ESSENTIAL BOOKS DECLARED MISSING.

Horowhenua Chronicle, 12 September 1934, Page 7

ESSENTIAL BOOKS DECLARED MISSING.

TRUTH MAY NEVER BE KNOWN ' " ABOUT CERTAIN TRUST PACTS.

McArthur says debentureholders ARE FULLY PROTECTED.

(By Telegraph-Press Assn. —Copyright) Received Tuesday, 10 p.m. SYDNEY, Sept.-11.

: Before the Royal Commission which is inquiring into the ■ activities and methods of a number of trust and other companies, Mr. Justice Halse Rogers presiding, assisted by Mr. Monahan, Major M. L. F. Jarvie, M.C., M.L.A., made a statement regarding his association with a previous witness, Victor

Mclnnes, He said that he met Mclnnes

through a member of a firm of accountants. He had never been associated with a man mentioned in the evidence, Foster, who, it had- been alleged, had a criminal record.

* Jarvie explained that after accom--1 panying Mclnnes on a business tour of the country he had been offered a directorship with the British Medical Investment Trust' and had accepted it. He had approached Dr. Colvin, chairman of the Commission, who was a lifelong friend, and had suggested - that he, too, become a director. Dr. Colvin agreed, and both applied for 500 shares, paying £SO application money, as provided in the prospectus. Later . Dr. Colvin resigned for health reasons. His place was' taken by C. J. Alcorn. ' Jarvie said that after further association with Mclnnes and McArthur he had been offered a position with ~ the British National Investment Trust at a

salary of £SOO a yea* r -the appointment '(taking effect from April 1, 1934. The £125 he had been paid in June was for three months’ salary. 'When the British Medical Association objected to the name British Medical Investment Trust, it had been resolved to change it to the British Vocational Investment Trust. He did not know whether the change had been effected; because he resigned bn August 8.

, Mr. Monahan: The Commission was appointed on August 8. Did you not resign after Parliament had taken action? Jarvie: No. Jarvie added that he knew the Government intended taking action. An Advisory Capacity.

Eeplying to Mr. Monahan, Jarvie said that his appointment was in an advisory capacity, but he was not expected to give advice in business matters. Mr. Monahan: So the only thing you did was to give advice regarding persons invited to attend the opening of the Trust Building?

Jarvie: I attended at the Trust’s offices daily. Jarvie added that there had been .nothing to do during July, though he bad drawn his salary. He had actually never taken any part in the business transactions. Jarvie denied having told Mclnnes that Dr; Hunter had approved of the name of the British Medical Investment

Trust. Mclnnes’ evidence in that re-

spect was inaccurate. Witness had merely asked Dr. Hunter for approval for Dr. Colvin being on the board of .this trust; Jarvie said he had retired from the board as he wanted, as a public man, to be free and to vote iu Parliament free from association with

trust companies. Mr. Monahan: It was in your mind that there would be ■ Parliamentary action -before you retired? Jarvie: Yes; I discussed the matter with the Premier. Key To Everything Missing.

Glasson, recalled; was questioned re-

garding the production of the balancesheets. He said that-Sterling Investments’ balance-sheet was the key to •everything. Mr. Monahan:/'And the books of Sterling Investments are missing? Glasson: Yes.

Continuing, Glasson said the books bad been left by him in Auckland, but bad disappeared. Apparently they had been removed from the office. Mr. Monahan: I suppose that, without the books, the truth wild "never be known 1 1 ''Glasson: I wouldn’t say that. Mr. Monahan: Is there any doubt ‘that, as a result of McArthur's and ‘ Alcora’a with:ther;booka v -- of ' these or>-One. or all of" withfthe trus&huildingf Glasson: I. could’not .say.Mr, Monahan: Isn't it somewhere sear that? Glasson:, On paper.

Mr. Monahan: McArthur, as a result of these transactions, has a whole lot of assets of the Wynwood Investments, 3Wd.?‘ Glasson: Yes; he has a charge over the assets.

Mr. Monahan: Such a charge that it makes him virtually the owner of the Jot. He also has property that belongs to Pacific Explorations, Ltd., including a yacht. .’That is all paid for out of •the profits; of these transactions. Can you unravel it? I am afraid I cannot. Mr; Monahan: If you had Sterling Investments' you be in a position to do it? Glasson: Probably. Fencing With Commissioner? The j Commissioner asked Glasson whether he had altered the Southern British balance-sheet on Friday afternoon as a result of McArthur’s directions. ' *

Glassoh said he did not remember. The Commissioner: I think you are inclined’ to fence with ine. ' Glasson: No. The Commissioner: Did you-alter it -on Friday! • ‘ " ’

Glasson; Yea,

Mr. Monahan then quoted alterations, which Glasson said had been made at McArthur’s suggestion. After further questioning, witness said an expense item had been converted into an asset.

Asked to explain how he had originally -shown a list of investments in other companies as an expense and had afterwards put it on the other side as an asest, witness said that, on reconsideration, it was realised it was asset, in effect.

