PREMIER TOBACCO

Hawke's Bay Tribune, Volume XXV, Issue 78, 15 March 1935, Page 7

PREMIER TOBACCO

COMPANY PROMOTION Alleged Corrupt Practices CLAIM FOR £33,820 By Telegraph—Press Association. AUCKLAND, March 14. Allegations of corrupt practices on a large scale in the promotion of the Premier Tobacco Co. (New Zealand) Ltd., were made in proceedings brought before Mr Justice Herdman in the Supreme Court. Chambers, Worth and Chambers, public accountants (Mr Mackay) as liquidators for the Premier Tobacco Co. (New Zealand) Ltd., in liquidation, took action by way of misfeasance proceedings against William Samuel Russell, managing director of the Premier Tobacco Co. (Mr R. N. Moody). Plaintiffs claimed a total of £33,820 made up of 15.000 £1 shares received by defendant, 15,000 shares which he allowed to go to the Eeronne syndicate, though it had never carried out its part of the contract, and £3820 cash received by the defendant, Mr Mackay said that the question ! was whether Russell had been guilt v I of misfeasance within the meaning ot I section 254 of the Companies Act, 1908. In 1930 Russell was managing director of Tobacco Growers (New Zealand* ! Ltd., a concern having a nominal capital of £25,000, which went into liquidation on January 14, 1932. In September, 1930, this company received I from R. G. Stavely Dale, managing I director of the Endoto Syndicate. London, proposals for promoting a tobaeU I co manufacturing company in New Zeaj land with capital of £250,000, of which I j £lOO.OOO was to be issued. There was 1 to be a promotion fee of £lO,OOO nnd I 30,000 one pound shares in the new I company, this to be divided equally be- - tween Russell and the Endoto Syndicate. Russell registered the Premier Tobacco Co., in March, .1931, and about ' that time was instructed to substitute the name “Eeronne” for Endoto. " HIG H L Y CO LOU R ED PROSPECTUS.” The Premier Tobacco Co., which was Io be promoted by the Eeronne Syndicate, issued a prospectus, on which the public subscribed for shares, continued counsel. That prospectus was a highly coloured document which set out that the directors in England would be the Hon. Richard Cecil Joynson-TTick* (now Lord Brentford), Mr R. G. Staveley Dale, F.R.G.S., and Mr John R. Remer, M.P. The New Zealand directors were Mr Russell, a brother of his now deceased, and Mr M. M. Millikin The prospectus claimed that the Eeronne Syndicate was a strong group with connections in Paris, Berlin, Athens, Cyprus, Alexandria and Addis Ababa. Its confidence was said to have been shown by financing in London over three times the amount of capital that New Zealand was asked to subscribe. His Honour: How much did the public subscribe? Mr Mackay: The public in New Zealand subscribed £23,000, and they lost every penny of it. There was not a penny piece subscribed in England. Russell’s cable agreeing to the proposal that he should receive half the fee for promoting the Premier Co. formed the basis of the charge against him of receiving a secret commission, said Mr Mackay. The cable was followed by a letter to Alexander Ronne, of whom it might be said he was equally culpable with Russell in these proceedings. Ronne was a bankrupt ! carrying on in London the business oi a free lance tobacco agent. An agreement dated March 12, 1931, provided that the promoting syndicate should receive from the Premier Tobacco Co. £lO,OOO in cash and 30,000 paid-up shares for its services. The I sydnicate was never paid a penny piece j for any of the purposes stipulated, ! neither did it raise any capital. SECRET COMMISSIONS. The two main charges against Bus- i I sell, said Mr Mackay, were that he rcceived a secret commission and that, | acting as director of the company, ho ' sanctioned the huge payment of | ; £lO,OOO and 30,000 £1 shares to a nebu- I ■ lous concern that had never in any I I wav met its obligations —Russell had I i received £3,800 in cash. i Mr Mackay said he could not say j exactly who were the members of the I Eeronne Svndicatc. Its documents were , signe<l bv different names and the de-! I duet ion he drew as that it was a ■ nebulous and fraudulent concern. j Mr Mackay referred to the directors of the Eeronne Sydnicate as including "two undischarged bankrupts and a penniless Lord.” His Honour: Lord Brentford is not penniless, is he? Mr Mackay: Perhaps not entirely penniless, but I will place tacts before the Court to show that he is a person of no standing in the business community. His Honour: He is a son of the late : . sir William ,Toy nson-Hicks? ' Mr Mackay; That is so. * C ounjcl added that Hie prolßOtloa (

agreement was a bet of £40,000 to nothing. Mr Mackay-said that 12 months after Russell had been informed by cable that the position for raising money in London was well-nigh hopeless he went down to defraud unfortunate tobacco | growers in Nelson with a published I statement in May, 1932, that “Capital to the extent of £150,000 is subscribed, guaranteed or underwritten in Londoi? to the satisfaction of the New Zealand directors.” In September, 1931, Russell advertised in a financial journal that of the company’s 250,000 shares 170,000 had been issued in London. Later Russell persuaded shareholders that if he went to London he could do something to pull the company out of the mire. That trip cost the shareholders £9OO, and while he was in London the company went into liquidation. THE ONLY ASSETS. Dudley Norton Chambers gave evidence that when the Premier Company went into liquidation the only assets | were the office furniture worth a few pounds, tobacco in bond which had gone mouldy, uncalled capital of approximately £BOOO, and a building at Nelson on which the company had spent £3OOO. That building went back to the Nelson Borough Council without compensation and was utterly valueless as an asset. The liabilities were two debentures of £lOO each in favour of Mrs Russell, creditors of approximately £3300, and a liability to the Crown for a lease at Newmarket which was settled by payment to the Crown of £450 I Very little of the share capital would be collected, said witness, as much ef it was held by married women and infants. The company had at present £2200 owing to creditors, £l4OO in the bank and there were £3OOO worth oil calls, of which perhaps £2OOO would collected. Probably the company would I eventually pay its creditors 20/- in the pound. Between £19,000 and £20,000 of the shareholders’ capital would be wholly lost. From the company itself Russell had received £2551 and, in addition, the company had paid accounts amoun- ■ ting Io £1219 which it was considered Russell should have paid. 'Hie defendant, William Samuel Russell, was submitted by counsel for cross examination, lie said that at one time the London directors had £lOO,OOO firmly underwritten. His Honour: Why did you continue to take money from shareholders alter you knew that the money could not be got in Lofidon? Witness: The prospectus was changed They endeavoured to get money m London eventually. Witness said that when he went to England he represented the Harbour Bridge Company, but he did not receive any payment from it. Witness said he knew that Ronne j had lost £40,000 in the Hatry crash. . Ronne was a Russian baron. Ihe hearing of legal argument was adjourned. — —