“TRUST” BALANCE SHEET

Greymouth Evening Star, 12 September 1934, Page 7

“TRUST” BALANCE SHEET

“KEY” BOOKS MISSING INVESTMENT OF FUNDS [BY CABLE —PRESS-ASSN. —COPYRIGHT.] SYDNEY, September 11. I Major Jar vie, member of the New South Wales Assembly, continued his evidence before the Royal Commission on. company promotion. He denied having told Mclnnes that Doctor Hunter approved and named the British Medical Investment Trust. Witness said: Mclnnes’s evidence in that respect was inaccurate. Witness said he had merely asked Dr Hunter for his approval for Colvin being on the Board of this Trust. He had retired from the Board because he wanted, as a public man, to be free and to vote in Parliament free from any association with Trust companies. Mr Monahan: It was in your mind

that there would be Parliamentary action before you retired? Major Jarvie: Yes. I discussed the matter with the Premier (Mr Stevens).

Glasson was recalled, and was questioned regarding the production of the balance sheets. He said that Sterling Investments Ltd. balance sheet was the key to everything. Mr Monahan: And the books of Sterling Investment are missing? Glasson: yes. Continuing, Glasson said that these books had been left by him in Auckland, but they had disappeared. Apparently they had been removed from his office.

Mi' Monahan: I suppose that without the books, the truth will never be known ?

Glasson: 1 wouldn’t say that. Mr Monahan: Is there any doubt that, as the result of McArthur’s and of Alcorn’s dealings with the books of these companies, some, or one, or all of them, have made three hundred and forty thousand pounds profit in connection with Trust building in Sydney? Glasson: I could not say. Mr Monahan; Isn’t it somewhere near that?

Glasson: On paper. Mr Monahan: McArthur, as the result of these transactions has a whole lot of the assets of Wynwoods? Glasson: Yes, he has charge over the assets. Mr Monahan: Such a charge that it I makes him virtually the owner of the lot! He has also property that belongs to Pacific Explorations, including the yacht! That is all paid for out of the profits of these transactions. Can you unravel it? Glasson: I am afraid I cannot. Mr Monahan: If you'had Sterling Investments’ books, would you be in the position to do it? Glasson: Probably. The Commissioner (Judge. Rogers) asked Glasson whether he had altered the Southern British balance sheet on Friday afternoon, as the result of McArthur’s directions. Glasson said that he did not remember. The Commissioner: I think yon are inclined to fence with me? Glasson: No. The Commissioner: Did you alter it on Friday? Glasson: Yes. Mr Monahan then quoted specific alterations, which Glasson said had been made at McArthur’s’"suggestion. After further questioning the witness said that an expense item had been converted into an asset. Asked to explain how he had originally shown the list of investments in other companies as an expense, and had afterwards put it on the other side as an asset, the witness said that, on reconsideration, it was realised that it was an asset in effect. Further reference to the “X” and “Y” Companies was made when Mr Monahan questioned Glasson to consider the interests of the Investment Executive Trust.

The Commissioner said that he had to consider the interests of companies. He said: “When people try to get control of a company by secrecy, one suspects that there is something wrong. It seems as if two wellestablished New Zealand companies may get into the hands of people employing such business methods as we have here.” Mr Monahan: What steps are being taken by the Investment Executive Trust with regard to the Trustees. Executors and Agency Companies of New Zealand? Glasson: I know nothing about it. Mr Monahan: It is a company with assets of three or four millions, comprising deceased people’s estates, is it not? Glasson: I believe so. Mr Monahan: Why are you trying to get control of these funds? Are they to be invested ;is these others have been? Glasson: I know nothing at all about it. Mr Monahan: How much debenture capital has the Investment Executive Trust allowed the Transport Mutual for the purchase of the Trustee Company’s shares? Glasson: About fourteen thousand.

MCARTHUR’S STATEMENT. McArthur presented a lengthy statement in which he said that every penny of the debenture holders’ money was fully protected and secured by sound investments. These investments exceeded in value the sum charged upon them. He stated that, the total amount subscribed by the public for debentures in the Southern British Trust, and in the Investment Executive Trust amounted to £648,194, while the book value of the investments, at cost, was £649,153. The present market value of the investments held on behalf of the debenture holders was much higher than the value set against them in the company’s books. The debentures of the British National Trust were supported by a great deal more in the way of substantial assets than the Trust building alone. After dealing with the general plan of the Investment Executive Trust and the Southern British National Trust, McArthur said that one clause of the debenture provided that ninetyfive per cent of the annual net earnings should be set aside for the holders of debentures as interest. The security given to the subscribers to these Trusts was a first mortgage debenture, which, must always take pre-

