‘Cosmetics From Russia'

Press, Volume CVI, Issue 31125, 30 July 1966, Page 3

‘Cosmetics From Russia'

(New Zealand Press Association*

AUCKLAND, July 29.

Representatives of Leidrum and Hartnell, Ltd., claimed they were importing from Russia a line of cosmetics which were to be sold in milk-bars and dairies throughout New Zealand, a witness said in the Magistrate’s Court at Auckland today.

Giving evidence was Angus Laurance Cobb, national organiser of the Dairy, Confectionery and Mixed Business Association.

Before the Court for the taking of depositions are Patricia Amelda Keane, aged 28, a secretary, and Noel James McGurgan, aged 35, company representative.

They face 18 charges of false pretences and 17 of attempted false pretences involving a total of £62,272 and charges of attempting to destroy and conspiring to destroy company documents.

Cobb said he was first visited by Keane about February 25. She introduced herself as a vice-president of Leidrum and Hartnell, Ltd., which she said wished to expand to New Zealand.

She told him the company was interested in establishing retail outlets for cosmetics through milk-bars and dairies at a 50 per cent mark-up to the retailers.

She gave him to understand that the cosmetics were Russian, but would be manufactured in New Zealand. Early in March, said Cobb, he went to the company offices in Parnell where he was introduced by Keane to Gardner who was named as Auckland manager for the company.

“Gardner said their main line was textiles —this was a sideline—and that they were concerned with the export of New Zealand wool to Russia. They were able to import'the cosmetics from Russia under licences because of the connexion with wool going to Russia,” said Cobb. Gardner told him the cosmetics would be ready to go into the shops early in June. Later, at the request of

Gardner, the association sent a letter supporting the approach to the dairies and milk-bars. They also sent a brochure, seeking new members for the association, which Gardner said he would enclose with the letter to dairies and milk-bars. Cobb said he had no further dealings with the company until June, when he received several inquiries from dairies wishing to know when their goods would be arriving. He rang the company and was told the police had taken over. lan Laing Muir, a transport company director, of Wellington, said McGurgan became annoyed when the witness asked for confirmation of a special agreement. He said McGurgan became annoyed that Muir might be doubting his integrity. Muir said that when he had heard Leidrum and Hartnell (Australia), Ltd., had gone into liquidation, McGurgan had told him it was purely the company’s way of changing its distribution of stock methods in Australia. The liquidation had been only for the company’s convenience and it remained financially sound, McGurgan had said. Advertising File Muir said he had seen McGurgan in Auckland in April, after expressing interest in an advertisement in a Wellington newspaper. He had also met Keane and Gardner at the Leidrum and Hartnell offices in Parnell House. He had been shown a file of advertising relating to Leidrum and Hartnell, Ltd., and the Unigroup. He was shown the price system. Lipstick was taken as an example. It would cost him 5s 6d, the retailer 6s 7d and the price to the purchaser would be 10s. A second example a “moisturiser” would cost the agent 6s 3d, the retailer Ils 8d and the ultimate purchaser 17s 6d. Muir said there was also sales tax, which had to be paid by the agent distributing goods in his zone, incorporated between the price of the product to the agent and the price to the retailer. McGurgan told him he was on loan from a branch of an Australian company which financially was very sound, being backed by Unigroup which was referred to as a

large group of international companies. McGurgan had shown him newspaper clippings and financial reports to substantiate this. Stopped Cheque When Muir said he agreed to become distributing agent for Leidrum and Hartnell’s cosmetics in the Wellington city area, which included a small portion of Oriental Bay, he paid a deposit of £331. He had stopped the cheque for £1324, the balance of the agency price. Of the 20 retail outlets he was promised in his area, he was notified of only three, but he received no refund of his deposit Hugh Douglas McCrostie, retired, of Christchurch, said McGurgan told him that 14 men had spent five months in New Zealand on a market survey.

In basing his confidence on Australian experience, McGurgan had told him he was sure the market for the cosmetics “would go over well here.” McCrostie said he was not interested in buying a zone for distribution at his first interview, but when he was told of Unigroup’s contracts

with Russian groups, he expressed an interest.

Bank Reference

McCrostie said he was expected to pay the deposit of £331 at the conclusion of the second interview, but he thought he had said: “Not on your sweet life. We New Zealanders have been warned about Australian company promoters.” However, he had sought a reference from his bank, said McCrostie. The reference was excellent, so he wrote a cheque for the deposit. On May 14 he was appointed to the agency in a Christchurch area and was told the scheme would start about June 12.

Later, he told McGurgan that he would send no more money until the goods were in his possession. McCrostie said McGurgan said another Christchurch agent, a Mr Heard, and the witness were the only two agents in the country to have adapted this course. McGurgan was concerned because the products were soon to be marketed.

McGurgan had then told him that the goods were ready to be shipped and the two agents could send their cheques. McCrostie said he was no longer interested in that case and he and Heard had then withdrawn. He had received no refund of his deposit. The hearing will continue on Monday.