TRUST COMPANIES

Evening Post, Volume CXVIII, Issue 56, 4 September 1934, Page 9

TRUST COMPANIES

THE SYDNEY INQUIRY

ALCORN AGAIN EXAMINED

SHARE TRANSACTIONS

United Press Association—By Electric Tele^

graph—Copyright.

SYDNEY, September 3,

In the course of the proceedings of the Bo}'al Commission, under Mr. Justice Halse Rogers, assisted by Mr. Monahan, which is inquiring into the activities of a number of trust and other companies, Robert Harold Gumming, coiiquiiltitor in the Primary Producers' Bank, described the relations of the liquidators with the Southern British National Trust and the overtures of McArthur and Mclnncs for the purchase of the bank's assets. A letter was read from tho accountant called in to investigate the position, repeating his assurance that he had not revealed any information relating to tho affairs of the bank. Tho Commissioner (to Mr. Cumming): There is no doubt in your mind that the giving away of information regarding the state of accounts of depositors in a bank to anybody outside the employ of the bank was a breach of trust? Mr. dimming: Yes. Mr. Monahan: If you had suspected that Mclnucs had been guilty of conduct of that sort you. would have cut him right off? Mr. Gumming: Certainly. NO CASH, BUT DEBTS OWING. C. G. Alcorn, recalled, told Mr. Monahan that the previous evidence lie had given concerning the purchase by Alcorn, Trower and Company of shares in tho Investment Executive Trust was not intentionally misleading. His company had no cash at the time of the purchase, but there were debts owing to it. He did not now stand by the statement- "that shares were bought in the ordinary way from McArthur for ea'sh. Dr. Louat, for the British National Trust, Ltd., the British National Investment Trust,-Ltd., and the Sterling Investments Company of New Zealand: In fairness to Alcorn, I must point out that he said that he had no personal recollection of the transaction. The Commissioner: Surely this is a transaction of which there should be some personal recollections? Alcorn: We had just been discussing transactions in share and debenture exchanges, and I regarded this as quite different and a cash transaction. The Commissioner: Yet this is far different from a cash transaction. Witness: Yes. But it was different from the other transactions. Dr. Louat informed the Commissioner that the balance-sheets for two of the lesser companies had been prepared, but tho remainder could not be completed before Wednesday. Alcorn, further questioned by Mr. Monahan, said that the shares in the Investment Executive Trust were valued at £1675. Mr. Monahan: You took the shares at first as security for a debt of £.500. What did you think their value was? Alcorn: I thought they were worth par value. Mr. Monahan: How long did you have them? Alcorn: About six months. Alcorn said that McArthur had reminded him during the luncheon adjournment that he had paid witness by cheque. Mr. Mouahan: Do you suggest the shares are still in Aleorn, Trower's name? Alcorn: I think so. There was an arrangement between Alcorn, Trower, and myself. Mr. Monahan: I take it you paid McArthur the difference between £500 and the share value? There was no reply. Mr. Monahan: On these figures you made a profit of £1100? Alcorn: Yes. Mr. Monahan: You say McArthur had given you a cheque for £500? Alcorn: It was paid, into the Investment Securities Association Limited, a New Zealand company. Mr. Monahan: What did they want with these securities? Alcorn: That company is really myself. My sister and myself are the only shareholders in Alcorn, Trower and Company. SELLING OF SHARES. In reply to further questions by Mr. Monahan, witness said that he did not transfer all the shares from Alcorn, Trower to himself. Ho left 500. It was not intended to sell them to anybody outside. They were sold subsequently to the Southern British National Trust. Mr. Monahan: How soon afterwards? More or less at tho same time? Alcorn: Yes. Mr. Monahan: At the same instant that you bought them? You sold them to the Southom British National Trust for £7000. Alcorn: Yes. Mr. Monahan: How did you como to get about £7000 for shares worth £16,000 (? £1600)?' Docs it appear honest? Alcorn: Quite honest. To the Commissioner, Alcorn said: We sold them to tho Southern British National Trust 'because we were bringing about an amalgamation. It was for our mutual benefit. No one else could have bought them on the market. Witness was questioned about the acquisition by Sterling Investments of British National Trust debentures. He said that he adhered to the evidence lie had previously given. Tho Commissioner: Do you know why you were given a cheque for £50,000 on Hewitt? Who decided to buy British National Trust debentures? Aleorn: I discussed it with Hewitt. I think I was told by Glasson we owed the money. The Commissioner: Is it a fact that in this matter you had no personal discretion? Alcorn: Yes. We were in the hands of the trust. Tho Commissioner: You incau McArthur? Alcorn: Yes. The Commissioner: You did not know much about this transaction? Alcorn: Oh, yes. Sterling Investments owed tho British National Trust a large sum of money for debentures they had delivered to cither Sterling Investments or the Investment Executive Trust. Mr. Monahan: Was it decided to buy out people who invested in thfi Investment Executive Trust, and your company was made the tool to carry on the transaction'! Alcorn: No. Most of the Investment Executiva Trust debentures had been bought on the New Zealand Stock Exchange. They were trying to discredit them and Sterling Investments was to buy them at the low market value. Mr. Monahan: Do you remember thp case of Mrs. Smith, to whom £10,000 was paid? Alcorn: Yen. The case was notoriCWMr. Monahan: On April 19 £20.000 worth of shares of Sterling Investments were held by the Securities Invest-

merits Association, that is, by yourself. You transferred these shares to the British National Trust. Did you get anything for them? Alcorn: I am to get something. The Commissioner: Did you pay £20,000 for tlio shares. Alcorn: They were paid up to 2s in the £. Mr. Monahan: "Why should you and McArthur divide up in the Investment Executive Trust, and the Southern British National Trust? Did you put a shilling in? PAYMENT TOE IDEAS. Alcorn: I got a fifth share for assisting McArthur with ideas. There is no other investment trust of this kind in the world. Mr. Monahan: The difference between English trusts and this trust is that English trusts' debentures are backed by real capital while your trust was backed by nothing. When asked why, according to the books produced in the Court, £90,000 which was owing to the British National Trust, at the time of tlio August transfer was not shown in tlio July balancesheet as a liability, Alcorn said that the balance-sheet was prepared by Hewitt and Glasson, and he signed it assuming it to be correct. Mr. Monahan: But was it not. hopelessly incorrect to the tune of £50,000? Alcorn: It would appear so, although I understood it to be perfectly correct at that time. . The Commissioner: Do you really understand books? Alcorn: No. AVhile being questioned about Farms and Farmlets, Ltd., Alcorn said that certain parties in New Zealand started a public investors' journal and dug up things which were twisted about in a wny detrimental to the interest of the trust. The Commissioner: What have you to fear if everything is in order? Alcorn: The matter was misconstrued by interested parties. "Akcrn was then examined about the purchase of the former "Daily Telegraph"' building in King Street, Sydney. He said that McArthur and ho himself specially benefited by the enhanced value ,of that building. The Commissioner: How much, did you get? Alcorn: A fifth of what McArthur received. I think between, us we got £105,000.

How much did

The hearing was adjourned till to morrow.