COMPANY INQUIRY

Hawke's Bay Tribune, Volume XXIV, Issue 213, 22 August 1934, Page 8

COMPANY INQUIRY

SYDNEY INVESTIGATION Mr. Hewitt Again in Box INTEREST OUT OF CAPITAL By Telegraph—l*ress Assn. —Copyright SYDNEY, August 21. The Commission of Inquiry into the activities of 17 trust companies was resumed. Mr W. C. B. Hewitt, a director of the British National Trust, was again ttxamined by Mr Monahan regarding the operations of the British National Trust. He admitted that £4OOO Interest owing to debenture-holders had been paid ont of subscribed capital. Asked by the Commissioner what assets the British National Trust actually possessed, he said its assets consisted of the assets of the Sterling Investment Co., which was practically controlled by tho Pacific Exploration Co. Those two companies’ assets totallei £200,000. Further questioned by Mr Monahan, Mr Hewitt admitted that he had been writing up the books over the weekend. The books were all brand new and had been written up from rough records he had kept. Plans for the establishment of a new radio station were outlined by Mr Hewitt, who said that the British National Trust had bought £300,000 worth of shares in 2LE Radio Corporation Ltd., a registered company. The money paid at the time had gone through his trust account, the company’s account not having been opened. The money had been obtained from the British National Investment Trust. Mr Monahan: But that was the company with no money except that for the purchase of the Trust building, Mr Hewitt: The British National Investment Trust made the advance to the British National Trust out of money advanced by the Australian Glass Co., which had a mortgage on the building. The Commissioner: How and why eould the British National Investment Trust advance money to the British National Trust? Mr Hewitt: It was an arrangement between the two companies. The Commissioner: 1 suppose they were so interlocked that it did not matter who had the money! Mr Hewitt: That is the position. Mr Monahan: Di ( j the Australian Glass Co. know that their mortgage money was to be used for buying radio •hares! 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 Tn cstment Trust any security. POWER TO ISAUE. Mr Hewitt said that the British Nat' :I Trust purchased on March 12 ! r.«t 2i .801 ordinary shares in Sterling To vestments for £2170. Practically all rl a rest of the investments were adVance.-, to the Sterling Investment Co. Mr ”onahan: What are they! Mr Hewitt: I cannot tell you. This r un’uuiy hns also issued debentures fo: £107.000 to the Investment Executive Trust of New Zealand since Tune 3#. 1933. Mr Monahan: Did you have a minute dealing with the issue of these debentures! Mr Hewitt: I had power to Issue debentures at any time, and since the appointment of this commission a minute hns been entered in the books of the company confirming all issues of debentures. Mr Monahan: When your company I«sues EPM.OOO worth of debentures it should get £107,000 for them. Mr Hewitt: I did, in effect, get that for them. Mr Mtmahan: You did not get eash securities: consequently, what did you getY Mr Hewitt: We had the liability of Sterling Investments for them. Mr Monahan: Was that liability recorded in any way! Mr Hewitt: It is just a general liability by Sterling Investments. The Commissioner: Do you think that the position you have disclosed to-day Is a satisfactory one? Mr Hewitt: I admit that I should have known more about where these moneys were going. The Commissioner: Can you say at whose request these debentures were issued! Mr Hewitt: I was requested by the executive of the Investment Trust. The Commissioner: Where is the record of the commitments they were issued to cover! Mr Hewitt: I have no record. I have, however, discussed the matter with Mr Glasson. Mr. Monahan: To whom were the a t util debenture paper:, handed: Mr Hewitt: Some were handed to Mr At ' rthnr. MGNED DEBENTURES LEFT. Mr Hewitt- said that when he le't " Zealand in February to provide h r mi a lives be left a certain number OI ,igued debeiitur. - nub the secretary 11 th< Investment Executive Trust. While being closely questioned re-

garding these debentures Mr Hewitt interposed: I prefer to ascertain the full facts from the books rather than give negative answers.

The Commissioner agreed that it might be as well to call Mr Hewitt later when he had full knowledge of the facts. Mr Monahan interjected that there were reasons for trying to get the facts out before collaboration between the parties. “One object of this commission is to inquire into the methods and activities of these companies,” he said The Commissioner: As far as the management of the British National Trust is concerned only Mr. Hewitt can offer any reason why 1 should not draw the inference that his actions were controlled from outside. Mr Hewitt: I think that hardly fair. The Commissioner; Why? You are asked about the issue of debentures worth £107,000 and you do not know why they were issued. You left a lot signed in New Zeaand to be issued and you do not know whether money was paid or not. Mr Hewitt: I have no reason to assume that money was unpaid The Commissioner: Is that the attitude of a managing director? If there is any reality in it surely it is important for the managing director to know whether money is paid or whether he has any security? Mr Hewitt; As far as I am concerned I may have been relying too much on my faith in other people. The Commissioner: My present inference is that somebody called the tune and you moved accordingly. Mr Hewitt: In certain cases I was merely confirming action already taken. Mr Hewitt went on to say that the Pacific Explorations Co., which owned 27,000 acres north fl Auckland, was formed for the purchase of a yacht. He understood that Mr McArthur now owned the yacht while the land was worth £lOO,OOO. «I know that Mr McArthur does not make bad deals when he buys,” said Mr Hewitt. Mr Monahan; Or sells! Mr Hewitt: Quite so. (Laughter.) Mr Monahan then exhibited a certain document which Mr Hewitt explained comprised notes made by him on which he claimed privilege. Mr Monahan: Do you claim privilege as a solicitor. Mr Hewitt: I think 1 am entitled to claim privilege. Mr Monahan proceeded to examine Mr Hewitt about the formation of the British National Trust, and mentioned a transaction relating to Mr McArthur applying for 65,000 shares. ‘‘l suppose there was a plan afoot to clear a profit through this too?” he asked Mr Hewitt. Mr Hewitt: 1 don’t see that at all. Mr Monahan: Well, there was the sum cut up between Mr McArthur and Mr Alcorn in a proportion of four to one. Mr Hewitt: Yes Mr Monahan: Why were they to . apply for all these shares in the British National Trust! OBJ.' ”O WORDS. Mr Hewit': it was part of the transaction. Mr Monahan: There was £287,000 to be procured and Mr McArthur was to apply for 365,000 five-shilling shares in the Southern British Co. There was also a plan to clean up another £45,000 out of the transaction for Messrs McArthur and Alcorn. Mr Hewitt: I eannot see that at aU. Mr Hewitt’s counsel objected to the words ‘‘clean up.” The Commissioner: 1 assume that what is meant is ‘‘profit.” Replying to further questions, Mr Hewitt said that the British National Trust was to have issued £1,000.000 worth of debentures to be used to finance alterations to the company’s building, but not for other purposes. The hearing was adjourned.