FARROW'S BANK

Evening Post, Volume CI, Issue 18, 21 January 1921, Page 7

FARROW'S BANK

OPENING OF THE TRIAL

"COOKING" THE BALANCE-SHEET

REMARKABLE DISCLOSURES.

(UNITED PEIB3 ASSOCIATION.—COPIRMHT.)

(Received January 21, 9.30 a.m.)

LONDON, 19th January.

There were astounding disclosures at the Police Court prosecution of the officials of Farrow's Bank at the Guildhall. Sir R. D. ftTuir, K.C., in his opening statement, said that in May, 1920, the New York firm, Norton, Read, and Company, with a London house, agreed to acquire the controlling interest in the bank by providing £500,000, of which £400,000 was .to bo placed to the re--servo account, and £100,000 was for the compensation of Sir Thomas Farrow and other directors who! would retire. Mr. Read, the London partner of the Norton, Read Company, was dissatisfied with his examination of the Jwoks, some of which were, withheld, and" called in chartered accountants in November. They eventually informed him that the bank was hopelessly insolvent, whereupon ' tho agreement was cancelled. Counsel suggested that the idea of Farrow and Crotch was that when the crash came, Read, being enmeshed in this fraudulent business, would shoulder the financial burden' to save his honour and credit, and prevent exposure. Crotch, who was the leading &pirit of the concern, a.pparently owed the bank between £100,000 and £200,000, of which £35,000 stood in the name of a certain lady. Counsel said that with the exception of the firat portion of 1908, the band had done nothing but make losses, ranging from £11.000 in 1909 to £203,000 in 1920. and'aggregating £1,107,000., quite apart from the loss by the depreciation of securities, which must be .considerable. All this time the bank was paying interest to depositors and shareholders. This must 1/a.ve been paid out of capital, and the losses concealed by fictitious values of book assets. One asget which-appeared; £780,000 due from a cement company, was wholly fictitious.' The reserve fund was also wholly fictitious. A cupboard broken open in Halt's room icvenled papers ' showing how the fradulent balance-sheets were prepared for each year. A document was prepared showing the true position of affaire, and thus Hart "cooked" the balance-sheet.