TRUST COYS

Grey River Argus, 21 August 1934, Page 5

TRUST COYS

SOME REVELATIONS SYDNEY INQUIRY Assets in Question (Aus. & N.Z. Cable Assn.) (Received August 20 at 5.5 p.m.) SYDNEY, August 20. Tlie Commission inquiring into the activities of seventeen t>ust companies resumed to-day. Mr W C. B. Hewitt, Director of the British National Trust, was recal.ed to explain why the companies’ books were not yet ready. ll e said they had not had sufficient time to make the necessary entries. Air Monahan. K.C.: “Is it not a fact that, when the. inquiry opened, the books were in such a state that they could not assist ordinary accountants in any way?” Mr Hewitt: “No. I would not say t'ha-t.” Mr Hewitt added that he ha.l brought some books up to date Air Afonahan; “Have you made any alterations in the books?’’ Mr Hewitt: “As far as they are concerned, I can explain any alterations I made.” Air Alonahan: “Are you not trying to alter the complexion of certain transactions? ’ ’ HOW COMPANIES GOT MONEY. Air Hewitt: “Certainly not.” Mr Monahan said the accountants were having difficulty in elucidating certain matters, aufl particularly the source from which £116.000 was obtain ed to pay the contractors for ithe Trust Building. Air Hewitt: “It was the British National Trust’s own money.” Al r Monahan; “The British National Trust never had any money! Air Hewitt: “.It was obtained by selling debentures to the Southern British National Trust Ltd., and to the -Investment Executive of New Zealand Ltd.’’ Air Alonahau: “How did those com panics get the money?’’ Air (Hewitt: “By the sale of debentures to the public.” Mr Monahan: “So the building has ; been paid for by publicly-subscribed ; money. ”

Air Monahan: “Is it not correct to l say that the Bri-tish National Trust entered a contract for over one hun- i dred thousand pounds without even having a bank account?’’ Air Hewitt: “Yes. Mr Hewitt said that ho was unable to say what proportion of the money had been paid by the Southern British National Trust and the Investment Executive Trust. The entry had not been posted 'in the books. H e had entered it on a >heeit of paper, which was in the office. Air Monahan: “When was that done?’’ Air Hewitt: “On Saturday morning.” Air Alonahan: “So that one hundred thousand pounds changing hands is recorded on a scrap of paper?” Air Hewitt: “Yes.” AVAILABLE CASH. Replying to the Commission, Mr Hewitt said that jf the British National Trust wound up, there would be very little liquid cash available. Referring to Mr Hewitt’s sole directorship of the British National Trust. Air Alonahan ‘inquired why AlcArthur had relinquished his directorship' in the company. Air Hewitt said that AlcArthur had made a profitable deal, involving a turnover to himself of two hundred thousand, and he had immediately left the companyj THE CENTRAL FIGURE. Mr Monahan; “Is it not a fact that AlcArthur 'is running all of these companies, and that you and others are just, doing his bidding, without question?’ ’ Air Hewitt: “We all have every confidence in AlcArthur! ” Air Alonahan: “Did you ever exercise any independent judgment as sole director of your company?’’ Air Hewitt: “In some things, yes.” A PAPER TRANSACTION. Air Hewitt, continuing, said, in 1928, with his wife, he started the company, known as Farms and Farmlets Ltd. The nominal capital, which was one thousand pounds, was put in by himself and his wife. Air Alonahan: “How did it happen that your company decided to purchas P I an interest amounting to £51,000 in the British National Trust Irom AlcArthur? Did you have any money for it?” Air Hewitt: “We did not propose to pay money. We proposed to take out a debenture issue, and pay AlcArthur. The Commissioner: “Is it not entirely an illusory transaction?” Mr Hewitt: “It was a paper transaction. ’ ’ The Commissioner: “What was the object ?” Mr Hewitt: “As far as I was conI cerned, it gave me an interest in the building.” The Commissioner: “Were you to get something for nothing?” Mr Hewitt: “No. I’ve worked for all I got.” Air Alonahan: “Then McArthur unloaded £52,000 of debentures on you the same day as he received them?” Air Hewitt: “Yes, and Farms aid I’armlets Ltd., had no actual share certificates which could be sold, on the n arket. In ‘the following June, the capital of Farms and Farmlets Ltd., was increased to twenty-five thousand, but the Subscribed capital remained the same.. The Debentures indicated

