COMPANY INQUIRY

Hawke's Bay Tribune, Volume XXIV, Issue 236, 18 September 1934, Page 1

COMPANY INQUIRY

Mr. McArthur Questioned

EXCHANGE OF CHEQUES

By Telegraph—Press Assn.—Copyright SYDNEY, September 17. The Company Commission recalled Mr McArthur to-day and he was closely questioned as to the paper profits he and Mr Alcorn had made, Mr Monahan suggesting that the figure was £340,000, and Mr McArthur admitting £287,000.

Mr Justice Haise Rogers presided as Commissioner, Mr W. VV. Monahan, K.C., aud Mr J. B. Collier appeared as counsel assisting tho commissioner, Mr R. Windeyer, K.C., and Mr B. Fuller for the Investment Executive Trust of New Zealand, Limited, and the Southern British National Trust, Limited, and Dr. F. Louat for three other companies.

William Andrew Pilkington, chairman of directors of the Investment Executive Trust and Southern British National Trust, was asked to explain his reasons for coming to Sydney from New Zealand.

He said that from Press reports and from propaganda distributed by a group of hostile companies known as the “Kelly gang’’ ho thought it his duty to join his business associates, whom he regarded as brilliant mon of absolute integrity. Mr Monahan: Did you not com* here to sign some documents! Mr Pilkington: No.

Mr Monahan: Do you know that Mr McArthur used certain funds of the In vestment. Executive Trust to enrich himself? Mr Fuller and Dr. Louat objected to this question. The Commissioner- (to Mr Pilkington): You know that Mr McArthur borrowed £50,000 from the lavestmeut Executive Trust without security? Mr Pilkington: The building was the security.

Mr Monahan: Do you thiuk that the Investment Executive Trust should have, its trust funds invested in the Trust building! Mr Pilkington: Yes. The Commissioner: Wo have had several members of these associations here aud ono and all have admitted that they exercise no indejicudcnt discretion whatever. Arc you in the same categoryl Mr Pilkington; No. 1 exercise my own discretion. The Commissioner; Have you ever opposed any of Mr McArthur's schemes! Mr Pilkingtons I have never had occasion to. ME. McARTHUR’S ACTIONS. After Mr 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 that one of his duties was to recommend whether any of the companies should be wound up. If it appeared that Mr McArthur and Mr Alcorn had, in law, no right to these moneys, 'that would be a very strong reason that all the profits should be diverted to the debenture-holders. If Hie deposit money was paid out without any security at the 'limo it was pail, it should bo a matter for serious consideration what the ultimate effects were. '

Mr Pilkington was questioned regarding tho principles of tho Investment Executive Trust.

Tho Commissioner; As 1 understand tho scheme, there arc very few shareholders in your companies. Most of tho share capital is held by two men.

Mr Pilkington: Yes. Tho Commissioner: So the debenture ■holders hax e no say whatever in the control of 'the company? Mr Pilkington: No.

The Commissioner; Practically, these investments of your companies aud the shareholdings are entirely in tho control of ouo rnau! Mr Pilkington; Yes.

Tho Commissioner: You have debenture capita] amounting to £400,000 and, as far as wo know, the real capital subscribed by the shareholders is practically that of one man who is inviting the public to place capital unreservedly at his disposal. Mr Pilkington: No. He is subject to the directors. The Commissioner: Let us face the facts. If you opposed Mr McArthur to-morrow on a matter of principle I suppose you would go out? Mr Pilkington: Of course. If he wanted me to. Replying to Mr Monahan, Mr Pilkington said that his co-directors in I lie Investment Executive Trust had been Mr Pollard and Mr McArthur. He had heard a rumour that Mr Pollard had resigned. At the last meeting of directors at which Mr Pollard wns present a proposal had been put forward to give Mr McArthur power of attor ney, but Mr Pollard had taken the view that since 'the Commission had begun its sittings it would be dangerous to transact business of that mil uro. Further questioned, witness admitted that a power of attorney was prepared so that Mr McArthur could perform in New Soutl Wales any acts of a director. Mr Manahan: Mr Pollard was not prepared to sign it, so you came over to New South Wales.

Mr Pilkington: I had arranged to come over before that. Mr Monahan: Did Mr Hope, a former director, retire because 'the operations of the company were not to his liking Mr Pilkington: No, because they were too big for him. It had nothing to do with a balance sheet. Mr Monahan: Ho retired at the same time as the auditor, Mr Anderson, got out. ALDITOK’S REPORT. Mr Pilkington was further questioned regarding the Investment Executive Trust balance sheet to which Mr Anderson had taken exception. He said that there had been a division of opinion as to the line of demarcation between brokerage charges and commission charges. Only live per cent, has been stipulated, but Melnnes and Co. had received considerably more. Mr Monahan: Did you show Mr Pol.lard the report sent by Mr Anderson to tho board? Mr Pilkington: Yes. Mr Monahan; 1 put it to you that. Mr Pollard was never told of the dispute witii Mi Anderson. Mr Pilkington. I don't know. Mr Monahan: Mr Anderson was invited to meet the directors, yet Mr Pollard was not present. Mr Pilkington: I don't remember.

Dr. A. E. Colvin appeared to explain his connection with the British Medical Investment Trust. He said that Major Jarvie had told him that the trust wanted a medical man on Ihe board. Major Jarvie had said that tho company was tho same as the British Medical Investment Trust in England and that that company worked in conjunction with the British Medical Association in Englund and that the new company would work with the British Medical Association.

Major Jarvie also informed him that Mr Hunter, secretary of tho British Medical Association had told him that it was a good thing that such a company was being formed to safeguard the interests of medical men.

Witness in cuii'seqiiencc of certaiu tilings be had read, had subsequently suggested that on account of his own ill-health the mattei of his association with the company should be left open foi about twelve mouths, alter which be would see whether the company were working properly and with the approval of the British Medical Association. Ho hud later withdrawn

from being a director on tho ground of ill-health.

MR. McARTHUB AGAIN.

Mr SlcArtnut, recalled, produced tho pass books of his bank accounts. Mr Monahan (referring to one of these): What is this cheque paid in for £lOOO P Mr McArthur: That was an advance made to mo from either the Southern British National Trust or tho British National Trust f can't remember. Mr Monahan: Was it not the balance of a mortgage advanced by the Australian Glass Co.? Mr McArthur: If it is I paid £s°o procurator’s fees and repaid the other £5OO to the British National Trust. 1 was under the impression that T hnd repaid it, though T can see nn record ot it in any of these statements. Mr Monahan: T suggest that you cm ployed that for personal uses, but we will go into that later. Continuing, Mr Monahan asked: You and Mr Alcorn have made profits on paper of £340,000. have you not? Mr McArthur: No Mr Monahan: There was one for £287,000? Mr McArthur: Yes. Mr Monahan: And one for £77,000 in connection with sales of Southern British? Mr McArthur: That did not affect our position at. all. It does not mean that there were any profits made. Th> share capital was increased. Mr Monahan: But that was only done after this commission started. Y'ou appeared in the Southern British National Trust honks as a creditor? Mr McArthur: Ye# Mr Monahan then questioned Mr McArthur regarding exchange of certain cheques The Commissioner: I may take it that oil this was done because you did not wish the facts to be disclosed to any one? Mr 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? Mr McArthur: Wo did it to keep the true facts from our opponents. The commission adjourned till tomorrow.