WHOSE PROFIT ?

Grey River Argus, 22 August 1934, Page 5

WHOSE PROFIT ?

TRUST COY. INQUIRY DEALS QUESTIONED In N.Z. and Sydney (Aus. & N.Z. Cable Assn.) (Received Autrust 21 at 5,5 p.m.) SYDNEY, August 21. The hearing of evidence was continued to-day by the Royal C'omm.ssioner. Mr Justice Ha.se Rodgers, at the inquiry regarding seventeen trust comnanies. Plans for the establishment of a new radio station were out lim'd by W. C. B. ’Hewitt, (Director of th' British Nat onal Trust), who said the British National Trust had bought three thousand pounds worth of shares in the 2LE Radio Corporation. Ltd., a registered company. The money paid at the time had gone through his Trust account, a Company- account not having been opened. The money had been obtained from the British National Investment Trust. Mr Monahan, K.C.: “But that was the Company with no money except that for (he purchase of the Trust building? ’ ’

M;- Hewitt: ‘‘The British National Investment Trust made the ad van/*' to the British National Trust out oi money advanced by the Australian Glass Company, which had a mortgage on the budding ’’ The Commissioner: “How, and why could the British National Investment Trust advance money to the British National Trust?” Mr Hewitt: ‘‘lt was just an arrangement between the t-wo companies. ’ ’ The Commissioner: “I suppose they 'were so interlocked that it did not matter who had the money?” Mr Ilewitt: “That is the position.’"' Mr Monahan: ‘‘Did the Australian Glass Company know their mortgage money was to be used for buying radio shares?” Mr Hewitt: “No. It did not concern them.” Further questioned. Mr Hewitt said that no book entry had been made for the transfer nor did the British National Trust give the British National Investment Trust any security. INTEREST PAYMENT. MADE OUT OF CAPITAL. SYDNEY, August 21. Hewitt, again examined by Mr Monahan, regarding the operations of the British National Trust, admitted that £4OOO in interest, owing to the debenture-holders, had been paid out of the subscribed capital. Asked by the Commissioner, what assets the British National Trust actually possessed, he said that its assets consisted of the assets of the Sterling Investment Coy., which was practically controlled by the Pacific Exploration Coy. Those two companies’ assets totalled £200,000. Further questioned by Mr Monahan, Hewitt admitted that he had been writing up the books over the weekend. The stocks were all brand new, and had been written up from freight records he had kept. ONE COY. SELLS 20,000 SHARES. TO ANOTHER FOR £2170. (Received August 21 at 7.15 p.m.) SYDNEY, August 21. At the companies Commission Hewitt. giving further evidence, said that the British National Trust purchased on March 12th last 20,801 ordinary shares in ' the Sterling Investments Company 4aor £2,170. Practically all the rest of its investments were advances to the Sterling Investment Company. Nlr Monahan, K.C’.,: What are they? Hewitt: “I cannot toll you” DEBENTURE ISSUE. 'Hewitt said that his company had also issued debentures for £107,000 to the Investment Executive Trust of New Zealand since June 13th, 1933. Mr Monahan: ‘‘Did you have a minuto dealing with the issue of these debentures?” Hewitt: ”1 had power to issue debentures any time, and since the ap pointment of this Commission, a minute had been entered in the books of the Company confirming all of the issues of debentures.” WHAT SECURITY? Mr Monahan: ‘‘When your company issues one hundred and seven thousand pounds worth of debentures, it should get £107,000 for them.” Hewitt: ‘‘l did, in effect, get that for them.” 1 Mr Monahan: “You didn’t get cash or securities! what did you get?” Hewitt: ‘‘We had the liability of Sterling Investments for them.”

