FALSE PROSPECTUS

Evening Star, Issue 22271, 24 February 1936, Page 9

FALSE PROSPECTUS

COMPANY DIRECTORS SENTENCED MANIPULATION OF PEPPER MARKET Press Association—By Telegraph—Copyright LONDON, February 21. In the pepper case, Bishirgian and Howeson were each sentenced to one year’s imprisonment, and Hardy to nine months, all in the second division. Bishirgian was charged with circulating a prospectus knowing it to be false in material and particular, and the others with aiding and abetting. Leave to appeal was granted. The case, which lasted for nine days, arose from dealings in shellac and pepper by the Williams Henry Company, of which Howeson held two-thirds of the shares, Bishirgian one-third, Hardy being managing director, and Bishirgian acting as broken. In a series of transactions.they bought 66,000 bags of shellac, costing £500,000, of which £109,500 was paid; and 11,245 tons of pepper, costing £967,046. The Attorney-General, prosecuting, explained that the Williams Henry Company estimated that there were only 12,000 tons of pepper in the world, but the new crop was larger than expected, while 6,000 tons of the old crop were still unsold in London, and a further 6,000 tons were released by Chinese and other sources. When prices improved the company got into difficulties, but arrangements were made with the old-established metal brokers, the James Shakspear Company, which Howeson then controlled, by which he could transfer Bishirgian’s commodity business. When James Shakspear publicly floated capital of £400,000 the prospectus did not mention the pepper and shellac commitments. The Attorney-General contended that the defendants saw further stocks of pepper coming along, and accordingly took steps with a view to the necessity of making further purchases to protect the price. The evidence disclosed that James Shakspear eventually bought a further 12,340 tons of pepper and went bankrupt, with liabijities of £755,000 and assets of £235,000. Mr Justice Atkinson, summing up, referred to the attempt to corner pepper. He said there was no law against cornering “ although it might not be thought very nice.” He pointed out that £400,000 had been taken out of somebody’s pockets and lost in a few months. Delivering sentence, he said; Prisoners held great positions, carrying great responsibilities. Sir Patrick Hastings, K.C., defending Bishirgian, who is an Armenian, said he started work at the age of 12, and built up a commodity business. He said he spent nearly £IOO,OOO making good the pepper losses, and was now penniless. Howeson, described as the “Tin King,” was director of 19 companies, chairman of 12, and adviser to 20 others. He concentrated on h.uilding up the Anglo-Oriental Tin Mining Group, with a capital of £20,000,000. He began in 1929 to obtain world-wide co-operation to counteract over-produc-tion, resulting in the Government backing his scheme. At present his operations were estimated to have saved the Empire producers £40,000,000. .PROTECTION FOR INVESTORS DRASTIC RESTRICTIONS URGED LONDON, February 22. The ‘ Daily Herald ’ says members of the House of Commons will urge the Government to take drastic action to prevent a repetition of the pepper gamble, including tightening up the legislation relating to dealing in commodities. It is expected that the Board of Trade will first be asked to institute an inquiry regarding unhealthy speculation in commodities.

The 1 News-Chronicle ’ urges that the law should be altered to prevent cornering.

‘ The Times,’ in a leader, regards the case as another of the pitfalls of •finance, following the Bottomley, Hatry, and Harris cases, which alarmed investors in recent years. The article expresses the opinion that, in the interests of shareholders, the company law requires consideration regarding the identity of corporations, as James Shakspear within a few days changed from the role of a sober concern to the nom de guerre of a group of reckless gamblers.

The costs of the case amount to £30,000.