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BANK OF NEW ZEALAND., Issue 8047, 25 October 1889
BANK OF NEW ZEALAND.
The following is a mller report of what took place during the latter part of the meeting of shareholders at Auckland yesterday : Mr G. Buckley, late president of the bank, said before the question was put and the report was adopted ho decked to make a, iVw remarks. In the first place ho did not think the account for the half-year had been at allsatwiactory, nor thatadeqnate provision had been made for bad debts ; but he wished to remark upon that more generally, lie wished to take exception to the balanceBhuet as a whole as not being a fair and cor. rect statement of liabilities and assets of the bank, as there were losses and deficiencies of long standing which were not provided for, and therefore affected the amount of capital as stated. These he amount in the whole to at least L 300.000 by which sum in the meantime the capital of the bank was reduced or lost. He might add that, had the real state of the banks aifaira been more fully disclosed to the Shareholders' Committee than it was some fifteen months ago, they would have had no alternative but to report that in consequence of halt of the bank's capital being then lost it would have to be wound up under the 118tn clause of the deed of settlement He would go into details and explain as a 8 shortly as possible how such a large sum as L 300.000, in addition to UM».«g which was provided for by the Shareholders Committee, was now required. The accounts themselves which proved that could im submitted to a small committtee._ There were over 100 branches and agencies connected with the bank; and, in anticipation of the appointment of the Shareholders Committee, managers wore specially instructed by circular to prepare certain accounts of the bank's assets as on dlst March, 1888. la this form No. 1 was to contain all good sound accounts and business, giving names and amounts with remarks etc. The certificate attached to this was- "I certify that the foregoing are all good and recoverable, and represent sound business." That certificate was on every account to be signed by the manager, countersigned by the inspector, and the figures were certified by the accountant. No. 2 ana No. 3 were bad and doubtful accounts. No. 4 were accounts in course of liquidation. The full details and estimates and probable deficit or loss in each case were given with the following certificate :—" I certify that the foregoing is a true and correct list of operative and doubtful accounts at this branch, and that the probable out-turn has been arrived at after careful examination, aid is to the best of my knowledge and uelief a fair and trustworthy estimate. These were also signed by every manager, ountersigned by the inspector, and the inures were certified to by the acconntants. : Mr Murray: If you please, Mr Buckley, what insriector do you refer to? I was inspector at that time, and I did not sign Mr Buckley said he referred to different iospectors. The total amount resulted in a deficit of about L 750.000 or LBOO,OOO. The accounts turned out to be so unreliable and misleading, as well as the certificates being worthless to authenticate and support; several estimates, that the Committee would ineed to have taken at least L 250,0,00, or just .-■ne-third more from tho banks assets, i The accounts in No. 1 were not altogether uatisfactory, but of thw, of course, the Committee could only judge from personal knowledge of the parties. For instance, they noticed in one account that there was a considerable sum due by a well-known political leader who was not now in the colony, and that it was stated to be perfectly «ofld and sound, and so on. Of course it was not so. The bank never recovered anything, and never would. He wanted to »»ive that as an example of several accounts. The accounts, however, which he tad to refer to were chiefly those connected with No 2 and No. 3-the L 300.000. Those present would understand he referred more particularly to the liquidation of old accounts. Properties he left outside at present, as the value might increase in j time : but he from the first thought, as did I others of the Committee, that the Wailcato ptooerties in particular were moss objectionable, as being absurd in value, feince he had become better acquainted with them, he did not hesitate to say that they ought to be written down to one-third of their present value, and then things must improve v°ry greatly to enable them to realise at those reduced values. He would take some of the accounts he had referred to. About one of the first accounts, he must mention, which was taken in hand here was the account of Owen and Graham. Tho estimate of loss was stated to be L 20.000, and t>y had, perhaps, to be a little particular iu that account, because it was the first proposed on account of Mr P<ven having .been formerly & director of that bank. _ It was proposed that they should pay oatßioc creditors the sum of LU.OOO iu fall. He, for one, and other directors also, objected to that account strongly. An arrangement was subsequently made by which the estate, paid 15s in the £, and Mr Owensfriends contributed 5s in the I on all outside accounts, and the whole thing was made over to tho, bank. A hat was carried out on the part of Mr Owen That account was in liquidation. It had got to L 41.000, and in July last it -;ot up to L 57.000; and he was sure the bank would not get clear of this account without a loss of L62.C00. However, he put it down as an excess of L 40.000. Another account was that of Henderson and Macfarlane. The estimate from it was ;L20,000, and he put down L 20.000 more. The next one was A. Buckland, Auckland and Waikato. He pat the deficiency in excess at L 25000. The next he put down was Morrin and' Co., Limited ; and ho might say that in all his experience he never came across a more disgraceful business in his life than that of Morrin and Co., Limited, xhat business was valued to them at the Committee meeting at L40.C00. He would say that at the time it was not worth 40s. # But the Committee could not form an opinion till afterwards. The next item he came to was that of J. C. Firth. There was an excess of L 20.000, and he (Mr Buckley) said it would be L 25.000. The next he came to was G. Buehanan. The loss there was supposed to be L 6.000. It would be 108,000. There would be an excess of L 20.000. Thcro was a mortgage which was valued to the Committee at L 28.000, but which was only worth L 12.000. There were then two a-counts against Mr Thomas Russell. A deed connected with these did not come tinder the notice of the Committee until some time after they made their report, or ■else he thought they would have been compelled to have taken notice of