MISSING BOOKS

Evening Star, Issue 21823, 12 September 1934, Page 9

MISSING BOOKS

THE COMPANY INQUIRY A SECRETARY'S EVIDENCE Press Association—By Telegraph—Copyright. SYDNEY, September 11. Continuing his evidence before the Royal Com mission, Major Jarvio denied having told MTnncs that Dr Hunter approved of the name British Medical Investment Trust. MTnnes’s evidence in that respect was inaccurate. Witness had merely asked Dr Hunter for approval for Colvin being on the board of this trust. Jarvio said he had retired from the board, as lie wanted, as a public man, to be free and to vote in Parliament free from association with trust companies. Mr Monahan (Assistant Commissioner) : It was in your mind that there would bo parliamentary action, before you retired ? Jarvio: Yes. I discussed the matter with the Premier. H. C. Glasson, secretary of the Investment Executive Trust, who was recalled, was questioned with regard to the production of balance-sheets. He said Sterling Investments balance-sheet was the key to everything. Mr Monahan; And the books of Sterling'are missing? Glasson: Yes. Continuing, Glasson said the books had been left by him in Auckland, but had disappeared. Apparently they had been removed from the office. Mr Monahan; I suppose without the books the truth will never be known? Glasson: I wouldn’t say that. Mr Monahan: Is there any doubt that as the result of M'Arthur’s and Alcorn’s dealings with the books of these companies some, or one, or all of them have made £340,000 profit in connection with the trust building? Glasson: I could not say. Mr Monahan: Isn’t it somewhere near that ? Glasson: On paper. Mr Monahan: M‘Arthur, as the result of these transactions, has a whole lot of assets of Wynwoods? Glasson: Yes. He has a charge over the assets. Mr Monahan: Such a charge that it makes him virtually owner of the lot. He has also property that belongs to Pacific Explorations, including a yacht. That is all paid for out of profits of these transactions. Can you unravel it ? Glasson; I am afraid I cannot. Mr Monahan: If you had Sterling’s books would you be in a position to do it? ' Glasson: Probably. The Commissioner asked Glasson whether he had altered the Southern British balance-sheet on Friday afternoon as the result of M'Arthur’s directions. Glasson said he did not remember. The Commissioner; I think you are inclined to fence with me. Glasson: No. The Commissioner: Did you alter it on Friday? Glasson: Yes. Mr Monahan then quoted specific alterations, which Glasson said had been made at M'Arthur’s suggestion. After further questioning, witness said an expense item hat! been converted into an asset. Asked to explain how he had originally shown a list of investments in other companies as an expense and afterwards put it on tho other side as an asset, witness said that an asset in effect. _ on reconsideration it was realised it was companies was made when Mr Monahan Further reference to “ X ” and “ Y ” questioned Glasson regarding the investments of the Investment Executive Trust. The Commissioner said he had to consider the interests of the companies. “When people try to get control of a company by secrecy one suspects there is something wrong. It seems as if two well-established New Zealand companies may get into the hands of people employing, such business methods as we nave here.” Mr Monahan: What steps are being taken by the Investment Executive Trust with regard to tho Trustees, Executors, and Agency Company of New Zealand? Glasson: I know nothing about it. Mr Monahan: It is a company with assets of three or four millions, comprising deceased persons’ estates, is it not?Glasson: I believe so. Mr Monahan: Why are you trying to get control of those funds? Are they to be invested as these others have been ? . Glasson: I know nothing at all about it. Mr Monahan: How much debenture capital has the Investment Executive Trust allowed the Transport Mutual for the purchase of the Trustee Company’s shares ? Glasson: About £14.000. [There is reason to believe that the two New Zealand companies to which reference is made in the proceedings before the commission are the Perpetual Trustees, Estate, and Agency Company and the Trustees, Executors, and Agency Company, both with headquarters in Dunedin. The Perpetual Trustees Company has never been approached with any proposal that it should sell its’business, and we are informed that if any such proposal had been made it would have been flatly rejected. Tho Trustees, Executors, and Agency .Company of New Zealand Ltd. is an old-established Dunedin company operating under a private Act of Parliament, passed in 1881, for the administration of deceased persons’ estates. 1 Its business is entirely different from that of the Executive Investment Trust, and the manager (Mr P. O. Smellio) states that his company has had no dealings of any kind whatever with the M‘Arthur concern. The directors have known for some timo that a movement was on foot to buy its shares, but, acting under legal advice, they have exercised tho power given to them by the articles of association to refuse to register transfers. Only three transfers of shares sold, comprising altogether 120 shares, have been passed by the board within the past twelve months, and the transferee in each case has been a member of the legal profession in Dunedin. The directors of the company are Mr G. R. Ritchie, Sir John Roberts, Mr P. C. Neill, Sir John Sinclair, Sir James Allen, Mr Richard Hudson, and Mr S. C. Sutherland.] STATEMENT BY M'ARTHUR DEBENTURE HOLDERS FULLY PROTECTED SYDNEY, September 11. M'Arthur presented a lengthy statement to tho commission. He said every penny of the debenture holders’ money was fully protected and secured by sound investments, which exceeded m value the sum charged upon them. Tho total amount subscribed by the public for debentures in the Southern, British

and in the Investment Executive Trust amounted to £6-18,194, while the book value of the investments at cost was £649.153. The present market value of the investments held on behalf of debenture holders was much higher than tho value set against them in the company’s books. The debentures of the British National Trust were supported by a great deal more in the way of substantial assets than the Trust Building alone.

