MEAT WORKS.

Press, Volume LXI, Issue 18369, 30 April 1925, Page 13

MEAT WORKS.

SALE TO VESTEYS.

COMMISSION OF ENQUIRY. (rSESS ASSOCIATION" nUOUU.) GISBORNE, April 2D. The Meat "Works Commission reopened its enquiry at Gisborne this morning. It is understood that between 30 and -10 local witnesses will be called. Mr W*. D. Lysnar suggested that the Commission should visit tho works in the afternoon. Mr M. Myers, K.C., said it did not interest the Bank to sec the works. Ho had como to Gisborne to get tho work finished.as early as possible. , Mr D. Jones was also opposed to wasting time in an inspection of tho works.

Tho chairman said tho Commission would visit the works to-morrow morning.

Mr F. S. Bowcn, director of tho Poverty Bay Meat Company for two years, intimated that he desired to call evidence as to the mismanagement and misrepresentation which brought about the failure of the company. Mr Bowen's witnesses will be taken on Fridnr.

The Commission gave authority for tho books of the company to be examined by an accountant.

Mr Taylor: Does that apply to papers concerning the Admiral Cotlrington? The chairman said the understanding was that all documents should bo produced to the Commission, but not for disclosure to other parties. Mr Myers said no accountant could investigate the accounts without tho ledger, Mr Lysnar: The Admiral Codrington account* has nothing to do with the question. Mr Jones said that Mr Jolly had given evidence that the accounts had to be separated two years before tho company's bankruptcy. Mr Lysnar: Tho company is not bankrupt, and you havo no right to suggest such a thing. The company could not disclose information to tho other side. The company's position was largely duo to disclosures previously made to the Meat BoardMr Jones: Quite untrue.

Company's Finances. Edward Plumcr Mountford, a retired bank manager, deposed that he mado an examination of the finances of tho Poverty Bay Farmers' Meat Company. The assertion that the company was in a hopelessly insolvent condition was quite unfounded. After £93,775 had been allowed for repairs and depreciation, the company showed a profit of £4 18s 2d per cent. Its losses wero largely accounted for by the reclamation and tho liability which the company shouldered in connexion with the shipping arrangements with the Imperial authorities. In the opinion of •witness, if the Admiral Codrington had been written off entirely the company would not have been insolvent. Ho aceopted James and McCarthy's valuation of £401,000 for the works. It was impossible to accept the price which would be realised at auction as the correct value. The balance-sheets drawn up by the company were fairly accurate. Those drawn up by the Bank were not so. The latter overstated the liabilities by £12,126 and the assets were understated by £266,172. In his opinion the company conW have teen safely carried on, and he could not conceive any reason for Mr Jollv's.statement that it was insolvent. He could not reconcile Mr Jolly s statement the* the. bank had lost ±45,000 with tho banks' own balance-sheet. Mr Mvers objected to a question oa to tho position of the National Bank, stating it- was not relevant. Mr .Lysnar: The bank has alleged that the company is bankrupt and insolvent. The company is no more insolvent than tho bank itself. . Mr Myers said the question was absurd and ridiculous. . . The chairman said witness s opinion of the financial position of the bankj would not assist tho commission.

Standing of Guarantors. Mr Myers again objected to Mr Lysnar questioning the witness as to tie fiuancial standing of guarantors to t-hc. bank. .. 'five chairman said Mr Lysnar would hare to accept full responsibility lor anything that occurred through questions ho asked. . ■ Mr Myers said ho did not wish to injure the position of the local gentlemen, but if Mr Lysnar forced the posi-. tiou he would not hesitate to- go right to the end of this matter. Mr Lvsnar eaid ii : Mr Myers wouM admit that the guarantors collectively were good for the amount of the guarantee ne would go no further with _tlu> matter, otherwise he would go right ahead and prove that the guarantee was good. Mr Myers: I am not going to make anv compromise with Mr Lysnar, but will assure him I shall not comment upon the position of individual guarantors.

Mr Mountfort. was questioned as to his knowledge- of the position cf tho guarantors. Mr Myers objected to a general question being asked by Mr Lysnar. H« wanted to know the source of the witness's information. The chairman said the witness retired from the bank in 1922 and could not possibly give evidence of tjii> position of the guarantors in 1023. Mr Lysnar said he was only ssking for general information. The chairman warned Mr Lysnar that he would haive to ac-copt full responsibility if he pressed the matter. Witness" said that u:> to 1022 lie would have confidential information. Ho considered the guarantors collectively were capable of meeting the guarantee unless made of a sudden and pressure were brought to licar on them. To Mr Myers: If they ha,] been pressed to pay £130.000 within three months, he did not think they could do it. |

Valuation of Works and Ship. Mr Mvers cross-examined witness ns to the valuation ho had accepted i<->-the works and the ship. _ Witness saitf ho had reliable information. Mr Myers: Of what information. "A'itness: From Mr Lysnnr. I accepfnd Mr J/vsnar's. statement. Mr Myers: If a shin had beer, purchased 'during the l>oom time for £IO0i)0O, and in slump time was only worth £(w,000, which _. value would you accept—the lower one? Witness said he had other information frnm Mr T.ysnar as to the ship earning £20,000 a trip. A.skeil if he thought there was room for three -works in the district. witness replied "IVs, if the farmers had known which works to support." Mr Myers: As a banker, would yon have mado an advance to the company on the value of £400.000. Witness: I would have made an advance in the usual way.

