What McInnes Drew in Commissions

Manawatu Times, Volume 59, Issue 214, 7 September 1934, Page 7

What Mclnnes Drew in Commissions

Sixty Thousand Pounds From Two

Companies

ss A Simple, Trusties' Soel 55

United Press Assn.—By Elc Received Thursday, 10 p.m. SYDNEY, Sept. 0. On the resumption of tho proceedings of the Royal Commission inquiring into company matters, Mr. Justice Halsc Rogers presiding, with Mr. Monahan assisting, Victor Mclunes handed the Commissioner a document relating to his salary drawings. Air. Monahan: To wliat extent did you deal with these companies in New Zealand, the old and tho new scries? Alclnnes: Approximately four hundred thousand, pounds. Mr. Monahan: Your commission on that would be £40,000? Alclnnes: Yes, approximately. I did not get. tho extra 24 per cent, in New Zealand. All earnings were left in Now Zealand. Air. Monahan later asked Alclnnes to what extent he had done business in Australia for the Southern British National Trust. Alclnnes: Approximately two hundred thousand pounds. Air. Monahan: So you have had about £20,000? Alclnnes: Yes. Medical Trust and B.M.A. Air. Monahan said that he had been asked to obtain a statement from AlcInncs to tho effect that the British Aledical Investment Trust had no connection with the British Aledical Association. Alclnnes said that he was not in a position to do so, as lie had boon told that tho secretary of the British Aledical Association had approved the trust. No official information had been obtained on that point, but Alajor Jarvio had told him that such was the case. Air. Monahan: Who told Jarvic? Alclnnes: I think the name he mentioned was a Air. Hunter, who, I was told, was secretary of the British Aledical Association. Air. Monahan: Did it not occur to you that such a name would be objected to by old reputable members of the medical profession? Alclnnes: No. The name was adopted because wc intended to sell investments to medical men. Air. Alonnhan: I suppose you hoped that unsuspecting people would associate the company with the British Aledical Association? Alclnnes: No. Giving details of the brokerage paid by the British Aledical Investment Trust, Alclnnes said that his companj' had been unable to handle the business and the brokers’ business had been conducted by British Consolidated Investments, Limited. That company had received £4OO brokerage fees. The brokerage was paid ns soon, as the shares were applied for, even tftough only 2d had been paid to date on many shares. Air. Monahan: Who arranged the business with the Primary Producers’ Bank? Alclnnes: Originally I received word while I was in New Zealand from our Alclbournc manager, Foster. Agent Convicted Five Times. ATr. Alonahan: You had no reason to bolievo that any of your agents were dishonest when you appointed them to any position in your company? Alclnnes: No. Air. Alonahan: You have information before you appointed one of these people that he had uecu convicted five times? Alclnnes: I have received rumours. Air. Alonahan: You had received a communication from your right-hand man, Cayley Alexander, and you call that a rumour? Alclnnes: I found to my cost later that it was true. The Commissioner: Did you know it was a breach of trust for a bank official to disclose the business to you? Alclnnes: No. The Commissioner: You were in a kind of Arcadian simplicity. Did you know your officials were paying anything for it? Alclnnes: No; I would not countenance such a thing. Air. Alonahan then read a letter from Foster to Alclnnes, in which Air. Alonahan said Foster had related how he had taken particulars personally from tho records of the bank relating to certain depositors, and had continued that results had been achieved not only at the expense of labour and time but also by the distribution of “palm oil.” Air. Alonahan asked Alclnnes what he know about that. Alclnnes said he did not believe those methods were nuopted. The Commissioner: For how long afterwards did you employ Foster? Alclnnes: For four or five months. The Commissioner: You did not think ho was using "palm oil”? Alclnnes: No. The Commissioner: You thought ho was a liar? Alclnnes: Yes. (Laughter.) Air. Alonahan: Within 12 days of receiving that letter you promoted Foster to sales director at a salary of £ls per week although ho had just admitted he had obtained information in direct opposition to advice to the company from the bank’s solicitor. Tho Commissioner: Alclnnes is putting himself forward as a simple, trusting soul. Is that the position—simple trust? Witness did not reply. Tho Commissioner: Do you expect to be regarded as a truthful witness? Alclnnes: Yes. The Commissioner: Do you regard me as being simple in cortain matters? Alclnnes did not reply. Air. Alonahan asked Alclnnes what had opened his eyes about Foster.

