LONDON PEPPER GAMBLE

Press, Volume LXXII, Issue 21715, 24 February 1936, Page 11

LONDON PEPPER GAMBLE

IMPRISONMENT TERMS FOR FINANCIERS GOVERNMENT ENQUIRY EXPECTED UNHEALTHY SPECULATION IN COMMODITIES "(united PRESS ASSOCIATION—COI'YRIGHT.) (Received February 23, 7.42 p.m.) LONDON, February 21. In the pepper case, Garabad Bishirgian, deputy-chairman of James Shakespeare, Ltd., now in compulsory liquidation, and John Howeson, director of many companies, and a member of the executive of the Tin Producers' Association, were each sentenced to one year's imprisonment, and Louis Hardy, former managing director of Williams, Henry, and Company, to nine months, all in the second division.

Bishirgian was charged with circulating a prospectus knowing it to be false in material and particular, and the others with aiding and abetting. Leave to appeal was granted. The "Daily Herald" says that members of the House of Commons will urge the Government to take drastic action to prevent a repetition of the pepper gamble, including the tightening up of the legislation for dealing in commodities. It is expected that the Board of Trade will first be asked to institute an enquiry into unhealthy speculation in commodities.

The "News Chronicle" urges that the law should be altered to prevent cornering.

"The Times," in a leading article, regards the case as another of the pitfalls of finance, following the Bottomley, Hatry and Harris cases, which have alarmed the investor in recent years. It expresses the opinion that in the interests of the shareholders, company law requires a consideration of the identity of corporations, as James Shakspeare within a few days changed from that of a sober concern to the nom-de-guerre of a group of reckless gamblers. The costs in the case amount to £30,000.

The case lasted nine days and originated in dealings in shellac and pepper by the Williams, Henry and Company, in which Howeson held two-thirds of the shares and Bishirgian one-third. Hardy was managing director. Bishirgian, acting as broker, in a series of transactions, bought 66,800 bags of shellac costing £500,000, of which £109,500 was paid- also 11,245 tons of pepper costing/£967,046.

False Prospectus The Attorney-General (Sir Thomas Inskip), for the prosecution, explained that the cctipany had estimated that there were only 12,000 tons of pepper in the world, but the new crop was larger than had been expected, while 6000 tons of the oud crop were still unsold in London. A further 6000 tons were released by Chinese and other sources when the prices improved. The company got into difficulties but arranged with the old-estab-lished firm of metal brokers, Jame3 Shakespeare, which Howeson then controlled, to transfer to it Bishirgian's commodity business. When James Shakespeare publicly floated capital of £400,000 the prospectus did not mention the pepper and shellac commitments. The Attorney-General contended that defendants saw further stocks of pepper coming along, and accordingly took steps to make further purchases to the price. The evidence disclosed that James Shakspeare eventually bought a further 12,340 tons of pepper. The firm went bankrupt. Its liabilities were £755,000 and its assets £235,000.

Mr Justice Atkinson, summing up, referred to the attempt to corner pepper, and said there was no law against cornering although it might not be thought very nice. He pointed out that £400,000 had been taken out of somebody's pockets and lost in a few months.

Judge's Comment Giving sentence, the judge said that the prisoners held great positions, carrying great responsibilities.

Mr Patrick Hastings, defending Bishirgian, who is an Armenian, said he started work at the age of 12, built up a commodity business, and was said to have spent nearly £IOO,OOO making good the pepper losses. He was now penniless. Howeson. described as a "tin king," was the director of 19 companies, chairman of 12. and adviser of 20 others. 'He concentrated on building up an AngloOriental tin mining group with a capital of £20,000,000. He began in 1929 to obtain world-wide cooperation to counter-act over-pro-duction, resulting in the Government's backing a scheme at present in operation. He was estimated to have saved the Empire producers £40,000,000.