TRUST METHODS.

Auckland Star, Volume LXV, Issue 203, 28 August 1934, Page 7

TRUST METHODS.

BROKER'S EVIDENCE.

Explanation of Liquidation of

Company.

JUDGE'S SCEPTICISM.

(United P.A.—Electric Telegraph—Copyright)

SYDNEY, August 27.

The Royal Commission -which is inquiring into the activities of 17 trust companies adjourned to-day until Thursday.

The Commissioner, Mr. Justice Halse Rogers, requested counsel for the investment companies to report by then as to the progress made in producing the balance-sheets of the various companies as at a given date.

Dr. F. Louat. counsel for three of the companies, said he did not think he would be ready to proceed then.

The commissioner requested that the balance-sheets be handed to him when they were prepared.

Mr. V. Mclnnes, broker for the Investment Executive Trust of New Zealand, Limited, continued his evidence this afternoon. Mr. W. W. Monahan, K.C., counsel assisting the commission, questioned the witness concerning tho. operations conducted in Queensland in connection with the Primary Producers' Bank. He quoted from letters written Mr. Mclnnes' firm from the State. One contained the passage, "If half of these overdrafts are received by the bank they will be worth £200,000 at leaet. Systematic and careful preparation must be made and good propaganda must be prepared. , ' Another read: "If we don't get in before this dividend is paid they will expect a dividend instead of a call."

Mr. Monahan: In view of your secret and official information of substantial unsuspected sums that the bank was receiving in payment of overdrafts, the idea was to purchase while the shareholders were still thinking they would have to face a call? Mr. Mclnnes did not answer. Suggestion Denied. Mr. Monahan: And this propaganda? I suppose your salesmen were instilling fear into the shareholders' minds so thej would vote confirming the sale by the liquidators to the Trust? Mr. Mclnnes: Thero was no suggestion along those lines.

Mr. Monahan: Why was there a suggestion that you should hasten before the dividend was paid?

Mr. Mclnues: No dividend was paid.

The Commissioner: Of course not, but does not it convey that, unless you moved quickly, the shareholders would b© more likely to retain their holdings than if you worked to induce them that- their holdings were not as good as when they bought them?

Mr. Mclnnes: Yes.

Mr. Monahan: You were anxious to get them to agree to the sale of their assets?

Mr. Mclnnes: That was only a sugges tion. It was not acted upon.

Mr. Monahan: Have you dealt with the assets of the bank? Mr. Mclnnes: No.

Wife's Assignment of £270.

Mr. Monahan then quoted from a letter in which an agent of the company had related that he had induced a Mr. Heron to assign £8 interest in the Primary Producers Bank, and had then gone to Mrs. Heron, who had a much larger sum, £270, and, by convincing her of her husband's assignment, had induced her to assign her interest without reference to her husband. The agent was then able to inform Mr. Heron that, as his sum was less than £10, it could not be accepted. Mr. Monahan: Do you regard that as a gross fraud on Mrs. Heron?

Mr. Mclnnes: No. The Commissioner: Do you regard it as honourable conduct?

Mr. Mclnnes: No

The Commissioner: One of your officers reports it as if it were good business. Would you regard it as good

business?

Mr. Mclnnes did not reply.

Liquidation of Company.

Mr. A. H. Hill, secretary of Mclnnes and Co., Ltd., and liquidator of V. B. Mclnnes (Australia), Ltd., said the capital subscribed in the latter company at tho time it went into liquidation amounted to about £2500. The capital had gone into a number of investments at the time of liquidation.

Mr. Monahan: What has been done to protect the interests of shareholders ?

Mr. Hill: Some of them are directors in tho new company and are aware of the facts.

Mr. Monahan: Was a protest made by a Mr. Morrison? Mi - . Hill: Yes, he seemed to think payments were to be made in cash immediately.

Mr. Monahan: Did Mr. Morrison later on move that the option granted by V. B. Mclnnes (Australia), Ltd., be exercised? Mr. Hill: He spoke of the fact and demanded the payment of £10,000 so he could get his money back. Mr. Monahan: And no one seconded the motion?

Mr. Hill: No.

Mr. Monahan: Why was the option not exercised? Mr. Hill: It was accepted. I overlooked recording it. The Commissioner: Why did you omit entering it in the minutes? ■ Mr. Hill: It was just negligence, I suppose. Mr. Monahan: You made an entry "No seconder"?

Mr. Hill: Yes. That was the position at the meeting.

Mr. Monahan: Which of your statements is true?

Mr. Hill: At th'e meeting on June 6 it was decided to exercise the option.

Mr. Monahan: That explanation will not help you. The option did not expire until Juno 13.

"Acting Under Orders."

Witness informed the commissioner that the option had been exercised. It was put in order on August 14. Mr. Monahan: But it had lapsed then by effluxion of time. The Commissioner: You say you are to prepare an option which had already been accepted ? Witness: I am acting under orders entirely. The Commissioner: Whose orders? Mr. Hill: The directors'. The Commissioner: Under -whose orders are you preparing the option? Mr. Hill: Under my own as liquidator.

The Commissioner: Do you expect me to believe what you say? Mr. Hill: Yes.

The Commissioner: Then I am afraid I do not.

"An Honest Transaction."

A. D. C. Dunn said he was branch manager for New South Wales for McInnes and Co., Ltd. He had been in Queensland for ten months.

Mr. Monahan: There was a scheme to get in touch with,, elderly ladies and get them to part with their deposits in the Primary Producers' Bank?

Mr. Dunn: I don't know that there were many ■ elderly ladies in the bank. The depositors were mostly men.

Witness admitted writing a letter in which he had recommended a man named Crowley for appointment, as he was "exceptionally well fitted for - approaching ladies."

Mr. Monahan questioned Dunn con cerning transactions with the Herons.

Witness said it was an honest transaction. He had informed Mr. Heron that th© Southern British. National Trust, Ltd., would take over the deposit if it was more than £10, but if it was below that amount, the trust probably would not do so. He did not know at the time what the exact amount was. After taking over Mr. Heron's deposit, he had gone to Mrs. Heron and shown her that her husband had transferred his deposit. That was definite evidence that the husband agreed with the proposal.

The commission adjourned until Thurs day.