TRUST INQUIRY

Dominion, Volume 27, Issue 306, 22 September 1934, Page 7

TRUST INQUIRY

Interest Due at End of Year

DIRECTOR’S ADMISSION Further Evidence at Sydney Hearing McArthur recalled By Telegraph.-—Press Assn.—Copyright. (Received September 21, 7.45 p.m.) Sydney, September 21 When the Royal Commission resumed its inquiry to-day into trust company activities the examination of J. W. S. McArthur was continued. Mr. Justice Haise Rogers presided. Replying to Mr. Monahan, McArthur said that it was now proposed that the Southern British should control the British National Trust, Sterling Investments, and Pacific Explorations. Mr. Monahan: Why should Southern British get control? McArthur: They are going to take the British National Trust debentures now held by Farms and Farmlets, which would then disappear.

McArthur said that he thought Sterling Investments could disappear and its assets be put in the British National Trust. It w r as proposed to eliminate some of the companies which had completed their usefulness. Replying to the commissioner, McArthur said that he desired to obtain control of the Trustees, Executors and Agency Company of New Zealand in order to make certain assets available. He proposed to amalgamate that company with his own trust and reorganise the amalgamated company with a strong directorate. He also desired to obtain the remaining assets of the Primary Producers’ Bank, on which a profit of £200,000 could be made. He intended also to conduct a branch of the bank for deposits only. He had the idea of giving the present shareholders in the bank some interest in the new amalgamated company. Bribery of Politicians Denied. Referring to the letter dealing with the activities of the Polab Association the commissioner asked, “You don’t suggest that the methods mentioned meant anything but bribery?" McArthur: I can only say there was no intention of bribing politicians. The commissioner suggested that If McArthur could, before the conclusion of the commission’s sittings, assist in drawing any inference other than that it was a scheme of bribery to prevent the report to the New Zealand Government getting before Parliament he should produce evidence to that effect. McArthur said that he would do so. The commissioner said that he would need some Help in framing the recommendations he had been asked to make. Among other things he had to protect investors’ interests.

Dr. Lpuat: Suppose we are able to put forward some voluntary plan which would eliminate what- you may consider to be the evils of the present situation? The commissioner: I say now that any such plan must not leave the control of these companies in one man’s hands. It may be that in preserving ‘ the interests of debenture holders I shall have to make recommendations cutting across the Interests of other people. H. C. Glasson, recalled, said that bonds representing £2300 of Southern British debenture capital had been taken from Sydney to Auckland by McArthur aud sold there. The proceeds had been paid into Sterling’s account, but he did not know whether any money had been withdrawn almost simultaneously. He admitted that some of the money was undoubtedly going to Miss Smith for the purchase of her holdings. McArthur had been paid £BOO at about that time, but Glasson did not know whether that also was part of Southern British money. The money had been made secure for Southern British, which had been given British National Trust debentures. Various sums had also been paid at different times to Alcorn and McArthur, the former’s drawings being fairly regular.

> “For Personal Use.” Mr. Monahan: So Alcorn was being given Southern British Trust funds for his personal use. Glasson: He gave security. W. C. B. Hewitt, director ,of British National Trust, said that the improvements to the Trust Building during August had cost £2OOO, which had not yet been paid. There would be more expense for September, and at the end of the year interest would have to be paid on £112,000 worth of Southern British debentures. Mr. Monahan: And the British National Trust has nothing? Hewitt: Yes. Mr. Monahan: So a fresh batch of debentures will have to be issued to meet all this? Hewitt: That Is about all I can see for it, apart from money due to us. McArthur, was recalled by Dr. Louat. counsel for the companies. Dr. Louat: It has been suggested that in the transaction between Wynwood Investments and Sterling Investments you got in value for 60 British National Trust debentures something considerably exceeding the £60,000, and possibly up to £90,000? McArthur: That is quite untrue. Continuing, McArthur said he had subscribed £9OOO for shares in Wynwood Investments and £40,000 for de- .

bentures in, Wynwood’s, and had paid Wynwood’s £ll,OOO to buy for himself personally from Wynwood’s the ordinary assets which they were acquiring from Sterlings. These assets included the yacht. List of Inves'hnents. Asked to state why he had refused to give his list of investments.to the New Zealand Stock Exchange, Me Arthur said it would have given competitors an opportunity to compete' with his companies in the directions . disclosed. “If we were holding investments and not changing them there was no reason why they should not be disclosed, but we were changing investments continually and it was not wise to let competitors know. For instance, insurance companies have large lists of investments and do not publish them.” The commissioner said he thought it ought to be provided by law that if an investment trust did not publish its list of securities some responsible auditor nominated by the Government should have-access to its books and cer tify as to the suitability of the investments. Replying to Dr. Loiiat, McArthur said another reason for not publishing

the list of investments was that if the Stock Exchange knew of them it would do its best to block dealings In them. His experience was that stock exchanges here and in-New Zealand had boycotted investments in which they knew trusts bad been dealing. Boycott Alleged. The commissioner: Has -the Stock Exchange operated that way? McArthur: It has boycotted investments we endeavoured to sell. The commissioner: Does that mean that no stock exchange would have you as a client? McArthur: Yes. Replying to Dr. Louat. McArthur said he had transferred bis British National Trust debentures in exchange for credit at present appearing in Sterling’s books, which was to be trans ferred to the British National Trust. He had no desire to become a. creditor of Sterling’s and be placed ahead of the debenture-holders. He had never taken any. interest on his British National Trust or Sterling debentures. The commission adjourned till Monday.

SCOPE EXTENDED

12 Additional Companies

(Received September 21,10.10 p.m.) Sydney, September 21. The Executive Council hns decided to extend the scope of the Haise Rogers Commission to Include the following twelve additional companies:—New Zealand Redwood Forests, Limited; Selwyn Timber Company. Limited; Wynsel Timber Company, Limited; Beulah Land Company, Limited; Edgecombe Forests, Limited: Katoki Lands, Limited; Overana Land Company, Limited ; Modern Homes, Limited; Liberty Motors Corporation, Limited; Auckland Provincial Town Properties, Limited; New Zealand Freeholds and Buildings, Limited; and Freeholds, Limited.