itric Telegraph.—Copyrigh L Alclnnes replied that Foster’s cheques had not been met. Air. Alonahan: Did you believe that rumour? Alclnnes: I had proof and immediately recalled Foster. Mr. Alonahan: Then you found that Foster had got £SOO of yours. Did you regard that as justice? Alclnnes: I was very sorry about it (laughter). “Take Bank Officers for Holiday.” Air. Monahan: You were notified that Dunn, sales manager in Brisbane was receiving tho bank’s list also? Alclnnes: Yes. Air. Alonahan: Dunn suggested .that some of tho bank’s officers should be taken for a holiday by you? Alclnnes: Yes. Air. Alonahan: They were to be taken away among the bank’s depository. Alclnnes: I do not know. Air. Alonahan then questioned Alclnnes about his discussions with Air. Camming. Air. Alonahan: Would you have told him about “palm oil” being distributed to one of the officers of his bank? Alclnnes: No; I did not toll him. The Commissioner: Even now I take it you do not regard it as a betrayal of trust? Alclnnes: On the face of it, yes. The Commissioner: What do you mean by “on the face of it”? It either was or was not. Do you regard it as a breach of trust? Alclnnes: Yes. In reply to further questions, Alclnnes said his organisation was trying to build up an honourable organisation. The Commissioner: By the methods wo have heard about here to-day? Alclnnes did not reply. Stanley Grange was examined. He said he was a sharebroker in Auckland and had been called to Sydney by McArthur to discuss business arrangements with either the X or the Y r company. He understood that Wynwood Investments drew a cheque for £50,0(0 in February to take over sonic of McArthur’s securities. Air. Alonahan: You signed the cheque. What was the transaction? Grange: I was only acting in a nominal capacity as a director. The matter was fully explained to me at tho time. I was not specially interested in the matter. It was in connection with securities; that is all I remember.

Payment To Auckland solicitor. Air. Alonahan: Do you remember signing a cheque in December last for £750 for Wynwood Investments. Grange: Yes. Air. Alonahan: It was in favour of a gentleman named Aloredith? Grange: Yes; that was a payment for Aloredith acting for the Crown. Air. Alonahan: It was in connection with some securities Wynwood Investments were holding? Grange: I understand it was a debt of Wynwood Investments in connection with some securities taken over from Ale Arthur? Air. Alonahan: If you had not taken over tho securities, McArthur might have had to pay for them? Grange: I thiuk so. Air. Alonahan: I understand Air. Aloredith is Crown Solicitor in Auckland? Grange: Yes. Air. Alonahan: You arc a director of the British National Investment Trust? Grange: Yes. Raising of £IO,OOO. In reply to further questions, Grange said the Trust had issued ten debentures for £IOOO each at the application of the Investment Executive Trust. The money had gone to Sydney as a deposit on the building in King Street. Air. Alonahan: Who gave you instructions to raise £10,000? Grange: Ate Arthur. Air. Alonahan: But he had nothing whatever to do with your company at tho time? Grange: No. Air. Alonahan: He made a tool of your company for his own ends? Grange: That was it. Air. Monahan: Did you get any consideration for your accommodation? Grange: No. Air. Alonahan: What have you had out of it? Grange; The sale of my shares and director’s fees. Air. Alonahan: The sale of your shares was at a high rate? Grange: Yes; I received £IOOO for what cost me nothing. Mr. Alonahan: Put bluntly, it was a bonus paid to you for accommodating Ale Arthur? Grange: That is the position. Air Alonahan: You allowed your company to be used to put £IOOO in your own pocket? Grange: No one was losing anything by it. The Commissioner: It might not have done anyone any harm, but the Investment Executive Trust was advancing money on the debentures of your company. The Investment Executive Trust, of which AlcArthur was managing director, was advancing £IO,OOO to enable this purchase to be financed, the whole profits of which, so far as you knew, hiight go into the pockets of Alcorn and AlcArthur. Did you consider that? Grange: I did not consider where the profits were going. “A Particularly Good Salesman.” Oscar Josephson gave evidence that he was associated with tho companies in which Alclnnes had Interests; also with the British Aledical Investment Trust. He asked Alclnnes to put capital into the company. The latter agreed,

