THE COLONIAL BANK.

Evening Post, Volume LXX, Issue 49, 26 August 1905, Page 5

THE COLONIAL BANK.

REQUEST FOR INVESTIGATION. THE PREMIER OPPOSES IT. •The subject of the Colonial Bank occupied the attention of the House of Representatives for the greater part of yesterday afternoon. Some time ago certain shareholders of tha Colonial Bank petitioned tho House that an enquiry should be made into the liquidation of the Bank, which showed that only £110,000 'had been Tealised, although the last balance-sheet of the Bank tho ao&ets were stated to 'be worth £465)000. Yesterday the Petitions Committee recommended that tha investigation asked for be made. ' "" Mr.i HeTdman pointed out -that when the Colonial. Bank went into liquidation it had a capital of £400,090 and a receive fund oi] £65,000, tout as the result of the liquidation, the shareholders only Teceivd a sum of £110,000. The chief object of itbs petition was to have a searching enquiry set on foot in order i-o ascertain where the balance of £355,000 had disappeared to. They had a right to assume one of -two things — either that .the balance-sheet which was published by the Directors of the Colonial Bank prior to the liquidation was untrue a/nd misleading, or "that the liquidators in winding up -the institution had been guilty of gross und culpa'oie negligence. In the inteTC* 1-*1 -* of public morality, he contended that ifc was clearly the duty of the Government to grant a searching enquiry into .the whole matteT. Shares had been purchased toy the public on the strength of the. last balance-sheet issued by the Colonial Bank, and the shareholders 'having exhausted all their legal Temedie.s now came to tho House for thfe purpose of securing an enquiry. The Premier 6aid that Mr. Herdman ought to 'have stated what occurred between the Colonial Bank and the Bank of New Zealand, and that would have shown tho House how the £400,000 disappeared. He did not .hesitate to cay that a good deal of ihe capital of the Colonial Bank disappeared in that, arrangement, which favoured .the Bank of New Zealand, and was a serious loss t>o •the Colonial Bank shareholders. He went further, and said 'that if, in respect to a. large number of the accounts, the Directors of the Bank of New-Zea-land had been dealing with their own capital they would 'have dealt with it very differently. The balance-sheet of the Colonial Bank was 6ound at the time it was made, .but when the arrangement was made with the Bank of New Zealand the conditions had altered. Tho action of the House in regard to the Bank of New Zealand Sad depreciated 'Hie stock and assets of the Colonial Bank. Tn fact, it went without eaying that had it not been for the course taken in respect to the Bank of New Zealand, .there would not have been a necessity for the Colonial Bank' taking tho course it had to follow. The Government would look carefully into the matter, hut after the step 6 that had been taken what, he asked, could the Government do? The Court had dissolved the Bank, and the only thing feft was .the records, which could not resuscitate the Bank, and the Government was powoTkss. He believed it would be a waste of dime to go through the accounts unless something more could be done. It lay with the petitioners to show what could be done, and to give grounds for an investigation. They had not done so. No attempt had bean made •to prove that the Bank should have been dissolved. The Court had done its duty faithfully, and in his opinion tho capital disappeared when the agreement •was made between the Bank of New Zealand and the Colonial Bank. If any further representations were made they would be considered by the Government, but seeing .that the subject had been dealt with by the Supreme Court he did not think there was any need for enquiry. Mr. Taylor rsaid the member for Ohinemur: had frequently asked for certain documents to be la,id on the table, and declared that if they were produced certain officials would immediately , be liable to indictment for misconduct. But he could' not get those .papers. Why, he asked, should they not have the investigation! There was an enormous amount of money concerned — a deficiency of £350,000, and they wanted to know who had had ilhat money. If Mr. W. Wateon had been examined foy a Committee of tho 'House they would have heard, where the money had gone to. But he was not allowed to give evidence, and the one chance of learning the secret history of the disappearance of this money went, from them on the. night when, under the. pressure of 'Mr. Watson's circular, the amount of his retiring allowance, was raised to practically what he demanded ■ac -he price of his silence. And .now, in a few weeks, tho books would ho destroyed, and every chance of solving tho mystery would have -gone. It was quite conceivable that if the truth could be elicited the shareholders would have an action against somebody, and perhapa hays soma of the money restored to them. Was it .to be said that Parliament had no concern for commercial morality? It was noi intended that the details should ever be made public. / Mr. Wilford said they wanted to know whether the £350,000 had been lost by the directors or by the liquidators. The balance-sheet showing assets of £465,000 had been certified by the Supreme Court as being correct, but the liquidators had x been grossly negligent in dealing with the assets. There was, for instance, an estate at Foxton, for which an offer of £9000 was made, and the liquidators sold it for £6000. In other cases ■' £23,000 was knocked off one account and £22,000 off another account. That \ras the way the money went. Mr. Duthie moved to add to the report "That meanwhile tho House .desires the Government to take steps to prevent tho destruction of tho Bank's books and papers, with a- view to having a thorough investigation and enquiry into the liquidation of the Bnnk before Ist November next." Dealing with the subject, Mr. Duthie said the Government nud the Parliament were parties to the agreement between the two banks, and the colony was therefore responsible for seeing that full justice was done. The subject was "talked out," tho Premier and the Minister for Public Works taking, between them, an hour of the time available, and the result is that tho question was not submitted to v vote of the House. THE QUESTION BEFORE THE COUNCIL. The matter was also discussed at considerably length by the Council, on a motion by tho Hon. J. E. Jenkinson that the petition be referred to the Government for their consideration, in accordance with the recommendation contained in the report of the Petitions Committee. In the course ot his speech, Mr. Jenkinson said that the manner of the liquidation demanded enquiry. Ho spoke of the justifiable suspicions of "the Bank's shareholders, and said that while ho did not suggest a criminal act on the part o{ the liquidators, yet a great sum of moucy had been frittered away somehow. The liquidators should justify their conduct. The lion. G. Jones moved as an amendment that the report of the Committee be referred back for more mature consideration. He declared jthat there had been a •change of altitude on the part

of the Committee since 1903, nnd,'" i^ attributing this to the Government's su-. pineness, he contended that the Committee was surrendering its independence of thought. He would not say that wrong had been done, but a large'- Bum of money had disappeared in a very funny wny. A 6 guardians of public morality the Government should set up .-a Com* mission of Enquiry. x / The nmendment was seconded by. th«| Hon. J. Rigg. The Attorney-General, in opposing ths amendment, said that ten years had expired since the winding-up, and thft shareholders had had ample opportunity of finding what the position of the Bank was. He did not think it reasonable that they should now come and wqnt the colony to undertake a very expensive commission on the subject. It had been shown that £125,000 had been lost in taking over accounts. This being so,why should the colony undertake an expensive enquiry? What good would bo done? The liquidation had lasted sis yeais, and in thot period any share- -■ holder was competent to ask for and v obtain any information he required. Hon. G. Jones : They could not get. it. Tjie Attorney-General insisted that they, could, under the Company Law and qther laws. He asked again what good pur-i • pose could bo served by appointing a. commission? Hon. J. Rigg : The documents will be destroyed in November. "■ The Attorney-General: Let them ap--ply to the Court now. The liquidators were responsible to the shareholders, and the shareholders were asking an unreasonable thing. i Hon. G. Jones : You agreed to it lft&t' year. The Attorney-General : That' doesn't matter. ' The Hon. G. M'Lean said it was absurd to say there had been no investigation, as the whole matter had been investigated by the Supreme Court.What was the good of doing any more? After further debate tho amendment was lost by -23 votes to 6, and the motion was agreed to.