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1 067

1926.

THE PARLt AM OF THE CO ]iMON - WEAL'rH OF AUSTRALIA.

REP 0 R rr

0 .1! 'l'H H

ROYAL ON CERTAIN lVIATTERS IN

CONNEXION WITH THE BRI1,ISH PfiOSPI-IATE

COMMISSION;

TOGE'l'HEH Wl'l'H

APPE T I CES.

Presented by Command; order e

1' 1·i 11 Letl Publish d for Lb e 'OVEl{NML!'.T of tb(· l ' "1'10"""-\l:r,u of_ I!T Lll II. ,J. O HII -!'o ,

Government P rinter for ll 11 tate nf \ a·tor1 a

No. 67 .- F.ll512.- PRICK 9n.

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COMMONWEALTH 0]' AUSTRALIA.

GEORGE V., by the Grace of God, of the United Kingdom of Great Britain a,nd Ireland and of the British Dominiom beyond the Seas King, Defender of the Faith, Emperor of India ..

'ro Our Trusty and \Vell-belove <;l THE HoNOHAH LJ<: Sm. AH'l'HOrt RnBJNSON, 1\.C.M.C.

GREETING:

YE by these Our Letters in Ou_r_ na.n.Je by Ch.1 r of 0. ur of Al.tstra.lia.,

actmg w1th the adviCe of Our FcderaJ Executive Counc1l, and m pursuance of the Const1tutwn of Our sa1d Commonwea.lth, the Royal CO'Inmis.sions Act 1902--1912, and aU other powers him thereunto enabling, appoint you to to be a Commissioner to inquire into and upon the alleged inharmonious relations existing between the Australian Phosphate Commissioner on the one hand and the British and New Zealand Phosphate Commissioners on the other, and between the Australian Phosphate Commissioner on the oue hand and the

Executive Staff of the Commission on the other; the manner in \vhich such relations have arise n and the person or pc1·sons responsible therefor ; the extent to which such relations have affected the interests of the Commission in general and Australian interests in particular; the extent to which they have contributedt.owards t.b: decision of the Commissioners to transfer the Head Office of the Commission from Australia to New Zealand; and, further, to report how far the investigations of this Roya.l Commission support the contention of the

British Government, contained in the cablegram of the 26th May, 1926, from the Secretary of Sta te for Dominion Affairs to His Excellency the Governor-General of the Commonwealth of Australia, that harmony between the Commissioners cannot be established so lon g as the present Australian Commissioner remains in office.

AND \Ve require you, ·with as litt.le delay as possible, to report to Our Governor-General of Om sa.id Commouwealtb the result of your inquiries into the matters entrust-ed to you by these Our Letters Patent.

IN TESTIMONY \VHEREOF We these Our !,etters to. be made Patent and the Se a l of Our said Co mmonwealth to be thereunto affixed.

\VITNESS Our RightTrusty and ·w ell-beloved Counsellor, JoHN L AvVl{.J•JNCE, BARON STO NE HAVE N, Knight Grand Cross of Om Most Distinguished Order of Saint Michael and Saint George, Compa.nion of Our D:i.E;tingnished Service Orde r, Om· Govcrnor-(L.S.) General and Commander-in-Chief .in and over Our Commonwealt.h of Australia., this thirteenth day of ,J11nc, Lll the year of Our Lord One thou>Jand n.ine hundred and twenty-six, and in the seventeent h .)'G<11' of Our l{,eign.

Governor-Genera l.

By His Excellency's 'Command, 1-l. lH),UUE,

Prime Minister.

Entered on record by me .. jn Register of Patents, No. 25, page 448 , this fLft ce nth day of .Tune, On e thousand n in hnndre d a.nd twent.y-six . .

F. STRAHAN.

I 07 1.

OF AUSTRALIA.

REPORT OF THE COMMISSIONER.

INTRODUCTION.

To /lis S ·xaellency fM .Right Ronorable JDliN BARON STONERAVEN, a member of His Majesty's Most Honorable Privy ·Council, Knight Grand Gross of the Most Distinguished Order of Saint Michael and Saint George, Companion of thfJ Serrviru Order, Governor-General anil Oorrvmander-in .-Chiej in and

the Oommonwealth of Australia.

MA-Y t'l' PLE.A-$E YoTJR

In ·accordance with the Commission issued by Royal Letters Patent, dated the thirteenth day of June, 1926, en1powerin:g me to inquire into and report upon-=- ·

(1) the alleged inharmonious relations existing between the Australian Phosphate Commissioner, on the one hand, and the British and New Zealand Phosphate Commissioners, on the other ; and between Aust:ra.lian Phosphate Commissioner, on the one hand, and the Executive Staff of the Commi$sion, on the other: (.2.) the manner in whJoh such have arisen, and the pgrson or persons

responsible :

(3) the extent to which such relations have affected the interests of the in general and Australian interests in ( 4) the ext.ent to which they have contributed towards the decision of the Co1n1nissioners to transfer the Head Office of the Commission fro1n Australia to New Zealand :

and, further, to reportr.---(5) how ·far the investigations of this Royal Commi. sion support tbe contention of the British Government, contained in the cablegram of the 26th May, 1926, from the Secretary of State for Dominion Affairs to Excellency the Governor­

General of the Commonwealth of Australia, that harmony b tween the Co1nmissioners cannot be established so long as the present Australi n Commissioner remains in office,

I have the honour yo submit the following Report :-The cablegram above referred to is in Appendix No. 1 tD this my Report.

The oriO'ins of the control over phosphates in auru and Ocean Island by oinmi sioners ·representing His Majesty s Governments o.f the. K_ingdom, Common we lth of ustralia, and the Dominion of New Zealand are briefly indicated m Appendix . 2. The constitution of the Board of Commissi :uers fur ish d some opp rtu · i

of outlook on the part of the Commissioners. The pr donrina ing in er f A Zealand may be said to lie in their being of au b __ nd nt u ply f ph_

cheapest P?Ssible . . The_ interest of Great in m r 1aL tb .

concerned 1n the admm1stratwn. of the undertakino· 1n u h mann r tha th 1 uJ interest on the British share of the purchase price is dtu pai tha a quat r 1 i n i

Tor a sinking fund, and that, if surpluses arise (see Arti 1 12 o£ e men of 2nd she shall get her due proportion.

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As the output from the Islands exceeds the demand from the partner countries, th.is surplus must be disposed of to other countries. The Table in Appendix No. 3 shows the proportion of the phosphates shipped that have been taken by Australia and New Zealand since operations commenced. The United Kingdom has taken less than 2 per cent. of the total output from the Islands since the Com:r;nission began to operate. No sales to non-partner countries may be made without the unanimous consent of all the Commissioners 10), and the Australian

Commissioner took the view that no such sale should be made unless it was practically certain that not even the slightest hitch could occur in the delivery of phosphates to Australia and New Zealand. The British Commissioner took the view that the Commission was a commercial . undertaking, and that, though the claims of the partner countries were paramount, yet ordinary business risks regarding deliveries to partner countries should be accepted hy the Commission. The Australian Commissioner and, at first , the New Zealand Commissioner appeared to think that the British Commissioner desired the Uommission to acquire large surpluses for distribution to the partner countries. As a fact , no portion oi the surplus accumulated through sales to non-partner countries has been distributed, all o: f: it being used in the business. Fmther, foreign sales on a good basis were essential to secure a low f.o .b .. price for phosphates for Australia and New Zealand.

The apparently divergent interests of the three partner countries were capable of reconciliation, in t he interests of alJ , and were not, in my opinion, sufficient to cause long continued differences between the Commissioners, had a

basis of mutual trust and confidence existed between .

them.