Further reference to “X” and “Y” companies was made when Mr. Monahan questioned Glasson regarding the investments of the Investment Executive Trust. The Gdmmissioner said he had to consider the interests of the companies. ‘ ‘ When people try to get control of a company by secrecy, one suspects there is something wrong. It seems as if two well-established New Zealand companies may get into the hands of people employing such business methods as we have here. n

Mr. Monahan: What steps are being taken by the Investment Trust with regard to the Trustees, Executors and Agency Company of New Zealand! Glasson; I know nothing about it. Mr. Monahan; It is a company with assets of £3,000,000 or £4,000,000, comprising deceased persons* estates, is it not? Glasson: I believe so.

Mr. Monahan: Why are you trying to get control of those funds? Are they to be invested as these others have been?

Glasson; I know nothing at all about

■ Mr. Monahan: How much debenture capital has the Investment Executive Trust allowed the Transport Mutual for the purchase of the Trustee Company’s shares?

Glasson; About £14,000. “Fully Protected and Secured”

McArthur presented a lengthy statement to the Commission. He said every penny of the debenture-holders’ money was fully protected and secured by sound investment; which exceeded in value £he sum charged upon them. The total amount subscribed by the public for debentures in the Southern British National’ Trust and in the Investment Executive Trust amounted to £648,194, while the book value of the investments, at cost, was £649,153. The present market value of the investments held on behalf of the de-benture-holders was much higher than the value set against them in the company’s books. The debentures of the British National Trust were supported by a great deal more in the way of substantial assets than the Trust building alone. After dealing with the general plan of the Investment Executive Trust and the Southern British National Trust, McArthur said one clause of the debentures provided that 95 per cent, of the annual net earnings should be set aside for the holders of debentures as interest. The security given to subscribers to these trusts was a first mortgage debenture, which must always take precedence over creditors of every class, no matter what kind of charge or mortgage the directors of the trust might attempt to create over any of the assets. He had attempted to plan the operations of the trusts in such a way as eventually to return to the debenture-holders a rate of profit exceeding that of interest on an ordinary investment trust debenture. An indication of the success which the trust had achieved was that, after less than 3$ years of activity, the Investment Executive Trust had been able to pay its debenture-holders a total of 26 per cent, by way of return on the capital invested by them. Financial Enemies McArthur contended that the af fairs of the companies were being investigated at an incomplete stage of their development. He admitted that, on a general view, the relations of the various companies with one another might seem to have been needlessly, even purposelessly, involved. Many matters had their explanation in the conditions under which the Investment Executive Trust had been compelled to operate. It was necessary to understand the nature of the forces working against this trust since its inception. There had been “strong influence at every point of the financial and political life of New Zealand againstr trust companies,’ ’- and “delibattempts; ite vin jure-r the - • Invest*; mettt Bxeeutive? Trust';by.:;making; it ap* pear,, that its debentures .. had - r been* bought below par value.” Suggestions had been made during the inquiry that the financing of the trust building involved some misuse of the money subscribed by the public, and that portion of that money had been transferred from the debenture fund to Alcorn and himself. There was not the faintest foundation for any such suggestion. McArthur said the primary function of the Sterling Investment Company had been to conserve the interests of debenture-holders by doing what the Investment Trust Company . had not been able to do for itself. The Sterling Company, in the early stages of the life of the main company, had been used to purchase certain assets of his and at the same time take over liabilities secured on them in order to frustrate those who desired to strike at the Investment Trust by accomplishing his own financial ruin. A further purpose for which the Sterling Company had been employed on behalf of the debenture-holders had been, in a few cases, to purchase debentures from individuals who, for one I reason or another, were threatening action against the Investment Executive Trust. The, hostile condition with .which -the trust was surrounded had made it even more important that no

weapon should be given to its opponents with which they could stampede the debenture-holders. Claim Against Trust

Referring to the case of Miss Smith, of Christchurch, McArthur said the Guardian Trust and Executors’ Company of New Zealand had obtained .control of her estate and a writ had been* issued .against the Investment Executive Trust seeking to recover securities . which had been- transferred by r Miss:'Smitfc t(E;the: trust'in' payment jftws debeptuwsif: -The' direGtora' knewthat, whatever-, the Jasue ,pf the« trial might be, the ultimate result would be to injure the ,company and the deben-ture-holders claim, accordingly, had been settled for £29,000, which represented substantially the .value of the securities originally transferred to the Investment Executive Trust, and the amount by which they had appreciated. McArthur said the Guardian Trust was connected with the companies with which he had had to contend during the Redwood Forests negotiations. Continuing, McArthur said Mclunes, during three years’ service as director of the selling system in New Zealand on behalf of the Investment Trust, had carried out his duties faithfully.

McArthur declared ■ that the accounts of all the companies were now in order.’ Referring to the assets of the Pacific Exploration Company, he said it possessed 27,000 acres of freehold land in the northern part of the Auckland province, which contained rich and extensive depolfis of kauri gum. On a conservative estimate, the quantity of, gum on the area was worth £3,000,000 gross. This asset was set down in the books of the company at £4700, being the cost of the land to the company. The Commission adjourned till tomorrow.