“TRUST” EMPLOYEES

Greymouth Evening Star, 7 September 1934, Page 7

“TRUST” EMPLOYEES

CLAIMS BY McINNES “ARCADIAN SIMPLICITY" [by CABLE —PBESB ASSN.—OOPYBIGHT.] SYDNEY, September 6. At the Companies Royal Commission, Mr Monahan, K.C., asked McInnes: Who arranged the business with the Primary Producers’ Bank? Mclnnes: Originally I received word, while I was in New Zealand, from our Melbourne manager, Foster.

Mr Monahan: You had no reason to believe any of your agents were dishonest when you appointed them to any position in your company? Mclnnes: No. Mr Monahan: Did you have information, before you appointed one of these people, that he had been convicted five times? Mclnnes: I had received rumours. Mr Monahan: You received a communication from your right hand man Cayley Alexander, and you call that rumour? Mclnnes: I found, to my cost later, that it was true. lae Commissioner: Did you know it was a breach of trust for a bank official to disclose the business to you? Mclnnes: No. The Commissioner: You were in a ki..u of Arcadian simplicity! Did you know your officers were paying anything for it? Mclnnes: No. I would not countenance such a thing. Mr Monahan then read a letter from Foster to Mclnnes, in which, Mr Monahan said, Foster had related how he had taken particulars personally* from the records of the Bank relating to certain depositors, and he had continued that results had been achieved, not only at the expense of labour and time, but also by a distribution of “palm oil.” Mr Monahan asked Mclnnes what he knew about that. — clnnes said he did not believe those methods were adopted. The Commissioner: How long afterwards did you employ Foster? Mclnnes: Four or five months. The You did not think he was using “palm oil”? Mclnnes: No. The Commissioner: You thought he was a liar? Mclnnes: Yes. (Laughter). Mr Monahan: Within twelve days of receiving that letter, you promoted Foster to Sales Director at a salary of fifteen pounds a week, although he had just admitted that he had obtained information in direct opposition to advice to the contrary from the Bank’s solicitor! The Commissioner: Mr Mclnnes is putting, himself forward as a simple, trusting soul! Is that the position—simple trust? The witness did not reply. The Commissioner: Do you expect to be regarded as a truthful .witness? Mclnnes: Yes. The Commissioner: Do yon regard me as being simple in certain mat-

ters ? Mclnnes did not reply. Mr Monahan asked Mclnnes what had opened his eyes about Foster. Mclnnes replied that Foster’s cheques had not been met. Mr Monahan: Did you believe that rumour? Mclnnes: I had proof, and I immediately recalled Foster. Mr Monahan: Then you found Foster had got five hunureu pounds of yours! Did you regard that as justice?

Mclnnes: I was very sorry about it. (Laughter). Mr Monahan: You were notified that Dunn, the sales manager in Brisbane, -was receiving tne bank’s list also? Mclnnes: Yes. Mr Monahan: Dunn suggested th a' some of the bank’s officers should be taken for a holiday by you? Mclnnes: Yes. Mr Monahan: They were to be taken away among the bank’s depositors? Mclnnes: I do not know.

“PALM OIL.” Mr Monahan then questioned Mclnnes about his discussions with Cumming. Mr Monahan: Would you have told him about the ‘palm oil’ being distributed to one of the officers of his bank? Mclnnes: No. I did not tell him. The commissioner: Even now’, I take it, you do not regard it as a betrayal of trust? Mclnnes: On the face of it, yes. The Commissioner: What do you mean by ‘on the face of it’? It either was, or was not. Do you regard it as a breach of trust? ’Mclnnes: Yes. In reply to further questions, Mclnnes said his organisation w r as trying to build up an honourable organisation. The Commissioner: By the methods we have heard about here to-day? Mclnnes did not reply. Stanley Grange was examined. He said that he was a share-broker, of Auckland. He had been called to Sydney by McArthur to discuss business arrangements with either the X or the Y Company. He understood that Wynwood Investments Coy., Ltd., drew a cheque for sixty thousanu in February to take over some of McArthur’s securities. Mr Monahan: You signed the cheque! What was the transaction? Grange: I was only acting in a

nominal capacity as a director. The matter was fully explained to me at the time. I was not specially interested in the matter. It was in connection with securities. That is all I remember. Mr Monahan: Do you remember signing a cheque in December last for seven hundred and fifty thousand pounds for Wynwood Investments, Ltd.? Grange: Yes. Mr Monahan: It was in favour of a gentleman named Meredith? Grange: Yes. That was payment for Meredith acting for the Crown. Mr Monahan: It was in connection with some securities that Wynwoou Investments, Ltd., were holding? Grange: I understand it was a debt of Wynwood Investments, Ltd., in connection with some securities taken over from McArthur. Mr Monahan: If you had not taken

over the securities, McArthur might have had to pay for th am? Grange: I think so. Mr Monahan: I understand that Meredith is the Crown Solicitor in Auckland? Grange: Yes. Mt Monahan: You are a Director in the British National Investment Trust? Grange: Yes. In reply to further questions, Grange said that the Trust had issued ten debentures for a thousand pounds each at the application of the Investment Executive Trust. The money had gone to Sydney as a deposit on the building in King Street. Mr Monahan: Who gave you instructions to raise ten thousand? Grange: McArthur. Mr Monahan: But he had nothing whatever to do with your Company at the time? Grange: No. Mr Monahan: He made a tool of your Company for his own ends? Grange: That was it.