· J see no reason to think that the British Commissioner acted contrary to the view that the interests of Australia and New Zealand were in the direction of a constant supply at the lowest possible price. The other Commissioners might well consider that any particular course of action proposed by the United Kingdom Commissioner might affect, to some extent, the continuity

of supply to Australia .and New Zealand, or the cost of production of phosphates. But th.is, after all, · is only one of those differences of opinion that frequently occm in the management of large businesses. Such differences not seldom lead iu commercial undertakings to strained personal relations, disappearing, however, vvith the progress of the undertaking.

The Commissioner appointed by the British Government, Mr. A. R. Dickinson, had been Managing Director of the British Phosphate Company for a number of years. He was a trained and competent business man. -

The Commissioner appointed by the Dominion of New Zealand, Mr. A. F. Ellis, had with the Pacific Phosphate Company since its inception, and, at the time of the winding up of that company, was one of its local directors in New Zealand. He appears also to have been a trained business man.

The Commissioner appointed by the Australian Government was Mr. H. B. Pope, who entered tile service of the British Phosphate Company as a junior clerk in 1903, and gradually rose to the position of Chief Accountant on Nauru Island. He was then appointed to the staff of the administration of that island, and· afterwards enlisted to serve in the Great War. Mr.1 Pope's experience with the company extended over twelve years, and there is no reason to think that he was other than an honest and zealous employee. After the war was over Mr. Pope was attached to the Department of the Prime Minister of the Commonwealth at a remuneration of

One guinea per day, his services being required to advise the Government on matters connected with or arising out of the Nauru Island Agreement. From this comparatively modest position he was appointed to the responsible one of Commissioner for Australia at a remuneration of £2,000 per annum. (The remuneration of the British Commissioner was also £2,000 per annum, that of the New Zealand Commissioner being £1 ,000 per annum.) Mr. Pope states that he had no thought of applying for this position until' it was suggested to him by the Secretary of the Prime Minister's Department.

As to the qualifications of the Commissioners: I have no evidence from Mr. Dickinson or Mr. Ellis, but I have the statements of Mr. Pope in the witness box, and an enormous mass of correspondence, as well as the results of the Commission's work. In the cable of the 26th May, 1926, from the British to the Australian Government, Mr. Dickinson is referred to as possessing "unrivalled experience and standing in the phosphate business. " So far as I am able to form an opinion, his handling of the foreign sales of phosphate on behalf of the Commission seems to have been marked with great skill and judgment, but;tihel was evidently very irascible and overbearing, and inclined to be curt to those from whom he differed.

Mr. Ellis was evidently highly regarded by the New Zealand Government, and was described by Mr. Pope in an early communication as a "most worthy, honorable, and capable gentleman."

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Mr. Pope, as I have had experien?e, but not, so far as I am aware, any experience in the conduct of large busmess transactwns. It IS clear to me that he bas a firm belief in his own probity, and this appears to me to be .well founded; but he is apt to think that those who differ from him are influenced by indirect or discreditable motives.

The difference in outlook between the Commissioner for the United Kingdom and the other Commissioners contained elements of trouble, but, with mutual trust, con.:fidenee, and forbearance, serious differences between the Commissioners should not have arisen. Unfortunately, as regards Mr. Pope and Mr. Dickinson, the chance of securing harmonious working was not bright from the very commencement of the undertaking. Prior to the appointment of himself as Australian Commissioner and of Mr. Dickinson as the British Commissioner, Mr Pope had written minutes for the information of the Prime Minister for Australia, which indicate an unusual degr.ee of distrust of Mr. Dickinson.

In one of these minutes (page 65 of the transcript) he states that Mr. Dickinson bas but "little sympathy for Australia and the Australians" ; that he believes Mr. Dickinson or his wife is a large shareholder of the Pacific Phosphate Company, which retains a large interest in the French Island of Makatea (a phosphate-producing island competing with Nauru and Ocean Island), and he doubts whether it would be " humanly " for Mr. Dickinson to act in a

disinterested manner. II). another minute he advised that a cable should be sent to the Secretary of State, questioning the advisability of retaining Mr. Dickinson's services for other than a very brief pe_riod.

It is clear also , from his oral evidence, that Mr. Pope regarded with suspicion propositions relating to foreign sales and other matters put forward by Mr. Dickinson . . He seemed to think that Mr. Dickinson's recommendations were influenced by indirect motives injurious to the interests of Australia.

While Mr. Pope speaks of Mr. Ellis in high terms, he does not seem to realize that he also nursed suspicions regarding the bona fides of Mr. Ellis. On the winding up of the Pacific Phosphate Company Mr. Ellis received, at first, the sum of £1 ,500 as compensation for loss of office, &c. A sum of £150,000 had been set aside by that company to .meet all such claims, and Mr. Dickinson

was the liquidator of that company. Early in 1921 Mr. Ellis told Mr . Pope that he had only received £1,500 from tl;te company or its liquidator, and that he was very dissatisfied with this payment. Early · in 1922 Mr. Ellis informed Mr. Pope that he (Ellis) had received from the liquidator of the Pacific Phosphate Company (Mr. Dickinson) a further sum of £6,500 for compensation for loss of office. In a conversation at Mr .. Ellis's house in Ne·w Zealand, in No vember,

1923 (i.e., about eighteen months or more later), details of which are given by Mr. Pope, Mr. Ellis urged Mr. Pope to abandon his attitude of opposition to Mr. Dickinson's requests regarding foreign sales, in which, at that time, Mr. Dickinson was supported by Mr. Ellis. 1\lfr. Pope says in his evidence: "he (Mr. Ellis) indicated to me that if I did not agree to these requests of Mr. Dickinson in which he (Mr. Ellis) supported him, some clay there may be a public inquiry, and it would then

transpire that I was unsupported in the action I had taken, that my colleagues were opposed to me and the principal Executive Officer, and, in short, I would have to take the consequences . I replied to Mr. Ellis, saying : 'Mr. Ellis, allow me to inform you that I do not fear such an inquiry, but if the inquiry should ever come, which you apparently hold over my bead, so t o speak, I think it is sure to transpire that you received from Mr. Dickinson, acting as liquidator, a further sum of £6,500, and let me, as in old friend, enjoin upon you the probable interpretation which the public might put upon your action.' "

On important questions prior to this conversation Mr. Ellis and Mr . Pope had been in agreement, and opposecl .to the views put forward by Mr. Dickinson, and the relations between Mr. Pope. and Mr. Ellis appear to have been harmonious up to this time.

Mr. Pope states that Mr. Ellis did not resent this remark and that the relations between himself and Mr. Ellis continued to be most friendly. I find a difficulty in accepting this ment, however, as further evidence by Mr. Pope, relating to interviews in Australia with Mr. Ellis a few months later, indicates that Mr. Ellis was labouring under a feeling of strong resentment

against Mr. Pope by reason of the suggestion contained in the stat ement quoted. T doubt whether, even at the time of giving his evidence before rrie, Mr. Pope full y reali zed the seri ousness of the innuendo made by him. It must be borne in mind that I had no oral evidence from anybody bu t Mr. Pope.

There was no cross-examination of Mr. Pope by counsel on behalf Dickinso n, or of Mr. Ellis, or on behalf of any member of the Executive Staff of the Co mmis w n . The reason for this is set out in the letter from Messrs . Blake and Riggall which appears in Appendi x No. 4. Hence in considering the attitude of Mr. Dickinson and Mr. Ellis towards Mr. Pope, I have to rely

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-solely 011 the oral testimony of Mr. Pope and the do cuments put before me, and such inferences as I feel c;an be legitimately drawn from such evidence. I felt, of course, lmable to avail myself of the opportunities suggested in Messrs. Blake and Riggall's letter.

