THE TRUST INQUIRY

Manawatu Standard, Volume LIV, Issue 288, 2 November 1934, Page 9

THE TRUST INQUIRY

REPORT BEFORE ASSEMBLY. RECOMMENDATIONS BY COMMISSIONER. PREMIER INTRODUCES BILL. (United Press Association—By Electric Telegraph.—Copyright.) SYDNEY, Nov. 1. The interim report of the Royal Commissioner who inquired into the affairs of a number of trust companies, Mr Justice Halse Rogers, was tabled in the Assembly to-night. It recommends the appointment of a receiver and manager of the assets of the Investment Executive Trust, Ltd., and 16 other companies, and that J. W. S. McArthur should cease to hold any executive position in any scheme for the reconstruction of the companies. The Commissioner expressed the opinion that public money was unwarrantably invested in speculation by McArthur and Alcorn, who were actuated by a desire for personal gain, and there was strong ground for saying that they should no longer be entrusted with the control of the affairs of the companies. The Commissioner suggested that they should be declared, trustees of profits made for the benefit of the companies. There w r as no doubt, added the Commissioner, that McArthur used the Investment Executive Trust of New Zealand, Ltd., in its early stages for Ins own purposes and practically the whole £60,000 subscribed for debentures was applied to salvaging his own assets through the medium of the Sterling Investments Company of New Zealand, Ltd.

The Commissioner found that wherever Alcorn had anything to do with the company he acted according to the bidding of McArthur. Referring to the Southern British National Trust, Ltd., the Commissioner said that its history was very largely bound up in transactions associated with the. purchase of the old Daily Teleraph building in Sydney. McArthur and Alcorn proceeded to make arrangements to obtain a profit of £287.000 without venturing their own money, and the object of the formation of this company was to equable them to get the necessary ready cash for alterations to the building, and so turn a profit on paper of £287,000 into an actual profit for themselves. • The Commissioner definitely gave the opinion that there had been abuse of public confidence in the transactions between the Investment Executive Trust and the Southern British National Trust. There was a scheme cunningly worked out with the definite object of benefiting McArthur and. his friends and making it possible to say that nothing was done which was not within the law. Whether the transactions were just within or just, outside the law might be a matter for argument. “However,” he said, “there is no doubt that they have, abused their positions of trust for their own advancement.”

The Commissioner estimated the net results of the various transactions to be that McArthur and Alcorn had enriched themselves by £IOO,OOO without risking a penny of their own money by using moneys contributed by the public to the trust companies. Referring to the balance-sheet of the Investment Executive Trust, the Commissioner thought that this document had not showed any intention to conceal from debenture-holders the real nature of the investments made by the company or to produce false impressions. ... The Commissioner declared that the worst evils of share hawking were apparent in connection with the two main companies. Upon the question of recommending wliat steps should be taken for the preservation of the companies’ existing assets,. the Commissioner said he had- received a scheme propounded by McArthur, but he could not recommend any scheme which left control or possible control of the companies in the hands of McArthur. “My view is that he should cease to hold any executive position. It may be deemed necessary to make special provision for the appointment of a receiver and manager of assets within the jurisdiction of these companies for the time being and until the wishes of the debenture-holders as to the future policy and control can be ascertained,” he said. The Commissioner finally recommended that steps be taken compulsorily to wind up the original Mcinnes Company, also the Mclnnes Canberra Company.

INTRODUCTION OF BILL. The Premier (Mr B. S. B. Stevens), shortly after tabling the Commissioner’s report, obtained leave to introduce the Companies Receiver and Manager Bill for the appointment of the Public Trustee as receiver to take charge of the assets of the companies and to hold them in the interests of those who had subscribed, until methods were devised and sanctioned for their distribution. Mr Stevens emphasised that many difficulties made it impracticable to invoke the Courts, as the contract whereunder the money was subscribed to these companies'.was entirely novel. The debentures were not true ones and were not repayable either immediately or at any fixed date. Very heavy law costs would probably be involved in pursuing remedies. Moreover, it would be impracticable to get meetings of the deben-ture-holders, who were scattered throughout Australia. The Bill empowered the Public Trustee here to work in co-operation witli the Public Trustee in New Zealand and elsewhere in the Commonwealth, and its operation would come to an end either by Act of Parliament or by proclamation The Bill is being rushed through all stages, despite fierce opposition from Mr J. T. Lang, who claimed that the measure was un-Britisli, and that it was unprecedented, invoking Parliament to do what tho Courts were supposed to do. COMPANIES AFFECTED. The companies covered by the Bill are:— Investment Executive Trust. Sterling Investments Company. . Investments Executives Association. British National Investment Trust. New Zealand Shareholders’ Trust. Wynwood Investments. Pacific Exploration Company. Farms and Familets First Mortgage Freehold Security Company. New Zealand Transport, Mutual and General Insurance Company. V. B. Mclnnes and Company (N.Z.). Alcorn, Trower and Company. Financial Publications, Ltd. Southern British National Trust. British National Trust. V. B. Mclnnes and Company (Australia). Mclnnes and Company, Ltd.