COMPANY INQUIRY

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

COMPANY INQUIRY

NEW SDUTH WALES COMMISSION FURTHER EVIDENCE HEARD Press Association —By Telegraph—Copyright SYDNEY, September 6. The Royal Commission which is inquiring into the activities of certain trust companies continued its sitting. Mr Monahan (Assistant Commissioner) : Who arranged the business with the Primary Producers’ Bank? M'lnnes; Originally I received word while I (vas in New Zealand from our Melbourne manager (Mr Foster). Mr Monahan: You had no reason to believe that any of your agents were dishonest when you appointed them to any position in your company ? M'lnnes: No. Mr Monahan: Did you have information before you appointed one of these people that he had been convicted five times ? MTnrics: I had received rumours. Mr Monahan: You received a communication from your right-hand man, Cayley Alexander, and you call that a rumour? MTnncs; I found to my cost later it was true. The Commissioner: Did you know it was a breach of trust for a bank official to disclose the business to you? M'lnnes: No. The Commissioner: You were in a kind of Arcadian simplicity. Did you know your officers were paying anything for it? M'lnnes: No. I would not countenance such a thing. Mr Monahan then read a letter from Foster to M'lnnes in which, Mr Monahan said, Foster had related how he had taken particulars personally from the records of the bank relating to certain depositors, and that results had been achieved not only at the expense of labour and time, but also' by the distribution of “ palm oil.” Mr Monahan asked MTnnes what he knew about that. M'lnnes said he did not believe those methods were adopted. The Commissioner: How long afterwards did you employ Foster? MTnnes: Four or five months. The Commissioner: You did not think he was using “ palm oil ” ? M'lnnes: No. The Commissioner: 'You thought he was a liar? M'lnnes; Yes. (Laughter.) Mr Monahan: Within twelve days of receiving tl letter you promoted Foster to sales director, at a salary of £ls a week, although he had just admitted he had obtained information in direct opposition to advice to the contrary from the bank’s solicitor. The Commissioner; Mr M'lnnes is putting himself forward as a simple, trusting soul. Is that the position—simple trust? Witness did not reply. The Commissioner: Do you expect to be regarded as a truthful witness? M'lnnes: Yes. - The Commissioner: Do you regard mo as being simple in certain matters? M'lnnes did not reply. Mr Monahan asked M'lnnes what had opened his eyes about Foster, and M'lnnes replied that Foster’s cheques had not been met. Mr Monahan: Did j’ou believe that rumour? M'lnnes: I had proof and immediately recalled Foster. Mr Monahan: Then you found Foster had got £SOO of yours. Did you regard that as justice? M'lnnes: I was very sorry about it. (Laughter.) Mr Monahan; You were notified that Duni]., the sales manager in Brisbane, was receiving the bank’s list also? M'lnnes: Yes. Mr Monahan: Dunn suggested that some of the bank’s officers should be taken for a holiday by you? M'lnnes: Yes. Mr Monahan: They were to be taken away among the bank’s depositors. M'lnnes: Ido not know. Mr Monahan then questioned M'lnnes about his discussions with Gumming. Mr Monahan: Would you have told him about “ palm oil ’’ being distributed to one of the officers of liis bank? M'lnnes’: No, I did not tell him. The Commissioner: Even now I take it you do not regard it as a betrayal of trust ? M'lnnes: On the face of it, yes. The Commissioner: What do you mean by “On the face of it?” It either was or was not. Do you regard it as a breach of trust? M'lnnes: Yes. In reply to further questions M'lnnes said his organisation was trying to build up an honourable organisation. The Commissioner: By the methods we have heard about here to-day? M'lnnes did not reply. _ , Stanley Grange was examined. He said he was a sharebroker, of Auckland, and had beep called to Sydney by M‘Arthur to discuss business arrangements with either the X or the Y company. He understood that Wynwood Investments drew a cheque for £60,000 in February to take over some of M'Arthur’s securities._ Mr Monahan: You signed the cheque. What was the transaction ? Grange: I was only acting, in a nominal capacity as director. The matter was fully explained to me at the time. I was not specially interested in the matter. It was in connection with securities; that is all I remember. Mr Monahan: Do you remember signing a cheque in December last for £750 for Wynwood Investments Limited? Grange: Yes. Mr Monahan: It was in favour of a gentleman named Meredith? Grange: Yes. That was payment for Mr Meredith acting for the Crown. Mr Monahan: It was in connection with some securities Wynwood Investments were holding? Grange: I understand it was a debt of Wynwood Investments in connection with some securities taken over from M'Arthur. Mr Monahan: If you had not taken over the securities M'Arthur might have had to pay for them? Grange: I think so. Mr Monahan: I understand Mr Meredith is Crown Solicitor in Auckland. Grange: Yes, Mr Monahan: You are a director in the British National Investment Trust? Grange: Yes. In reply to further questions, Grange said that the trust had issued ten debentures for £I,OOO each at the application of the Investment Executive Trust. The money had gone to Sydney as a deposit on the building in King street. Mr Monahan: Who gave you instructions to raise £10,000? Grange: M'Arthur. Mr Monahan: But he had nothing whatever (o do with your company at the time? Grange: No. Mr Monahan: He made a tool of your company for his own puds?. Grange; That was it.

