PERSONAL FACTOR

Evening Post, Volume CXVIII, Issue 34, 9 August 1934, Page 8

PERSONAL FACTOR

MR. J. W. S. M°ARTHUR

CONTROL OF THE TRUSTS

The Commission proceeds to state that Mr. J. W. S. Me Arthur cdjitrols tho four main. investment • trusts of . the. group-i—two in Now Zealand and -two in New South.Wales. ■: ;, .. • .-.;■■;,

"In the year 1930/' the report states,

"ho was financially embarrassed. He was interested iv and controlled a group of timber and afforestation and allied companies, as interaeshed'in proprietorship and transactions as tho group of investment trust companies described herein. He owed £3000 to tho State Forestry Department; legal proceedings were instituted, and judgment was obtained against 'him; he wrote admitting inability to pay, and suggested paying off £350 per annum out of his director's fees'. A bankruptcy notice was issued against him. In July, 1932, at ■ tho latest moment possible if bankruptcy wore'to be averted, he paid tho whole amount in cash. (Vido flies of Stato Forestry Department and of thp Crown Solicitor at Auckland). . . ,

"The foregoing pagos havo revealed the extent to which Mr. J. W. S. McArthur is involved in the control and operations of the Investment Executive Trust of New Zealand, Ltd., and its affiliates. . . . -

"In this connection, it is, in our opinion, an important, disquieting fact, that many of the liquid investments of the Investment Executive Trust of New Zealand, Ltd., are held either in the namo of J. W. S. MeArthur personally, or in the namo of venders from whom McArthur holds a power of attorney. This,power of attorney is full and unqualified, and permits McArthur to effect transfers of the shares and investments of such venders, when and to whom he pleases.

" It. is true that holding companies like the Investment Executive Trust of New Zealand, Ltd., aro compelled to appoint a trustee or trustees to hold iv their own names shares, stock, and other forms of security issued by corpora; tions which will not place the names of other corporations on their share lodgers or stock and debenture rogisters. A recognised safeguard is to appoint at least two directors or officers of known integrity to .act as trustees, and to adopt, for safe custody of the scrips checks devised and required by. an experienced auditor. ...

"No effective audit of the companies controlled by Mr. J. W. S. McArthur and his associates is possible, unless it is a comprehensive and contemporaneous audit of all these companies made at a common date," ■'. ■