A MYSTERY.

Dominion, Volume 3, Issue 826, 26 May 1910, Page 6

A MYSTERY.

♦ •. ABOUT A LOAN. DISCUSSION AT HARBOUR BOARD. AN ERRONEOUS PROSPECTUSWHO WAS RESPONSIBLE? A matter which has been tho subject Df a good deal of rumour and speculation was ventilated at last night's meeting of the Harbour Board. The following resolution passed by tTio board on April 27 appeared on th'o order paper:— "That this board in committee request the board at its next meeting to inquire into, the correspondence laid on tho tablo of the board, and the circumstances surrounding the issue of a prospectus for tho. raising of a loan of ,£500,000 on tho London market during the year 1909." The secretary then read a number of documents, including, the following:— A letter from Mr. Wilford to Mr. James Coates, general manager of the National Bank of New Zealand, Limited, dated February 22, 1910, and stating:— "I have been shown a prospectus prepared in London, to which is attached a certificate purporting to be signed by me as chairman of the Wellington Harbour Board, certifying to certain figures relating to the board's finances. This certificate is undated, and is addressed to the National ■ Bank of New Zealand." The writer further stated that he had not signed any such certificate, and askBd for confirmation. Mr. Coates wrote, under date February 83, 1910:"In reply to your letter of 22nd inst. in reference to a confidential , prospectus prepared in London, relative to a. loan proposition for .£500,000 on account of the Wellington Harbour Board, I beg to say that I have already written to .our London ofiice, inquiring as to the certificate attached to same and which purported to be signed by yourself as chairman of the board. "Meantime, I have pleasure in confirming that no.such document, nor indeed<*any document, was furnished by you to the bank relating to. the above proposition." The. manager of the National Bank of New Zealand, Wellington; wrote as follows,' under date June 29, 1909,- to the eecretary of the Harbour Board:— . We are this morning in Teceipt. of the following cable from our London office:— ■ ■ ' ' "Wellington Harbour interviewed financiers, result is Macdonald recommends following:— "Financiers will take .£500,000 at ,£9B. Wellington Harbour Board to pay stamps and give them the option further .£500,000, terms to be arranged. To be issued within, fortnight; 25 per cent, to be paid allotment, 25 per cent, middle August, 25 per cent, middle September, 25 ' per cent, middle October. Full halfyearly dividend to be paid 15th January next. Ask Wellington Harbour Board to authorise Macdonald conclude transaction and approve prospectus on their behalf. Present easy monetary conditions are not expected to continue -long." When you'; have • considered its terms, will you be good enough to instruct us. Tours faithfully, (Signed) JOSEPH GIBSON STOTT, Manager. The following telegram (unsigned) was sent,through Eeuter's Tehgram Com-*' pany, Ltd., dated from London, June 28, 1909', and addressed to "Wilford, Wellington":— . ' . . Strongly urge call board together at once, and instruct National Bank arrange for half-million immediately in terms of their cable, June 28th. • Absolutely necessary take advantage present conditions money market and secure strong finance for board. Mr. H. B. Nicholls, secretary to tfie Harbour Board, writing under date July 7, 1909, to. the manager of the National Sank, said:— '• I now have to inform you that the board, at its meeting yesterday, resolved as follows:—"That tho National' Bank of New Zealand, Ltd., be instructed to cable its. London office that the Hon. T. Kennedy Macdonald is in no way authorised to represent the Wellington Harbour Board financially, and that the 'offer conveyed by bank's cable of v 28th June bo declined, the board not requiring money at present." I shall be obliged, therefore, if you will acquaint your London office by' cable of the above resolution at your earliest convenience. Remarks by Chairman. The documents having been read, the chairman said that he regretted very much the manner in which the matter lad been brought before the. board. tChere had been a great deal of innuendo and a great many insinuations and rumours. He was an advocate of an open-door policy, and of giving the greatest possible publicity . to board matters, but there was always a proper way of getting to the bottom of a question. Mr. Harkness had originally moved the matter into committee, and that was quite right and proper, and it was a great pity that it did not remain' so. The documents which he had perused contained absolutely nothing, to justify the inferences that had been drawn. It had been all round the city, and hardly a day had .passed that he hadnot been asked what the trouble was about. The prospectus that had been alluded to had not been before him, and he had never seen it. He thought that when a member quoted from such /& document he should lay it before the board. The matter had been dealt with in committee, and afterwards all that