The Sun.
London, England, 1849-07-16 00:00:00

to each holder of Newcastle and Darlington stock, and
thus disposed of 20,000 of the 22,000 Brandling Junction
shares. It was . then resolved " that the surplus, be
placed at the disposal of the directors." • •
On the sth of March following the Board of Di•
rector?, at a meeting at which were present Mr. Hud-
son, 'Mr. Davies, Mr. Richardson, ail Mr. Flews,
placed the 2,000 shares at the entire disposal of the
chairman.

The 2,000 shares thus given to Mr. Hudson were
worth 21Z premium at the time of the appropriation to
him, being equivalent to a bonus of 41,0001.1 but it is
B..ated to your committee by Mr. Close that Mr. Hudson
gave shares out of the 2,009 to the following parties :
Mr. D2.vies (director) ... 100
Mr. James. Richardson (director)... ... 100
Mr. Close (secretary) ••. ••• ••• 50
Mr. Harrison (engineer) ... 25
Mr. Hobert Steptu‘nson (engineer) ... 25
Mr. Wood (director) ... 20
Tho committee have thus brought under the notice
of the shareholders the leading facts attending this
transaction.

AS TO THE PURCHASE OF IRON RAILS FOR THE NEW-

CASTLE AND BERWICK RAILWAY.

Your committee refer the sharehuldersto the evi
deuce and correspondence upon this subject, from which
it appears that on the II th of January, 1845, and im-
mediately before the 811 for making the Newcastle and
Berwick Railway was submitted to Parliament, Mr.
liudspn concluded a contract which had been parry
made in the previous month of October with Messrs
Thompson, Forman, and Co., iron manufacturers, of
London, for the purchase of 10,000 tons of iron rails, at
6/. lat. per ton. The first meeting of which any record
appears of the provisional committee of the I\ ewcastle
and Berwick Railway, was on the 30th of January,
1845, at which were present, Mr. Hudson, Mr. Davies,
And Mr. James Richardson, when it was i resolved to ad-
vertise for tenders for the supply of 20,01/0 tons of iron
rails, and an advertisement accordingly appeared in the
I?ailmay Times of the Ist of Feb., 1845, signed by Mr.
Hudson, as chairman, requiring tenders to to be sent in.
On the sth of March the same parties, with the addi-
tion of Mr. Plews, assembled, and tenders were received
from various persons. Messrs. Thompson and Forman
then sent in a tender, which was accepted, for 14,000
tons, to be supplied at 121. per ton. Four other patties
were permitted to supply 1,000 tons each.
It appears that by arrangement with Thompson and
Forman; Mr. Hudson was interested in this contract to
the extent of 7,000 tons, that quantity having been sup-
plied out of the 10,000 tons purchased by Mr. Hudson at
6/. 10s. per ton. The profit on the supply of these 7,000
tons would amount to 38,500/, and Mr. Hudson must
have known that he was acting illegally in being interested
in any such contract with a company of which he was
chairman.

PAYMENTS FOR LAND AND TO CONTRACTORS ON THE
NEWCASTLE ♦ND BERWICK RAILWAY.

Your committee, having referred so fully to the
Newcastle and Berwick share allotments, would now
direct attention to the mode in which the general funds
of that company were dealt with at the concurrent
period.
The first account presented to the shareholders of the
Newcastle and Berwick Company was for the half-year
ending the 31st of December, 1815. That account,
which will he found in the evidence, contained the follow-
hog item among the list of payments:—
" Land-37,3504"
_ _ _

and is signed as
" Audited and allowed, January, 1846,

" THOMAS BARSTOW, / Auditors."
" HENRY RICHARDSON,

Your committee find that the actual psyments for
land at the period referred to amounted to 6,350/. only,
and that 31,000/. of the above-mentioned 37,3501. was
not, in fact, pail, but had been taken by Mr. Hudson
out of the company's funds, and applied by him to his
own purposes. The m/Rie in which this was done shows
the very loose manner in which the auditors tested the
accounts, inasmuch as if they had called for proper
vouchers none such could have been produced. It ap-
pears th:st, on the 30th of December, 1843, Mr. Hudson
took two of the company's cheques, to the amount of
14,000/, signed by himself and Mr. Davies, one of
which cheques was made payable to the Duke of North-
umberland for 10,0001, and the other to the Earl of
Tankerville for 4,0001 ; and it further appears, that on
the following day, Mr. Hudson took four other of the
company's cheques, signed by himself and Mr. James
Richardson, and which were made payable to the fol-
lowirg parties, viz :

k.il Grey £5,000
Lady Mary Stanley ... ... 2,000
Sir M. W. Ridley 3.000
Earl of Carlisle ... 7.000