Mr Monahan: Did you get any coneideration for your acconuuodation * Grange: No. Mr Monahan: What have you had out of it? ' Grange: The sale of my shares and director’s fees. Mr Monahan: The sale of your shares was at a high rate? Grange: Yes, T received £I,OOO for what cost me nothing. . Mr Monahan: Put bluntly, it was a bonus paid to you for accommodating M‘Arthur.

Grange: That is the position. Mr Monahan: You allowed your company to be used to put £I,OOO in your pocket? Grange: No one was losing anything by it. _ The Commissioner: It might not have done anyone any harm, but the Investment Executive Trust was advancing money on debentures of your company. The Investment Executive Trust, of which M‘Arthur was managing director, was advancing £IO,OOO to enable this purchase to be financed, the whole profits of which, so far as you knew, might go into the pockets of Alcorn and M‘Arthur. Did you consider that? Grange: I did not consider where the profits were going. Oscar :1 osephson gave evidence that he was associated with companies in which MTnnes had interests and with the British Medical Investment Trust. He asked M'lnnes to put capital into the company, and the latter agreed, his interest, he thought, being 1,900 two shilling shares. Josephson said he started the British Medical Investment Trust in conjunction with Foster, but the latter dropped out. Replying to the commissioner, witness said the words “ British Medical ” were given to the company’s name after consultation with the secretary of the British Medical Association. Witness knew Foster in New Zealand in 1929, but what he had heard about him was riot to his credit. Mr MonahanNotwithstanding that you went into business with him. Josephson: You will meet him perhaps later. He is a particularly good salesman. (Laughter.) ■ Witness hdded that ho thought it was Foster who suggested starting the British Medical Investment Trust. Foster told him the secretary of the British Medical Association had no objection to using their name in part. The Commissioner: Was the idea that medical men should be induced to subscribe ? . Josephson: Yes. It was a vocational trust, purely for medical men. Foster resigned in March, 1934. W. B. Hewitt, who was recalled, stated that the amount expended on the old ‘ Daily Telegraph ’ building in King street at Juno 30, 1934, was £132,000. The commission adjourned till to-pior-row. TO.DAY'6 SITTING ASSISTANCE OF.EXPERTS SUGGESTED. SYDNEY, September 7. (Received September 7,' at *1.25 p.m-) The suggestion that the assistance of experts be invoked for the purpose of advising the commission regarding amendments that could be made to thecompany law was made when the commission resumed. The Commissioner said; “It seems that the commission has reached the stage where examination of witnesses will soon be concluded. This is a matter affecting the whole community,• particularly the commercial community. Expert advice is needed, and I want to know who the Crown proposes calling.” ' . Mr Monahan said he thought it would be necessary to call members of the Stock Exchange, the Chartered Accountants’ Association, and the Bar, Council, and Law Institute together, ' with any member of the public who was sufficiently qualified to make suggestions. , An emphatic denial that he had ever approved of the name or aims of the British Medical Investment Trust was expressed by Dr J. G. Hunter, secretary of the New South Wales branch of the British Medical Association. Dr Hunter said he had refused an offer by Major _ Jarvie that ho should accept a position as director of the company. Dr Foster had later seen witness. It is absolutely incorrect that the words * British Medi-. cal’ were ever mentioned, nor did 1 ever tell him I had no objection to the use of the words,” said Dr Hunter. Questioned by Mr Monahan, Hewitt said up till June, 1934, £72,856 had been spent on alterations and improvements to the Trust building. The Sterling Investment Company had paid the £91,000 that was owing to the British National Trust by giving the latter £50,000 worth of shares and promising to issue debentures for the balance. An undertaking had also been given that the Sterling Investment Company would not contract a, debt of more than £IOO without the consent of the British National Trust. The commission is proceeding. VICTORIAN INVESTIGATION TO COMMENCE IMMEDIATELY. Press Association —By Telegraphy-Copyright MELBOURNE, September 7. (Received September 7, at 10.35 a.m.) The Companies Special Investigation Act received the Royal assent. The State Executive Council approved an order appointing two chartered accountants (Mr J. W. Ross and Mr L. A. Cleveland) inspectors under the Act to investigate the affairs of the companies specified. An inquiry will commence immediately into the SouthernBritish National Trust Ltd., V. B. M'lnnes and Co. (Australia) Ltd., and Commonwealth Homes and Investment Co. Ltd. It was announced that the AttorneyGeneral was satisfied that a prima facie case had been established, and it was necessary for the protection of the public and the creditors of the companies named that the affairs of these companies should be investigated.