representing Officers and families of

The Commercial Banking Company of Sydney Limited

and its subsidiaries & affiliates.

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Subject: Re: Internal Embezzlement from Pg 230 Select Documents of the 19th Century Vol. 1

1847 June 10 consequent upon information of fraudulent entries by the accountant, received from Mr Harkness, a clerk in the bank's service, enquiries commenced into the affairs of senior bank staff.  These enquiries led to the suspension and subsequent resignation of
the managing director and charges being laid against the accountant Mr. Townend.
Consquently inspectors were appointed to carry out regular audits and internal procedures reviewed and tightened.
1847 June 21 Board Minute ....
...Managing Director place all the securities in the vault and hand over the keys to the Chairman and Deputy Chairman & that the Board then adjourn till seven oclock tomorrow morning 22 June.
The Board assembled at half past 2 o'clock and resolved that Mr Townend be taken into custody and prosecuted for the embezzlement acknowledged by himself to amount to upwards of 9,000 pounds.
1847 June 22 Board Minute
Directors met at 7 o'clock and proceeded at once to examine the Securities of the Bank that at 8 o'clock the following letter was received from Mr Duguid:-
Dear Mr Barker,
I am sorry to be so laid up with the heavy cold I had yesterday as to be unable to leave the bed from which I now write -
The Directors have formally taken possession of the keys I must beg to give up all charge and under existing circumstances will in all probability forward my resignation.
L Duguid. Cooks River 22 June 1847.
The chairman reported that the Coin had been found correct and that as close an investigation as the limited time at their disposal would allow appeared to confirm the supposition of the Directors that Mr. Townend's defalcation amounted to about 9,200 was decided to write a letter to Mr Duguid for explanation of these matters in the following terms.
1847 June 22 Sydney,
The Directors have requested me to acknowledge receipt of your letter of this morning's date
and having upon examination of the Securities held by this Bank in conformity with the
Resolution of the Board of yesterday received from the Teller the following documents purporting to form a portion of the amount of 5,372 pounds & 4 pence under the head
Sundries among the floating assets of the Balance Sheet. viz:
L Duguid's Cheques a/c Trustees Mrs Duguid dated 1 Aug 22 pounds 3 & 6 pence
1847 June 2 P/Ns endorsed by L Duguid 300 pounds
1847 June 4 June 500 pounds
1846 Aug 9 560 pounds
1847 Jan 13 2,137 pounds 13 & 8 pence
1842 May 18 670 pounds
1846 Aug 19 320 pounds
1846 Sep 13 611 punds & 3 pence
Total 5,120 pounds 17 & 5 pence
To call on you for immediate explanation relative to the origin and nature of these Securities.
Signed Thomas Barker Chairman.
1847 June 24
I Protest against the Proceedings of certain Directors..........L Duguid Managing Director
1847 June 25 To L Duguid, Your continuance in the office of Managing Director is prejudicial to the interests of the Comany, we have to inform you that we have this day suspended you from your said office, until a Public Meeting of the Propriators can be called (signed) Blaxland Marker Parker Smoth Old Knox Bowman Ebsworth MacPherson.
1847 June 25 Inserted in the Herald and Australian:
Bank Notice CBCofS a General Half Yearly Meeting of the Proprietors of this Bank will be held withing the Banking House Sydney on Tue 13 July at 12 o'clock precisely for receiving report of the Directors, declaring dividend for the election of two directors and for determining whether the Managing Director shall continue in office, he having been suspended by the Directors and for such other special business touching management and affairs of the Company
Signed Thomas Barker

1847 July 13 Half-Yearly Meeting defalcations totalling 10,700 pounds of Accountant and of the Managing Director through embezzlement.
The Managing Director was dismissed and Mr Edward Knox appointed Managing Director.
100 pounds was awarded to bank clerk Mr Harkness for discovering the defalcations.
Two Inspectors were appointed to inspect monthly the books and papers and report monthly to the Board, and to half yearly general meetings.
Five Guineas per month was to be paid to the Inspectors.

1847 July 14 on a motion the suspension of Mr Duguid was confirmed.

1847 Nov 22 Mon General Meeting to wind up old bank into new bank.
1847 Sir Edward Knox became Managing Director of CBCofS
1847 John Lamb became Chairman of CBCofS
1848 May 15 New Bank CBCofS was incorporated
as a limited liability company
1848 June 17 Act of Incorporation of CBCofS was assented to
1848 Sir Edward Knox appointed manager of CBCofS

Up Directors Embezzlement Some Important Dates