TRUST INVESTIGATIONS

Hawera Star, Volume LIV, 18 September 1934, Page 5

TRUST INVESTIGATIONS

Director Says That Control of Company Lay With One Man RECENT POWER OF ATTORNEY ISSUE OP CERTAIN CHEQUES (United Press Association —By EJcetric Telegraph Copyright.) SYDNEY, Sept. 17. When the Companies Commission resumed- its sitting to-day, \\ iliiam Andrew Pilkington, chairman of directors of the Investment Executive Trust and the Southern British Na-, tional Trust, was asked by Mr M. Monahan, K.C., counsel for the commission. if he had come to Sydney to sign, some documents. Witness replied that lie had not. j\jfr Monahan: Do you know that McArthur used certain funds of the Investment Executive trust to emic himself ?

Mr B. Fuller (Investment Executive Trust, of New Zealand, Ltd,, and the Southern British National Trust, Ltd.) and Dr. F. Louat (for the other three companies) objected to this question. The Commissioner, Mr Justice Halse Rogers (to Pilkington : You know that McArthur borrowed £50,000 from the Investment Trust without security?—The building was the security. Mr Monahan: Do you think the Investment Executive Trust should have its trust funds invested in trust buildings?—Yes. The Commissioner: We have several members of these associations here and one and all have admitted that they exercise no independent discretion -whatever. Are you in the same category? No. I exercise my own discretion.

The Commissioner: Have you ever opposed any of McArthur’s schemes? I have never had occasion to. ' After Pilkington had been further questioned concerning the purchase of the trust building the Commissioner directed Dr. Louat’s attention to the dates of the purchase transaction. He said one of his duties was to recommend whether any of the companies should be wound up. If it appeared that McArthur and Alcorn had in law no right to these moneys, that would he a very strong reason that all profits should be diverted to the debentureholders. If deposit money was paid out without any security at the time it was paid, it should he a matter foi serious consideration what the ultimate effects were. BY TWO MEN. Pilkington was questioned regarding the principles of the Investment Executive Trust. The Commissioner: As I understand the scheme, there are very few shareholders in your companies. Most of the share capital is held by two men. —Yes. ■ So the debenture-holders have no say whatever in the control of the company ?—No. Practically all these investments ot your companies and the shareholders are entirely in the control of one man ? •—Yes.

You have debenture capital amounting to £400,000, and as far as we know the real capital subscribed by the shareholders is practically in the hands of one man, who is inviting the public to place the capital unreservedly at his disposal?—No, he is subject to the directors. Let us face facts. If you opposed McArthur to-morrow on a matter of principle I suppose you would go out ? —Of course if he wanted me to.

Replying to Mr Monahan, Pilkington said his co-directors in the Investment Executive Trust had been Pollard and McArthur.,He had heard a rumour that Pollard had resigned. At the last meeting of the directors at which Pollard was present a proposal had been put forward to give McArthur power of attorney, but Pollard had taken the view that since the Commission had begun its sittings it would be dangerous to transact business of that nature. POWER OF ATTORNEY.

Further questioned Pilkington admitted that a power of attorney was prepared so that McArthur could perform in New South Wales any acts of a director.

Mr Monahan: Pollard was not prepared to sign it so you came over to New South Wales?—l had arranged to come over before that.

Did Hope, a former director, retire because the operations of the company were not to his liking?—No, because they w'ere too big for him. It had nothing to do with a balance sheet.

He retired at the same time as the auditor, Anderson, got out. Pilkington was further questioned regarding the Investment Executive Trust balance sliced to which Anderson had taken exception. He said there had been a division of opinion as to the line of demarcation between brokerage charges and commission charges. Only 5 per cent, had been stipulated, but Melnnes and Co. had received considerably more. Mr Monahan: Did you show Pollard the report sent by Anderson to the board?—Yes.

I put it to you that Pollard was never told of the dispute with Anderson.—l don’t know.

Anderson was invited to meet the directors, yet Pollard was not present?—l don’t remember.

MEDICAL TRUST. Dr. A. Ti. Colvin appeared to explain his connection with the British Medical Investment Trust. He said Major Jarvie had told him the trust wanted a medical man on the board. Major Jarvie had said the company was the same as the British Medical Investment Trust in Elngland, which worked in conjunction with the British Medical Association in England, and that the new company would work with the British Medical Association. Major Jarvie also informed him that Dr. Hunter, secretary of the British Medical Association, had told him it

was a good thing that such a company was being formed to safeguard the interests of medical men. Witness in consequence »f certain things he had read had subsequently suggested that on acount of his own ill-health the matter of his association with the company should be left open for about twelve moi ths after which he would see whether the compan3 r were working properly and with the approval of the British Medical Association. He had later withdrawn from being a director on the ground of ill-health. ( McArthur, recalled, produced passbooks of his bank accounts.

Mr Monahan (referring to one of these): What is this cheque paid in for £looo?—That was an advance made to me from either the Southern British National Trust or the British National Trust. I can’t remember which. BALANCE: OF MORTGAGE. Was it not the balance of the mortgage advanced by the Australian Glass Company?—lf it is I paid £SOO in procurators’ fees and repaid the other £SOO to the British National Trust. I was under the impression I had repaid it, though I can see no record of it in any of these statements. Mr Monahan: I suggest that you employed, that for personal uses, but we will go into that later. Continuing Mr Monahan asked : You and Alcorn have made profits on paper of £340,000 have you not?—No. There was one for £287,000? —Yes. And one for £77,000 in connection with sales to the Southern British?— That did not affect our position at all. It does not mean that there were any profits made. The share capital was increased.

But that was only done after this Commission started. You appeared in the Southern British National Trust books as a creditor?—Yes. Mr Monahan questioned McArthur about the exchange of certain cheques. The Commissioner: I may take it that all this was done because you did not wish the facts to be disclosed to anyone? McArthur: Not to the banks. The Commissioner: Is not this series of transactions a cloak over the fact that you have certain holdings obtained in this way ?—We did it to keep the true facts from our opponents! The Commission then adjourned.