cedence over creditors of every class, no matter what kind of charge, or mortgage that the Directors of the Trust might attempt to create over any of the assets. He had attempted to plan the operations of Trusts in such a way as eventually to return to the debenture holders.a rate of profit exceeding that, of the interest

on an ordinary investment trust debenture. An indication of the success which the Trust had achieved, was that, after less than three and ahalf years’ activity, the Investment Executive Trust had been able to pay the debenture holders a total of 26 per cent, by way of return on the capital invested by them. McArthur contended that the affairs of the companies that wore being investigated were at an incomplete stage of their development. He admitted that, on a general view the, relations of the various Companies with one another might seem to have been needlessly, and even purposelessly, involved. Many matters had their explanation in conditions under which the Investment Executive Trust had been compelled to operate. It was necessary to understand the nature of the forces working against this Trust since its inception. He remarked that there has been “strong influence at every point of the financial and political life of New Zealand against the Trust Companies.” He said that there also had been “deliberate attempts to injure the Investment Executive Trust by making it appear that its debentures had been brought below par value.” Suggestions had been made during the inquiry that the financing of the Trust building in Sydney had involved some misuse of money that had been sub- i

f scribed by the public, and that portion of that money had been transferred from the debenture fund to i Alcorn and himself. There was not ■ the faintest foundation for any such ■ suggestion. I ALLEGED HOSTILITY. The primary function of the Sterling Investments Company had been to conserve the interest of the debenture holders by doing what the Investment Trust Company was not able to do for itself. The Sterling Investments Company in the early stages of the life of the main Company, had been used to purchase certain assets of his, and at the same time, to take over liabilities secured on them in order to frustrate tho.sewhose desire was to strike at the Investment Trust by accomplishing his own financial ruin. A further purpose for which the Sterling Investments Company had been employed on behalf of the debenture holders had been, in a few cases, the purchase of debentures from individuals who, for one reason or another, were threatening action against the Investment Executive Trust. The hostile conditions with which the Trust was surrounded had made it even more important that no weapon should be given to its opponents with which they could stampede the debenture holders. Referring to the case of Miss Smith, of Christchurch, McArthur said that the Guardian Trust and Executive Company of New Zealand had obtained the control , of. Miss Smith’s estate, and a writ had been issued against the Investment Executive Trust, seeking to recover securities which had been transferred by Miss Smith to the Trust in payment for debentures. The Directors knew that, whatever the issue of a trial might be, the ultimate result of a trial would be to injure the Company and the debenture holders. This claim accordingly, had been settled for £29,000, which represented substantially, the value of the securities which were originally transferred to the Investment Executive Trust, and the amount by ; which they had appreciated. Me- ; Arthur said that the Guardian Trust and Executive Company was connected with the Companies with which he bad had to, contend during the Redwood Forests Coy. negotiations. Mclnnes, during his three years’ service as the Director of the selling system in New Zealand on behalf of the Investment Executive Trust had carried out his duties faithfully. The accounts of all of the companies were ’ now in order. Referring to the assets of the Pacific Exploration Company, he said that it possessed twenty-seven thousand acres of freehold land in the northern part of Auckland province, which contained rich and extensive deposits of kauri gum. On a. con- j servative estimate, the quantity of ( gum on the area was worth three mil- « lion pounds gross. This asset was set down in the books' of the Com- j pany at £4,700, that being the cost of ] the land to the Company. 1 The Commission adjourned till tomorrow. 1

TO-DAY’S PROCEEDINGS. SYDNEY, September 12. When the Companies Commission resumed this morning, Hewitt was questioned regarding the differences in the Sterling and British National Trust balance sheets. He said that an unintentional mistake had been made in then’ preparation. The Commissioner: As a matter of fact, the balance sheet is hopelessly wrong. Hewitt: Yes. Hewitt set out to explain how the Sterling Companies’ assets in British National Trust had increased from £90,000 to £120,000 and he produced a number of documents. Mr Monahan' (after . inspecting one of the papers): This has all been worked out in the last few days? Hewitt: Yes. Mr Monahan: When was this transfer signed? Hewitt: This morning. The Commissioner: These papers are dated yesterday, yet entries were made in the balance sheet as at June 30. Hewitt: It had all been arranged, but not signed. Mr Monahan: Is this not the result of Glasson’s evidence yesterday? I Hewitt: No. (Proceeding.) FARMERS’ CLAIMS. (Recd. September 12, 1 p.m.) BRISBANE, September 12. James Cork, retired farmer, of Maleny, has issued a writ out of the Supreme Court against the Southern British National Trust Ltd. He claims, a rescision of the assignment made on May 3 last, purporting to transfer and assign to the company all. his moneys due to him by the Primary Producers’ Bank of Australia, Ltd. in liquidation. An action setting forth a claim similar to that made by Cork has also been instituted by John Daniel Somner, dairy farmer, of Maleny, against the Southern British National Trust,