Canada. Commission to Inquire into and Report upon the Recent Defalcations in the Department of Militia and Defence, and into the Methods of Keeping the Accounts in the Several Departments of the Government, Particularly in Relation to the Issuing of Cheques and the Receipt and Disposal of Public Moneys : The Commission to Inquire into and Report Upon the Recent Defalcations in the Department of Militia and Defence, and into the Methods of Keeping the Accounts in the Several Departments of the Government, Particularly in Relation to the Issuing of Cheques and the Receipt and Disposal of Public Moneys was established under Order in Council P.C. 350, 6 March 1903, under An Act Respecting Inquiries Concerning Public Matters, (R.S.C., 1886, c.114) and on the recommendation of the Minister of Finance. The Commission was mandated to inquire into all the circumstances connected with the recent defalcations in the Department of Militia and Defence, and into the methods of keeping the accounts in the several departments of the government, particularly in relation to the issuing of cheques and the receipt and disposal of public moneys, and to report what changes, if any, are deemed advisable for the purpose of securing the fullest possible protection of the public interest. The commissioners were John Mortimer Courtney, George Burn, and Ambrose Leonard Kent.
On 1 August 1901, Mr. Martineau started work in the Accountant's Branch of the Department of Militia and Defence and by October 1901, he was drawing cheques against the departmental letter of credit at the Bank of Montreal.
Under the letter of credit system, the government cheques, upon presentation to the bank, were paid from the funds of the bank. In turn, the bank was reimbursed the correct amount by the Receiver General of Canada.
In Martineau's case, money was obtained from the Bank of Montreal on forged cheques. When the bank sent its monthly statement of the Department of Militia and Defence to the Accountant's Branch, Martineau apparently destroyed the cancelled cheques and handed over the statement to another officer in that Branch to verify. It appears that this officer signed the bank statement on Martineau's word that it was correct.
In January 1903, the Assistant Accountant of the Department of Militia and Defence noticed that the bank's balance was substantially less than the balance shown in the ledgers of the Department. Upon further investigation, the Accountant discovered that the statements furnished by the bank, for the period from December 1901 to December 1902, were missing and that a total amount of 5,705 had been charged by the Bank of Montreal for which no cheques had been drawn by the department.
It was also discovered that Martineau had opened three bank accounts in Ottawa; one in his own name, and two in the fictitious name of Chas. D. Coté. For each account, he was registered as Paymaster for the Department of Militia and Defence. After the discovery, Martineau was arrested and a sum of 2,443.77 was found in his possession. A smaller amount was obtained from him later but the greater part of the money he had taken was lost on stock speculations.
Because of the misappropriation of funds, the Government of Canada appointed a commission of inquiry, on 6 March 1903, to examine the accounting procedures of government departments for the collection and disbursement of government funds. (See Report of the Commission to Inquire into the Martineau Defalcation, Ottawa, King's Printer, 1903).
From 6 March to 15 June 1903, the Commissioners investigated the accounting practises of the various departments of the Government of Canada. RG33-82 General Inventory
