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

Clutha Leader, Volume XX, Issue 1033, 11 May 1894, Page 3

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

tTustice Williams gave his decision re the New Zealand Loan and Mercantile Agency Company on Tuesday. He stated that, despite the evidence of the Right Hon. A. J. Mundolla, he thought the statements of the other directors correct — that counsel's opinion with regard to the alterations in prospectuses in 1879 had been submitted to the Board, and that counsel's opinion had been based on the case prepared by Mr Thomas Russell. Judge Williams considers that Mr Falconer Larkworthy had been a valuable and trustworthy servant, and if he had been allowed control, and not forced to leave, the company would probably still have been in a solvent position. The latter balance-sheet was positively misleading. It was evident that the diiectors had not doubted Mr Lark worthy's report, which he (the judge) held had placed the directors in full possession of the condition of the company's properties, but the directors had not disclosed this information to the shareholders. It was apparent, he thought, that Mr T. Russell had acquiesced with Mr Elder (the Australian manager) and Mr Paul (the London manager) in the telegram surpressing Mr Elder's report on the Australian properties. There appeared to hi.u no satisfactory reason why the directors should not have informed the debenture-holders earlier of their insecure position. . The directors, too, ought to have noUoed the irregularities

of placing the investment in the Land Company's shares under the heading of 1 wool and produce.' The auditors had failed in their plainest duty, and they ought not to have signed the lalftacesheet of 1892 until a substantial ElUount had been written off. Judge Williams said he considered the advance of the Land Company was to save the Land Company and Mr Thomas Russell from liquidation. He also stated that apparently the system of suppression adopted in London was for the object of throwing a strong light upon the officers' estimate of the directors. Justice Williams stated that the reports issued prior to 1890 were calculated to mislead shareholders, although the directors were aware the position of the company was unsound. If they had adequately provided for all losses the reserves would have been exhausted. The balance sheet had been manipulated )o avoid criticism and a large commission had also been paid to Baron Schroder. His Honor commented on the dull interest many of ths directors showed in the affairs of the company at the time of the Waikato transfer, a transaction that had been deliberately withheld from the knowledge of the shareholders ; in fact, the directors by their action had left Thomas Russell master of the situation. His Honor contrasted Mr Larkworthy's frankness with the attitude of Mr Paul while in the witness box, and commented on the action of Mr Mundella in selling the shares held in thst Nevr Zealand Loan and Mercantile Agency Company, although retaining his other investments. Justice Williams, in conclusion eulogised the frankness with which certain of the directors submitted to 'examination but said he "would refrain from commenting on the attitude of the other members of the board, as he preferred to leave them to their own consciences. The Times, commenting on Justice Williams's statement re the New Zealand Loan and Mercantile Agency Company, says the public examination of directors and officials disclosed a gigantic system of continued and complicated dishonesty, and thinks the boasd of directors collectively were guilty of the most dishonorable actions. Both the public and shareholders, the paper declares, have been tricked and defrauded for years past through the fault of the directors. The article condemns the part played by Mr Mundella in the business. The Standard, referring to the commercial morality of the officers, states that they received no benefit from the transactions or by the withholding of of the. reports. It considers that the investment in the Waikato land was bad and favoured Mr Thomas Russell whilst it protected the Loan Company's directors, who were interested.