The chief differences of opinion between the Commissioners were those relating to-1. Makatea phosphates. 2. Purchase of additional ship. 3. Erection of cantilever for ]o'ading vessels. 4. Sales to countries other than partner countries. 5. Shipment of paint and Customs prosecution which arose out of it. 6. The dismissal of Captajn Evans.

In so far as Makatea phosphates are concerned, .Mr. Dickinson's views are set forth in a statement which he made to a meeting in Australia Houseon 23rd May, 1923) at which Sir Joseph Cook, Mr. Herbert Brookes, Mr. C. H. Reacting, Mr. J. Sanderson, and Mr. M. L. Shepherd were present. This statement appears at pp. 26 et seq. of the transcript.

Mr. Dickinson's views on this subject were opposed both by Mr. Pope and Mr. Elli.s, the latter being at that time very hostile to such an arrangement as suggested by Mr. Dickinson. Mr. Pope held, rightly I think, that the Commission had no legal power to enter into such an arrangement as Mr. Dickinson desired. But he also felt, I am satisfied, that Mr. Dickinson's attitude in this matter was not bona fide and in the interests of the successful conduct of the undertaking, but really in the interests of the company controlling the Makatea Island phosphates. Mr. Pope, in a letter to · Mr. Dickinson dated 26th February, 1924, definitely suggested want of propriety on his (Mr. Dickinson's) part in regard to dealings by the Commission with Makatea,. The tone of Mr. Pope's letter was such as to make any ill-feeling that previously existed more pronounced.

The purchase of an additional ship was recommended by Mr. A. H. Gaze, the Chief Executive Officer, and so also was the erection of ·the cantilever. It is important to note that the Chief Representative pressed these proposals and that Mr. Ellis and Mr. Pope supported them. They were both opposed by .Mr. Dickinson.

In regard to sales to non-partner countries, Article 10 of the Agrem;nent o£ 2nd July, 1919, requires the consent of all the Commissioners to any such sales. As I have indicated, Mr. Pope felt he shoUld not agree to any such sale unless it was a practical certainty that every ton o£ phosphate required by Australia would be. delivered without any hitch. l\fr. Dickiuson felt that this attitude made it exceedingly difficult-for him to negotiate sales to foreign countries, which were essential to the success of the undertaking, and necessary to secure a low f.o.b. price for phosphate for Australia and New Zealand. lV&. Dickinson's views are disclosed in a letter written by him to Mr. Pope on 2nd November, 1922, the tone of which is most regrettable. Mr. Dickinson's views are aga.in expressed in his lettel' dated 26th June, 1924, to Mr. Pope, which

views had then the support of Mr. Ellis.

Mr . Pope did not regard Mr. Dickinson's attitude in regard to foreign .sales as being single-minded, and held the same view of Mr. Dickinson's attitude in relation thereto as he did regarding proposed business vv:ith Makatea, i.e., that it was influenced by improper motives. There is a significant sentence in a cable sent by Mr. Pope to Mr. Ellis on 18th October, 1922, ;regarding certain negotiations for foreign sales, which is as follows :-

. " I a:rp. more concerned with rendering material service this Commission rather than to rival undertaking with whom we are in active competition." This cable was repeated by Mr. Pope to Mr. Dickinson, and appears to have angered that gentleman very much. He wrote to .Mr. Pope on 2nd November, 1922, in hot, and, mdeed, bitter terms, and his comment on this particular sentence is worth noting:-.--:..

"Let me say that this sort of fustian does not influence me. You worked for many years under the Commissioner for New Zealand and myself, as well as under the Chief Representative. ·we are very well aware of your record, and the fact that you are now one of the three Commissioners does not qualify or entitle you to adopt a censorious and dictatorial attitude towards your fellow Commissioners . ."

I think that by this time .Mr. Dickinson had an inkling of Mr. Pope's distrust of him and , of the grounds therefor, and, probably, he also felt initated that his one-time junior should adopt a somewhat self-righteous attitude. This, however, does not justify the tone adopted by Mr. Dickinson in his letter of 2nd November, 1922. I regard the terms in which Mr. Dickinson couched

this letter to Mr. Pope, and a number of subsequent references to Mr. Pope, as objectionable and as not calculated to allay, but rather to increase, ill-feeling.

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Regarding the paint shipment: A huge mass of evidence, oral and documentary was ?n this subject, no good be by attempting to make a· digest

of It m this Report. A precis of some of the prmcipal pomts IS set out in Appendix No. 5.

It will be observed that this incident commenced in September, 1923, some considerable time after the shipment arrived in Australia, and was not finally disr:osed of until June, 1926. This matter embittered the relations · between Mr. Pope and his fellow Commissioners to an extraordinary degree, and seems to be one of the causes of the definite step t aken by the for. the United and. Zealand to exclude Mr. Pope from any real

share m the directiOn of the Conmusswn s actiVIties. It also seems to have caused both the Chief Representative and the Assistant Representative to believe that Mr. Pope was intent on forcing .them out of their positions .

. I that Mr. W. qhambers was guilty of a gra;re irregularity in regard to this shipment of pamt. His first explanatiOn was not the full and candid one It should have been. His conduct · .was deserving of severe censure by the Board of Commissioners. Mr. Pope's action in referring the matter, without prior consultation with his colleagues,

to the Prime Minister's Department for advice as to whether l\'Ir. Chambers's action was such as to warrant the Commission dismissing Mr. Chambers, was premature, and calculated to lead to further differences between him and his colleagues. The length to which this incident was drawn out was largely due to Mr. Pope's zeal for a conviction in the courts of somebody connected with the shipment, a feeling from which neither professional nor amateur detectives are entirely free. I

am unable to accept Mr. Pope's statement that in this matter he was actuated solely by a desire to protect the good name of the Commission. I think that the evidence shows that Mr. Pope 'was not free from the frailties of ordinary human nature, and that this incident caused him to exhibit some of them.

Shortly after the paint shipment question arose, Mr. Pope secured possession of a cable sent by the Chief Representative to Mr. Dickinson on 11th September, 1923. I regard the means by which Mr. Po pe secured this cable as objectionable, and I feel that they inflamed to a very material extent the ill-feeling that existed between Mr. Pope and Mr. Dickinson, and also caused

the Chief Representative to regard Mr. Pope as a bitter enemy. The cable referred to was not in any way connected with the paint question, but its contents certainly would have influenced the minds and actions of most people in Mr. Pope's position, and I think Mr. Pope was so influenced. It appears that Mr. Dickinson had cabled confidentially to the Chief Representative asking

for his confi:1ential opinion regarding the attitude of Mr. Pope on certain business of the Commission. While this action cannot be defended it shows the feeling which at that time existed between the two Commissioners, and is, I think, some support to the view that Mr. Dickinson must have had by this t ime some idea of Mr. Pope's distrust of him and of the reasons therefor.

. The Chief Represent'ltive sent a long cable in reply (see pp. 173 and 174 of transcript). This cable was sent forward as on Commission business, the cost to be charged to the Commission, but the day after it was dispatched the Chief Representative paid the P acific Cable Board the cost of the cable out of his own pocket . Notwithstanding that Mr. Por:e lmew of this fact, he asked for, and eventually secured through the Prime Minister's Department, a copy of the cable as sent

by Mr. Gaze to Mr. Dickinson. Mr. Pope's persistence in the paint matter was due to a belief that the Chief Representative and the Assistant Representative were in some way interested in an attempt to benefit themselves at the expense of the Commission; and also to the belief th

misplaced, and he (Mr. Pope) would be vindicated as the more vigilant and reliable Commissioner. Everythin?· that has t aken place between the Commissioners since September, 1923, seems to have been by this paint incident. The feelings of distrust on the part of Mr. Pope

grew stronger and stronger. Mr. Dickinson's feelings of contempt and ho stility for Mr. Pope grew more pronounced. Letters from Mr. Dickinson to Mr. Por e cea sed J une, the former contentina himself with cables to Mr. Pope when he fo und It Imr ossJble to avOid communications with him. Mr. Dickinson, however, wrote letteTs on the business of the Commission to the Chief Representative, copies of which were forwarded by the latter to Mr . Pope. In these letters Mr . Dickinson did not scruple to make sarcastic comments on the Commissioner for Australia--a very objectionable pTo c.eeding. Pr?bably, however,_ Mr. Pope's letter of 26th Febru8.ry, 1924, expressing doubts as to the pro pn ety of so me actwns of M:- .

