NOT ACCEPTABLE

Grey River Argus, 5 October 1934, Page 7

NOT ACCEPTABLE

McARTHUR’S SCHEME Judge and Counsel Argue DENOUNCE DIRECTORS’ METHODS. (Aus. N.Z. Cable Assn.y (Received October 4 at 11.35 p.m.) SYDNEY", October 4. At the Royal Commission, on Company Promotion, McArthur’s scheme for the reorganisation of the trust companies was criticised to-day by Mr. W. W. Monahan, K.C., who said that he could not recommend its adoption in any shape or form. No court, he said, could countenance a scheme which, allowed McArthur and Alcorn to enrich themselves by over one hundred thousand pounds. Neither a trust nor any other business was allowed to speculate with public funds and retain the profits. “When you strip these operations of chicanery and camouflage,” declared Mr. Monahan, “they stand revealed as an elaborate scheme for applying sixty thousand pounds of the Investment Executive Trust money for the rescue of McArthur’s assets! As regards the Southern British Company, they manipulated public money in order to embark on speculation, and to put profits in their own pockets.

“I would not associate myself with any scheme which did not allow for the full restitution of the profits to the people to whom they belong,” declared Mr Monahan. He added that he was compelled to say, on the evidence, that the men in charge were unworthy of confidence. On the question of future control of the concern, Mr Monahan said that the effect of McArthur’s scheme was that the present management should continue. McArthur’s proposal regarding the election of directors was farcical, because the holdings in Bri-

tish National Trust or in some other Company would probably be such that all of the elections of Directors would be controlled probably by McArthur.

“I say, without hesitation,” said Mr. Monahan, “that any scheme which leaves in control the existing management cannot possibly commend itself for adoption.’’ No provision had been made in the scheme, he said, for Mclnnes, who held a five years’ contract for selling Southern British debentures. Mr Monahan then invited the companies’ counsel to say how they pro posed to get funds from the public in future if they jettisoned Mclnnes. If they were to retain Mclnnes, they would be countenancing methods which would not commend themselves to any court.

Mr Fuller began his address by dealing with McArthur’s and Alcorn’s investments, which, he said, were for the interests of the debenture holders, rather than for personal profits. The Commissioner (Judge Haise Rogers): “They were profits made by juggling with the funds or the money placed in the hands of the companies of which they were the executive officers. ’ ’

Mr Fuller submitted that that was not so.

The Commissioner; “Well, that is what I intend to report! What else is all this elaborate scheme of juggling with the funds of the Investment Executive trust?”

Mr Fuller was explaining how, in his opinion, McArthur and Alcorn were legally converting the funds, when the Commisisoner interposed: “Yes, for their own personal profit! Things were so arranged that they may have been acting legally.” Mr Fuller said that what had been done had been right legally. If the Commission were to - embark into the realms of moral conduct, it would be a remarkable procedure. The Commissioner said that all that the Commission was interested in was the interest of the people who had invested their money in the companies.

THE CASE FOR McARTHUR. Air Fuller (for the companies) submitted that the only possible scheme by which the public could be protected was one put forward by the companies. The elimination of unnecessary companies must, in effect, strengthen the debenture holders in the British National Trust, because the assets came back, and were held by the British National Trust. The position in regard to payments to the Managing Director was dealt with. It might happen that the present control would be removed altogether, because McArthur had offered to cancel all of his interests under the agreement, with the Trust Companies. Doctor Louat (for the companies) said that the purchase of the Trust Building could be regarded from only two viewpoints—whether it was legal, and whether it was moral. He submitted that its legality could not be attacked. If it were immoral, it must be shown that someone had suffered, or been exposed to risk or to prejudice. That could not be shown. The fact of the matter was that, whether the original intentions had been to surrender half of the profits on the building or not, the sum of £178,000 was to be transferred to the debenture holders. In a final plan, there was no doubt how the debenture holders stood as the result of the building transaction.

DR. LOUAT’S ARGUMENT. AIR MONAHAN’S QUERY. (Aus. and N.Z. Cable As«n.) SYDNEY, October 4. At the Commission, Doctor Louat, for the companies, went on to say that two thirds of the profits of the Investment Executive Trust and the Southern British National Trust transaction were transferred to the shareholders and if AlcArthur and Alcorn intended the transaction to be merely for their own personal gain, they need not have thought of the shareholders. There were also other actions which

showed that they were mindful of the interests of the shareholders. In addition, he asked the Commissioner to consider the stamp of the men to judge whether they were telling the truth. Dr. Louat submitted that the reconstruction scheme gave the debentureholders complete control of their funds in future.

Mr W. W. Monahan, K.C., in replying, said that, the whole contention of counsel had been that McArthur was within the law in all he did, whereas there had been evidence which showed that he had paid forty thousand pounds into his private account. Was the man who would do that with invested money within the law? The Commisison adjourned till tomorrow.