EXECUTIVE TRUST

Evening Post, Volume CXVIII, Issue 36, 11 August 1934, Page 9

EXECUTIVE TRUST

SYDNEY COMMISSION

J. W. S. 1V1 CARTHUR'S EVIDENCE

NATURE OF BUSINESS

United Prcs3 Association—By Electrlo Tele-j erapli—Copyright. SYDNEY, August 10. J. W. S. McArthur, continuing his' evidence before tho Sy<Jliey Commission, inquiring into company ms-Uors, sa-ial that tho business of the Investment Executive Trust of New Zealand was to mako purchasing investments from capital obtained from debenture-holders and sell as opportunity offered and tako the income. Tho sharo capital was £.100,000. Ho was paid in cash for his services in compiling records. He us6d that cash to purchase, shares in the company. Twenty-six thousand pounds' worth of 2s shares were taken up. He took most of them. Mr. Justice Halse: What was your quota? McArthur:. About four-fifths. Mr. Monahan, counsel assisting the .Royal Commissioner: What investments did you hand over for tho £20,000? McArthur: Debentures in tho British National Trust. Mr. Monahan: Was that,all tho actual investments put in? McArthur: There were £7000 worth of preference shares subscribed by tho public, and that was all the liquid capital. ' • • Mr. Monahan: To what extent woredebentures taken up by tho public? McArthur: A ' little more than £400,000. Tho Judge: I take it these two companies do exactly tho same business? McArthur: Yes. They both have tho same function. The capital of the Southern British National Trust was subscribed by myself ; and Alcorn. Tho Judge: What was tho necessity for the two companies? McArthur: Thero wero advantages in registering a company in Australia, also a psychological advantage. Australians prefer their own companies. NEW SOOTH WALES CONTEOI,. McArthur, replying to Mr. Monahan, said that tho New Zealand company was controlled by tho New South Wales company, and practically tho whole £20,000 had been transferred. It had not been thought necessary to advise debenture holders that shares had been, transferred. > The Judge: What was tho object of the transfer? MeAi'thur: To make money for tho debenture holders. Me Arthur went on to say that the Now,., Zealand company had investments in more than 200 companies in various parts of tho world. He held 'about 200,000 2s shares in the British National Investment Trust when the transfer of the "Daily Telegraph" building was effected. The shares were exchanged for investments. The face value of his holdings in three companies in tho past three years wa3 about £90,000. McArt.hnr added that as director of Wynwood Investments, Ltd., he hold practically the whole of the 9900 £1 shares. The money for the purchase of the Wynwood properties he thought came from the Sterling Investments Company.

Explaining that he bccamo associated with the South British National Trust eighteen months aeo. MeArthur said that about £95.000 worth of the 5? shares issued were paid for by an exchange of British National Trust debentures—the Canberra company—but not monpy put up by the public. THE ONLY REAL PROPERTY. Mr. Monahan: The only real property you havo is in King Street? MeArthur: Yes. Its book value is £450,000. ; * At a later stage MeArthur said that £200,000 cash was paid to the Canberra company by the public, and this was mostly spent on alterations to the former "Daily ■Telegraph. building in King Street, which cost-£IOO,OOO. The Canberra company, in return, received debentures. Mr. Monahan: How did you got these 9900 shares? MeArthur: I subscribed for them.-* The Judge:, Then it is a one-man company. MeArthur: Yes. ... Victor B. Mclnnes said that ho came from New Zealand and formed V. 8.1 McTnnes1 (Australia), Ltd. There were seven to ten debenture holders in the company. Ho so,ld shares for the various companies on a commission basis. Special salaried officers carried out a. definite soiling, campaign. Approximately 90 per ieent. wcrou sold in the cities in New Zealand. Ho was still disposing of shares both at Sydney andCanberra. OFFICES VISITED. Prior to the adjournment at the end of the day, Lewis Baker, an officer of the Auditor-General's Department, said that he had visited the companies' offices and had made a list of eight pages ■of securities handed to him. Theso were mostly share certificates. MeArthur, as well as Glasson, were recalled and informed by the Commissioner. They said they had commitments to meet within a fortnight, and therefore desired to havo access to the books. Glasson said that it was intended to sell about £16,000 worth of assets.'

The Commissioner, in announcing an adjournment until Monday week, said that a digest of the audit officers' reports resulting from their investigations would *be available to legal representatives by next sitting. Meanwhile, the Government had sanctioned the appointment of three officers and three typists to expedite the work. He gave no ruling in regard to the application for access to books by tho companies' directors.

The Commission adjourned to August 20. ; '