TRUST COMPANY

Evening Post, Volume CXXII, Issue 31, 5 August 1936, Page 16

TRUST COMPANY

SALE OF DEBENTURES

INVESTORS' EVIDENCE

THE MC ARTHUR TRIAL

Details, of debentures which they said they had taken up iti the Investment Executive Trust o& New Zealand, Ltd., as a result of information they had been given and from what they had read in literature issued by the company were, given by two Wellingon residents in the Supreme Court yesterday afternoon at the continuation of the trial of John "William Shaw McArthur. McArthur is facing six charges relating to the issue of allegedly false prospectuses and reports in respect of the Investment Executive Trust of New Zealand, Ltd. The trial is taking place before the Acting Chief Justice (Sir John Reed) and a jury. Mr.'.V. R.Meredith and Mr. C. Evans- ■ Scott are conducting the prosecution, | and Mr. H. F. O'Leary, X..C, with him Mr. K. E. Tripe, is appearing for the I defence, which has the assistance of1 Dr. F. Louvat, a Sydney barrister, who appeared for* McArthur in the Royal Commission1 and' extradition proceed-1 ings in Sydney. Cross-examined by Mr. O'Leary after ''The Post" had gone to press, Edwin Redstone, a' retired insurance agents of Wellington, said that he attended; a meeting of debenture holders in April, 1936, to discuss inter dlia the sale by the.Public Trustee of certain assets in the liquidation. He took no part in the. discussion but many others of the 60 or 70 present did.. Oi! all the debenture holders he knew he and a Mr. Dowdy were the two to give evidence against McArthur. He was recommended by his solicitor to give his information to Mr. Evans-Scott. The great concern of the debenture holders was naturally to get; something out of the assets. He knew that McArthur | had formed another Australian company to try and salvage the New Zea-, land assets. He did not know, that up to , date at least one-third of the debenture holders had dealt with McArthur. | The witness did not agree that it was | evident at the debenture holders' meeting that great confidence was expressed in .McArthur. Great complaint was expressed at the action of the Publis Trustee in selling some of the assets. ' ' A QUESTION OF RELEVANCE "Is this relevant?" asked the witness, to which Mr. O'Leary replied that'it was not for him to ask. His Honour interrupted to point out that Mr. O'Leary had questioned the relevance of some of the Crown's evidence. His. Honour would not stop counsel, but he ; too, asked whether this aspect of the ■ cross-examination was relevant? Mr. O'Leary replied with the submission that in cross-examination there was much . more latitude than in evidence-in-chief. , Harry Edwin Dowdy, of Wellington, public accountant, said that having read certain documents relating to the company, he took up debentures in the Investment Executive Trust. What appealed to him in the documents, were expert management and the | spreading of risk. Later he was ap-. pointed one of the selling agents of Mclnnes and Co., Auckland, brokers for: the investment Executive Trust,. and he was. supplied with pamphlets ] and other documents for propaganda' purposes. He was supplied with the | names of companies in which it was. stated the Investment Executive Trust I had investments. Neither the Sterling' Co. nor'any of the companies associated with the ■ Investment Executive I Trust were mentioned in the list. He made use of the literature, the chief feature of which* was the 'spreading of risk both geographically and industrially,' to attract investors. Early in October, 1933, witness continued, he went to Auckland and told McArthur that it was rumoured in Wellington that the Investment Executive Trust had:. invested by way oi debentures in some of the subsidiary companies. The sum of £30,1)00, witness told McArthur; had been mentioned as the amount. Witness named as the. subsidiary companies Redwood Forests, Selwyn Timber Co., and Wynsel Timber. Co., and asked McArthur if what was rumoured was true. McArthur said "No,", and also denied that there were investments in these companies by way of shares or other holdings. Witness insisted on getting a. statement in writing to this effect, : and this was given him. , Had witness known that approximately onethird 61 the funds subscribed by the public had been invested in subsidiary companies he would not have taken debentures in the Investment Executive Trust or have taken a position as one of the company's' selling agents: • Replying to Mr. O'Leary witness said he was an investment .adviser. He thought he had a 'fair knowledge of shares. Since the time he took up the position as one of the selling agents tie had acquired'a gobddeal more experience. ' ; In reply to further' questions witness said he had been impressed by the list af British companies in which it was stated that the Investment Executive Trust had investments. It was true the company had investments in these British' companies but only to a minor extent. He said he also took notice of the assets shown to be; ppssesesd by these British companies. "Does anybody in New. Zealand know that there is £74,000,000 in the world?" asked Mr. O'Leary, referring to this latter point. His Honour: We owe more than that, j (Laughter.) ' Witness agreed that of the paid-up capital of £15,000,000 of one of these companies any individual debenture holder would have only an infinitesimal share. AN AUSTRALIAN COMPANY. Re-examined by Mr. Meredith, Dowdy said that a man had approached him with a view to buying up his Investment Executive Trust debentures tor a company started by McArthur in Queensland, but heMiad not sold his debentures. He had been offered shares in the new company but no cash for them. Arthur Eric John Anderson, an accountant in the Wellington Public Trust Office, said that he had done the accountancy work in the liquidation of certain companies, which included the Investment Executive Trust and other associated companies. He produced and explained in detail a statement of particulars relative to the charges prepared by him from the books of the Investment Executive Trust. The Court adjourned until today, McArthur being allowed bajl.