.E 17,000

NOIIC of these cheques were handed by Mr. Hudson to
the parties in whose favour :hey purported to bo drawn.
These cheques formed the only dJeuments which were
presented, as vouchers, to the auditors, and it will be at
once observed that such a mode of audit presents no
security whatever to the arm-holders. In the case of
this item of " land," the accounts have, by this system,
continued overcharged in each half-year, down to that
which is now current; for the evidence shows that until
the appointment of this committee Mr. Hudson had re-
tained by far the greatest portion of this sum of 31,0004
in his own hands, but on the day after your committ?.e were
appointed, he restored to the company the several sums
of 3,000!, 2,0001., and 4.000/., which he had previously
taken as on account of Sir Matthew W. Ridley, Lady
Mary Stanley, and Lord Tankerville. The evidence fur-
ther shows that on the 12th of May Mr. Hudson restored
to the company 7,0001, which he had taken as on ac-
count of the Earl of Carlisle; and that on the 14th of
May ho further restored 10,0001., which he had taken
us on account of the Duke of Northumberland. The
whole of these sums were so refunded by Mr. Hudson,
with interest for above three years, during which
he had improperly held the money, but the sharehol-
ders will observe that such has been the inattention to
the real state of the company's accounts, on the part of
both directors and auditors, that the solicitors have been
subsequently allowed, in some of the instances referred
to, to draw cheques for payment of the same land and
to the same parties for whom Mr. Hudson had so ob-
tained cheques in December, 1845, and the moneys so
drawn by the solicitors must have formed the subject of
twilit by the same two gentlemen who had passed the
account containing the previous payments.
In the Construction Account of the Newcastle and
Berwick Railway, your committee also find that on the
31st of December, 1847, Mr. Hudson drew out of the
funds of the company the suaa of 40,0001., under circum-
stances which are fully detailed in the evidence, and
which establish that the accounts of the half-year end-
ing on that day were overcharged by that amount under
the head of " Works," inasmuch as the cheques which
constituted this amount, viz:—
To Messrs. Rush and Lawton ... .£30,000
Hattersley end Newell ... 5 000
M'Kay and CuR 5,000
were all taken by Mr. Hu-dson on the day they were
drawn, and paid to his own private credit at the
banker's. In this instance, too, the vigilance of t!a,
auditors appears to have been evaded by the mere pro.
duction of the cheques, without any evidence of the sums
having reached the parties to whom they purported to
be payable, while, if that vigilance had been rightly ex-
ercised, the auditors must have discovered the et ror, in-
somuch as your committee have it in evidence from the
clerk who kept the'books, that the ordinary course of
business was departed from, and that no entries were
made of these sums to the debit of the indivi4uals in
whose favour the cheques were drawn, but that by spe-
cial instructions from the secretary the clerk posted,
such payments to a distinct account, entitled Works.'
Until your committee was appointed, this sum of
40,000/. was standing as a payment to the debit of this
company, and the conarmtion account was to that ex-
tent overcharged. Mr. Hu6son, on the 15th of May
last, restored the whole amount, with 2,4791. 13s. 7d. for
interest thereon.

Your committee bring these matters under the atten-
tion of the shareholders, as instances of the imperfect
mode in which the company's accounts have been kept,
and of the funds and books of the company having been
so entirely under the control of its chairman, so as to
enable him to apply those funds to his own or the
company's purposes, as his convenience required. All
the security to shareholders which the appointment of a
body of directors and auditors, and the rendering of a
periodical statement of accounts, are expected to afford,
have in this instance become altogether nugatory.
Your committee have called upon Mr. Hudson to offer
his own explanation of these matters. That explana-
tion is stated at length in the evidence. Your committee
will only observe upon it, that it has failed to convince
them of any right in Mr. Hudson to have so dealt with
this company's funds, and to have falsified its accounts
in the manner which the evidence proves him to have
done, and they leave it to the shareholders to draw their
own conclusions upon the facts which the evidence has
established.
JAMES MEEK.
HORATIO LOVE.
JAMES LEECHMAN.
JOHN KIPLING.
D. MsLaarr.
J tt
onN SHIELD.
Yotk, July 12. G. LEEDIAN, Secretary.