had been done had appeared in tho press. He thought that was very wrong. Tho matter had been gone about in a wrong way. Mr. Jones had apparently wished to discuss it at the last meeting. Mr. Jones: I was not allowed to. The chairman said that Sir. Jones had an opportunity of speaking fully on.the matter when the board came out of committee at the last mooting. Proceeding, he deprecated tho washing of dirty linen ii. public. It was not in the best interests ef tho board. As Mr. Harkuess hod moved the motion under which tho matter was now beforo the board, perhaps he would ask him to throw some light upon it, and tell them why he wanted an inquiry, and what there was to warrant an inquiry. Mr. Harkness Asks Questions. • Mr. J. G. Harkness said ho must deprecate the remarks of the chairman. He was, however, exceedingly glad to welcome him to the platform of discretion in regard to matters of importance touching the affairs, of the board. He did not know why he should be found fault with for not laying a copy of the prospectus on the table. The resolution covered tho documents in possession of the board, and not those in possession of any member. It was absolutely unfair for Mr. Fletcher to make a reflection upon hiin. He had merely tried to get some information on a matter of importance to the board, and he had had no desire to cast any reflection upon anyone. There was a prospectus issued in London in regard to a half-million loan, and the documents that had been read confirmed that. It was useless to insinuate that the document was bogus. The chairman: Where is the document ? Mr. Harkness: It wa9 printed and circulated. ... The chairman: I have never seen it. Mr. Harkness said he did not think he need go much further into the matter until the rest of the information for which they had asked the bank was to hand, but he wanted to give Mr. Wilford an opportunity of making an explanation. Mr. Wilford was instructed to go into the matter of raising a loan of £200,000, and he had a conversation .jrith.the manager of the National Bank,

and handed him some pnpers, which con- i sisttd of certain statistics and a printed | copy ot the balance-sheet. If Mr. Wil- ( ford did not supply the erroneous stulis- < tics, it was the duty of Hie board lo find i out who did. ■ •■ ■ ■ '. Air. Wilford: They are not the same, s Those 1 supplied were some prepared by I ill-. Nicholls to see wlieru the board j could get some extra revenue. ; Mr. Harkness said the chairman had ) thrown out an imputation that members > or a committee on the board had given 1 Information to tho prets. He wished to I fny that he had never given any infor- ] mation to the press in regard to any i board matter which ho regarded as one I thut oujht to be kept secret. .. i Who Accredited Mr. Macdonald? j Mr. C. W. Jones asked who accredited ', Mr. Macdonald to tho National Bank in | London. It was unthinkable that a ] stranger from an outlying part ol' the s Empire coiild go into a London hank and | say he had come about a half-million ( loan. Ho would be shown the door at , once, if ho was not accredited. The mat- ] ter bad not done tho board any good ( with financiers in London. They had ] got to clear themselves. He also wanted i to know who signed the false certificate I which Mr. Wilford hud stated that lit) never signed. Mr. Macdonald should take hi? fellow-members into his confidence, and . tell them exactly what did hap- . pen, and the board should bo exoner- ( ated, and cleared of all connection with , those transactions, in London. The first j the-board heard of it was when the j cables came from London (see above) one ] of them being unsigned, though they ( now knew that it came from Mr. Mac- j dojiald, and another from the National i liank. The board immediately cabled | that Mr. Macdonald was not authorised to represent them. financially, and that 1 the board did not require a loan at that time. i Mr. Macdonald Explains, ' Tho Hon. T. K: Macdonald, M.L.C., \ said ho was very pleased to accede to the request of Mr. Jones. He was not , accredited to the National Bank in Lon- i don and was never received by the bank i as accredited; but in the course of his | private business be had to interview the bank about certain other matters, and the bank, knowing that he bad been chairman of the board for two years, s very properly asked him his .opinion J about the proposed loan and finances of ] the board. He was. asked if ho had any , objection to give the bank information, E as they would like to know all they i could. He replied that, if they would i ask questions, he' would be very pleased t to answer. A broker was then sent for. I The chairman: Would you mind giv- i ing us his name? ' i Mr. Macdonald said the broker's name 1 was . He was a very eminent bro- t ker, and was connected largely with loan c transactions. The broker was introduced i to him. He told the broker that he £ would be pleased to answer any questions. ' Ho did. what he would always do under ■" such circumstances. He spoke well of ; the board, its finances, the harbour and ' the members. He understood from the broker that they would formulate certain , facts and send them out to have them confirmed and he knew no more than ' that. A draft of a prospectus, which was, he believed, drafted by the brokers, E w,as received by him some days afterwards. It was marked: "Proof pri- j rate not for circulation,'" the idea be- ; ing that it was to be sent by the brokers to the bank in Wellington to be as- ] amined. ' Mr, Harkness: It is in print. ; Mr. Macdonald: It never was printed. ; Mr. Harkness: I have seen it. i Mr. Macdonald: Where, may I ask? lli. Harkness: I have seen it. 5 Mr. Macdonald: May 1 ask where Mr. Harkness has seen it? Mr. Harkness: I sot- it from London.. Mr. Wilfard's_ Position. C Mr. T. M. Wilford, M.P., said" ho could j throw a gooo , deal of light on the sub- { jeer, ae he had gone into it very care- i fully. He was authorised by the board, when he was chairman, to raise a loan of ,£200,000. HeMnterviewed the general manager of the National Bank of New .Zealand, and gave him some facts, which r the latter wrote' -down, and certain t figures, which ho had : got from Mt. V Njcholls, and which had been prepared c with the object of showing how the board e could get more revenue if' it desired to t do so by putting up the charges. Ho o put that beforo ■ the manager, Mr. h Coates, with the board's balance-sheet, o Ho never signed a document or a. letter I to anybody in regard to any loan. He d never accredited anybody with the right n to raise a loan. Mr. Macdonald and Mr. t Harkness would bear him out in tho s statement that when the Finance Committee met, and the question was raised t whether they should have an accredited representative to England in regard to the loan,, and it was decided not to, Mr. Coates told him he would eeo if he could get the loan, and on ivhnl terms. Ho received a cablegram strongly urging him to call tho board together, on the ground '- that:it was absolutely necessary to take advantage of the state of the money market. He never replied to that cable. v Was that true? . £ Mr. Macdonald: Truo. c "A Mad Proposal." " a Mr. Wilford said he at once called tti« r boajd together, because he thought it c right the board should know about it. G (Mr. Macdonald: .Hear, hear.) Tho cable- i> gram only spoke of a ha.lf-million loan, ' and said nothing about the terms, so he a instructed tho secretary, to get details f irom the bank. When ho had the de- J tails ho told the board it would be mad- ,: ness to go in for such a proposal, be- a cause the money would have to bo placed I In the- Harbour Fund Account, and ■ would only earn 4 per cent., while the " board would be paying" 4} per cent. on. c it. Every member would beaT him out ' in that. Hβ then asked tho board "to c pass a resolution and cable it to Eng- T land that nobody was authorised to raise ° any money for the board, that Mr. Mac- jj donald was in no way authorised to re- * present the board, and, further, that J the board declined to continue the nego- * tiations for the .£200,000 loan. The board £ approved of all he said, and decided not 8 to borrow any money. No money was ' borrowed while he was chairman. When e Mr. Harkness showed him the prospectus s with the alleged certificate, it was the c first time he had ever seen it. He under- Q stood that the prospectus had never been * in New Zealand until Mr. Macdonald brought it out. Mr. Macdonald had now ° told them that it was prepared, by the * brokers, from information partly supplied - 1 by him. ° Mr. Macdonald: No; I supplied no- s thing. ? Mr. Wilford: Well, then, prepared af- f ter a conversation with yourself. It was t a very clumsy document. It was not ! dated. It said, "Copy of a letter from j tho chairman and Government nominee j on the board to the National Bank." ' A Strange "Signature." v Mr. Wilford then read Mr. Coates's ? statement that the bank had received no J, such letter from him, and repeated his own denial of it. Tho document pur- , k ported to be signed by T. M. Milford- { and that was curious. Ho could not be- . lieve that Mr. Macdonald prepared the l document because he would know better 5 than to add loan proposals to revenue to * show the revenue of the board. Before fc the name T. M. Milford appeared , the word '.'(signed)," showing that it pur- , ported to be a copy of some document. : Mr. Nicholls would bear him nut in the , statement that he always signed "Tho- „ mas M. Wilford." The whole thing was- \ an extraordinary jumble, and if ho had , made out siich a thing and sent it lo the bank, they would never hare sent it : to London. Every member of the board r could endorse his statement, which was | the same statement that he made when ] the matter first came before the board. ? Neither Mr. Macdonald nor anybody else had applied to him to ho accredited lo t represent the board in England. The ; nnly time that Mr. Macdonald raised the ] question was at the Finance Committee, , and the committee docidcrl that nothing f should be done. Mr. Wilford further - «niil that be felt that he liad been some- h what unfairly treated in the press about ( this matter. Insinuations that some- j Miin» that was unfair had been done by , him "had boon put into sub-leaders in a 0 certain paper during the late election, and he thought that was hsrdly fair Every member of the board knew, and Mr. 'Nicholls knew, that nobody had ■, been more careful than himself to see t that everything' 'bat ,was dnno in con- \ nection with the board's finances was re- ) ported to the board. j Mr. Cohen's Views. Mr. M. Cohen said be did not nuitc j agree with tho chairman's oponiDg re- ;