£lOOO FOR NOTHING. Mr Monahan: Did you get any consideration for your accommodation? Grange: No. Mr Monahan: What have you had out of it? Grange: The sale of my shares and Director’s fees. Mr Monahan: The sale of your shares was at a high rate? Grange: Yes. I received one thousand pounds for what cost me nothing! Mr Monahan: Put bluntly, it was a bonus paid to you for accommodating McArthur? Grange: That is the position. Mr Monahan: You allowed your Company to be used to put one thousand pounds in your own pocket? Grange: No one was losing anything by it. The Commissioner: It might not have done anyone any harm, but the Investment Executive Trust was advancing money on the debentures of your Company. The Investment Executive Trust, of which McArthur was Managing-Director, was advancing ten thousand pounds to enable this purchase to be financed, the whole profits of which so far as you knew, might go into the pockets of Alcorn and McArthur. Did jwd consider that?

Grange: I did not consider where the profits were going. Oscar Josephson gave evidence that he was associated with the companies wherein Mclnnes had interests, also wiv.i the British Medical Investment Trust. He had asaed Mclnnes to put capital into the company. The latter agreed, his interest, he thought, being 1900 two shilling shares. Josephson said he started the British Medical Investment Trust in conjunction with Foster, but the latter dropped out..

Replying to the Commissioner, witness said the words ‘British Medical’ w’ere given to the company’s name after consultation with the secretary to the British Medical Association. Witness knew Foster in New’ Zealand in 1929, but what he had heard about him was not to his credit. Mr Monahan: Notwithstanding that you went into business with him? Josephson: You will meet him perhaps later. He is a particularly good salesman. (Laughter). Witness added he thought it was Foster who suggested starting the British Medical Investment Trust. Foster told him the secretary of the British Medical Association had no objection to using their name in part. The Commissioner: Was the idea that medical men should be induced to subscribe?

Josephson: Yes. It was a vocational trust purely for medical men. Foster resigned in March, 1934. W. B. Hewitt, recalled, stated that the amount expended on the old “Daily Telegraph” building, King Street, at June 30, 1934, was £132,000. xne sitting was adjourned. B.M.A. DENIAL, (Recd. September 7,2 p.m.) SYDNEY, September 7. A suggestion that the assistance of experts be invoked for the purpose of advising the Com-mission regarding amendments that could be made to the company law was made when the Commission resumed. The Commissioner said: It seems the Commission has reached a stage where examination of witnesses will soon be concluded. This is a matter affecting’the whole community, particularly the commercial community. Expert advice is needed, and I -want to know who the Crown propose callino*. Mr Monahan said he thought it would be necessary to call members of the Stock Exchange, Chartered Accountants’ Association, Bar Council and Law’ Institute, together with any member of the public who was sufficiently qualified to make suggestions. An emphatic denial that he had ever approved of the name or the aims of the British Medical Investment Trust was expressed by Dr. J. G. Hunter , secretary of the New South Wales branch of the British Medical Association, who said he had refused an offer by Mr J’arvie, M.L.A., that he should accept a position as director of the Company. Foster had later seen witness. "It is absolutely incorrect that the words ‘British Medical’ were ever mentioned nor did I ever tell him I liad no objection to the use of the words,” said Hunter. Questioned by Mr Monahan, Hewitt said that up till June, 1934, £72,856 had been spent on alterations and improvements to the Trust building. The Sterling Investment Company had paid £91,000 that was owing to the British National Trust by giving the latter £50,000 worth of sharesand promising to issue debentures for the balance. An undertaking has also been given that Sterling would not contract a debt of more than £lOO without the consent of the British National Trust. (Proceeding.) VICTORIAN INVESTIGATION.

MELBOURNE, September 7. The Companies’ Special Investigation Act received Royal assent.. The State Executive Council approved the order appointing two chartered accountants, J. W. Ross and L. A. Cleveland, as inspectors under the Act to investigate the affairs of the companies specified. The inquiry will commence immediately into Southern British National Trust, Ltd., V. B. Mclnnes and Co. (Australia) Ltd., and Commonwealth Homes and Investment Co. Ltd. It was announced that the AttorneyGeneral was satisfied a prima. facie case had been established, and it was necessary for the protection of

t the, public and the creditors of companies named that the affairs of these companies should be investigated, j. . “MEREDITH” PAYMENT. I AUCKLAND, September. 7. In evidence given by Stanley Grange, sharebroker, before the Royal Commission, in Sydney yesterday, it was stated that £750 had been paid by one of McArthur’s companies to V. R.. Meredith, Crown Solicitor, at Auckland. Mr Meredith’s law partner said today the sum was received by his firm as trust money for the Railways, Land and Income Tax Departments, and had been duly accounted for to those Departments. t ’ 4 PAYMENT OF INTEREST. WELLINGTON, September 6. In the House, to-day, Mr J. N. Massey asked the Minister of Finance whether he had seen a circular letter from the Chairman of the Executive Trust of New Zealand, which suggested the action taken by the Government was to preclude the payment of interest to debenture-holders in New Zealand, and whether he was in a position.to make an announcement on the subject, Mr Coates, replying, said, that no pressure was brought W rj b’ear on him ih connection with the investigation of the affairs of the Trust.' In introducing the legislation', he and the Government were influenced solely' by considerations of public interest in' the light of what was disclosed in the first report of the Commission. He hathnever refused and had no power to refuse, to allow the company to pay interest.