Mr Monahan: “Was that liability recorded in any way?'” Hewitt: “It’s just a general liability by Sterling’s”. The Commissioner: “Do you think the position that you have disclosed to-day is a satisfactory one?” Hewitt: “I admit that I should have known more about where these moneys were going.” WHOSE ORDERS? The Commissioner: “Can you say at whose request these debentures were issued ? ’ ’ Ilewitt: “I was requested by the Executive of the Investment Trust.” The Commissioner: “Where is the record, of the committments which they were issued to cover?” Hewitt: “I have no record. T have, however, discuss'd the matter with Mr Glasson. ” Mr Monahan: “To. whom was the'

actual debenture payer handed?” Hewitt: “Some were handed to McArthur. , ’ Hewitt said tha’ when he le’t New Zealand last February to provide f« r advances, he left a certain number of signed debentures with/^the secretary of the Investment Executive Trust. A QUESTION OF CALLOBORATION. While he was being closely questioned regarding the debentures. Ilewitt interposed: “I prefer to ascertain the fu’l falcts from the books, rathe- than give negative answers.” The Commissioner (Judge Haise Rodgers) agreed that it might be an well to call Hewitt later, when he had a full knowledge of the facts. Mr Monahan interjected: “There are reasons tor trying to get the facts out befor e the”e is collaboration between the parties. One object of this Commission is to inquire into the methods and the activities of these companies. ’ ’ The Commissioner: “As far as the management of the British National Trust is concerned, only Hewitt icar offer any reason why I should not draw the inference that his actions were controlled fem outside.” Hewitt: “I think that ha’dly fair.” WHY THE LACK OF KNOWLEDGE The Commissioner: “Why?” You are asked about the issuing of debentures worth one hundred and seven thousand pounds, and you do not know why they were issued. You left a lot. signed, in New Zealand to be issued and you do not know whether the money has been paid or not.” Hewitt: “I have no reason to assume that the money has been unpaid.” The Commissioner: “Is that ths aih titude of a Managing Director? If there is any reality in it, surely it is important for the Managing Director to know whether money has been paid, or whether he has any security?” Hewitt: “As far as I am concerned. I may have been relying too mulch on my faith in other people.” The Commissioner: “My present inference is that somebody called the tune, and that you moved accordingly” Hewitt: “In certain cases, I was merely confirming action already taken’.” Ilewitt went on to say that the Pacific Explorations Company, which owned twenty-seven thousand acres of land, north of Aukcland, was formed for thc purchase of a yacht. He understood that McArthur now owned the yacht, while the land was worth one hundred thousand pounds.” “Hewitt added: :“1 know that McArthur does not make bad deals when he buys.’’’ ” * Mr Monahan: “Or sells!” Ilewitt: “Quite so.” (Laughter.)

PRIVILEGE CLAIMED. Mr Monahan then exhibited a certain document, which Ilewitt explained comprised notes ' made by him, on which be claimed privilege. Mr Monahan: “Do you claim privilege as a solicitor?” Ilewitt: “I think I am entitled to claim privilege.” Mr Monahan proceeded to examine Ilewitt about the formation of the British Natioanl Trust, and he mentioned a transaction relating to McArthur applying for sixty-five thousand shares “I suppose there was a plan afoot to clear a profit through this too,” he asked. 1 Ilewitt: “I don’t see that at all.” MONEY “CUT UP.” Mr Monahan: “Well, there was the sum sut up between McArthur and Alcorn in a proportion of four to one.” Ilewitt: “Yes.” Mr Monahan: “Why were they to apply for aH of these shares in the British National Trust?” Ilewitt: “It was part of the transaction.” Mr Monahan: “There was £287,000 to be procured, and McArthur was to tipp’y for 365 thousand five-shilling shares in the Southern British Company.! There was also a plan to clean up another forty-five thousand pounds out of the transaction tor McArthur and Alcorn,” Hewitt: “I cannot see that at all ” Hewitt’s counsel objected to the words “clean up.” 1 The Commissioner: “I assume that what is meant is a profit.” Replying to further questions, Hewitt said that the British National Trust was to have issued one million pounds worth of debentures to be used to finance alterations to the company’s building, but not for other purposes.” The hearing was then adjourned.