‘JBL needed $9M to do $3M work’

Press, 26 May 1977, Page 10

‘JBL needed $9M to do $3M work’

PA Auckland JBL needed capital of i S9M to complete building i projects worth S3M, De- ! tective Inspector P. B. Kilj vington. a police account- ! ant, has said in the Su- ; preme Court at Auckland. The JBL trial is before Mr Justice Somers and a jury. Nine former executives for directors of the group have pleaded not guilty to charges of conspiracy to defraud the public. To continuing crossexamination by Mr M. J. ! Ruffin for James Jeffs Mr ; Kilvington said that the ! main emphasis of his in- •. vestigation into the ■ accounts of the group was I to see what the cash situi ation and the group’s abil- ■ ity to continue trading I were. The indications were ■ that JBL was not able to raise the' S9M needed, said the witness. The only cash coming in from debentures, mortgages, bridging finance or syndicate investors. A company might well grow in profit but unless it has immediate cash to pay its debts growth would not eventuate. The inspector told Mr Ruffin that his concern was the cash situation of the company at October 1, 1971, and the indication ! was that it was desperate. I The most important I documents were the cash--1 flow sheets which, as they progressed month by I month, showed the group I was continually deferring | creditors, efforts to obtain ■ finance were not success- ! ful, and that the only cash ; coming in was borrowed. Cross-examined by Mr i J. S. Alexander (for Vaugi han Jeffs), Mr Kilvington said that after examining

all the company’s records he realised that these were very well kept and disclosed all the proper information. The witness said that he had no reason to doubt the bookkeeping methods used. Questioned by Mr N. I. Smith (for Hugh Buchanan Jones), Inspector Kilvington said that it might well have been James Jeffs’s intention for corporate management and management service.; in Sydney to take over control of the New Zealand operation, in April-May, 1971. Witnesses sa’’d indications were that the New Zealand directors and management, remained effectively in control of the New Zealand group, in spite of documentation stating that James Jeffs had put New Zealand under the control of the group Sydney headquarters. To Mr N. J. Carter for Michael Bruce Gurneg Thomson, he said that a properly operated trust account was most essential in the case of JBL. Cash-flow documents were, he said, completed from October, 1971, only through to January, 1972. These did not include budgeted JBL Sargent figures. Mr Kilvington said he was aware that JBL Sargent was considered to be one of the profitable subsidiaries at that time. From November, he said. profitability was relatively immaterial and of secondary importance to the cash flow of JBL. Unless the subsidiaries showed cash and a cash

flow, profitability meant -nothing in the short term. Former Detective Inspector Charles Earl Sturt said that on October 2, 1973, he took a statement from Vaughan Jeffs. In this Vaughan Jeffs said that JBL Consolidated, Ltd, was formed by the Jeffs brothers in 1967 and he became a director in 1969. In 1968 he took control of the Auckland Seineboat Association (Seafoods) which the company had acquired. About August, 1970, he moved to Legal House and became deputy managing director. From that time he would have been effective head of the New Zealand operation although his brother, Jim, would have been in over-all control as managing director of the international group. Vaughan Jeffs said that when the idea of a special partnership was put forward he knew of it and did not object. He knew that syndicate investments were being used for the general trading purposes of the group. His understanding was that investors received 10 per cent from consolidated pending settlement and this entitled JBL to use their funds. Mr Sturt said on that November 8, 1973, he took a statement from Thomson. In this the accused said that before he joined JBL he took some part in the preparation of brochures. Subsequently the preparation of the brochures was the chief responsibility of investment department.