THE LOAN AND MERCANTILE DIRECTORS.

Auckland Star, Volume XXV, Issue 99, 26 April 1894, Page 2

THE LOAN AND MERCANTILE DIRECTORS.

WHY THE BOARD FOUGHT,

THE PROCEEDINGS AND SCENES

IN COURT

(FROM OUR LONDON CORRESPONDENT.)

London, March 24_ It is altogether impossible to help chuckling over tho lamentable mesß into which bhe directors of the New Zealand Loan and Mercantile have got bhemselves. After five days' expensive law proceedings (to be paid for oub of bheir own pockets), bhey have failed übberly to resist public examination, vvhilsb drawing down upon themselves a mosb unpleasant judicial dissecbion of tbe affairs of their unlucky corporation. In the Lower Court Sir Henry James was emphatic in his contention bhab all the directors objected bo was bhe imputabion ot fraud conveyed by the order for public examinabion. They did nob object to examination, nay, they cburbed and desired ib. Lord Jusbice Kay, in bho Courb of Appeal, ab once noticed Sir Henry omitted tho word " public " before "examination," and wenb bo the heart of the matter.

" The kernel of this dispube is whebbor bho examinabion of bhe direcbors, officials, etc., shall be public or private." Sir Henry winced. He dared not say his clienbs wanbed it to be private, and if he pretended to approve a public examina tion—well, thoj mighb cabch and pin him bo ib.

Ho "bluffed." "The more public the better. All wo objecb to is the prima facie imputation of fraud." " Very well then," said the judge, "if we discharge bhe old ordor (or rulo was ib) which conbains the alloged offensive imputation and substitute a new one simply ordering the public examination of directors, officials, etc., everyone will be satisfied." Sir Henry's face as he Baid " porfecbly" was a picture. Seldom has a greab counsel been "euchred" more com plebely. There was nothing to do but bolt the compromise. What tho direcoors felb and said when bhey heard, deponenb knoweth not. Their firsb act after having failed totally in the Courts was to issue ('through their solicitors) the following letter :—

NEW ZEALAND LOAN AND MERCANTILE

AGENCY COMPANY, LIMITED,

(To the Editor of the " Financial Times.")

Mincing Lane, E.U,

London, 20bh March, 1894,

Rir.—With reference bo bhe comment** which havo been made on the judgment o* Mr Justice Vaughan Williams in this matter, our clients, tho directors pasb and presenb, are desirous of its being stated thab the courso taken by them in opposing the Order for Public Examination was adopted under advice, and upon the sole ground that bho ordor was made under tbe section of bhe Act of Parliamenb which invojvoß a charge of fraud againsb ab leasb one person in relation to bho affairs of the Company, againsb which charge, as unfounded, our clients most indignanbly probesb. They have never desired to avoid examination, but on bhe conbrary have ropeabedly expressed in public their earnest wißh to be examined, and to afford all the information in their power, and to that they adhere. The resistance to tho order made by Mr Justice Vaughan Williams has boen fully justified by the order made to-day by the Courb of Appeal, to Which order our clients gave their most cordial assent as exacbly meeting their object. VV c are, Sir, Your most obedient servants, Hollams, Sons, Cowalid and Hawksley.

Naturally it did nob improve the position of affairs much.

What bhe public thinks of these law proceedings tho following excerpt from a lead ing article in the "Times" (not tbe " Financial Times ") clearly shows :—

Mr Justice Vaughan Williams, says the " Times " : " Closed his judgment with the remark thab tho discussion in open Court must have shown the distinguished mon now or formerly on the directorate that whether or not tho reporb makes oub a prima facie case of fraud, as, in his opinion, ib clearly doep, it ab all events shows estate of things demanding rigid investigation. He thoughb therefore that bhey themselves would earnestly desire, conscious of their own innocence, that there should be an immediate public inquiry : and, significantly adding ' Noblesse _ oblige,' he diomiseed the application with costs. Bub these distinguished men, one of bhem the chief of the department specially ehargod with the care of British trade and commerce, take a different view of the whole matter. The public will view with astonishment their attempt to escape, by appeal to another Court, thab investigation for which conscious innocence and regard for their public position ought to tender bhem impationb." In these remarks the "Times"does nob prejudge the questions to bo settled by the publio examination now ordered. To do so would be manifestly unfair to the persons concerned. Ib will be a causo of gratification to all concerned if a searching public examination ot bhe directors, past and presenb, disproves any suggestion of fraud such as w_lß complained of in the original order.

WHY THE BOARD FOUGHT;

The reason bhab bhe Loan and Mercantile direcbors fooghb so hard bo avoid public examinabion is perfectly well understood in the city. Ib is nob their knowledge of the Company's affairs the righb honourable gentlemen concerned dreat. exposing,, but bheir ignorance. The proceedings in Court bhis week cover ben columns of bhe " Times," and are too long to give entire. I do hope, however, you will find room for most of Jusbice Yaughan Williams' masberly judgmenb. Herein bhe affairs ot bhe Company and the proceedings of the Board are for the firsb time analysed in such a manner as plain folk can understand. To use bhe words of a man who ia creditor, shareholder and debenbure-holder, "I abtended all the Company's meetings and perused their literature, bub till Tuesday morning^, when I read Judge Williama' judgment, I was like the man in the comic song of bhe day, who 'dunno where'e are.' " In the following resitfne Of the Company's legal proceedings, a greaff deal has of course been ruthlessly excised, and 1 boiled down. Bub the portions* affecting New. Zealand are clear enough.