LIGHT ON METHODS

Evening Post, Volume CXVIII, Issue 50, 28 August 1934, Page 9

LIGHT ON METHODS

M CINNES TRUST GROUP

COMMISSIONER'S COMMENT

LIQUIDATOR'S STORY

United Tress Association —Ey Electric Telo-

graph—Copyright.

SYDNEY, August 27.

In the eourso of the inquiry by the Royal Commission under Mr. Justice liaise Rogers, assisted by Mr. Mouahau, into the activities of a number of trust: and other companies in New Zealand and Australia, V. Melnnes, broker for the Investment Executive Trnst, Ltd., of New Zealand, and the Southern British National Trust, was further questioned in reference- to correspondence on tho subject of the- Primary Producers' Bank, an Australian institution which had gone into liquidation. In regard to this Melnnes had admitted at an earlier' stage that a Mr. Stevens, former manager of the Primary Producers' Bank, who had since joined tho Melnnes staff, had propounded a scheme under which he, Melnnes, should buj the depositors' interests on behalf of the Southern British National Trust, Ltd.

Mr. Monahan read extracts from let t.ers from Queensland on this point, sug gesting that the idea was to purchase while the sharehpldcrs were still thinking they had to face a call and to instil fear into their minds so that tlioy would vote confirming- the sale by tho liquidators to the Trust.

Mr. Monahan: Why was there a suggestion that you should hasten before a dividend was paid?

Mc'lnncs: No dividend was paid,

Tho Commissioner: Of course not. But; floes not it convoy that unless you moved quickly shareholders would bo move likely to retain their holdings than if you worked to induce them to think that their holdings wove not so good as they ivcro when they bought them?

Melnnes: Yes,

Mr. Mouahan: You were anxious to got them to agree to a sale of their assets ?

Mclnnes: That was only a sugges> tioii. It was not acted upon.

Mr. Monahan: Have you dealt with the- assets of the bank" Mclnnes: No.

Mr. Monahan then quoted from a letter in which an agent of the company had related that he had induced a Mr, Heron to assign an £8 interest in tho Primary Producers' Bank, and had then gone to Mrs. Heron, who had a much larger sum—£27o—and by convincing her of her husband's assignment had induced her to assign her intorest without reference to her husband. He was then able to inform Heron that as hia sum was less than £10 it conld not bo accepted. Mr. Monahan: Do you regard that aa a gross fraud on Mrs. Heron? Mclnnes: No. The .Commissioner: Do you regard i* as honourable conduct? Mclnnes: No. Tho Commissioner: One of your officers reports it as though it was good business. Would you regard it as good business? Mclnnes did not ropty. A. H, Hill, secretary of Melnnes and Co., Ltd., and liquidator of V. B. Mclnnes (Australia) Limited, said that the capital subscribed in the latter company at tho time it wont into liquidation amounted to about £2500. Tho capital had gone into a number of investments at the timo of liquidation. | Mr. Monahan: What has been dono i to protect tho interests of shareholders? Hill: Some of them are directors in i the now company and are aware of tho facts. Mr. Monahan: Was a protest made by a Mr. Morrison? i Hill: Yes. Ho seemed to think payments wcro to bo made in cash immedij atoly. | Mr. Monahan: Did Morrison later on move that the option granted by Mclnnes (Australia) Limited be exercised1! I Hill: Ho spoke of tho fact -and demanded payment of £10,000 so ha could get his money back. Mr. Monahan: And no one seconded the motion?. Hill: No. Mr. Monahan: Why was tho option not exercised? , Hill: It was accepted. I overlooked recording it. The Commissioner: Why did you omit ontering it in the minutes? Hill: It was just negligence, I suppose. Mr. Monahan: You made the entry "no seconder*?

Hill: Yes. That was the position at tho meeting. Mr. Monahan: Which of your statements is true?

Hill: At a meeting on. June 6 it waa decided to exercise the option.

Mr. Monahan: That explanation will not help yon. Tho option did not expire until Juno 13. Witness informed tho Commissioner that the option had been exercised. It was put in order on August 14. Mr. Monahan: But it had lapsed then by effluxion of time. The Commissioner: You say you aro to prepare an option which has already been accepted? I Witness: I am acting under orders entirely.

The Commissioner: Whose orders?

Hill: The directors?

The Commissioner: Under whose orders are you preparing the option?

Hill: Under my own as liquidator

The Commissioner: Do you expect me to believe what you say?

Hill: Yes. The Commissioner: Thou I am afraid I do not-.

A. D. 0. Dunn said that he was branch manager for New South Wales for McInnes and Co. He had been in Queensland for ten months.

Mr. Monahan: There was a scheme to get in touch with elderly ladies and get! them to part with their deposits in tho | Primary Producers' Bank. Dunn: I don't know that there were many elderly ladies in tho bank. Tho depositors wore mostly men. Witness admitted writing a Totter in which he had recommended a man named Crowley for appointment, as he was "exceptionally well fitted for, approaching ladies." Mr. Monahan questioned Dunn concerning tho transactions with the Herons. Witness said it was an honest transaction. Ho had informed Heron that tho Southern British Trust would take ovor the deposit if it was more than £10, but if it was below that amount [ the trust probably would not do so. Ho did not know at the time what the exact amount was. After taking over Heron's deposit ho had gone- to MrsHeron and had shown her that her husband had transferred the deposit. That was definite evidence that the husband agreed with the proposal.

The Commission adjourned till Thursday.

The Commissioner requested oounsel for the investment companies to report by then as to the progress made in producing balance-sheets of the various companies as at a given date. Dr. Louat, for the British National Trust, Ltd., the British National Investment Trust, Ltd., and tho Sterling Investments Company of New Zealand, .-aid that he did not. think he -would, be ready to proceed thon. Tin: Commissioner requested dial the l.ial;iiu-f:-sliefts !«• liiuided to him when they were prep Hied.