27th February 1886
States treasurer is charged with embezzlement
Philip Gosset was treasurer of the Jersey States, at the same time as being employed by the Jersey Banking Company, of which he was managing director. When the bank collapsed, Gosset was charged with misappropriating £37,000 of public money and illegally disposing of foreign bonds, presumably with the aim of keeping the bank afloat. His actions landed him in the dock, upon several charges of embezzlement.
The bank had unexpectedly closed the previous month and refused to pay out to account holders who wanted to withdraw their money. It was referred to the Insolvency Court the following week, leading some other companies, with the largest deposits there, to go bankrupt. The bank proposed offering its creditors 10 shillings to the pound, later reduced to five shillings in the pound, but this was insufficient for most.
Arrest and trial
Gosset was arrested, and stood trial less than two months later. Unwilling to take the blame alone, he gave evidence against the chairman and two directors of the bank, inspiring one of its creditors to issue a charge against them. The creditor claimed they’d assured him that the bank was in good financial health when he’d asked them about its finances. He was therefore given false information when deciding whether to deposit his money there. The chairman and directors were arrested and released on £500 bail apiece.
A professional accountant who had examined the bank’s books testified that they had been written in such a way that it would have been impossible for anyone who enquired to tell quite what liabilities the bank was facing and, thus, how much it might have to pay out if its creditors all asked for their money to be returned. However, he calculated that the amount of hidden liabilities ran into the hundreds of thousands of pounds, which was a very considerable amount at that time.
Gosset was found guilty on the three charges he faced and sentenced to five years’ penal servitude. The other directors were found not guilty of two charges but declared guilty by a jury of not checking on the state of the bank’s finances before declaring them to be healthy.
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