McARTHUR TRIAL.

Auckland Star, Volume LXVII, Issue 186, 7 August 1936, Page 8

McARTHUR TRIAL.

CROWN CASE ENDED.

TRUST BUILDING DISCUSSED.

QUESTION OF OWNERSHIP,

(By Telegraph—Press Association.)

WELLINGTON, Thursday.

The trial of John William Shaw McArthur, company director, on charges alleging falsity of prospectuses and reports, was continued in the Supreme Court to-day before the acting-Chief Justice, Sir John Reed. John Leslie Griffin,'public accountant, Wellington, one of the four inspectors appointed under the Companies (Special Investigations) Act, dealt with the manner in whicli the trust building in Sydney was purchased in 1932 by the British National Investment Trust for £100,000, and with the allotment of shares in this company to McArthur and C. G. Alcorn. Counsel for the defence, Mr. - EC. F. O'Leary, K.C.: Had the Investment Executive Trust purchased the trust building for £100,000 and subsequently sold it for £287,000, it would have been liable for income-tax on a profit of £187,000? Witness: I don't know whether it would necessarily. It may have been. I think it is a debatable point. ; Mr. O'Leary: There is no question 1 about this, is there ? The trust building was a very substantial asset to which debenture-holders of the Investment Executive Trust would have to look for a return of their money if they wanted it? Witness: Yes. It was one of their substantial assets. Taking it intrinsically it was a' substantial asset. Mr. O'Leary submitted a large photograph of the building to his Honor and the jury. His Honor: Yes, it is a very fine building. Mr. O'Leary, to witness: Is it not evident now thai; the £100,000 paid for this building wa<| tens, if not hundreds, of thousands of pounds below its true value ?

"Good Deal Below Value." Witness: I think it must have been a good deal below its value. You know that reputable valuers in Sydney placed a value on it, certainly after "money had been expended on it, of over £400,000?— Yes, but Mr. Justice Halse Rogers did not accept that. He suggested some figure between £300,000 and £400,000.

Mr. Evans-Scott, assisting the Crown, asked witness if the Investment Executive Trust at any time owned the trust building. "No," replied witness.

Mr. Evans-Scott: If there had been a profitable sale of the trust building if it had been turned over at a profit a few months after its purchase —who would have got the nrofit ?

Witness: The profit then would have gone to the British National Trust. In answer to another question witness said the shares in the British National Trust were held principally by McArthur and C. G. Alcorn. Mr. Evans-Scott: 'And accused personally held SI of these?

Witness: I think so at that stage. John Macfarlane Ellifl'e, of Auckland, public accountant, another of the four inspectors, said he had specialised in the Sterling Pacific and Wynwood _ companies, and, to a certain extent, in the Investment Executive Trust. The Sterling books to February 28, 1934, had not been recovered in spite of a search made for them. They were of very considerable importance in the operations of the various companies. In fact, they could be regarded as the key to many of the transactions. A balance-sheet of the company to August 31, 1932, had been found, and with its assistance and that of other documents available witness made a partial reconstruction of the Sterling books, discussing it at times whh McArthur. • Mr. V. R.S Meredith, of Auckland, counsel- for the Crown, began to question witness concerning a list the latter had prepared showing assets taken over j by McArthur personally and by the j Wynwood company from the Sterling company. Mr. O'Leary objected to the schedule as being irrelevant. He submitted that there was nothing in the schedule to indicate intent. "This is in striking resemblance to what we are charged with," said Mr. O'Leary, "that is, with part of the information being put forward and not the whole of it. Material which would put a different complexion on it is being suppressed." His Honor: I do not know where suppression comes in at the present time. Mr. O'Leary: The witness does not go hack far enough. Judge Sees No Objection. His Honor said he saw no objection to the matter being dealt with, and Mr. Meredith proceeded with his examination of witness. Mr. Meredith: Do you know who made the declaration of ownership of the Morewa ? Witness said he did know. Mr. O'Leary again objected, referring to a claim for £10,000 made by the Public Trustee against McArthur, the hearing of which was to come on immediately after the present case. _ His Honor said he thought the question necessary, and witness answered that McArthur made the declaration 'of ownership of the yacht on December 16, 1933, at Auckland. John Anderson, public accountant, of Auckland, said he audited a balancesheet in March, 1933, and attached a report to it. This referred to the Sterling Company and British National Investments and connection by membership with the Investment Executive Trust. It also stated that f 12,768 should be transferred to a suspense account until it was decided whether or not they were administrative costs in terms of the debentures. The stand was ■ taken against him that he was interfer- ■ ing with the company's policy. He . replied that his duty was clear, and he 1 would make no alteration. He resigned ' the next day. His -balance-sheet was never published.

The hearing was adjourned until tomorrow, when the defence will be opened.

Defence Case Outlined. An outline of the defence was criven to-day by Mr. O'Leary. He contended that the Crown had brought in a mass of detail to cloud the issue. The charge in lespect of alleged false documents was extraordinary. The chief witness for the defence would be McArthur, who had not hesitated to meet the attacks of those who were against him. Two years ago the authorities had come down on McArthur, possessing themselves of all his personal records and the records of the companies he was associated with.