The Dominion. FRIDAY, MAY 27, 1910. WHO IS TO BLAME?

Dominion, Volume 3, Issue 827, 27 May 1910, Page 6

The Dominion. FRIDAY, MAY 27, 1910. WHO IS TO BLAME?

» . The more the mystery surrounding the preparation of the thorised prospectus providing for the raising of a half-million loan for the Wellington Harbour Board is investigated the more unsatisfactory the position appears , to bo. From the disclosures made at the meeting of the Harbour Board on Wednesday, certain facts stand out clearly. Firstly, a prospectus for the raising of a half-million Harbour Board loan was prepared in London about June or July, without the authority of the Board. Secondly, that prospectus embodied a certificate purporting to be: signed by the chairman of the Board, Me. M. Wii,fohd, containing grossly misleading statements as to the revenue of the Board over a. period of years. Thirdly, tho late chairman denies that he ever signed any such certificate, or that he authorised anyone to act for him. Fourthly, the Board authorised no one to issue the prospectus and knew nothing of its preparation. Fifthly, tho Board is unable at present to discover who was responsible for the issuing of the prospectus. These are the main facts as stated. The prospectus was unauthorised, and in face of the late chairman's statement, the certificate attached to it must have been a forgery so far as his name is concerned. The matter obviously is a very serious one. «That any unauthorised person should have issued such a prospectus on behalf of an important local body is quite bad enough, but that misleading information should have beon included in it, and the name of the chairman of the- Board attached to that information as a guaranteo of its accuracy, makes the offence a very grave one indeed. We are a little surprised in this respect that the present chairman of the Board, Mr. Fietcheh, should haw adopted the tone he did when discussing the matter. He "deprecated the washing of dirty linen in public.' . This is a very curious attitude for a gentleman who is so persistently proclaiming his belief that the public should lenow what is going on in connection with local bodies' affaire. It is still more surprising that ho should describe as' the "washing of dirty linen" the discussion of so serious a matter, and one so vitally affecting tho interests of the Board, as the unauthorised preparation pf a half-million loan prospectus , in such circumstances as set out above. His remarks make it clear that ho has quite failed to grasp the seriousness of the position. This is to bo regretted, Cor as chairman ho should be the most active member of the Board in tho endeavour that is being made to get to the bottom of this ver.y strange business. During the discussion on Wednesday it transpired that Mr. T. K. Macdonald, a member of the Board, was in England at the time this prospectus was prepared. Mr. Macdonald was not authorised to act for the Board, and indeed it would appear that prior to his departure for England the Board considered the question of accrediting him, but decided not to do so. This gentleman, however, seems to have culled at thd offict! of the Board's bankers, who were also his own, when in London, and the loan question was then raised. Me. Macdonam> disclaims any responsibility for the prospectus, stating that ho merely answered any questions that were put to him by the manager of the National Bank and by a broker summoned by the manager. He, however, sent a cablegram to the Board urging it to instruct the Bank to arrange the loan "immediately." His cablegram, which was addressed to the chairman of the Board, read as follows: — Strongly urge call Board together at unce, and instruct National Bank ■ arrange for half-million immediately in terms of their cable, Juno 28th. Absolutely necessary tako advantage present conditions money market and secure strong finance for Board. The interesting point about this message is the fact that it rather upsets the suggestion put forward by Mb. Macdonald ■ at the meeting on Wednesday to the effect that the copy of the offending prospectus was merely a draft to be sent from London to Wellington for revision. In the course o£ Wednesday's debate he said, referring to his London interview with the Bank manager and the broker: He understood from tho broker that they would formulate certain facts and send them out to haw them confirmed, and ho knew no more than that. A draft of a prospectus, which was, he believed, drafted by tbo brokers, was received by him some days afterwards. It was marked: "Proof —— private -— not for circulation," tho idea being that it was to bo sent by tho •brokers to the bank in Wellington to bo examined. If our readers will compare Mr. Macdonald's cablegram to the chairman of tho Harbour Board with his utterances of two days ago they will see tho inconsistency. Mr. Macdonald in his cablegram strongly urges tho Board to meet and instruct tho Bank to immediately arrange the loan. That it was absolutely necessary to take advantage of the present conditions of the money market. This was on June 28. If it had been intended to submit the draft prospectus to Wellington for revision it could not have bo.en returned for ovor two months, and tho "present conditions" of the money market would have passed. Mr. Macdonald's memory apparently has failed him 'in' this matter. It must be quite evident that so far

as he was concerned he at tho time urged that the loan should be floated "immediately," which would mean 'that, the contents of tho prospectus would not have been known to the Board until after tlio loan was ■ raised. Fortunately the Board disregarded the advice tendered it, and ' instructed tho National Bank to in- j form its London office that tho proposition was declined. Mention of tho Bank raises the question of why the Board has not long ago used this moans of getting to the bottom of the matter. The National Bank has done tho banking business of the Board for many years past, and its name has been freely mentioned in connection with the raising of the half-million loan. According to Mr. Macdonald it was tho manager of this Bank in London who called in the broker with whom tho discussion concerning the loan took place. The framer of the draft prospectus even went so far, we believe, as to mention the National Bonk ,as having received from the thon chairman of the Board the letter, or certificate, embodied in the prospectus, and containing the misleading figures—a letter or certificate which the then chairman says ho never wrote, and which the general manager of the Bank says he never received. It is really just as much to the Bank's as to tho Board's interests to have the origin of this unauthorised document cleared up, and the wonder is that the assistance of the Bank in unravelling the mystery was not called in long ago. It is astonishing that nearly twelve months should have elapsed and so little be known here as. to who was responsible for the matter in the prospectus and for its preparation. What has already been disclosed.will no doubt impress the Board arid its bankers with the necessity for clearing up the whole matter as speedily as possible, so that tho financial world and the public generally may know whore to attach the responsibility for this very curious loan