“TRUST” FINANCE

Greymouth Evening Star, 5 September 1934, Page 5

“TRUST” FINANCE

ALCORN CROSS-EXAMINED (BY CABLE —PBESB ABBN. —OOPYBIGHT.] SYDNEY, September 4. At the Companies Commission, Alcorn was further questioned in regard to the King Street (Telegraph) building. He said that on March 1 last, it was decided to lease this property to the British National Trust for 99 years at a yearly rental of £7500. Mr Monahan interjected: That just suffices to pay interest on the mortgage and also the rates and taxes.

Alcorn referred to the resignation of McArthur from the British National Investment Trust. Alcorn explained that his (McArthur’s) going into that company was a mistake. There had been some trouble with the printing of names, and a special rescinding resolution was necessary. The Commissioner: So he became a director by mischance? That’s the first time that I have heard of where a man becomes a company director through the printers’ error. Mr Monahan: It is very handy to fade out like that after piloting his shares through.

Alcorn was questioned regarding the list of personal drawings "he had compiled at the Commissioner’s request. Mr Monahan: These book entries detailing your drawings have been entered since the Commission started? AY as there no book records until then?

No. Referring to £15,000 he had made in June, Alcorn said he and McArthur had sold Investment Executive Trust shares to the Southern British National Trust in order to give the latter control of the former. There had been money owing to McArthur and himself for the establishment charges in Southern British. Mr Monahan: So actually you made £15,000 personal profit? Alcorn said that, though he was personally a friend of McArthur, he did not know the particulars of bankruptcy proceedings in which McArthur had been involved in New Zealand.

Mr Monahan: Don’t you know that such proceedings resulted from his non-payment of a debt to the Government?

Alcorn: Yes. McArthur took up a timber contract, and, when he began operations, he found that there was no timber there. It was all part of a campaign being directed against the Investment Executive Trust. Alcorn said that the formation of the Investment Executive Trust in 1931, he and McArthur, and McArthur’s son, had been the original directors, and each had received 250 shares, which had never been paid for.

Mr Monahan: Have you ever put one shilling of your money into any of these companies? Alcorn: No; but I have put into them all of the money that I received for my services. The Commissioner: As far as I can see, you find it hard to detail just what your services were. Alcorn: McArthur and I put in many months of hard work in drafting ideas for these companies. Alcorn said that he later was allotted a further 4,750 shares, for which he had paid with money that he had received for his two years’ service. He had subsequently resigned from the Board in order that better known men might appear on the prospectus that was about to be issued. He had introduced McArthur to Mclnnes, and it was arranged that McTnnes and Bridgewater were to sell Investment Executive Trust debentures in the South Island of New Zealand. Another firm had charge of the sales campaign in the North Island, hut Sterling Investments was anotted the Auckland district. Replying to Mr Monahan, Alcorn said that he had had no income for income tax purposes for four or five years. The Commissioner: You got £4SS for your services to the Investment Executive Trust. Alcorn: Yes. The Commissioner: Is that income?

Alcorn: Yes, I forgot that. x „r Monahan: Yon got £45 or more for introducing McArthur to Mclnnes? Alcorn: Yes. Witness said he really had been living on capital. Alcorn, continuing, said The British National Investment Trust began as the Stock Exchange Corporation of New Zealand, Ltd. It consisted of licensed sharebrokers, who were not in the Stock Exchange, which opposed them. Witness had 250 two-shilling shares. He was not sure whether he or the Trust paid for them. Mr Monahan: Investment Securities Association took over nine thousand of the shares? Alcorn: Yes. That is myself. Mr Monahan: Who paid for them? Alcorn: I do not know. Mr Monahan: At a meeting in February, 1933, additional shares were allotted to McArthur and yourself. You were allotted 44,598 shares. What had you done to deserve that? The Commissioner: He applied for them, on condition that he paid for them. Mr Monahan: What was the value of these shares at the time? Alcorn: Par value. Mr Monahan: Did you, as ActingChairman of Directors, regard yourself as having a duty to see that the Company’s property was not sold for less than the real value? Alcorn: Yes. Mi 1 Monahan: What did you pay for the shares? Alcorn: Par value. The Commissioner: How did you pay? Alcorn: Wo borrowed from the Investment Executive Trust. Mr Monahan: You took Trust moneys, and used them for speculation for private gain? Alcorn: No. A loan was raised for fifty thousand pounds with the Investment Executive Trust. Mr Monahan: You used Trust moneys for private speculation! Alcorn: It was in accordance with the terms under which we got the money. The Commissioner: Is there any record that, before this Commission began, one penny of the profit that you made as a private speculator was to go anywhere but into your own pocket? Alcorn: Yes. Ninety-five thousand pounds was already in the hands of the British National Investment Trust, and twenty-five thousand in tlie hands of the Investment Executive Trust. The Commissioner: Do you con-