After dealing with, the general plan of the Investment Executive Trust and tho Southern British National Trust, M‘Arthur said one clause of flic debenture provided that 95 per cent, of the annual net earnings should be set aside for the holders of debentures as interest. The security given to subscribers to these trusts was a first mortgage debenture, which must always take precedence over creditors of every class, no matter what kind of charge or mortgage the directors of the trust might attempt to create over any of the assets. He had attempted to plan the operations of the trusts in such a was as eventually to return to debenture holders a rate of profit exceeding that of interest on an ordinary investment trust debenture. An indication of the success which the trust had achieved was that after less than three and a-half years of activity the Investment Executive Trust had been able to pay debenture holders a total of 26 per cent, by way of return on the capital invested by them. M‘Arthur contended that tbo_ affairs of the companies were being investigated at an incomplete stage of their development. He admitted that on a general view the relations of the various companies with one another might seem to have been needlessly, even purposelessly, involved. Many matters had their explanation in the condition under which the Investment Executive Trust had been compelled to operate. It was necessary to understand the nature of the forces working against this trust since its inception. There had been a “ strong influence at every point of the financial and political lifo of New Zealand against trust companies,’-’ and “ deliberate attempts to injure the Investment Executive Trust by making it appear that its debentures bad been bought below par value.” Suggestions had been made during the inquiry that tho financing of the Trust building involved some misuse of the money subscribed by the public and portion of that money had been transferred from the debenture fund to Alcorn and himself. There was not tho faintest foundation for any such suggestion. M‘Arthur said that the primary function of the Sterling Company had been to conserve the interests of debenture holders by doing what the Investment Trust Company was not able to do for itself. The Sterling Company in the early stages of the life of the main company had been used to purchase certain assets of his and at the same time take over liabilities secured on them in order to frustrate those who desired to strike at the Investment Trust by accomplishing lus own financial ruin. A further purpose for which the Sterling Company was employed on behalf of debenture holders had been in a few cases to purchase debentures from individuals who for one reason or another were threatening action against the Investment Executive Trust. Tho hostile condition with which tho trust was surrounded had made it even more important that no weapon should be given to its opponents with which they could stampede debenture holders. Referring to the case of Miss Smith, of Christchurch, M'Arthur said that the Guardian Trust and Executors Company of New Zealand had obtained control of her estate, and a writ had been issued against the Investment Executive Trust seeking to recover securities which had been transferred by Miss Smith to the trust in payment for debentures. The directors knew that whatever the’’ issue of the trial might be the ultimate result would be to injure the company and the debenture holders. The claim accordingly had been settled for £29,000, which represented substantially the value of the securities originally transferred to the Investment Executive Trust and the amount by which they had appreciated. M‘Arthur said that the Guardian Trust was connected with the companies with which he had had to contend during the Redwood Forests negotiations. Continuing, M'Arthur said that MTnnes, during his three years of service as director of the selling system in New Zealand on behalf of tho Investment Trust, had carried out his duties faithfully. M'Arthur declared that the accounts of all the companies were now in order. Referring to tho assets of the Pacific Exploration Company, he said it possessed 27,000 acres of freehold land in the northern part of the Auckland province which contained rich and extensive deposits of kauri gum. On a conservative estimate the quantity of gum on the area was worth £3,000,000 gross. This asset was set down in the books of the company at £4,700, being the cost of the land to the company. The commission adjourned till to-inor-row. ' -. TO-OAY'S HEARING SYDNEY, September 12. (Received September 12, at 2 p.m.) Hewitt was questioned regarding the differences in the Sterling and British National Trust balance-sheets. He said an unintentional mistake had been made in their preparation. The Commissioner: As a matter of fact, the balance-sheet is hopelessly wrong ? Hewitt: Yes. Hewitt set out to explain how the Sterling Companies’ assets in the British National Trust had increased from £90,000 to £120,000, and produced a number* of documents. Mr Monahan (after inspecting one of the papers): This has all been worked out m the last few days. Hewitt: Yes. Air Monahan: When was this transfer signed? Hewitt: This morning. The Commissioner: These papers aro dated yesterday, yet the entries were made in tho balance-sheet as at Juno 30. Hewitt; It had all been arranged but not signed. Air Monahan; Is this not the result of Glasson’s evidence yesterday? Hewitt: No. The bearing is proceeding. WRITS ISSUED CLAIMS AGAINST BRITISH NATIONAL TRUST. BRISBANE, September 12. (Received September 12, at 12.40 p.m.) Air James Cork, a retired farmer, of Maleny, has issued a writ out of the Supreme Court against the Southern British National Trust Ltd. He claims rescission of an assigment made on Alay 3 last purporting to transfer and assign to the company all his moneys due to him by the Primary Producers’ Bank of Australia Ltd. (in liquidation). An action setting forth a claim similar to that made by Air Cork has also been instituted by Mr John Daniel Sommer, dairy fanner, of Maleny, against the Southern British National Trust.