Dickinson, contributed materially to the acrimonious tone ador t e? by the Ja:tter. Mr . ceased to write to Mr. Pope early in 1925, although Mr. Pope co ntmued to wnte t.o Mr. Ellis. The paint episode appea:rs to have been the cause which both the Jew Zealand and

the United Kingdom Commissioners not to hold commumcat wn With Mr. Pope other than by cable messages. F.ll512.-2

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.. The dismissal of Captain ·Evans arose out of the fac't that when handling ·the ship 'Chief at the. Islands on 13th August, 1924, the ship lost moorings valued at about £2,500. On her return to Sydney an inquiry int_ o the reasons for this loss :vas held on 22nd October, 1924; by Mr. · W. Chambers, the Assistant Represent.:ttive, and lVfr. Sted Thomson, a; consulting marine engineer appointed about a year previously to advise the Comrr1ission on matters connected with the ship. Mr. Thoms)n advised that Capt1in Evans had been guilty of negligence, and that he sho'uld be dismissed, and this step was t aken · by the Chief Representative.

A.protest against this dismissal was forwarded by the Merchant Service Guild to Mr. Pope, who immediately t ook the matter up and endeavoured to prevent the dismissal fron1 t ::tking effect: Without going further into details, it is clear from the evidence that Mr. Pope regarded the dismissal of Captain Evans as a device to prevent him (Mr. Pope) from securing a conviction in any Customs. prosecution regarding the paint. Mr. Ellis and Mr. Dickinson supported the action .of the Chief

Represent.:ttive, and declined to interfere with this action.

. I was pressed by counsel for Mr. Pope to take the view the dismissal of Captain Evans was not bona fide, but this I ain not prepared to do. The evidence before me falls very far short of justifying any such conclusion.

The relations between Mr. Pope and Mr. Dickinson had bee:ri going from bad · to worse, and Mr. Pope's actions regardingthepaint shipment and the dismissal of Captain Evans seem. to have made an unbridgeable gulf between Mr. Pope and his fellow Commissioners. :Mr. Pope held more tenaciously than ever to the view that Mr. Dickinson's interest in 'the Anglo-French Phosph.:tte Company (the holders of the concession over Makatea Island) 1nade Mr. Dickinson an untrustworthy Co!fimissioner, and he appears to have .come to the opinion that-Mr. Ellis, New Zealand Commissioner, was not to be trusted either, because, as Mr. Pope alleged, so.me of the relatives of Mr. Ellis had shares in the rival company. Mr. Pope, in his evidence, states that the interest of Mr . . Dickinson in this particular company comprised less than 350 shares "of very little value." There is no evidence that J\fr. Ellis has any personal interest_ in this company.

The Australian Government, on the 16th December, ·1924, sent to the British Government a cable message stating that :--" The Australian Con1missioner suggests that the attitude of the -United .JGngdom Commissioner was influenced by the fact that he is a shareholder in the Anglo-French

Phosphate Company, and that the New Zealand Comn1issioner, who previously supported the Australian Commissioner's view, but now supports that of the. British is ·influenced by the fact that relatives have become shareholders in t.he .rival compa11y."

This cable was shown to Mr. Dickinson by permission of the Commonwealth· Government in J\fa!ch,. 1925. Clearly it rendered personal relations impossible between the Australian Commissioner and his colleagues. Both Mr. Dickinson and Mr. Ellis (who were in constant communication) had now definite proof that their Australian colleague attributed dishonest motives to them, and had so informed his Government.. They felt, apparently, that the time for decisive action on their part had come ..

The· steps they have taken practically eliminate Mr. Pope any effective voice in the conduct of the Commission's undertaking. . ·

On 4th June, 1925, Mr. Gaze addressed the follo'\ving confidential letter to the Board of Commissioners :- ·

· " On the 30th instant the first five years ·of the Nauru Ocean Phosphate business. under the Commissision will be completed, and I assume that the results obtained· during this period and arraiigen1ents for the future will be under the consideration of the three partner Govern1nents. . . . · · ,

Remarkable results have been achieved since 1st July, 1920, phosphate production and shipping have been · largely increased, efficiencies improved, and costs reduced. Selling prices to the manufacturers in the partner countries have been progressively reduced until they are now below the pre-war level. vVe now hold contracts for all the requirements of all the superphosphate manufacturers in Australia and New Zealand, worth over £1,000,000 per annum, and transport and distributing arrangements are effectively organized. . ·

· The three ·Go vernments ·have not l:;een called upon to provide any rrioney f

surplus funds from foreign sales. ·

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.· . Under proper conditions, and run upon commercial lines, the undertaking should to prosper and resultsbe still further improved, but good will and co-operation in

directwn and management are essential if progress is to be maintained. My · agreement with the Cominissioners does not expire until 31st December, 1925, but in view of the early termination of the first quinquenniurn of the Con1mission · I refer now briefly, but candidly, to the existing situation. ·

To a gradually increasing extent my work for the Comnlissioners has been rendered unnecessarily difficult and unpleasant through friction on the Board and the hostile attitude of the Australian Con1missioner to his colleagues, rnyself, and the Assistant . after. question is made the subject of 9ontroversy, generally

':lthout any vahd business bas1s or reason, resulting in much useless expenditure of time and energy on the part of the Commissioners and their executive officers and incidentally causing a considerable waste of money on cabling. '

Differences have been referred by the Commissioners to the Governn1ents which except for this internal friction could readily have been settled by the Board. The selling ·of our surplus production to foreign countries has been done with a maximum of difficulty, due to the use made by the Australian Commissioner of Article 10, which requires the Commissioners to be unanimou.s regarding such sales. We are at the present time losing large sums of revenue through the loss of foreign sales owing to unnecessary stipulations and delays by the Australian Commissioner imposed under that article.

_ A very unpleasant feature is the introduction by the Australian Conm1issioner of prejudiced personalities regarding the other n1embers of the Board and rnyself, which alone-apart from his general attitude ori business questions-would render the mutual confidence and co-operation necessary fer the proper conduct of the undertaking difficult, if not· impossible: · .

The interests of the partner countries are common, not co nflicting, and I ca n see no justification whatever for the introduction of such an obj ectionable atmosphere, which is wholly foreign to the efficient conduct of a big business. If allowed to continue such conditions n1ust, in my opinion, lead to inefficiency, and bring discredit upon a

Government enterprise, which so far has been unusually successful, and which is a common asset of great value to the partner Governments. . The organization for direction and management is unusual, the Comn1issioners appointed to the Board by each Government residing in their respective countries, and operating through n1yself as attorney duly authorized to carry on the business with a

Central Office in Melbourne. With co-operation and good will, however, the arrangement, which is adapted to the peculiar circun1stances of the case, can be effective and satisfactory ; without such goodwill and co-operation no form of organization will give. the best results.

