DAIRY COMPANY'S FINANCE.

Auckland Star, Volume LVI, Issue 180, 1 August 1925, Page 14

DAIRY COMPANY'S FINANCE.

ALLEGATIONS OF TRANSFER.

WQtTIRY At PUKEKOHE.

SHAfcEHtiLDfcRS CRfeATE UPROAR

CBAIRMAK "COUNTED OUT."

A boisterous meeting that was closed Vy the chairman leaving the chair amid a stene of Uproar was held at Pukekohe last evening to inquire into 14 allegations made against the administration And mfchagement of the New Zealand Co-operative Dairy Company, Ltd. The Oddfellows' Hall was parted to the doors With a crowd of 600 dairy farmers. "Sir. Joseph Henry, of Patumahoe, ftesided, and the evidence in support of he allegations was submitted by Messrs. J. G. Wynyard, of Te Awamutu, C. J. Spiers and G. J. Parvin. Messrs. Dynes Pulton (chairman of directors), and D. L. Hames, secretary of the company, replied. The business of the meeting opened with a motion by Mr. J. Russell, convener, protesting against the seat of the northern districts on the Board of Directors being left vacant during Mr. Claude Motion's absence on Control Board business in the Old Country. The chairman had difficulty in putting the motion, but declared it carried. Applause and voices of. protest followed, with demands for an exact count. An amendment in favour of deferring tha question was then moved, and lost. Before calling upon Mr. Wynyard to address the meeting the chairman said that the information was for shareholders of the company only, and he requested the Press and non-shareholders to leave the room. There was an immediate uproar, with cries of: "What are you frightened oft" Mr. Wynyard said he was not going to give the information to the public, but Mr. Dynes Fulton challenged that too much publicity could not be given to the matter. Mr. R. Fulton said this was the view of the suppliers' committee that convened the meeting; and, I upon an assurance that the directors had nothing to hide, the chairman ruled that tbe Press be admitted. Wrong Impression Created. Mr. Wynyard agreed to this, and said that the responsibility must rest with the meeting. He had information to give that should have been supplied by the company, and he regretted exceedingly that the management had hot only failed to do so, but had gone to the extreme of absolutely creating a wrong impression in the minds of the shareholders.

A tribunal was set up in June to investigate certain ' allegations made against .the management. It consisted of the Hon. George Fowlds, of Auckland, and Mr. J. R. Fow (Mayor of Hamilton), assisted by Messrs. George Hutchinson and Stanley Chambers, as accountants: The auditors' report was found by the accountants, on certain alleged wrongful transactions, to be correct from an accountancy point of view; and the tribunal justified the directors in the policy they had pursued in paying losses on the dried milk, casein and cheese departments, out of the general funds of the company. "The officials of the company," said Mr. Wynyard, "have apparently impressed the tribunal with the justness of their actions, and, if they go through the country and obtain resolutions of approval and confidence throughout the company's area, they will be able to turn round and snap their fingers at our auditors, who are responsible for the accusations of wrongful practices, and probably bring about their removal, and the true facte of the position may continue to be hidden." Question of Meeting Losses. "If the management can satisfy the auditors who are appointed by the shareholders to safeguard their interests that the amounts used to cover up the losses of the dried milk, casein and cheese departments came out of the profits earned by the company outside of the butter sales and no injury is done to the butter people, and that the shareholders are made fully acquainted with the position," continued Mr. Wynyard, "then I am satisfied, and the committee of inquiry likewise; and, unless this can be done, the position will be most unsatisfactory." The speaker suggested that a balance, sheet be prepared, showing the assets and liabilities of the dried milk department, and a full report showing the position arrived at.