sider you were under any obligation to see that the Company got the value of the shares? xilcorn: No. The company was going into liquidation. TRANSFER OF BOOKS. Mr Monahan: What assets were there to represent the £55,000 you got from the British National Trust, and which I suggest was ptfblic money paid out of debenture capital? Alcorn: The debentures were a floating charge. Mr Monahan: Exactly, and that charge disappears when the debentures were paid off. There was nothing left. Alcorn: It was exactly the same as before the debentures were paid off. Mr. Monahan: Supposing the British National Investment Trust was placed in liquidation, where would the holders of preference shares stand? The Commissioner: I suppose they would have the lease. We must assume the lease for £7500 a year has value. Mr. Monahan (to Alcorn): Whatever was left was sufficient to pay a dividend on the shares? Alcorn: Yes, at the rate of seven per cent. Alcorn later admitted that he received 76,400 shares in the flotation of the Southern British National Trust—one fifth of the ordinary shares paid for by sale of debentures in British National Trust. Later, he sold his holding of the Investment Executive Trust to that company to hand over control of that trust to the Southern British National Trust. That had happened by the time they all left New Zealand with the books and records. Mr. Monahan: You had not produced your books to the New Zealand Commission. Alcorn: No, definitely. Mr. Monahan: The bringing o£ books here had no relation to this inquiry? Mr. Alcorn: None. Referring to Alcorn’s personal drawings Mr. Monahan asked whether he had had £2,200 out of the sterling investments since March. Alcorn replied: Yes, I had sold two debentures whereof I had sixteen or seventeen. I handed over the first debenture in Auckland. I think Glasson debited me instead of crediting me with it. Dr. Louat informed the Commission that he hoped to have the balancesheets of the Investment Executive Trust and Southern British National Trust ready by to-morrow. Mr. Monahan said he required a list of the securities of all companies as at June 30. The Commissioner directed that the securities register be brought to Court to-morrow, and adjourned the sitting till to-morrow. PAYMENT TO M.L.A. (Recd. September* 5, 1 p.m.) SYDNEY, September 5. Further questioned before the Commission, Alcorn said that £125 had been paid out of the accounts of the Southern British National Trust to Major Jarvie, M.L.A., on McArthur’s instructions. Jarvie was to have gone on the staff of this Trust, had helped in connection with the opening of the Trust building, Sydney, when he had supplied the list of guests to be invited to the function.

Alcorn also said that a yacht purchased by the Pacific Exploration Company had been sold to McArthur in consideration of the transfer of debentures through some of the associated companies. It had been the Pacific Exploration’s idea to go in for exploration in the Pacific, but the Company had been unable to do that. Replying to Mr Monahan, Alcorn said that a cheque for £60,000, drawn on the Sterling Investment Company in February, 1934, in favour of McArthur, had been in payment for debentures McArthur had held in the Setrling Company. McArthur had transferred his interests in various companies to the Sterling Company to counteract the attacks being made on him by outside companies. Monahan: So you were redeeming your own debentures. Alcorn: Yes. (Proceeding.)