When accepting the nmnagership offered to me by the Board in the latter part of 1920, I anticipated that the full. confidence of all the Commissioners would be accorded to me. . In fact, I have received full confidence and support from the Vnited Kingdom and New Zealand Commissioners only, without which my position would have been

untenable. As to the future, while I shouldbe glad to continue to act for the Board, if desired, under conditions offering some assurance of smooth working, and with the full confidence of the Board, I have no wish to continue under existing conditions, which would be

unacceptable to any responsible man with a vital interest in securing efficient results. I shall be glad if this letter can be brought under the notice the three partner Governments.''

I presume that the request in the last sentence was complied with.

A Board Meeting ·was arranged to be held at Vancouver in October, 1925 . Mr. Ellis notifie d Mr. Pope that he was leaving for this meeting, but the notice only reached :Mr. Poy.;e 47 hours before the vessel by which Mr. Ellis intended t o travel left Sydney, and Mr. Pope had to travel by the next steamer. Mr. Ellis and Mr. Dickinso n arrived in ab7ut a mont h ahea.d of

Mr. Pope, and no doubt discussed and decided upon a plan of n. \i\ h n l\1r . Pope arnved at the meeting he was prese;nted with a series of resolut.ions whic.h had een re12ar d by the other Commissioners, and which were duly carried without l\!Ir. or .· s s nd m ed a r rd

some of them, in spite of his strong dissent. Th se reso]utions ?' al1a) forth

of the head offic e of the Commjssion froin A-.:stralia to New Z l n . 'Ih th fOJnt-

ment of Mr. Gaze as Chief R epresent ative an d of :Mr. ntative .

l\fr. Pope put forward various suggestions, nearly all of ' hi h -v lie gues.

12

. The effect of the decisions thus taken (if they be given effect to) will be that the Head Office of the Commission will be shifted to Auckland, New Zealand, at which place an option over office accommodation has already been secured. They also mean that the Chief Representative . and Ellis will be in constant touch with each other, and that the influence of the Australian

-Commissioner will be negligible. ·

Cables have passed between the British and Australian Governments in regard to this, but these are not before me. I have, however, by the terms of my commission, to consider the contentions of the British Government in their cable of 26th May, 1926, that harmony between the Commissioners cannot be established so long as the present Australian Commissioner remains in office. This cable states :-

"He (Dickinson) has met to our (i.e., the · British Government's) complete satisfaction the imputations on his personal honour brought against him· by the Australian Commissioner. But these imputations were of such a nature that it is hardly to be expected that harmony can be established so long as the present Australian Commissioner remains in office. We have no desire to see the Central Offi.ce removed from Australia, and we under&tand that the Commissioners for the United Kingdom and New Zealand would not themselves wish it if it were possible to work harmoniously with the Australian Commissioner. We see .no reason. to suppose that if other arrangements were made · for the representation of Australia on the Phosphate Commission the affairs of the Commission could not' be conducted in a friendly spirit."

In my opinion no justification exists for the imputations cast by Mr. Pope on the Commissioners for the United Kingdom and New Zealand. l\ir. Pope is "extraordinarily suspicious " of the good faith of those from whom he differs.

I think it is impossible for harmony to be re-established between the present Australian Commissioner and the Comn1issioners for the United Kingdom and New Zealand. The imputations on the personal honour of both the latter, and the discreditable innuendo regarding the compensation paid to Mr. Ellis for loss of office, are of such a nature as to render the re-establishn1ent of harmonious relations impossible.

I think I should say that however the Commission is constituted in the future there is need for a revision of some of its methods. It is a great pity that regular meetings of the Commission did not take place. The first meeting was held in I.ondon the latter part of the year 1920 at which ti1ne Mr. J. R. Collins was the Acting-Commissioner for Australia. No subsequent m.eeting was held of the three Commissioners until the meeting at Vancouver on 17th October, 1925) although_ before ordinarily courteous relations became impossible, Mr. Pope and Mr. Ellis had several conferences. In an undertaking of the n1agnitude of the Phosphate Commission a meeting . of the Board · of Commissioners should be held, to use the words of the Companies Act, "once

at lea.st in every calendar year and not more than fifteen nwnths after the holding of the last preceding meeting." In view of the great distance that has to be travelled some intermediate spot might be arranged for such Meetings between the Australian and the New

Zealand Commissioners, who are representatives of the countries most vitaJly interested in the . supply of phosphates, could be held more frequently without inconvenience. Ariy .revision of the emoluments of the Commissioners rendered necessary hy such meetings would be, to some extent, offset by a reduction in the inordinate cable bill -that has been incurred during past years

by reason of the internal and never-ceasing strife and wrangling. Personal conferences and discussions do much to reconcile differences of opinion and of outlook. They tend to a better understanding of the attitude of those with whom one must frequently correspond, and they lessen the necessity for continuous reliance on very fruitful source of misunder­

standings, as most business men are a ware.

My answers to the specific questions addressed to me are as follows :-1. The alleged inharmonious relations between the Australian Phosphate Commissioner on the one hand and the British and New Zealand Phosphate Commissioners on the other, and between the Australian Phosphate Commissioner on the one

hand and the Executive Staff of the Commission on the other, do exist. I interpret the words " Executive Staff o"f the Commission" to mean the Chief Representative and the Assistant Representative. 2. The manner in which such relations have arisen, and tht> person or persons responsible

therefore> is to be ga ther:er1 £rom what I have said above. The root cause was the distrust by Mr. Pore of Mr. Dickinson, and his belief that Mr. Dickinson was actuated by indirect. and improper motives. Then when Mr. Ellis differed froin him, l\fr Pope felt that the attitude of Mr. Ellis was materially affected by the compensation he received from the Pacific Phosphate

1079

Con1pany of which J\Ir. Dickinson wa$ liquidator. Later on arne the definite i1nputations by Mr. Pope of improper 1notives to each of his colleagues as set out in the cable to the British Government of 16th December, 1924. In my . view no justification existed £or Mr. Pope,'s distru&t and s'Uspiqion. I do not

regard the divergencies of outlook, or the differences of opinion on matters connected with the working of the undertaking, as being sufficient, in themeelves, to have produced the present deeplyregrettable position. As regards the inharmonious relations between the Aust1•alian

Representative and Mr. Gaze , the former seem.s to have had suspicions of the Chief Representative before he (1\'lr. Pope) was appoint@ d Com1nissioner (vide J\iemorandun1 fro1n lVIr. Pope Australian Pri1ne :Minister, dated 4tn October, 1920). I do not think Mr. Pope ever really trusted J\1r. Gaze, and the incidents of the paint shipment, and the disn1issal of Captain Evans, effectually destroyed

any possibility of amicable relations between them. These two incidents also m.ade friendly relations i1npossible between 1\fr. Pope and the Assistant Representative, Mr. Chambers. 3. The evidence before n1e does not enable n1e to give any substantial answer to this

question. rrhe confidential letter of the 4th June, 1925, fron1 the Chief Representative 'to the Board of Comn1issioners set out above, indicates skilful of a large undertaking. ·

4. The decision o.f Inajority of to transfer the of

the Com1n1ssion from Austraha to New Zealand was due to t he inharmoniOus relation,s aforesaid ai+d to the n1an,ner in which S\lCh 5. Harmony between the Comn1issioners representing the thre.e partner countries, cannot, in n1y opinion, be established so long as Mr. Pope re1n aing as Au,stralian

Commissioner.

I have the honour to be,

0 : NANCE, Secretary, .

Melbourne, 21st July, 1926.

