LIVING ON CAPITAL

Evening Post, Volume CXVIII, Issue 57, 5 September 1934, Page 9

LIVING ON CAPITAL

ALCORN'S* ADMISSION

EXAMINATION CONTINUED

USE OP TRUST MONEYS

United Press Association —By Electric Telegraph— Copyright. SYDNEY, September 4. Before the Eoyal Commission inquiring into company matters, Mr. Justice Halse Rogers presiding as commissioner, assisted by Mr. Monahan, the witness C. G. Alcorn continued his evidence. Replying to Mr. Monalian, Alcorn said that he had had no income for income tax purposes for four or five years. The Commissioner: You got £485 for your services to the Investment Executive. Trust? Alcorn: Yes. The Commissioner': Is that income? Alcorn: Yes, I forgot that. Mr. Monalian: You got £45 or more for introducing Me Arthur to Mclnnes? Alcorn: Yes. Witness said ho had really been living on capital. Alcorn, continuing,' said that the British National Investment Trust began as the Stock Exchange Corporation of Now Zealand, Limited. It consisted of licensed sharebrokers who were not in the Stock Exchange, which opposed them. Witness had 250 twoshilling shares. He was not sure whether he or the trust paid for them. Mr. Monahan: The Investment Securities Association took over 9000 of the shares. Alcorn: Yes. Tluft is myself. Mr. Monalian: Who paid for them? Alcorn: I do not know. Mr. Monahan: At a meeting in February, 1933, additional shares were allotted to McArthur and yourself. You were allotted 44,598' shares. What had you done to deserve that? The Commissioner: He applied for them on condition that he paid for them. Mr. Monahan: What was the value of these shares at the time? Alcorn: Par value. Mr. Monahan: Did you, as acting chairman of directors,- regard yourself as having a duty to see that the company's property was not sold for less than its real value? Alcorn: Yes. Mr. Monahan: What aid you pay for the shares? Alcorn: Par value. BORROWING TO PAY. The Commissioner: How did you pay? • Alcorn: We borrowed from the Investment Executive Trust. Mr. Monahan: You took trust moneys and used them for speculation for private gain? Alcorn: No. A loan was Taised for £50,000 with the Investment Executive Trust. Mr. Monahan: You used trust moneys for private speculation. Alcorn: It was in accordance with the terms under which we got the money. The Commissioner: Is there any record that before the Commission began one penny of the profit you made as a private speculator was to go anywhere but into your own pocket? Alcorn: Yes. £95,000 was already in the hands of the British National Investment Trust, and £25,000 in the hands of the Investment Executive Trust. The Commissioner: Do you consider you were under any obligation to see the company got the value of the shares? Alcorn: No. The company was going into liquidation. Alcorn, further questioned in regard to the King Street building, said that on March 1 it was decided to lease this property to the British National Trust for 99 years at a yearly rental of £7500. Mr. Monahan interjected: That just suffices to pay interest on the . mortgage, also rates and taxes. Referring to the resignation of McArthur from the British National Investment Trust, Alcorn explained that his going into that company-was a mistake. There had been some trouble with the printing of names and a special rescinding resolution was necessary. DIRECTOR BY PRINTER'S ERROR. The Commissioner: So he became a director by mischance? That's the first time I have heard of where a man becomes a company director through a printer's error. Mr. Monahan interposed: It was very handy to fade out like that after piloting his shares through. Mr. Monahan: What assets were there to represent the £55,000 you got from the British National Trust .and which I suggest was public money paid out of debenture capital? Alcorn: The debentures were a floating charge. Mr. Monahan: Exactly, and that charge disappears when the debentures are paid off. There was nothing left. Alcorn: It was exactly the same as before the debentures were paid off. Mr. Monahan: Supposing the British National Investment Trust was placed in liquidation, where would the holders of preference shares stand? The Commissioner: I suppose they would have- the lease. We must assume a lease for £7500 a year has value.

Mr. Monahan, to Alcorn: "Whatever was left was sufficient to pay a dividend on the shares? Alcorn: Yes, at the rate of 7 per cent.

Alcorn later admitted that ho received 76,400 shares in the. flotation of the Southern British National Trust a fifth of ordinary shares —paid for by the sale of debentures in the British National Trust. Later he sold' his holding of tho Investment Executive Trust to that company to hand over the control of that trust to,the Southern British National Trust. That had happened by the time they all left New Zealand with the books and Tecords. Mr. Monahan: You had' not produced your books to the New Zealand Commission? Alcorn: No, definitely. Mr. Monahan: The bringing of the books here had no relation to this inquiry? Aleorn: None. Kef erring to Alcorn's personal drawings, Mr. Monahan asked whether he had had £2200 out of Sterling Investments since March. Alcorn: Yes, I had sold two debentures of which I had 16 or 17. I handed over the first debenture in Auckland. I think Glasson debited mo instead of crediting me with it. Dr. Louat informed the Commission that ho hoped to have the balancesheets of the Investment Executive Trust and Southern British National Trust ready by tomorrow. Mr. Monahan said that he required a list of securities of all companies as at June 30. Tho Commissioner directed that the securities register be brought to the Court tomorrow.

The hearing was adjourned until to morrow.