THE BANK CONFISCATION

Evening Star, Issue 25633, 6 November 1945, Page 7

THE BANK CONFISCATION

WHY DIRECTORS REMAINED IN OFFICE STILL POSSIBLE TO AID SHAREHOLDERS

(P.A.) WELLINGTON, Nov. 5. “ The brief explanation given by the Minister of Finance, Mr Nash, of the Bank of. New Zealand Bill on its introduction in the House of Representatives on November 1 and his reading of the two letters exchanged between himself and the chairman otf the board of directors of the bank, Mr A. T. Donnelly, record the agreement of the present shareholders’ directors to continue in office after the passing of the Bill. The shareholders of tne bank and also the New Zealand public are entitled to know why the shareholders’ directors have made this agreement,” says a joint statement issued by the shareholders’ directors, Messrs Stronacli Paterson and F. W. Dawson. “ At the annual meeting of the proprietors of the bank on June 15 last,” continues the statement, “ Mr Paterson declared his intentions in the following words: —‘ Subject to the over-rid-ing power of the Government to remove me from office by legislation, I shall continue, as a director olf the bank for the period for which you have appointed me, subject to my being free and able to continue to serve the interests, immediate or future, of. the shareholders who appointed me. If and when the bank is completely and irrevocably Government-owned and the present proprietors cease to exist and have no present or future interest that I fell I can serve and protect, I shall resign from the board.’ “ When Mr Dawson subsequently accepted appointment to the board in succession to Mr It. W. Gibbs, he advised the Shareholders’ Committee that in the event of the Government expropriating the property of the shareholders of. the bank his attitude toward the retention of office was the same as Mr Paterson’s. “Early in the recent negotiations between the Minister otf Finance and the board of the bank, we became convinced that if all the members of the board agreed to continue in office, the shareholders would get much better terms for their shares than they would get if the directors refused to continue in office. Therefore the immediate interests of the shareholders could best, be served by our agreeing to continue in office. “It also became clear that if the present members of the board and • the present management of the bank refused to continue in office, the business of the bank would suffer a severe setback and the goodwill of the bank might vanish. In such circumstances neither the present Government nor any future. Government could do anything toward even partially remedying the confiscation to be effected by the Bill now before the House of Representatives. We therefore came to the conclusion that our agreeing with the other directors and the management to continue in office would best serve the future interests of the shareholders. “ Apart from the special and peculiar interests of the shareholders whom we represent we had to give grave consideration to the wider national questions. If the present members of the board and the management refused to continue,, the business otf. the bank would have to be carried on by a new management, directed by a new and inexperienced board. Such a situation would inevitably result in such a disturbance to bank and finance that grave repercussions on the whole of the producing, commercial, and industrial organisation of the Dominion would ensue with very serious results indeed to- the public. “ Our. decision to join with other members of thp board in agreeing to the terms laid down by the Minister of Finance on behalf of the Government lias, in our opinion, given the shareholders a better deal than they would otherwise have got, and provided conditions that may enable them in the future to get some measure of redress of the grave injustice they will now suffer. Furthermore, so long as the Government stands by its assurances to us and our colleagues, it will prevent a banking and economic crisis . in this country. “ Throughout the board’s negotiations with the Minister of Finance we made it clear that those negotiations and any agreement that might arise from them in no way altered our attitude either to the principle olf the Bill—confiscation, instigated by political party expediency—or to the provision in the Bill for the forcible taking over of the shareholders’ assets at a price less than their full value. We made it clear that we would continue to fight against the Bill to the end. We hope that those who have hitherto supported the fight of the Shareholders’ Committee will also continue to fight with us.”