I

•I

·your Excell ency's obedient servant ,

AH.THUR ROBINSON ,

Ro yil.l Co :rnrPi$sio n,e;r ,

14

A PPENDTCES.

l. Copy of cabl egram rcceivecl hy t he Gov<'rtlOr-GPnera l frotn t hP Becn•tary of Stat<' fo r Domini on AH'a. irs , da tP d 26th May, 1926. · . ·

2. Statement re origins and co ntrolover phosphates in Na uru and Oceau Island.

3. Table show ing proportion of phosphates sh ipped from Nauru and Ocean tuken Ly Australi a antl New Zealand, 1st July, 1920, to 30th June, 1925. 4. Letter dated 26th .June, 1926 , from Messrs. Blake and Riggall to Royal Commissioner. 5. Statement re shipmC'nt of paint ex Nmtru Ch£ef a nd Customs prosecution .

APPENDIX No. l.

CoPY OP CABLEGRAM EECEIVEn BY r HE GovERNon.-GENEHAL FROM THE SECRE'I'ARY OF STATE FOR AFFAms, DATED 26TH 1\fAY, 1926, 7 P.M.

26th May. Following for your Prime Minister begins · We have now carefully considered t he views expressed in your tt•Ieg ram of 27th February with regard to t he British Phosphate Commission, and have also had an opportunity of considering the reply given by the New Zealand Government with the summary wh ich they have furni shed us. We arc not disposrd to relinquish ·our in t.hc undertaking. Indeed, we attach great importance to the retention of our interest. We concur with yo u in regarding any public inquiry into the affairs of the Commission as undesirable. There is no oecasion for such an inquiry so far as t he commercial success of the business is conce rned. It could only deal wi th highly personal matters invt>stigation of which in public could not but reaet prejudieially on the future of the enterprise. Nor do w·c r<'gard the situation as one calling for revision of t he agreement or of t he present organir.ation of the Commi ssion.

Th e problem as it appears to us relates so lely to-(a) the personal relations between the United Kingdom and New ZPalaml Commi ssioners on the one hand ancl the Australian Commissioner on the other ; (b) the personal relations between the .latter and t he executive staff of the Commission.

The present lack of harmony is greatly to be deplored, but we do not feel that we should be justified iu terminating the. appointment of our Commissioner. · He has an unrivalled experience and standing in the phosphate business, we know of nothing to indicate that his relations with the pxecutive staff leave anything to be desired, and we should view with great regret the loss of his services to the undertaking. He has met to our complete satisfaction the imputations on hi s personal honour brought against him by the Australian Commissioner. But these imputations were of such a nature that it is hardly to be expected that harmony can be established so long as the present Australian Commissioner remains in office. We have no desire to see the central office removed from Australia, and we understand· t hat the Commissioners for the United Kingdom and New Zealand would not themselves wish it, if it were possible to work harmoniously with tl1e Australian Commissioner. We see no reason to suppose that if other arrangements were made for t he representation of Australia on t he Phosphate Commission the affairs of the Commission could not be conducted in a friendly spirit on the present basis, and we would earnestly urge upon you desirability of gi vj ng further consideration

to this means of dealing with the situation . Proposals for settlement of all outstanding questions with regard to the financial control were submitted to you in my telegram of 16th January. These have been agreed to by New Zealand. No reply has ye t been received from Australia, hut we are advised that their adoption should, if the personal qu estions were settled, eliminate all possibility of l_iiffieulty.

I am repeating t his telegram to New Zealand. Ends.

APPENDIX No. 2.

The phosphate business in Australia, before being taken over by the British Phosphate Commissioners, was conducted mainly by the Pacific Phosphate Company, and the phosphates used in Australia and New Zealand were, in t he main, obtained from Ocean Island, Nauru, and Makatea. The Pacific Phosphate Company had the exclusive right to work the deposits of phosphate on Ocean Island under a grant from His Majesty's Government for something like 100 years.

Nauru was a German possession, and the right to work the deposits there had been granted by the German Government to a German company. That company had assigned its rights to the Pacific Phosphate Company. The phosphates in the island of Makatea (a French possession) were worked by a. French company. The Pacific Phosphate Company held 51 per cent. of the shares in that company.

After the war a mandate for Nauru was granted to the British Empire and an Agreement, dated 2nd July, 1919 , was entered into by His Majesty's Government in London, His Majesty's Government of the Commonwealth of Australia, and His Ma jesty's Government of the Dominion of New Zealand, whi ch provided that the phosphates there and the working of them should be vested in a Board of Commissioners of three members, one to be appointed by each of the Governments parties to such Agreement. Article 15 of the Agreement states that the Agreement shall come into force on its ratification by the Parliaments of the three countries. This Agreement was duly ratified by an Act of P arliament of the United Kingdom passed on t he 4th August, 1920-theNauru Island Agreement Act 1920 (10 and 11 George the Fifth Chapter 27)-and also by an Act of Parliament of the Commonwealth of Australia passed on the

28th October, 1919, and was ratified by resolution of the House of Representatives and of the Legislative Council of the Dominion of New Zealand, passed on the 23rd and 28th days of October, 1919, respectively.

I 0 8 1

15

A.rP EN DIX No. 2-'Cmu-mued. •

Article 7 of Agreement, dated 2nd July, 1919 , reads :-. " Anr: right, title,_ interest which Pacific Phosphate Company or any person may have in the sa1d depos1ts, land, buildings, plant, and eqmpment (so far as such right, title, and interest iR not dealt with by the Treaty of Peace) shall be converted into a claim for compensation a.t a fai r valuation ." with Pacific Phosphat e Compa ny for the amount of compensation whi ch should be paid to it for

Its m Nauru, It was brought under the attention of t he Governments that the P acific Phosphate Company was also workmg the Ocean Island phosphat e deposits, and that it was very undesirable that the Governments sho uld the Nauru deposits whi!st that company should be working the Ocean Island deposits in competition

With 1t. An Agreement was entered Into with the Pacific Phosphat e Company fo r the purpose of acquiring from that company of its rights in Ocean Island, and the working of t he Ocean Island deposits was to be ve;;ted in a Comm ission under similar articles of Agreement as those whi ch applied to Na ur u. .

No arrangement was made to take over t he interest that t he P ac ific Phos phate Company held in the F rench company that was working t he Makatea deposits. After t he transfer t o the Commiss ioners of t he Pacific Company's interests in Nauru and Ocean Island, that company still re mained t he holder of 51 per cent. of t he shares in the French company controlling the Makatea deposits.

By an agreement, dated 25th June, 1920, it was agreeu t hat t he Pac ific Company shorLld se ll and transfer, and the Govhnments of the United Kingdom, the Commonwealth of Australia, and t he Dominion of New Zealand should purchase and acquire, at the price of £3,500,000, t he w1wle of t he undertaking and assets of the company on Ocean Island and Nauru and all the rights, title, and interests of the company in the guano phosvhate deposits in and upon both islands.

By an indenture, dat ed 31st December , 1920, between t he P acific Phosp hate Company Lim ited and His Most Gracious Maj esty the King, on behalf of the United Kingdom , Australia, and New Zealand, and with the three perso ns named therein, Alwin Robinson Dickinson , J ames Richard Colli ns, and Albert Fuller E llis, the interests of the Pacific Phosphate Company were transferred to these Commissioners " TO H OLD all t he said premises (SUBJ ECT respectively

as aforesaid) Unto and TO THE USE of the present Commissioners, t hei r heirs administrators and assigns according to the nature thereof as joint tenants UPON 1'RUST and to the intent t hat the said premises shall at all times hereafter be held by the present Commissioners (as such Cominissioners) and the Board of Commissioners from time to time hereafter to be duly appointed under the Phosphat e Deposits Agreement (hereinafter included in t he expression " the Board of Commissioners " ) for the purposes and upon the t erms and with and subject to t he powers and in accordance with the prov;isions contained in the Phosphat e Deposits Agreement AND TO THE I NTENT that the phosphate deposits on the said Ocean Island and the said Island of Nauru shall at all times hereafter be worked sold disposed

of and dealt with by the Board of Commissioners in accordance with the provisions of Articles 9 to 14 (both inclusive) of the Phosphate Deposits Agreement AND SUBJECT ALSO to t he Agreements and obligations on t he part of the Board of Commissioners and the Governments· respectively hereinafter contained." Under the Agreement of 2nd July, 1919 , Mr . A. R. Dickinson was t o represent the United Kingdom, Mr. A. F. Ellis, New Zealand, and Mr. J. R. Collins, Australia. (Mr . Collins was appointed to act temporarily as Australian Commissioner from 1st July, 1920, to 5th J anuary, 1921. Mr. H . B. Pope was appointed as Australian Com missioner on the 6th January, 1921.) . . .

