M'ARTHUR CHARGES

Evening Star, Issue 22379, 1 July 1936, Page 8

M'ARTHUR CHARGES

PROCEEDINGS BEFORE MAGISTRATE HEARING TO LAST SEVERAL DAYS TWELVE WITNESSES FOI THE CROWN [Per United Press Association.] WELLINGTON, July 1.. The charges against John William Shaw ' M‘Arthur were proceeded with to-day. The charges were as set out when M'Arthur was remanded from Wednesday last, with the exception _of the three last (E, F, and G), which were not read. It is understood that the Crown progoses calling 12 witnesses and that the earing will occupy several days. Mr Mosley, S.M., is on the bench. The prosecution is being conducted by Mr 0. Evans-Scott and the defence is in the hands of Mr H. F._ O’Leary, K.C., with him Mr R. E. Tripe. Mr Evans-Scott suggested that if the magistrate approved the four charges could very conveniently be taken together. Mr O’Leary at once objected to this course. Mr Evans-Scott expressed surprise, saying that the charges were very closely connected and the evidence in respect to each would be identical, except in one small particular. If the charges were not taken together it meant that evidence that would take two days to hear would have to be taken four times. The Magistrate remarked that he was entirely in the hands of counsel in these matters. In justice to the accused, if counsel raised the slightest objection he must uphold it, even if the case took a month. Mr O’Leary said he-wanted to assure Mr Evans-Scott that he did not raise this objection for the purpose of obstruction, but in the interests of his client. It need not necessarily follow that four sets of evidence would have to be taken. To start with, at any rate, he asked that one information be taken. The Magistrate indicated that this was also his feeling; then if counsel consented the other three probably could be taken together. It would be easier for him to confine his attention merely to one information, and personally he would prefer counsel to take that course. ( All witnesses were ordered to remain out of court. M'Arthur was allowed to leave the dock and sit beside his counsel. It was agreed to take the second charge— On or about March 16, 1933, at Wellington, publishing a report in writing to debenture-holders of the company for the year ending December 31, 1932, which report was false. Mr Evans-Scott did not address the court on the facts, but said the evidence he proposed calling would prove, among other things—first of all, publication of the report; secondly, the responsibility of the accused for that publication; thirdly, that the statements in that report were false; fourthly, that the accused knew they were false; fifthly, with intent to deceive or defraud the debenture-holders; sixthly, that the accused had a motive to deceive them; and, seventhly, the nature of the investments in the associated companies which were concealed. In order to assist the court, said Mr Evans-Scott, he had prepared a diagram showing in perspective the transactions with the associated companies up to February 28, 1934. The evidence, he said, could establish various payments and transfers shown in the diagram, copies of which were supplied to the magistrate and Mr O’Leary, THE EVIDENCE. The first witness was John Henry M'Kay, assistant registrar of companies at Wellington, who produced documents relating to the Investment Executive Trust showing its incorporation in 1929 with a capital of £IO,OOO, a resolution of February 2, 1933, _ increasing the capital to £IOO,OOO divided into> 250,000 2s shares and 75,000 shares of £1 each, the issue of debentures dated May 9, 1931, and May 11, 1931, and the original filed copies of prospectuses issued by the company, the first of which was dated March 12, 1931. Mr O’Leary objected to the production of the later documents, submitting that any subsequent to the date of the charge, March 16, 1938, were irrelevant. Mr Evans-Scott agreed, hut explained that he intended to put all the documents in for convenience in marking the exhibits. The witness accordingly produced only the copy of the first prospectus, also the certificate of incorporation of Sterling Investments (N.Z.) Ltd., incorporated on October 14, 1930, and the memorandum of satisfaction of the last series of debentures issued by that company and dated February 28, 1934. He produced the certificate of incorporation of the Stock Exchange Incorporation of N.Z. Ltd., dated November 2, 1931. The original capital was £IO,OOO. The name was changed to the British National Investment Trust Ltd., dated December 3, 1932. On October 20, 1932, the capital was increased to £IOO,OOO, at 150,000 10s shares and 250,000 2s shares. Witness produced the certificate of incorporation of Wynwood Investments Ltd., August 6, 1930. The capital originally was £IOO, and was increased on April 11, 1932, to £I,OOO, and on October 26, 1933, to £IO,OOO. He produced the list of shareholders of that company. They were Stanley Grange (100 shares) and J. W. S. M'Arthur (9,900). He produced the, registration of a series of 100 £I,OOO debentures by Wynwood Investments, dated December 11, 1933. Mr O’Leary objected to this subsequent date. Mr Mosley said he would take the evidence and note the objection. Witness produced the certificate of incorporation of the Pacific Exploration Company Ltd., dated May 3, 1932, and said that as far as the records showed no debentures had ever _ been registered against the assets of the company. Its capital was originally £IO,OOO. • - ’ Madge Gregory, typist in the Public Trust Office, who was previously employed by M'Arthur as a stenographer, said she did secretarial duties for him. When Mr Evans-Scott proceeded to ask in connection with the incorporation of the Investment Executive Trust what procedure was followed to get into touch with prospective subscribers, Mr O’Leary objected to the evidence as hot being relevant. Mr Evans-Scott submitted that it was necessary to know the class of investor and the manner of approach to them.

He said he would call some of the debenture holders. . . • Mr O’Leary: I will object to their evidence also. , Mr Mosley said he would allow the evidence to go in, but would note the objection. It might be that, when considering the question later on, he would have to eliminate altogether the evidence objected to when he got the gist of the case. “At present I don’t know much about it. I don’t know anything about it, as a matter of fact.” Replying to a question as _to the method of approaching prospective subscribers, the witness said that lists of shareholders in various companies were taken from the Stamp Duties Department,- and a card index was kept. She saw communications sent to some of those shareholders. They consisted of certain literature sent to a selected list of shareholders. Mr Mosley: Quite a usual way of doing things. . • Mr Evans-Scott: In a certain class of companies, yes. Witness said a pamphlet called ‘ Increasing Your Income ’ was _ typed by her in draft form at the dictation of M'Arthur. A booklet entitled ‘ Increasing Investments ’ was partly typed by her also at M'Arthur’s dictation. Witness remembered M'lnnes and Co. being appointed brokers for Investment ■Trust, and they continued till she left the company about August, 1934. She typed the drafts of all the reports sent to debenture holders by Investment Trust. The report dated March 16, 1933, was one of them. She did_ it at M‘Arthur’s dictation. Witness identified M'Arthur’s signature on the agreement of February 28, 1931, appointing him managing director of the Investment Executive Trust and on the letter dated September 25. 1931, - from the accused to Mr* Meredith, Crown solicitor at Auckland.-,

Mr O’Leary objected and the objection was noted. Further evidence on the same lines was similarly objected to—witness identifying the signature on various documents, including the various transfers of shares. In the course of cross-examination witness said that whether the 1931 prospectus was finally settled by the solicitors to. the company she did not know. She said the draft was finally approved by M'Arthur before going to the printers. Certain statutory information in it was not settled by the solicitors to the company because it was dictated to her by M'Arthur. Mr O’Leary: Do you mean he would call you in and dictate to you the whole of the prospectus?

Witness; Yes. Mr O’Leary: Well, he is a better lawyer than I am. .