THE N.Z.L. AND M.A. COMPANY.

Clutha Leader, Volume XX, Issue 1029, 13 April 1894, Page 6

THE N.Z.L. AND M.A. COMPANY.

In his explanation before Mr Justice Williams concerning the New Zealand Loan and Mercantile Agency Company, Mr Falconer Lark worthy said in 1890 he reported that there were further deficits, that the reserves were exhausted, but the board took no notice of the matter. Losses amounting to L 348,000 appeared on the balance sheet as an asset, and the statement of profit presented in 1889 included interest on that sum, although ifc had nofc been paid. He added that only tbe Right Hon. A. J. Mundella, one of the directors, supported him in proposing that an independent inspector should be empleyed to inspect tLe company's properiies and report direct to the London board. Continuing his evidence before Mr Justice Williams, Mr Falconer Larkworthy described certain statements made by the Hon. W. Shiels, of Victoria, in his speech afc the London meeting, as grossly untrue, and said

Mr Shiels was a friend of Mr David Elder, the general manager of the company in Australia. In reply to some severe question's put by the judge, the witness admitted that had Mr Shiels known the true facts of the case he wojld nofc have spoken as he did, andihe also admitted that he himself had now confirmed the statements contained in Mr Shiels' speech to which exception had been taken. He said he did not consider it his duty to remonstrate at the time. In reply to another question Mr Larkworthy said he also acquiesced in the balance sheet at the same meeting, believing as he did that the reserve would cover the Melbourne deficit of L 480.000 which had nofc then been revealed. Counsel complained of the manner in which the witness gave his evidence, taking particular exception to his hesitancy in answering and his inability to remember certain things. The judge urged him to be perfectly candid in giving his evidence. Mr Larkworthy said his salary was increased"*in 1890, although his authority and duties had diminished owing to Mr Paul, the London manager, and Mr Thomas Russell assuming more control. Personally he hacl dissented from this arrangement. In reply tc a question, he said he did not remember approving of the certificate depriving the deben-ture-holders of their security. He admitted that he had approved of Mr . Thomas Russell's security for the advance he obtained. Mr Paul, the secretary was next examined, and gave the history of the 1 alteration in tbe debenture prospectuses which Mr Justice Williams described as * nofc confirmed by the documents and astonishing.' Mr Paul virtually admitted there -was nothing in the new form of debentures to notify holders of the charge. The board, he said, was well 'aware there was no special security. While the company was negotiating with Baron Schroeder the company issued a considerable quantity of debentures on the old basis. In reply to the judge, Mr Paul said he was unable to explain why at the time of the Schroeder issue the directors failed to clearly indicate that the old holders were not secured. He said Mr Larkworthy's report had been postponed in deference to the wishes of Mr Thomas Russell, and it had not been investigated. He added thafc Mr Barkor in 1892 reported a deficit of L690'000. The board had not discussed the propriety of specific mention being made in report that in 1892-93 the company held L 393,000 worth of New Zealand Land Association debentures. He was unable to say who actually altered the form of application for debentures in 1888. He, however, admitted that the form was misleading but he believed the fact of the deben-ture-holders being deprived of their security was accidental. The company's solicitor added this paragraph to the draft report of 1890, giving details of the company's loss during the year, but it was suppressed by the directors, who thought it too strong. Judge Williams here interrupted with the remark, 'Is the truth too strong? Mr ,Paul, continuing his evidence, said that the majority of the bond-holders in 1888. were aware of the absence of any special security. The Right Hon. A. J. Mundella in his examination denied that he was aware that the prospectus regarding the security of debentures were misleading, but thought them only ambiguous. He condemned the . colonial board's greediness for business and overtrading up to the hilt, against which he had protested. The suggestion that he was guilty of a policy of concealment was gross injustice, but he thought it would be injurious to inform shareholders of Mr Larkworthy's report without confirmation. Mr Paul, he said, never mentioned the company's holdings of Waikato lands in connection with the balance sheet of 1891. The judge described the company's transactions in Waikato lands as unjustifiable as an investment.