The P acific Phosphate Company went into liquidation shortly aft er t he payment of t he COllSlderatwn for the transfer of its rights to the Commissioners:

APPENDIX No. 3.

TABLE SHOWING PROPORTION OF PH OSPHATES P R OD UCED AT NAURU AN D OCEAN ISLANDS.

TAKEN B Y AusTRA LIA AND NEw Z EALAND, J sT JuLY, 19 20, TO

1920-21- l'otaZ Shipments Quantity taken by Australi a New Zealand

Total

1921- 22-- Tolal Shipments Quantity t aken by Australi a New Zealand

Tot.al

1922-23- Total Shipments Quantity taken by Australi a New Zealand Total 1923-24-Total Shipments

Quantity taken by Australi a New Zealand

Total

1924-25-T otal Shipments Quantity taken by Australia New Zealand

Total

Combined Totals f or .fi·ve yem·s Quantity taken by Austi:a li a New Zealancl

Total

30TH .) UN t: , 1925. 364,424· tons. ions 265 ,914

to ns

tons

17,100

283,014 361,486 tons. 171,286 38,500

209 ,786 313,758 to ns. 203, 44() 51,550

254,996 451,909 tons. 320,031 60 ,850

380,8 l 470,723 tons. 337 ,29 9 ,790

1,962 ,300 tons. tons 1,297 ,975 266 ,79

1,564,765

72 .97%

77.66%

47 10.65%

58 .04%

64.84% 16.43% 81. 27%

70.81 % 13.47%

R4 . 28%

71.66% 20.99 %

92.65% 100 % 66.1 5% 13.60%

79. 75%

1 11

,, [t

!' ,,

•I

;•

APPENDIX No . 4-.

120 William-street, -

Tl}e lfo11. Sir ArthlJ.r Eohinson, K.Q.M.G. 1 G&ttz,

SIR ARTHUR

Ro;1al Cormnis8ion on B'i' fti$h Phosphate (Jommissio n.

. · -- Melbourne,

26th June, 1926.

This letter is written on behalf of t he Commissioners appoint ed by His Majesty's G.aw-emm..ent in L.ondon and by H.M:. G.ova.rnmtmt of t he Do1n.irtiQn o£ :N'I=lW Fespf(otively, :w.e are instructecl t.o inform y ou that the.EJe do t9 offlci;:tiir the Royal

CommiSSIOn or t o be represented by counsel at Its Slttmgs. Neither, Will they allow anr q£ the ,adnuntstratlve offiCials of the British Phosphate Commission to do so . '

fltl-'B direoteP. to impress upon you t4f+t, in. ::).dpptiJlg th.j f'fPWtllde, the_f?f1 a PPt &c;ttmte-si by

qf respect, either fo :p perspn.f}.Jly QI; fo1-' the lJy w:Pipll, Y.Olt b.twn lt it?,

qonsidered Phfllt it would be 3ts PP-e q,rQ. t e

Governments which they represent, for them or the officials mentioned to appear before yon tp

qf a litigan1i-whf t4er purposes of attack or defence.

These Commissioners weFe of opinion that the Austr;:tlian Govfa·nu1ent ha.d b!tfore it $Uffl-0ient W.A-te:Pi!llls to enable it to deal with the issues submitted to the Royal Commission. for inquiry. SQ far !Xt9,y

'be able to do so consistently with the views expressed aho v.e; they willing to aid the Ogmmis:liil2n in its and to render you, personally and. alone, allue.c.essa:Py

· this ppject ip v iew, we are to infpJ-'1]1 that tpe for NFJW i,s

to tvJth yolJ. pi?J;SQP.;:tUy 11nd alpnEJ , aild poth t}1ese to and MS1&tant

gf the l3ritir?h Con::qr1ission

1 aJs,o its solicitor 1 likewise.

As to the Commissioner appointed hy Majesty's Goverl}iuent in Lon.don, lw i,s unoffiPia-lly to any appropriate questions telegraphed to him h y yD u.

F ;Jrtlwr, tl Cmnmis.sionwrs q,re wHJi:ng Y9Jl any offl_9i[-tl boqks pr docl{men;t[j .of

the British Phosphate Commission, provided suap_ not interfe:r:e with the routine of business or d,.e l11y

the r,emoval of the Cent ral Office to Auckland, as by the Board . of Commissioners .

We have the honour to he, Sir, - ' -

Your obeCJ_ient ,

Sgd.) & RIGGAJ..JL ,

APPENDIX No . 5.

SHIPMENT OF PAINT EX "NAUR.U CHIEF,'' AND CUSTOM£ PR.OSEOUTION.

l\1r. W. Cha:rnbeF£>, Assistant R epresentative of the British Commission, was sent to England to bn)' a steamship for the Commission , and to purchase, or arrange for the purchase, o:f a a.alled the Nuu1·u Chief .

When in England l\'Ir. Chambers purchased paint, and invoiced same to Ohal)Jbers and Co. Pty. Ltd., Sydney- a company formed by his brothers, but in which he had no financial interest.

On the pf the N auTu Ch1;ej in Australia she proceeded to Port Kembla to replenish her and

there an was made with the captain and chief officer for the paint. to r r main 011 board q,& StoreR

for t):te p_se of the ship .

Cost, originp;l invoice13 , to Chfl.mbers a;n,d Co . Pty . l 4d . ch f:lirge for and Co. Pty . Ltd., to Commission

GroS$ profit

£ 8 . d.

434 10 7

Q57 5 8

138 10 1

- (P. 350.)

During September, 1922, in Melbourne p aint valued at £208 9s. lld. was removed from tock on board, for r.r- pairs n ecessitated by fire .

Average Adjuster's apportionment is-

Allow to for paints fo r. hold& and top ides No. 3 anq :t.'lo. 4 ho1

t o · .own . r,

Total

c 8. d.

3

- (P. 354 .)

108

APPENDIX No. 5--'-continuecl.

. .; Pope states that the of of paint was first bro ught under his

bef?re he left for a !'o the Islands. by the Auditor ment1?nmg to him that he (the Auditor) thought

1t hrghly madv1sable for the Comrmss10n to be makin g- purchases to a conSiderable extent from Chamber and Co. Pty. Ltd., of Sydney (p. 344) . . : ·On return of Pope to :tyfelbourne the Auditor. was re9.uested by Mr. Pope to make inquiries, and, as a result;· he that pamt arnvecl by t.he Nauru ·0/nef consigned to Ohambers and Co. Pty. Ltd., but he was unable to. ascertam frmgl;t had been. paid (p . 344). The then asked for a report

of the Chief RepresentatiVe (p. 34o) , and he, m turn, asked the Assistant Representatlvc for a report (p. 345).

' ·''.' \·:-: ,., .. REPORTS.

. ReJJlf!$entative.

To Australian Commi.Ssicnwr,,r . .. 5th September, 1923. (Ex. 111, p. 347.) The pajnt was not landed as intended, but some of it was used en 1•oute, and balance left on board by arrange­ ment w-ith the Chief Officer, for use on the ship. Consent was given t6 retention, conditional on the Commission's receiving an advantage in price equivalent to not less than

the freight which would otherwise have been collected.