The members of the committee of inquiry were the speaker, as chairman, and Messrs. C. J. Spiers, J. T. Johnson, A. Howell, and J. Rickard. They had been recalled together by Mr A. J. Sinclair, ex-manager of the company, to receive information upon the conduct of the company's business. Mr. Sinclair had formulated fourteen allegations, which were placed before the tribunal of Messrs. Fowlds and Fow. After considering the whole of the evidence the chairman of the committee reported his conclusion, that Mr. Sinclair's evidence was based upon the auditor's report, and the accountants practically agreed that certain sums had been taken from moneys belonging to the butter people and used to bolster up the dried milk, casein and cheese departments. The accountants summarised th* amounts wrongfully chArged A» follows: Milk powder (in. eluding £40,000 to be provided for further losses). £101,388; cheese, £4886; casein, £7834; in addition to which £18,000 had to be found fo r depreciation on eafcein assets. The tribunal found that the conduct of the management wa* justified from the point of view of policy, but not of accountancy. " Wide Powers of Directors." Mr. Wynyard explained the fourteen Allegations, dealing with the transfers of money from the butter department to the other three departments, the losses involved in the manufacture and sale of dried milk, the incomplete information supplied to the shareholders as to the managing director's salary and the exCttftes of a certain employee, which had en met out of the company's funds The speaker said that transfers had been made from the profits Of the box factory, as well as from the Abutter account, nnd that the sum of "£7OOO was credited to the dried milk branch from the former account. He quoted from the auditor's report as follows: "We find in a great number of instaness during this year* traduction* that deliberate attempts bad been made t« eeseAAl th* rial remits by an ebtartb syttetm ot truifer initial. Th* m**ufAeturi«g expense* of «Uk »«vder fcafre been reduced by £7000 (half of the £14,000 profit of the box department), while the whole of the butter suppliers have received credit for

only £3677. This is only one of many cases, ahd, in our opinion, poittti to & systematic attempt to obscure the trUfe results in the various departments of your company's trading." Considering this the tribunal found that, in view Of the wide powers of the directors, it was reasonable that these items should be charged to the general account. The Allegations Denied. Messrs. Hames and Fulton emphatically denied the allegations. Mr. Hames challenged the accuracy of Mr. Wynyard's financial statement, and Said that ft6t a single penny had been taken from the butter suppliers to credit to the dried milk department. The money in question was taken from the general account, partly being a surplus existing when the amalgamation took place, and partly profits from other sources, including insurance. The shareholders of the dried milk factory were under a joint and several guarantee for the security of their factory, and were paying up to 3d a pound butter t6 reduce the liability. On the policy of the directors in making transfers, he emphasised the tribunal's opinion that their powers were sufficiently wide to do this. Mr. Hames denied the allegations, 6 -:aling with each separately and in dbfcail and quoting from a proof of the next issue of the' company's official publication. He invited the fullest inquiry and said that the company wished to hide nothing. His remarks were frequently interrupted by interjections and criticisms, his reception creating a scene of disorder and uproar, amid cries of "Respeot the chftir," and a refusal to bear the chairman, who was "counted out" because he declined to sit down. Doing the Right Thing. Mr. Fulton dealt with the circumstances of Mr. Sinclair's resignation and Mr. Goodfellow's offer to him if he decided to resign. On the attitude of the board of directors, he said: "After seeing the allegations made against him you can rest assured the board would do the right thing." (Uproar and stamping, with a renewed demonstration when the chairman attempted to restore order.) ''*~\ The speaker explained that Mr. Sinclair had been addressing suppliers' meetings for four years and given repeated assurances that everything was all right. He wanted to know why Mr. Wynyard would not accept the finding of the tribunal, which was a favourable one to the company. Mr. Wynyard: It is a question of concealing from the shareholders what the directors' policy is.

Mr. J. Dean: We want an audited balance-sheet for each branch of our business (Hear, hear.) lam out for a clean show-down, and every card on the table. If we turn down the auditors where are we going to be? I, for one, am going to get out. (Loud applause.) Further attempts to address the meeting by Messrs Wynyard and Fulton failed; and an effort to restore order being met with increased outbursts and vociferous cries from the back of the hall, the chairman vacated the chair and the meeting closed at 0.35 a.m.. after having lasted for four and a-half hours.