COMPANY INQUIRY

Evening Post, Volume CXVIII, Issue 98, 23 October 1934, Page 8

COMPANY INQUIRY

MR. MONAHAN'S CHARGES

PART PLAYED BY M CARTHUR

"NEW ZEALAND SYSTEM"

United I'ress Association—Dy Electric Tele

graph—Copyright.

SYDNEY, October 21,

When tho Royal Commission inquiring into company affairs resumed today, Mr. Monahan, K.C., who is assisting tho Commissioner, Mr. Justice Halse Rogers, intimated that he had decided to address the Commission first and formulate charges to which counsel would havo the opportunity of replying. His charges related to five companies— (he Investment Executive Trust, the Southern British National Trust, the British National Trust, the British National Investment Trust, and Sterling Investment, Ltd. The charges are:— 1. That the establishment of the main companies was devised by McArthur and carried out with the aid of his satellites to salvago his personal assets, which were in jeopardy, and to enrich himself by the manipulation of capital subscribed by the public for trust investment. . 2. That the methods McArthur adopted were invariably crooked and in many instances fraudulent and dishonest. 3. That the methods he adopted constitute a gross abuse of the Companies Acts. 4. That the balance-sheets issued and filed were known to be false and misleading. 5. That no books or records were kept which would' have enabled a skilled accountant or auditor to form an opinion in regard to tho affairs of tho companies. G. That the system of getting dobenturo capital from tho public was by ruthless exploitation methods and in somo instances had been declared criminally illegal under the recent British companies legislation. 7. That out of a total debenture capital of £648,000 subscribed by tho public £285,000 has been spent and is not represented by tangible assets.

8. That the present control of the companies constitutes a grave menace to tho safety of the remaining debenture capital.

9. That all directors and officers of companies who were called before the Commission were actuated by a desire to stifle tho truth, and were guilty of gross prevarication, if not actual false swearing.

Mr. Monahan addressed tho Commission along the lines of his charges, tracing at length the history of the companies.

The Commissioner said ho had been struck during the course of the. Commission by tho dangers in any system of putting off debentures on the public. An enormous amount of debenture capital had been subscribed by persons who had not had the slightest control of these companies. This business of selling debentures was really a new idea, and ho might call it "ihe New Zealand system." However, New Zealand Redwood Forests seems to be a genuine commercial company.

Mr. Monahan: I think-so, too, but when it fell on evil days it formed the basis of subsequent devious transactions.

The Commissioner announced that he had received a letter from New Zealand referring to some eommmittees of debenture holders in the Investment Executive Trust which wore apparently being formed. Apparently debenture holders in New Zealand were being circularised and asked to vote for certain people in different centres to represent their interests. "I think this is a little premature," added the Commissioner. "I shall hand the letters and papers to tho Crown to show to counsel."