it. However, there was ono item there of L 20.000, in ward to which it was said there was little prospect of recovery; and, knowing as he did that Mr Russell was living at Home at the rate of soiao L 6.000 or L 7.000 ayeax, he (Mr Buckley) eoctainly thought ho should be made to pay his debt to the bank, and in December last he gave instructions to the Home office that they should ask for the payment of this debt. But no sooner were instructions given than this deed was discovered, and it debarred the bank from making any demand for the L 20.000. An advance had been made in London and kept secret from the bank, and for no other purpose than to enable Mr Russell to speculate on the Stock Exchange and get a living there. That was just about what it was. Tho terms apon which the advance was mado were most extraordinary. It seemed that when the bank came to make the demand it was decided to give Mr Russell a month's notice. Mr Russell had only to say that he had lost all the money, or had only L 5.000 left and the bank would be bound to take that in full of all demands. However, he took it that they would lose upon that, tot and last, L 20.000. There was another account-P. Comisky-not provided for. There would be LIO.OOO lost there. Another loss of L 28,000 would be suffered upon the account of C. W. Turner, Canterbury, In Coster'saccountinCanterburytherewouldbe a loss there in excess of L 20.000. In rich Otago there was an excess of LIO.OOO. In the Invercargill business there was an excess of L 12.000. Then in Larkworthy*a account there would be an excess there of L10.6G0. He had given merely some of the larger items, but he was quite sure he was not far out in his estimate when he put it down in New Zealand at L 330.000, and in Australia at L3O 000 more. Then that made L 360.000. Jf they would add it all up they would find
that it amounted to L 354.000; so that he thought he made an underestimate when ho said that at the very least there was to be accounted for at the present moment some L.300,000 on those accounts which in the meantime was so much capital. The amendment which he would propose was this : "That consideration of the report and balance-sheet be adjourned to give the Board of Directors an opportunity of making further provision for bad and doubtful debts, the provision as per accounts now presented to the shareholders being inadequate to meet tho losses which have been sustained." Mr Reader Wood seconded the amendment.
Major George said he would not oppose the adjournment proposed by Mr Buckley. It was very easy for anybody to get up and make a statement like Mr Buckley had done. With regard to the figures, he was sure the directors had no intention to hide anything from tho shareholders. He believed that the Committee's report was an honest expression of opinion of the majority of the Committee, and he also thought that had the bank been left alone that opinion would have been borne out; but the bank had been discredited to such an extent that its very existence hadbeenimperilled—andby whom? Why, by Messrs Buckley and M'Lean, two of the men who made that report. If those gentlemen had subsequently found that the affairs of the bank were not working as they had anticipated, and had called the shareholders together and explained matters to them, they would have had no cause for complaint. Their action, however, was quite different, for while still remaiuing directors they commenced selling out their shares as fast as possible until they ceased to hold the necessary qualification for office, retaining only five and ten respectively. That might have been wise policy as far as money getting was concerned, but he most confidently asserted it was most dishonorable to outside shareholders whom they were supposed to represent. When Mr "Buckley commenced selling his own and Mr M'Lean's shares he moved at the Board that a transfer to the Sydney register should be authorised. At first the motion was carried, some members being strongly influenced in the interests of the place, but on time being given for reflection the motion was rescinded. Mr Buckley had seized two-fifths of the honorarium, and had used Mr M'Lean's resignation of the position of a director to threaten the Board. Mr J. Upton said every shareholder would have listened to the remarks of Mr Buckley with great regret. That v/ord was not severe enough for the feelings which, perhaps, animated the mind of every person in that room. He was present at the meeting six months ago when Mr Buckley occupied the position of president. No word of the statement which Mr Buckley now made was hinted at by him thpn. Every man who was acquainted with business matters must know that it was absolutely impossible that Mr Buckley should not have known something of what ho said he now knew. For his part he would say frankly that he did not believe that Mr Buckley's statement was correct.
Mr Boardman spoke in a similar strain. Mr John Murray regretted extremely that Mr Buckley had felt himself called on to make the statement he did, because the position had not been essentially altered since April last, when he mode bis speech from the president's chair, and ho failed to see why the explanation was oslled for. If it was not required, then it seemed to him less called for now, because the directors had reported to the shareholders that there was a considerable deficiency in the earlier stages of the realisation, and they had recommended that the control of the Board be transferred to London to a new and strong board. Mr Murray defended the bank staff from the assertions made by Mr Buckley, and said that as a preparation for the Committee's work snd to facilitate it lists of all the accounts and assets_ of the banks were prepared for them with the fullest explanation, and in case of landed properties' with valuations by independent experts. That there was no reason to anticipate unduly favorable reports was shown by the fact that in five out of seven cases managers had been changed. Mr Buckley was a prominent member of the Committee, and had every opportunity to become familiar with its affairs, and in the report had stated that the Committee had had sufficient data at its disposal. Mr Murray contended that Mr Buckley had made too much out of the deficiencies, and said if reasonable time was given to work out the gloho account they would right themselves. Some other speakers also condemned Mr Buckley, who in reply said he would meet the shareholders at any time aucl explain. Mr Buckley's amendment was lost, and the report and balance-sheet adopted. Mr John Murray and Mr T. Peacock were elected directors, and Messrs Buchanan, Boardman, and Scott auditors,
BANK OF NEW ZEALAND., Issue 8047, 25 October 1889
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