MEAT INQUIRY COMMISSION.

Auckland Star, Volume LVI, Issue 102, 2 May 1925, Page 16

MEAT INQUIRY COMMISSION.

THE SALE OF VESTEYS. EX-DIRECTOR'S EVIDENCE. THE COMPANY'S LOSSES. (Hy Telegraph. —Press Association^ OISBORXK, Friday. Tin- inquiry regarding the sale of the Poverty Hay' Meat Company's works at Waipaoa to'Vestey Bros, was continued this afternoon. George Hartley Coop, director of the Poverty Bay Farmers' Meat Company, in answer to Mr. Myers, admitted that he was prepared to sell the works at a reasonable price. Witness admitted Mr. Jolly was perfectly fair iv refusing to agree to extra capital. In reply to Mr. Taylor, witness admitted 'that a sale to Ycsteys at £.->OO.OOO would have been to the benefit of shareholders, but he never really thought the Government and the Meat Board" would have agreed to the sale going through. James Copcland Field, a farmer, and a director of the company since its inception, gave evidence on the visit of the deputation to Wellington to ask the Meat Board to include the vessel in the freight contract. At Wellington they saw Mr. Jolly, whose statement to the. directors, that the vessel was not to return to New Zealand under Jhe company's control, witness definitely denied. At the same time Mr. Matthews, another director, questioned Mr. Jolly concerning uncalled capital, asking if, after calling up all the capital of the company, it was tbe bank's intention to wind it up. Mr. Jolly replied in the negative.

To Mr. Myers witness admitted that with calls not coming in the bank had cause for anxiety.

In reply to Mr. Jones, witness said he did not think the bank had stopped the company's account when the directors interviewed the Meat Board over the Admiral Codrington.

The chairman of the commission announced that loose leaves of the ledger had been produced, and were now in possession of the commission.

Otto Hansen, fat stock buyer, gave evidence as to dissatisfaction with the management after Mr. Elliott's control of the works. AVitness said Mr. Lysnar paid the butchers over the award rates, which caused a strike as soon as Yestcys took over. During the slump the company advanced £15,700 to some of their clients on their meat. The manager arranged about the advance, and bought 48 head of cattle, but subsequently he was told that no more advances were to be made.

Eusiace Lane, a Wairon farmer, said he sent a shipment of beef through the Wairoa freezing works, but did not get satisfactory results. He not only lost his beef, but received a debit note against his account. He thought it was a fine opportunity for Mr. Jones, of the Meat Board, to distinguish himself, but he didn't do so. Witness simply got a letter referring him to the bank. ' In reply to Mr. Jones, witness admitted that his bullocks were sent home just before the Meat Board came into office. Ex-Director's Evidence. Frederick S. Bowcn (ex-dirpotor of the Poverty Bay Farmers' Meat Company) said 'Mr. Jolly had said they had lost £45,000. The shareholders of the company had lost £408,000. One thing that'had brought this about was the dismissal of the manager, Mr. Elliott, who was highly satisfactory to all but Mr. Lysnar. This was combined with laxity of the bank in dealing with Mr. Lysnar in connection with the overdraft. When witness was on the directorate he came to the conclusion that Mr. Lysnar was manager, and controlled the whole of the company. One of the first things that came before the board was the holding back of meat from Government storage. Mr. Lysnar defied the Government to take the meat and keep it in store, and said it must be shipped. Out of 42 works in the Dominion, tlioirs was tlie only one to quarrel with the Government. After the Admiral Codringtou wgs insulated she went Home, and she was no sooner there than Mr. Lysnar wanted to purchase another ship for £550,000. The directors made a halfhearted ofl'er, but the people in Wellington turned' the offer down because they knew the company did not have the mone'r.

The next thing Mr. X-yennr wanted to do was to buy a coal mine, which was supposed to be on the coast. It turned out to be well inland, and then Mr. Lysnar wanted to put a railway into it" There was no harbour on the coast, and be then proposed to build one there. (Laughter.) Meat was shipped to America, and claims cropped up as the result of the shipment. One claim was for ' £20,000. Mr. Crabb, surveyor, of London, was deputed to settle , the claims, and he reduced them to £11,700. The Admiral Codrington alter arrived Home, and they got a very bad report on the meat. That was gone into, and, with the American meat claims, it was found the claims totalled £20,000. The result was that the Imperial Supplies Department held back 2o per cent of the money on the moat stored in the works. The claims dragged on for many months and caused immense dissatisfaction.

