Jeffs circular before crash was Jo allay rumours9

Press, Volume CXVI, Issue 34087, 26 February 1976, Page 2

Jeffs circular before crash was Jo allay rumours 9

nt.X. Prett Aitociation) AUCKLAND, Feb. 25. A circular letter from J. E. Jeffs in 1972 was to allay rumours that JBL faced severe liquidity problems, a former secretary in the investment division said today at the JBL case lower-court hearing. She is Patricia Ann Gray, who was in her second day of giving evidence.

Miss Gray said that a circular letter had come from Jeffs in about January of 1972 after comments in a newspaper. The trawler syndicates seemed to be very popular with investors. These originally were on a normal partnership basis, but later they were set up as special partnerships. All were terminating syndicates.

Cross-examined by Mr Henry for Arnold, Miss Gray said that, at the beginning, settlement of syndicates was within a few weeks. The time span was not great from the date the money came in to the date of settlement, but in the later stages it increased. In most of the syndicates concerned with construction at least half of the buildings would have been started, but not all of them would have been completed by the time the syndicate was floated.

She was unable to say if JBL would have retained money before paying it out to the construction company if a syndicate was filled before the building was completed. CONTRACT PAYMENTS However, she believed that as soon as money was received from investors, JBL

would pay it to the contractor. If a building had not been begun, she would have

assumed the money would be going towards the purchase of the land.

It was necessary to fill the syndicates before they became viable entities, but it was not necessary to get the total syndicate moneys in until they could become legally settled and title transferred. Cross-examined by Jones (the former general manager), who is representing himself for the lower-Court hearing, the witness said she recalled an edict from J. E. Jeffs in May, 1971, placing the investment division under the direct control of corporate management in Sydney, and requiring direct reporting to Australia. Jones: Was it regular practice after his arrival in England on periodic trips from Australia for Mr J. E. Jeffs to discuss matters with either Mr Littlewood (Mr M. R. Littlewood, head of the JBL investment division) or yourself, without other legal management personnel being present? Miss Gray: Yes, that would have happened. LIQUIDITY DISCUSSIONS The witness said she did not specifically recall discussing with Jones liquidity problems, and their effect on syndicate settlements and creditor reaction, but she agreed she probably had. ‘‘l don’t consider a liquidity problem quite in the same light as serious trouble.” she said. Jones: If an assurance had I been given by J. E. Jeffs to 'the financial directors that the wording on syndicate bro. chures would be revised to give a clearer indication that funds held awaiting settlement would be used for general purposes within the group, would you agree that Mr Littlewood would have been the executive responsible for drafting and inserting the revised wording in the brochure?

Miss Gray: Probably with

The JBL hearing, now In its third day, is before an Otahuhu magistrate, Mr T. G. Maxwell, SJM. James Edward Jeffs and Vaughan Joseph Jeffs, JBL Consolidated, Ltd, and nine Auckland men, face a number of charges alleging conspiracy to defraud and fraudulently promoting.

The Jeffs brothers are not present for- the hearing.

The other defendants are Barrie Phelps Hopkins and Michael Bruce Gumey Thomson, solicitors; Rex Evans, Hugo Stephen Fanning, Hugh Buchanan Jones, and Eric Walter Thompson, chartered accountants; Francis William Ralph and Phillip Paul Sargent, company directors; and Peter Kenneth Le Neuve Arnold, company executive. The Crown is represented by Mr D. W. Baragwanath, Mr D. S. Morris, and Mr A. B. Lawson. Mr S. C. Ennor and Mr G. M. Foy appear for Sargent, Mr M. D. Robinson and Mr R. J. Collis for Ralph, Mr L. W. Brown, Q.C., and Mr G. N. Jenkins for Hopkins, Mr S. G. Lockhart for Fanning, Mr J. S. Alexander for Evans and Thompson, Mr J. S. Henry and Mr C. B. Littlewood for Arnold, Mr R. K. Davison, Q.C., and Mr N. J. Carter, for Thomson. Jones is not represented.

tive concerned sent a transcript of the discussion to J. E. Jeffs. To Mr Ennor, Miss Gray said the syndicate department and the investment divisional department were the same. It was officially called the investment department. SHIFT TO SYDNEY Miss Gray said J. E. Jeffs shifted to Sydney in 1970. Mr Binney (Mr K. R. Binney, a senior executive in the Sydney branch) joined J. E. Jeffs later that year. Bv September, 1971, Mr Binney was second in command to J. E. Jeffs.

At least by September, 1971, major policy decisions were being made in Sydney, she said.

Brochures for trading partnership No. 1 were drafted by Mr Binney. She believed that brochures for syndicates were drafted by Mr Littlewood or his subordinates.

Miss Gray said that in May, 1972, there were so many accountants she could not say who was the chief one.

Mr Ennor asked her if she was aware that in 1972 and down to the time of the receivership of the JBL group J. E. Jeffs hoped for substantial additional investments in the group. Miss Gray said a lot of information had been recevied that money was about to flow from England from

the sale of JBL Apparel and Australian assets, amounting to hundreds of thousands of dollars, to solve the liquidity problem.

She had not heard of a project from England or Europe that might have produced s4m — only of merchant bank money that was supposed to be coming from England.

She could not recall the sum, but it might have been a six-figure amount. She believed that J. E. Jeffs was the man who endeavoured to organise the additional moneys. By that time he was living in London. She believed his intention was to shift the financial control and direction of the JBL group from Sydney to London.

RALPH SHAREHOLDING To Mr Robinson, Miss Gray said she believed that the defendant, Ralph, was always one of the main shareholders in the company other than the Jeffs. She had always thought he had quite a large stake in the company from an early stage.

She believed that he became a director not so much from his stake but because of his personal contacts with the Jeffs.

Miss Gray said she thought Ralph had invested some of his money in debentures She knew his store invested money.