bank's clerks were detailed to carry out the search and among them was Kingsford.
In due course a list was prepared, which had to be produced to the Court on subpoena duces tecum. By the merest chance, Kingsford, as one of those who had been engaged in the search, was instructed to go to the Court in obedience to the subpoena and to produce the list and other documents covered by the summons. · He attended on the 23rd January, 1948, and produced the documents. When he returned he made a written report to the Accountant. It read-
23rd January, 1948. Wilks versus Garden. As requested I attended the Court held at Commonwealth Bank hambers, 7th Floor this morning. I was not placed in the box nor was I asked to take the oath. All I was asked to do was to produce the documents which are enumerated below. In fact I was not asked a single question.
On Wednesday, 28th January, he left his office at the Bank and disappeared. Since then nothing has been seen or heard of him. Some persons seemed to have jumped to the conclusion that because Kingsford was employed in the Bank where the Minister had his safe deposit and had been called to Court with the records of the Minister's visits to the safe, the Minister must in some way have been connected with his mysterious disappearance. Nothing could be further from the truth. Apart from this one occasion where by chance, he was called in to assist with the dockets, Kingsford's
duties did not in any way touch the safe deposit. Until he attended in Court to produce the documents, the Minister did not know of his existence. There was in fact no mystery in his disappearance. It was due solely to money troubles. He is not the first person who has disappeared when unable to summon up courage to face his creditors. Kingsford's principal creditors were his employers, the Bank of New South Wales,
who had treated him with every consideration and generosity and a money lending institution known as Simpson Securities Pty. Ltd. Kingsford was a veteran of World War I. He suffered both from war wounds and from the after effects of an illness of his childhood. He was in receipt of a military pension. He
commenced work as a junior clerk in the Australian Bank of Commerce, and rose to the position of a Branch Manager. In the early nineteen thirties the Australian Bank of Commerce was absorbed by the Bank of New South ·wales of whose permanent staff Kingsford became a member. His duties ultimately took him to Ganmain as Branch Manager. While with the Australian Bank of
Commerce he had become involved in financial obligations. From these he never recovered. He maintained his position by borrowing both from the Bank of New South Wales on overdraft and from private persons. In 1946 the Bank discovered that he had been a party to a transaction which, but for the merciful view taken by the Management and by the person most concerned, might have led to serious consequences. In December, 1946, it was decided to transfer him to the Head Office in Sydney where he could be under supervision. He seemed to be a man who always excited sympathy, and the residents of Ganmain, who did not know the facts, addressed a strong petition to the Bank asking that he be retained in the town. The Bank, however, held
to its decision and he was transferred. His money troubles followed him. Twice the Bank increased his overdraft limit to allow him to pay his debts. Notwithstanding the Bank's generosity he continued to incur private liabilities . On the 20th October, 1947, he borrowed £60 from Simpson Securities Pty. Ltd. on a Promissory Note for £70, the extra £10 being for interest. On the 8th January, 1948, he paid the £10 interest, but borrowed a further £50 on his own cheque for £53. When the cheque for £53 was presented it was dishonoured. Kingsford no doubt thought that to disclose to the Bank these transactions
with a money-lender would have meant instant dismissal and that it was better to disappear. He had educated his two daughters and had obtained good positions for them. The Bank continued its generosity to his family, advancing fmther moneys to his wife to tide her over the first period of the desertion.
It is a common enough story. There should be no mystery about it, not even in the fact that Kingsford cannot be found. The records of the Courts, both criminal and civil, show that persons are able to disappear and to hide their identity for many years.
This completes my report. I have answered the specific questions submitted to me and have endeavoured to tie up the "loose ends" as well. I have not pursued a number of by-tracks which led to dead ends. For instance about May, 1947, Ray Parer seemed to have received either the Department's letter of the 12th July
1946, or the Minister's of the 18th December, 1946, refusing the application for a licence: He was considerably perturbed and saw his brother, Leo Parer, about the whole matter. Leo Parer in communicating to Senator Courtice, endeavoured to make an improper use of the information which he alleged he obtained from his brother. Senator Courtice reported the matter to the Prime Minister who dismissed it with the curt remark, "One hears some strange
stories in these jobs of ours. I do not think that anybody who knows Eddie personally would doubt his honesty." Again there were suggestions made in anonymous letters that a mysterious robbery in 1945 and that a mysterious sum found in Brisbane in 1948 had something to do with the Hancock & Gore transaction. They were investigated and found to have no connexion
with the matters under inquiry. There are just two comments which I wish to add. First, I think that the authorities should give consideration to the question of prosecuting Farrell criminally. There were many indications that he was the master mind in formulating and carrying out the Hancock & Gore
transactions. The medical evidence submitted to me showed that since 1948 his health had improved to a considerable extent. He was able to give evidence at the inquiry and was in the witness box for periods aggregating three days. It was true that at times he exhibited distress, but on each occasion th is was remedied by a temporary postponement of his examination.
My second comment relates to the governmental status of Garden and Service. Each of them was brought temporarily into the Public Service and was given a responsible office. Each of them was allowed a measure of trust and discretion outside the routine of the Department to which he was attached. Each of them betrayed his trust. In marked contrast was Mr.
Halligan, the Secretary and Permanent Head of the Department of External Territories, who . over a long period had faithfully discharged his administrative duties. In the routine of his Department with its file s and memoranda, were found the solutions to many of the questions which arose in ·the course of the inquiry. The necessities of the time and the sudden expansion
of the Public Service may have made it desirable, if not necessary, to create offices like those held by Garden and Service . But this inquiry has emphasised t hat the utmost care should be exercised in selecting persons to fill such offices and in defining and supervising their duties and activities.
Supreme Court, Adelaide, S.A. 22nd June, 1949.
G. C. LIGERTWOOD, Commissioner.
Printecl. and Published for the GOVERNMENT of the C OMMONWEALTH OF AUST&A.l.lA by L. F . JoHNSTON, Commonwealth Government Printer, Canberra.