The Sun.
London, England, 1860-04-25 00:00:00

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PRICE 4D. STAMPED, SD.

REPORT TO THE PROPRIBToRS OF TIIE

UNION BANK OF LONDON.

• The following report on the recent frauds of their
chief cashier has been issued this evening by the
Union Bank of London. It gives a clear summary
of the means employed, and confirms the anticipa-
tions as to the degree of loss sustained, the total
being £263,000. A small proportion of this ninv
be recovered, but the directors propose to meet the
evil at once by writing off .f;2 per share, or £120,000
from the capital, which was increased to that ex-
tent by a bonus in July last, by appropriating the
exis,ing reserve fund of £lOO,OOO, and by deducting
£lO,OOO from the divisible profits of the twelve-
months ending on the 30th of June next. This will
leave the concern with its original capital intact,
and also with a sufficient surplus to declare a 5 per
cent. dividend at the next meeting, which, with the
per cent. already paid, will make 121 per cent.
for the year. As there is no reason to suppose that
the bank will lose a single customer from this un-
happy event, it may be hoped that the confidence
expressed by the directors that a few years will re-
store it to its natural state of prosperity may be
fully realised.
It is with deep regret that the directors have to
communicate to the proprietors that they have dis-
covered very large frauds committed by their late
chief cashier, William George Pullinger, and with
as little delay as possible they lay before the pro-
prietors a statement of the facts, and submit the
course which, upon a careful consideration of the
circumstances, they recommend for meeting the loss
which has been susteined.

William Geo. Pullinger was appointed a cashier
of this bank in April, 1839, having previously held
a similar situation in the banking-house of Sir
Claude Scott and Co., and after 16 years of most
efficient, zealous, and, it is still believed, faithful
service in subordinate capacities, was, about fire
years ago, raised to the situation of chief cashier,
and such was the confidence reposed in him by the
directors and manager and their satisfaction with
the manner in which he discharged his duties, that
about three months since they voluntarily raised
his salary to £6OO per annum.
His duties as chief cashier were to superintend
the other cashiers, to procure cheques for money, to
keep their tills supplied; and it devolved upon him
to pay all cheques, gold and silver coin, bank-notes,
&c.,whichwere not required for the purposes of this
bank, to the Bank of England, accompanied by a
docket specifying the particulars of each payment,
and by the pass-book of the Bank of England,
which was necessarily in his official charge, an
account of these payments being also furnished by
Pullinger to the principal ledger keeper. In
the ordinary course of business, Pullinger
daily sent a junior clerk for the pass-book,
which contained the acknowledgment by the Bank
of England of the cash paid in, and it was the
duty of Pullinger to deliver the pass-book to the
ledger keeper, whose duty it would then become to
check the entries in it against the Bank of England
by the items in his ledger. The ledger keeper, on
finding his account tally with the pass-book, would
report the Bank of England balance to the ac-
countant, to be posted in the general ledger, when
any error in the Bank of England balance would
disturb the general balance of the day, and become
the subject of investigation.
On Thursday last, the 19th inst., in consequence
of some information, application was made to the
Bank of England for their statement of the balance
of this bank, when a deficit of no less than £263,070
Bs. 10d. was discovered. Pullinger, who was absent
at the time attending a funeral of a relative, was
immediately followed by a director and the manager
and b: ought back, when he at once confused that
from losses on the Stock Exchange he hid from
time to time, since his appointaient es chief cashier,
abstracted large sums frqen the charges taken over
to the Bank of England, which he had concealed
from the ledger keeper by exhibiting to him a
fabricated pass-book, in which the balance agreed
with what it appeared in the accountant's general
ledger. He was t len given into custody. 1
It may be proper to state here that the supposed
balance at the bank of England.was £569,700 164.
2d., while the certified balance was £306,636 is.
4(1., exhibiting a dcficit of £263,070 Bs. 10d. The
directors now proceed to state the course they
recommend for meeting this loss, and they feel
assured that the proprietors will concur with them
in opinion that it should be done promptly and
effectually. In July last the sum of £120,000 was
transferred from the reserved fund to the capital ac-
count. It is now proposed to retransfer this sum
from that account, and to appropriate the fui Lher
sum of £lOO,OOO, the amount of the existing re-
served fund, towards meeting the present defalca-
tions, an npplication of this fund specially contem-
plated in the deed of settlement for meeting
unforeseen losses.' The balance of the deficiency,
about £40,000, will he paid out of the accrued and
accruing profits of the present year, which the di-
rectors confidently anticipate will further enable
them to declare a dividend of 5 per cent. for the six
months ending 30th June next, which, with the
dividend and bonus paid in January last, will be a
total payment of 121; per cent. for the year.
The directors hope that some of this large
amount may be recovered, although it would be in-
expedient to enter into details on this subject at
present; but they will not take these matters into
calculation now. They prefer taking the maximum
fors which can he sustained ; and they feel that the
honour and credit of the Union Bank of London,
and the true interests of their copartners, are best
consulted by at once liquidating that amount, con-
fidently believing, as they do, that with the original
paid-up capital intact, a few years' profits of their
business will enable them to replace all that has
now been lost without interfering with the usual
dividends paid to the proprietors.
While it is certainly satisfactory to be able to
meet so large a loss out of the reserved profits of the
bank without trenching on the original paid-up
capital, the directors find it impossible adequately
to express their regret and mortification that such a
crime could have been successfully perpetrated
under the system of checks which has been in opera-
tion since the establishment of the bark. No ex-
tensive business can be carried on without reposing
i
confidence in those employed n it, and in the pr.,-
sent case the directors felt jastifi,,,d in reposing in
Pullinger the confidence necessary for the discharge
of his duties ; he had been in the employment of the
bank since its commencement, his attendance was
unremitting, his industry and talents conspicuous,
his expenditure appeared consistent with his posi-
tion and salary, and his domestic habits were be-
lieved to be correct and creditable. It now appears
that for a long time he had been engaged in an ex-
tensive system of time bargains on the Stock
Exchange. The system of checks in operation in the
bank was framed mainly on that existing in the
Bank of England, and the directors have, with this
exception, found it effectual.