Witness stated that although lie hold 3600 shares iv the company, he was prepared to let them drop and freeze with Yesteys, because he had seen so much of Mr. Lysnar. The buyers who held meat in the works claimed 2-5 per cent that hajL been held back, and Mr. Lysnar made a definite settlement. The upshot was that the meat buyers refused to have anything to do with them, and the works lost double the amount of the claims through business turned away. In the meantime the banking account was getting from bad to worse. The increase in the overdraft in 1920 was £117,000. Before the annual meeting in 1921, witness went to see Mr. Smallbone, manager of the National liank, and asked him not to pay out the dividend of £15,090 suggested by Mr. Lysnar. Mr. Smallboiiu said the holding back of the dividend would cause mistrust among shareholders. Witness replied that if the dividend was paid the uncalled capital of £84,01)0 would have to be paid up. Purchase of the Codrington. Witness learned then for the first time how the Codrington had buen purchased, Mr. Smallbone saying lie had advised Mr. Lysnar to have nothing to do with it, but Mr. Lysnar threatened that if the bank did not iind the money for the boat, he would take away his private account, his butter factory account, and the company's account Mr. Smallbone did not like to lose these accounts, and after communicating with his head office, decided to increase the overdraft to £130,000, pro-

vided Mr. Lysnar sold 40.000 £5 shares. Mr. Lysnar issued a prospectus and held meetings throughout the district, promising that the ship would have a separate account and a balance-sheet after each trip. The ship was purchased When the money was called up Mr. Lysnar informed'him he had sold only 25.000 shares. Mr. Sniflllbone told witness that the subsequent correspondence between him and his head oliice would paper the room. Mr. Lysiuir then asked for a further £20.000 to insulate the boat. It was found, however, when the boat got to Auckland, that the cost of refrigerating was £84,000. The only reason Mr. Lysuar could give was that the work had been done speedily. The bank had no alternative but to lind the money. Analysis of Losses. Tlie directors pressed Mr. Lysnar for 1 a balance-sheet of the working of the vessel. At last he put out a statement showing on the first year an excess ot revenue over expenses amount ing to £JW,55.5, and for the second year an excess of revenue of £07.000. The directors still pressed for an audited balance-sheet, and a motion to this ecect was actually carried. When this was produced a loss of £24.000 was shown, or a difference of £."il,ooo from Mr. Lysnar's figures. While Mr. Lysnar was running the works he had produced six balance-sheets, showing a profit, and two showing losses, one of £700 and the other of £3000 or £4000. In spjte of this the shareholders had lost hundreds of thousands of pounds. It was said there was room for only two works in the bay, but he maintained that without Mr. Lysnar. they could have made a success of the company, notwithstanding the ship. Mr. Lysnar had been a dictator, dictating to everybody. He had increased the overdraft from £RO.OOO to £1 HO.OOO, while guarantees amounting to £300.000 had been Riven. If Mr. Smallbone had kept Mr. Lysnar to terms tlie preference shareholders would have been adequately protected. The action of the hank in*submitting to Mr. Lysnar's dictation was largely responsible for the failure of the company. The company had been badly, extravagantly and recklessly run.

Under cross-examination, Mr. Bowen said he was one of tlie stoutest advocates for the purchase of a ship, but he wanted a first-class one. He was elated at the purchase of tlie vessel until he saw it in the bay. Ho then realised where his money had gone, lip admitted supporting a resolution thanking Mr. Lysnar for his work in connection with the ship. He admitted that the Imperial claim regarding the meat included the claim of the buyers, and Mr. Lysnar stated that that claim, which witness had stated at £20,000, was settled for £2100, and was so shown in the balance-sheet.

Mr. Lysnar: You told the inspector of the National Bank that you expected the company to lose £20.00(1?—Yes.

I suggest to you that there was a profit that year of over £12.000, and over £0000 was shown for depreciation, so that in saying there was a loss of £20.000 you were about £25.000 out?—l do not admit that.

You will admit the audited balancesheets show that there were losses in only two years?

Witness: You have shown profits nil the way through and yet the company is bankrupt.

At this stage the Commission ad journcd.