Effort to Save Company. George Witters, deputy-chairman of the company, stated that in May, 1922, he hail been present at tho conference with Mr Jolly, and he contradicted tho latters statement that tho directors agreed that tho Admiral CocJrington should not return to New Zealand under the control of the company. The Meat Board was then waited upon to endeavour to make a contract for the ship. When the directors met Mr Jolly in May Mr Mathews asked if the bank intended winding the company un, and M.r Jolly replied in the negative. After Vestcys made their offer, witness, Mr Lysnar. and

Mr Coop went to Wellington and mot Mr Jolly on September 11th and 12th. The eonferenco had been opened by Mr Lvsnar, who said they/wanted to go into this miscrablo business. Mr Lvsnar had said, too, that only tho action of the bank could force the conmanv into bankruptcy. Mr Jolly tried to pcrsuado them to accept V esters' offer amicablv and without making the bank do the dirty work. Mr Jollv told them, thev could agree to the salo without reference to the shareholders. Witness told hiin. ho would not agree to such a proposal just to save his own skin. The legality of Mr Jollv's suggestion was also questioned, and even when it % was confirmed witness repeated his assertion that ho would not botray his fellow shareholders. Tho directors -were prepared to do anything rather than have tho works sold, and it was suggested that further shares should bo issued.

Concession Refused. Mr Jolly asked for time to think tho matter over, and tho confcror.ee- adjourned until tho following afternoon, when Mr Jolly said ho would not consider any alternative proposal. Reference was mado to the serious loss to the guarantors, and Mr Jolly said the bank too would be a heavy loser. He offered them a concession of £i._,ooo, but the directors refused to agree and expressed their determination tofight to a. finish. Mr Lysnar had said ho would ston the sale, lie and Mr Jolty being in "a state of keen excitement. Mr Jollv had said: "Lvsnar, you have as much chance of stopping, the salo as you have of leading Gabriel's choir in heaven." The conference had lasted until about 5 o'clock in the afternoon, when witness and Mr Coop left Mr Lvsnar with Mr Jollv. In tho office of the Meat Board they met Mr Jones and Mr Lysnar. Tho latter said bo was determined to stop the sale, and asked Mr Jonjos to keep an open mind upon the matter until the company's side had been placed before them. Mr Jones aopoared to favour a sale to VesteTS, but had given the directors to understand that nothing would be done until the companv's side had boon heard. They were told in regard to the works that the company would get a fair deal. Tho following morning Mr Jolly said that any offer made on tho previous dav would be contingent upon their efforts in connexion with tho other directors. Mr Jolly was wrong when he said that either witness or Mr Coon had met him in the street and said they had como to tho conclusion that the bank was doing tho right thing in forcing "the sale.

Negotiations with Vestey*. Following a suggestion made by Mr Black to witness and Mr Mathews that Vesteys woidd buy the works, thev went and saw Mr Tojerton, who told them he had no authorityMn the matter, but arranged an appointment for them with! Mr Rowlands in Auckland. Witness and Mr Mathews were acting without the authority of the directors. "Witness then telegraphed to Mr Lvsnar and arranged for him to meet them in Auckland on February 20th. Thev met in Auckland and interviewed Mr Rowlands.' MrLysnar asked Mr .Rowlands if Mr Hetley was acting for Vesteys, and received a. reply in tho negative. After they had got to grips, they asked £650,000 for the works and the ship, this representing £400,000 for the works. £150,000 for the ships and £IOO,OOO for the goodwill. M* Rowlands contended that there was no foodwill, and otlier values were also isputed. Mr Lyenar then asked for j» price to be put on the Taruheru works. It was intended to endeavour to arrange, in conjunction with the Gisborne Sheepfcumers' Co., to buy the 'workß out and close them down. Mr Lysnar had said he would endeaivour to stop Vesteys' rebuilding, as there was no room for three large worka in the district. The works had not been definitely offered to Vlssteya at thsit interview, Mr Rowlands being told tliflt I nothing could be done without the sanction of the shareholders.

I- A Statement Denied. His next meeting with Mr Rowlands was in May, when they accidentally mot in disborne, Mr Rowlands being accompanied by young Vestoy. Mr Rowlands had said he would' like to go over the works, and witness arranged for an inspection. The inspection was made, and subsequently Mr Lysnar asked Mr Rowlands if he had been advised of the price pat on the Taruheru Works and received a reply in the negative. On that occasion witness liad never suggested that Vesteys should make an offer for the Waipaoa Works. He denied emphatically that he had said to Mr Rowlands: "For God's sake get an offer for the works." At no time had the bank indicated that it intended pushing the company to extremes.

Did Ship Wreck Company? . Witness said that when the Admiral Codrington agreed to give a strong concession at Home she got a full,cargo. Then the Board complained. The directors took legal advice, which was in their favour and eased their consciences. He did not know .a concealed shorthand writer took notes of their* interview with the Board until afterwards.

Mr Lysnar here said that what took place showed what befol deputations to the Meat Board.

Mr Jones: We're not sorry we took' notes.

Mr Witters said lie could not say the Admiral Codrington had wrecked the company. After tho Board was established they intended selling, if tho price were favourable, but to run her in the meantime. Witness denied that Mr Lysnar alone was responsible for the purchase of' the ship. He said the other directors favoured the proposal. Ho himself was easy. His opinion was that the Meat Company would have recovered if the Board had not found a ready buyer in Vestey's. Mr Myers: Would you have sold tho vessel to Beelzebub if you had had a chance?

Witness: I don't know that chap. (Laughter.) Tho proceedings adjourned till tomorrow.