MORTGAGE SOCIETY

Greymouth Evening Star, 10 February 1938, Page 11

MORTGAGE SOCIETY

"SCANDAL,” SAYS RECEIVER After telling how many small investors had lost their sa.vings in a mortgage society Mr E. R. T. Phillips London Senior Official Receiver, commented: “It is to my mind nothing short of a scandal that it should be possible to carry on such a business, mismanaged and supported by the names of two peers. I hope the law will be. altered.” He was examining, at the London Bankruptcy Buildings, the affairs of the General Mortgage Society (Great Britain), Ltd. Mr Phillips said that the liabilities were £328.224, of which £65,707 was expected' to rank, against assets of £40,105, which, however, were absorbed in the debenture claims of ever £92,000. The history of the company up to June, 1936, could be regarded as one of harmless inactivity, he said. In June. 1936. the Official Receiver continued, Henry John Greville was in control as a nominee of Stanley Grove Spiro. The directors at the date of the winding-up order were Walter Ranson, Henry John Greville, Sir John Frankland Payne Gallway, the Earl of Ypres, and the Earl of Halsbury. K.C. Greville was removed from the board on August 31. "SHARE-PUSHING METHODS.”

The society subsisted on the proceeds of sales of its debenture bonds, but commissions in some cases amounting to 27 per cent., he said, were paid to agents who sold bonds on what, were commonly known as share-pushing methods, and an advertising campaign was undertaken at a cost of £13,000. In spite of a deficiency of £15,040 in December, 1936, the society continued to adverlise and canvass. It appeared that Greville became apprehensive of the imminent collapse of the society and obtained leave of absence for five weeks. He •'went abroad on August 5 and had not. returned. Later the directors caused an investigation, followed by a. report of the society’s auditor of complaints by debentureholders of an alarming nature.

Mr Phillips said that the circumstances in which the company was revived in July, 1936, with virtually no working capital, and acquired a large group of properties, and the methods of securing debenture sub rcriptions and the use of the society’s funds by Greville courted' suspicion. That, with other matters, would need the closest investigation. The directors presented' a petition upon which the winding-up order was made ou October 18. Mr Phillips added that he would m|ikc a report it he came to the conclusion that fraud ha.d been committed.

The liquidation was left in the hands of the Senior Official Receiver.