Assistant ·Representative.

To Chief Representative, 4th September, 1923. (Ex. 110, p. 346.) ·when in England he was asked if he could recommend a good Australian firm to represent " Hoyle's Paint for

He recommended his two brothers, trading

as ·Chambers and Co. Pty. Ltd.," Sydney. It was suggested to send out about 10 tons of paint, and freight arrangements were being booked by a Commonwealth liner, when the agent of the Nauru Chief suggested that the paint should go by that vessel, as she would not be

down to her marks on leaving the Tyne. · Agreed to this on the understanding that t he rate of freight would . be arranged in Melbourne.

On the- 21st September, 1923, the Australian Commissioner cabled the other Commissioners, stating that l\llr. W. Chambers, when in England, had purchased certain paint consigned to Chambers a1id Co. Pty. Ltd., Sydney, and setting out the informa.tion contained in the report of the Chief Representative. The views of the Commissioners in the action of Mr. Ohamt,ersin arranging this consignment without authority were requested (Ex. 13, p. 109).

REPORTS.

Chief

To Australian Commissioner, 4th October, 1923. (Ex. 112, p. 351.) . The first knowledg,ehe had of the matte,r was after the vessel reached Melbourne, and the paint was being used. He believed that no irregularity was · intended by the Assis.tant Representative, and would do everything pos­ sible to guar.d against any transaction open to criticism

being allowed in the future. ·

The report of the Assistant Representative was also forwarded . .

Assistant Representative .

To Chief Representat ive, 1st October, 1923. (Ex. 113, p. 355.) In allowing the shipment he thought that to do so wa.5 to benefit the ship, but realized that it would have been better to have obtained approval before he allowed it.

!fe would endeavonr .in the future to see that everything m regard to the sh1p would be transacted on regular and formal lines.

The reports of the Chief Representative and the Assistant Representative were forwarded by t he Australian Commissioner to the other Commissioners on 5th October, 1923 (Ex. 16, p. 110) for an expression of views.

VIEWS OF CoMMISSIONERS.

K ingdorn.

22nd November, 1923. (Ex. 17, p. 110.) ,

Considered existence Bill of Lading intenti(i)ln. concealing. ·Although advanced freight arrangements omitted, the matter was promptly reported . by l)Ir. Ghambers on arnva] in Melbourne. Case no'thLl!llg more than inadvertence. Chief Rep:!ie&entati've to direct

Chambel's to avoid :recurrence, 3/nd close matter.

New Zealand. 26th October1 1923. (Ex. 22, p. 115.) .

Th most eriou.s view he could take of the bransaction was that Mr. Chambers may have committed an error of jndgment subsequently in thinking that the vessel could be supplied with paint in any way but the usual

manner in which the Co:mm:i sion obtains supplie , nd particularly in tha.t the busines a done ith hi ,

brothers' :firm. His confidence in Mr. Chambers's integrity had not been di turbed, and he had no doubt t hat :Mr. Chamber would be rrtor careful in such matters in the future.

REFERENCE o F OoRRESPONDE cE To CusToMs D EPARTME T .

On 13th October 1923, the Australian Commissioner, without reference to the Co mmi ·ioner £or the nit d Kingdom and New for-w:arded to the Prime ad as o wheth r Mr. hamber.·

had committed any breach of his duty which would b1. bemg ternu.nat d (p. 117). Th er

was referred to the Attorney-General's Department, and adv1ce wa.. re ·e1ved _ha on fa_ ct. d.1. cl?sed t he papers con am a nothing justifying t he conclusion that Mr . Chamber.· had broken he undertakmg con d laus . 2 of Agreem n . (Clause 2 The said William agrees to ?arry out the b.est of hi ab1li y all m rue. lOJ?- he may

receive from the Commissioners or theu Chief Repre entat1ve for t he time belll:g o dev h ":hole of his 1me o t he interests of the Commissioners ; and not to trade for. or to m any o her busmes than tha _ of th

, ecrde· Mr.

1 h en uilty of

ccnduct which rendered him unfit to ac a heu r pi nta e. ug d matt r b ' referred to the rad nd

18

APPENDIX No. 5-continued.

Customs Department for consideration of the question as to whether any offence under the Customs Act had been committed (p. 117). The Australian Commissioner was advised of this opinion, and, on 7th December, 1923, without reference to his brother Commissioners, requested the Prime Minister's Department to forwa,rd the papers to the Trade and Customs Department (p. 116) .

On 22nd November, 1923, the Australian Commissioner cabled the other Commissioners, advising that the matter had been submitted to the Customs Department as to whether an offence under the Customs Act had been committed (Ex. 18, p. 111).

CoMMENTS OF CoMMISSIONERS.

United Kingdom. 22nd December, 1923. (Ex. 19, p. 111.)

Objected to action without being consulted.

(Ex. 25, p. 129.)

Matter should have been dealt with by Board, through its Chief :Representative.

New Zealand. 22nd December, 1923. (Ex. 19, p. 111.)

Protested against action without being consulted.

31st December, 1923. (Ex. 24, p. 123.)

Oi opmiOn Australian Colllllrissioner should have adviised that he feared a breach had been committed; matter could then have been submitted for expert leg<:J.l opinion, and, if breach committed, it should have been placed before the Department. ·

The Australian on 22nd December, 1923, and 27th December, 1923, cabled the New Zealand Commissioner (Ex. 19A, p . ll1) and United Kingdom Commissioner (Ex. 20, p. 112) respectively, that the matter should be brought under the notice of the respective Governments. On 16th J anuar_y, 1924, the Australian Commissioner informed the United Kingdom Commissioner that it was

not considered any offence against the Customs Act had been committed-the Customs Department decided to take no acti011- Chambers informed he was exonerated (Ex. 21A, p. 112). Mr . Pope, in a me.morandum to the Prime Minister's Department, dated 5th August, 1924, stated that it had been-reported to him that an irregularity had occurred at the time the paint was transferred from stock for repair work while the vessel was in dock in Melbourne, and, as it appeared likely that the Customs had been defrauded, he requested that the matter be referred to the Customs Department for immediate investigation (p. 138).

CusToMs PROSECUTION.

- (P. 148.)

For Charges see Table.

The Stipendiary Magistrate dismissed all the informations, being of opinion that the evidence given failed to support, and, in fact, disproved, the averments of the informant. An appeal was made to the High Court of Australia, and, it is stated, inte1' alia, ·" The question fo.r us is whether his determination was erroneous in law" (p . 148). The charges against Mr. W. Chambers (the Assistant :Representative)

were not pressed by the Crown, and the case was dealt with as if the charges were against Chambers and Co. Pty. Ltd. and L. Chambers alone .

Stipendiary M ugistmte.

L. Chambers and W. Chambers were charged with­ (1) Failii1g to enter the goods (sec. 68);

(2) Evading payment of duty (sec. 234) ; (3) Interfering with goods which were subject to the control of Customs (sec. 33).

The Judgrnent of Chief Justice, H,igh Court.

(1) Of opinion that obligation to make entry arose at time ship arrived at Port Kembla ; (2) Magistrate correct in djsmissing information ; (3) Decision of Magistrate correct.

', J I IJ

DETERMINATION oF HIGH CouRT; 8TH JuNE, 1926.

Re Section 68.

:Rmnit case to Water Police Court to be dealt with. Detennination of Stipendiary Magistrate was erroneous in point of law, as respond.ent ought to have been conVicted of being directly concerned in the offences committed by the company against that section, but not of having committed such offence with intent to defraud the revenue.

'rhe matter thus before the Police Court again. Fines imposed of lOs. in each case, with Is. 6d. Court costs.

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