that if the company showed no profits, there would be no dividends.” AN IMPORTANT QUESTION. Mr Monahan: “You sold them to ordinary members of the public ?” Mr Hewitt; “Ordinary members of the public do deal in such things. ’ ’ The Commissioner: “That’s one cd the questions that we have to inquire into.” Mr Hewitt, in a long explanation, said ithat Sterling Investments Ltd. was completely controlled by the Brit ist National Trust. The Commissioner: “Can you show /result from the whole of this transaction, except to substitute the name of Farms and Faruilets Ltd., foi the real holders, the British National Trust?” Mr Hewitt: “That 'is -the effect of it.’-* A DUMMY? The' C’ommbsioner: “Would it be reasonable and proper for me to draw the inference that Farms and Farm lets Ltd., is a “dummy’’ in certain snare transactions ? ’ ’ Mr Hewitt: “I cannot say that quite states the position.” The Commissioner: “I’ll give you the opportunity to think that over for a da v or two.” Mr Hewitt then gave ev.dence regarding -the formation of the British National Trust in January of 1933. with an issue of debentures for one million pounds at one thousand pounds each, the intention being to t’ad e in shares. He said that the Briti-h National Investment Trust was originally floated in New Zealand, under the title of the Stock Exchange Corporation. Its capital at present was £3OOO. Mr Monahan: “In February. 1933. that company passed a resolution to sell for two hundred and ninety thou sand pounds, shares that cost vendors about three thousand ponds?” Mr Hewitt: “Well, yes. That was the position. Mr Hewitt denied a suggestion that McArthur and Alcorn had tried to put anything in their pockets. Their object in forming so many companies was to try and build up the companies concerned. BUYING OF BIG BUILDING. Mr Monahan: “Wasn’t this the position?: The British National Trust which owned the old “Telegraph” building in Sydney, issued two hundred and fifty thousand ordinary shares, of which two hundred and forty-nine thousand were held by McArthur and Alcorn, and. in consideration, they gave three thousand pounds? They got it all for practically nothing. They then sold it to the British National Trust Coy., for more than one pound & share.” Mr Hewitt: “They were the ones who saw the value of this building, and they were entitled to make a profit from it.”

Mr Monahan: “Do you say seriously? ’ ’ Mr Hewitt: “Their intention was to build up' other concerns. I think they will use what assets they have to protect the debenture holders. I refer to the building—subject to the mortgage of one hundred thousand pounds. The income from that building is eleven thousand a year, which is sufficient to pay the liabilities.’’ Replying to the Commissioner (Judge Haise Rodgers), Mr Hewitt said that the book value of the old “Telegraph” building was in the vicinity of four hundred and fifty thou sand pounds, on which the profit was about two hundred thousand. THE PROFITS The Commissioner: “Have there been any dealings by these companies in the past year yielding a profit?” Mr Hewitt: “I do not know, so far as Sterling Investments is concerned, but the British National Trust would show just a slight profit.” Mr Monahan: “Why should your company give debentures to recoup the Investment Trust for payments to the Sterling Investment Coy.?” Mr Monahan: “Do you give away debentures as a matter of policy?” Mr Hewitt: “They were not given away. On account of a campaign being launched against the company in New Zealand, Australian debenture holders were taken over. Sterling Investments purchased some debentures in order to protect the interests of debenture holders generally.” Mr Mionahan: “Why should your company purchase debentures on that account ? ’ ’ Mr Hewitt: “Anything which affected one company affected the whole.” SUGGESTION OF LOSS. Mr Monahan: “If you treated the value of your building at cost price in the same manner as you treat debentures, it means that two hundred thousand pounds has been lost by the public.” Mr Hewitt: I am not prepared to answer that, you are scaring the public. ’ ’ • Mr Monahan: “I’m trying to enlighten them.” Mr Hewitt said that h 3 valued the “Telegraph” building at half a million pounds. The hea’irg was adjourned.