marks. The prospectus was never properly before the board, as the resolution called only for cables and correspondence. He :\\so thoughl it proper and desirable iu cases like this tlmt all the light that could bo thrown upon It should be »iven in public. He did not think the finances of the.board would bo in any way affected by the discussiun. Mr. Willbrd's explanations were periectly and consistent, and he (the speaker) was only sorry tbaL Mr. Wili»rd had thought it norassary to repeat those explanations. Mr. Macdonald's position in r«;ard to the bank in London was probably nolural, but tho ques(ion was wlicl her he hud been discreet, nml his explanation did mil account for the cablegram stated to be signed "Mncdomild." He emphasised the fact that the question of accrediting Mr.'Miicdonald had been discussed with him, and tho board had decided not to do so. Hfc considered that the board in' resolving to state that it. did rfot want to raise a loan, meaut lo convey its displeasure that the matter had been discussed in an irresponsible way. He had the utmost .respect for Mr. Macdonald, but thought he had shown a lamentable indiscretion in discussing matters with the bank and its brokers to such an end as had resulted. Mr. Wilford's Statement Accepted. Mr. J. W. M'Ewan said ae also thought. Mr. Macdonald bad committed a ■ grave breach of propriety. It looked as if the mistake in the supposed certitlcate was purposely made in order to favourably impress the financiers in London. It was curious also that the certificate should state that' Mr. Wilford was "Government nominee" as well as chairman. AVho, in London, knew that lie was so? Mr. Macdonald: It appears in tho board's balance-sheet. Mr. C. E. Dnniell said tho matter was very unsatisfactory. He could not believs that the bank would use the name of any individual as the name of. Mr. Wilford appeared to have been used. Mr. Jones said he wished to emphasisa what Mr. Cohen had said about Mr. Wilford. Tho board had already unanimously accepted Mr. Wilford's explanation of bis position. Mr. Macdonald Again. Mt. Macdonald said that whatever one said or did, oue could not convince men of the type of mind of Mr. M'Ewan. Did not Mr. Cohen understand that any man holding a public position, and going to London, was necessarilv sought after for information by men who bad interests in the Dominion? Naturally, the bank and the brokers wanted to kuoiv what ono ot' tile leading men, ih connection with the concern knew about it. It was a pride and a pleasure to him to say what he could in reference to the Dominion, and especially the city of Wellington. He had no hesitation in putting his 'signature to the cablegram, asking Mr. Wilford to call tlije board together. It came to him for .signature from tthe broker, and be signed it with pleasure. The whole thing was .-a storm in a teacup. •Mr. Dauiell: It's too serious for that. Mr. Macdonald: Neither I nor S£r. Wilford have done anything to be ashamed of. . Mr. Wilford: I never gave you any authority. Mr. Macdonald: No; you did not. I never said you did.' He supposed that tho broker in London had put on a clerk to draft a prospectus, 1 and tho clerk had made mistakes. Nobody who knew anything about the board's business would write a prospectus in such a silly idiotic way. If Mr. Harkness wanted more information, he should wait until tho information from the bank came to hand, and then thresh the matter out further. It was quite clear that tho whole thing was an absurdity, and that neither Mr. Wilford nor himself, was to blame. Mr. Harkness said he thought Mr. Cohen had been a little too severe on Mr. Macdonald. If a member visited London and were asked for information by the bank, he had a right to answer the ctuestions. More Information Awaited. The ohairman said it was the most natural thing in the world for tho bank to - interview Mr. Macdonald when they knew that thore was a loan under discussion, and knew also that ho was an ex-chairman of the board. 'Ho regretted that the matter had been discussed in open board, as it would do no good to tho board's financial reputation. The erroneous certificate must have emanated from London, and nothing further could be done until some information about it was received from London. Ho could testify that Mr. Wilford habitually signed, "Thomas M. Wilford." The subject dropped without any motion being proposed.