THE COMPANY INQUIRY

Evening Star, Issue 21819, 7 September 1934, Page 12

THE COMPANY INQUIRY

SECOND INTERIM REPORT CHALLENGED STATEMENT DY MR HAMPSOH REDWOOD DEBENTURE HOLDERS PROTECTED [SrKLMj TO TH* ' AUCKLAND, September 6. The following statement has been received from Mr W. H. Sampson, who was mentioned in the second report of the Companies’ Investigation Commission:— , , , “ The Redwood Company debentureholders are in a better position than any afforestation, share, _bond,_ or de-benture-holders in New Zealand For ■ this they have to thank Mr M Arthur. When Mr F. F. Hockly and I joined the Redwood board in September, 1929, ' both shareholders and debenture-hold-ers were in a difficult position. Only 'part of the>' land was planted, the forest area was heavily mortgaged, and, while the company had large_ stocks of trees in its nurseries, it had no fund available. The stock then held belonged to the shareholders, not the de-benture-holders, but was, hypothecated for payment of 'interest.- vnWhw--r;>rg*' signed from the directorate ,m Marchi: 1931, the debenture-holders had twoacres for each £35 debenture, the land had been planted, the unencumbered titles thereto were vested in the new trustees, Messrs Dawson and Knight, and these gentlemen held sufficient trust funds for the debenture-holders to maintain the forests to maturity should the Redwood Company fail to carry out its obligations. Mr Hockly and I have always felt, and always will feel, proud of the small part we took in effecting this achievement, but for it Mr M‘Arthur was mainly responsible. The reconstruction during that period affected transactions with- the ; j&lwyn. Timber Company Ltd., the Beulah Land Company Ltd., the Edgecumbe Forests Ltd., and Kotahi Lands Ltd. (of which the Averana Land Company Ltd. was a shareholder). The whole of etich transactions were considered in detail by Messrs H. P. Richmond, A. H. Johnstone, K.C., and Y. R. Meredith. On March 25, 1931, Mr H. T. Clements, the largest New Zealand de-benture-holder, writing to the deben-ture-holders, said: ‘ I 'instructed; Mi Meredith, the Crown Solicitor of Auckland, to make the'fullest investigation into the whole position; on behalf of the debenture-holders, and to take whatever action he thought best on our behalf. Mr Meredith tells me that, after examining the new scheme min- ■ utely with Messrs A. H. Johnstone and H. P. Richmond (and I suppose everyone will admit that no combined opinion could carry greater weight), it was beyond argument that the proposals .were fair and reasonable, conferring no -unfair advantage on the Redwood Company nor on the Edgecumbe,Company.’ i : “It is impossible forthwith to deal ■■■with the mass of misstatements in- this second interim report of the Barton Commission, but this first; .'opportunity (should be taken ,of correcting the most (erroneous and damaging suggestions by jthe following statement of fact:— (1) Messrs W. L. "Wiseman and K. B. Cox, as trustees for the dehenture- ■ holders, throughout. ■ placed them- ; selves entirely in,the hands of Mr H. P. Richmond/ and-.'acted and voted ■ solely as he directed. (2) The ■ £IO,OOO mortgage of Ko- : tahi Lands Ltd. was referred to by Mr Clements in the same letter, as follows:—‘ In the amalgamation pro- ! posals the Edgecumbe Company were ; most fair, taking shares only for their land, while they came to; the help '■ of the Redwood Company last planj> ing season by raising £IO,OOO on their own property -and lending it to_ the Redwood Forests Ltd. to enable it to plant £15.000 worth of trees on our land.’ : “ I have made no secret of the Tact that I consider the Barton Commission hostile to Mr M'Arthur. Nevertheless, the transactions that have appealed to Messrs .H. P. Richmond, "A. H. John-, stone, K.C., and V. R. Meredith as fair and reasonable and conferring no undue advantage on anyone can stand any investigation. In conclusion I might (add that Mr Knight informed me this morn- , ing that he and his co-trustee : (Mr Dawson) were perfectly satisfied, and had never altered their view, that the" interests of the Redwood debentureholders had been conserved, throughout.” . NO “STRANGLEHOLD” GOVERNMENT INQUIRY PURELY IN PUBLIC INTEREST [Per TTwitsd Press Association.! ■ WELLINGTON, September 6. Speaking in the House of Representatives this afternoon, Mr J. N. Massey (Franklin) asked the Minister of Finance (Mr Coates) whether he had seen the circular letter from the chairman of the Executive Trust of New Zealand which suggested that the action .taken by the Government was to preclude the payment of interest to the debenture-holders in New Zealand, and ' whether he was in a position to make an announcement on the subject. "Mr Coates, replying, said:. “The statement has been made against me personally by the chairman of the . Investment Executive Trust of New Zealand that, yielding to alleged pressure brought to bear on me by the company s opponents, I have effected a ‘ stranglehold ’ on the trust by refusing to allow it to pay interest. to the debentureholders. In tbe first place, I have to state clearly that no pressure has been ■ brought to bear on me in connection with the investigation of the affairs of the Investment Executive Trust by any ?erson, or body of persons, whatsoever, n introducing the legislation I, and the Government 1 represent, were influenced solely by consideration of public interest in the light of what was disclosed in the first report of the commission. It is scarcely, necessary for me to say that neither directly nor indirectly did I influence the commissioners in the framing of their report, nor, Except that the existing official Treasury flies with the files of all other departments were made , available to the commission, did I or any person on my behalf or at . my instigation make any representations to the commission. In making its report the commission acted solely on its own initiative, and I woukl like to say I have every confidence in the personnel of that commission, and have no hesitation in expressing the view that it was actuated by consideration of the public welfare when it made its recommendations. “As regards the allegations that I Defused to allow: the Investment

Executive Trust of Now Zealand to pay interest _ to the debenture-holders, I gave this an emphatic denial. I have never refused, nor have I any power to refuse, to allow the company to pay interest to the debenture-holders. Apparently, the company is referring to section 6 of the Companies (Special Investigations) Act, 1934, which makes it an offence for any person whatever, whether , that .person, is a director or agent of a company or not, with intent to defeat the purposes of the Act, or with intent to delay or obstruct the carrying out of any investigation under the Act, to send or attempt to send out of New Zealand any hook, document, or record or property of any description belonging to any such company. I think members _ will appreciate the necessity. for this power, seeing that without it any company could freely transmit abroad the records, funds, and other property of the company, and thus -render the investigation a nullity. There is no general prohibition against all and every transfer of moneys or other property beyond New Zealand. An offence, whether committed by the company or its bank, consists in so transmitting such moneys or property with intent to defeat the purposes of the Act or to delay or obstruct the carrying -out of-any investigation. “ If this circular to debenture-holders is intended to enlist the sympathy and support of the debenture-holders resident in-'New Zealand I should imagine it will not attain its object. What New Zealand debenture-holders require is funds in New Zealand, and it is difficult to see how" the transfer of funds from New Zealand to some other place abroad can assist New Zealand debenture-hold-ers to'obtain the payment of any interest due to them. Moreover, the Act places no restriction and imposes no, penalty on the remittance of moneys within New Zealand.

“Regarding the series of suggested questions which members and constituents are invited by the chairman of the Investment Executive Trust of New Zealand to request their member to ask me, 1 desire at this stage simply to say it will be time enough for the officials of that company to interrogate the Government when they have satisfied the Royal Commissions now sitting in Australia and the inspectors appointed under the Act recently passed here that any injustice has been done to their company, and that the investigations , now being made here and in Australia .were not justified,”