SECOND DAY.

Auckland Star, Volume LXVII, Issue 183, 4 August 1936, Page 8

SECOND DAY.

TRIAL OF McARTHUR. ALLEGED FALSE REPORTS. TRUST COMPANY'S AFFAIRS. (By Telegraph.—Press Association.) WELLINGTON, this day. The trial of John William Shaw McArthur, company director, on six charges concerning the Investment Executive Trust of New Zealand, Limited, was continued before Mr. Justice Reed to-day. Mr. V. R. Meredith and Mr. Evans-Scott are conducting the case for the Crown, and McArthur is represented by Mr. I-T. F. O'Leary, K.C., Mr. R. E. Tripe, and Dr. F. Louat (Sydney). The charges are:— (1) That McArthur, being a director of the Investment Executive Trust of New Zealand, Limited, on or about March IG, 1933, made, circulated or published, or concurred in making, circulating or publishing, a report to tlio debenture-holders for the year ended December 31, 1032, which was false in certain material particulars. That on or abbut April 8, 1933, he made or published, or concurred in making or publishing, a prospectus which was false in certain material particulars.

(3) That between April 8, 1933, and April 3, 1934, lie circulated or concurred in circulating a prospectus which was false in certain material particulars.

(4) That on or about March 20, 1934, he made, circulated or published, or concurred in making, circulating or publishing, a report to debenture holders for the half-year ended December 31, 1933. which was false in certain material particulars. r

(5) That on or. about April 3, 1934, lie published a-'prospectus which was false in certain material particulars.

(fi) That between April 7, 1934, and August S, 1934, he 'concurred in circulating a prospectus dated April 3, 1934, which was false in certain material particulars. Aucklandiis named in each of the charges as ' the place of the alleged offence. > Case For the Crown. Opening the case for the Crown, Mr. Meredith referred to the law relating to the formation of companies, the issuing of prospectuses and reports, and means by which money is raised by a company. In this case',: ho said, the Crown alleged that the documents were definitely false on their face, and also that there had been material concealment of facts which a person investing money ought to know before entrusting money to a company. Counsel next dealt with various types of companies, referring in particular to interlocking companies and the investment executive type of company. He said evidence would be called in support of the Crown case that speculation in which McArthur was particularly interested was embarked upon, and that from a chain of interlocking companies large sums of money filtered through to the personal advantage of McArthur. Mr. Meredith read from some of the pamphlets issued on behalf of the Investment Executive Trust, which, he said,

extolled the advantages of the company. It would be seen by the jury that the .pamphlets held out to the public the great advantages to them of entrusting their money to the Investment Executive Trust because of its great safety. Counsel also dealt with the method of operation of the Investment Executive Trust.

Mr. O'Leary objected that certain statements in. Mr. Meredith's opening were inadmissible, and were merely introduced to create prejudice toward McArthur. The judge ruled that the statements were admissible.

Mr. Meredith explained the position whereby Alcorn, T. R. McArthur and accused were in control of interlocking companies. He said that in September, 1931, McArthur submitted a statement to the Crown solicitor at Auckland showing liabilities at £10,240 and assets at £405. From a helpless financial position he had acquired, it was alleged, valuable assets, practically at the expense of the Investment Executive Trust debenture holders. When the Court adjourned Mr. O'Leary applied for bail for McArthur. Bail was renewed at £1000, with one surety of £1000, the application to be renewed at the close of each day's hearing. When the case was continued this morning evidence was called for the prosecution. To John Henry McKay, assistant registrar of companies, Mr. O'Leary suggested' that McArthur's operations must have been a prolific source of revenue to his department. Witness: Oh, yes, sir. Mr. O'Leary: That ppecial legislation must have had quite a considerable effect on your revenue. Witness: Yes, sir. (Proceeding.)