For the first time during 21 years the directors
are unable to address their copartners in those
terms of congratulation which they have used since
the establishment of the bank, and for the first time
during that long period has the steady and remark-
able success of the bank been interrupted. They
believed they had taken every necessary precaution
which experience dictated, and which, so long as
those precautions were strictly observed by all
those through whose hands Pullinger's ac-
counts passed, had proved, and would have
continued to prove, effectual; nor can the
directors claim for themselves, or from those in
their employment, exemption from those feelings of
confidence which long association and services (for
many years efficiently and honestly performed) are
calculated to engender. The confidence of their
devoted manager, Mr. Scrimgeour, no less than
their own has been grievously abused, and the
directors would do violence to their own feelings and
sense of justice were they not to express their sym-
pathy with their friend and officer under these
unfortunate and mortifying circumstances.
In point of magnitude, the defalcations of Pul-
linger throw those of PtobFon into the shade, and
even exceed those of Redpat h. The amount involved
in the latter case, it will be remembered, was about
£240,0Z0. Pullinger's method of proceeding was

simple. The whole of the large payments into
the Bank of England passed through his hands.
For a lengthened period he passed them in with
regularity. Finding then that he possessed vir-
tually the entire control of these funds, inasmuch
as the pass-book formed the sole check upon him,
it occurred to him, in a moment of temptation,
to appropriate money and falsify the pass-
book. Emboldened by success, he persevered
in his crime, and carried his misappropriations
to the almost incredible extent above men-
tioned, keeping systematically the real
pass-book for himself, and presenting ft fic-
titious one to his fellow-officers. The largeness
of the balance habitually kept by the Union Bank
at the Bank of England precluded the chance of
discovery through any heavy draughts being made