his interest, lie thought, being 1900 twoshilling shares. •Tosephson said he started the British Medical Investment Trust, in conjunction with Foster, but the latter dropped out. Replying to the Commissioner, witness said the words "British Medical” were given to the company’s name after consultation with the secretary of the British Medical Association. Witness knew Foster in New Zealand in 1929, but what he had heard about him was not to his credit. Mr. Monahan: Notwithstanding that, you went into business with him? Josephson: You will meet him, perhaps, later. He is a, particularly good salesmen. (Laughter.) Witness added lie thought it was Foster who suggested starting the British Medical Investment Trust. Foster told him the secretary of the British Medical Association had no objection to using their name in part. The Commissioner: Was the idea that medical men should be induced to subscribe? •Tosephson: Yes; it was a vocational trust purely for medical men. Foster, he added, resigned in March, 1931. W. B. Hewitt, recalled, stated the amount expended on the old Daily Telegraph building in King Street at June 30, 1931, was £132,000. The Commission adjourned till tomorrow. Payment of Interest To Debenture Holders MINI3TER DENIES STATEMENT. Per Press Association. WELLINGTON, Last Night. In the House of Representatives this afternoon, Mr. J. N. Massey asked the Minister of Finance whether ho had seen a circular letter from the chairman of the Executive Trust of New Zealand, in which it was suggested that the Minister had taken action to prevent the payment of interest to deben-ture-holders,' and if the Minister was prepared to make an announcement on the subject. "A statement has been made against me personally by the chairman of the Investment Executive Trust of New Zealand that, yielding to alleged pressure brought to bear on me by the company's opponents, t have effected a ‘strangle-hold’ on the trust by refusing to allow it to pay interest to de-benture-holders,’’ said Mr. Coates. "In the first place I have to state clearly that no pressure has been brought to bear on me in connection with the investigation of the affairs of the Investment Executive Trust by any person or body of persons whatsoever. In introducing the legislation, I and the Government I represent were influenced solely by considerations of the public interest iu the light of what was disclosed in the first report of the Commission. It is scarcely necessary for mo to say that neither directly nor indirectly did I influence the Commissioners in framing their report nor, except that the existing official Treasury hies, with the files of all other Departments, were made available to the Commission, did I or any person on my behalf or at my instigation make any representations to the Commission. In making its report the Commission acted solely °oii its own initiative, and I would like to say that I have every confidence in the personnel of that Commission and have no hesitation in. expressing the view that it was actuated by considerations of the public welfare when it made its recommendations.

Payment of Interest. “As regards the allegations that I have refused to allow the Investment Executive Trust of New Zealand to pay interest to debenture-holders, I give this an emphatic denial. I have neither refused nor have any power to refuse to allow the company to pay interest to debenture-holders. “Apparently the company is referring to Section S of the Companies (Special Investigations) Act, 1931, which makes it an offence for any person whatever, whether that person is a director or agent of the company or not, with intent to defeat the purposes of the Act or with intent to delay or obstruct the carrying out of any investigation under the Act, to send or attempt to send out of Isew Zealand any book, document, or record or property of any description belonging to any such company. I think mombers will appreciate the necessity for this power, seeing that without it any company could freely transmit abroad records, funds, and other property of the company and thus render the investigation a nullity. There is no general prohibition ngainst all and every transfer of moneys or other property beyond New Zealand—the offence, whether committed by the company or its bank, consists in so transmitting such moneys or property with intent to defeat the purposes of the Act or to delay or obstruct the carrying out of any investigation. Sympathy of Holders. “If this circular to debenture-holders is intended to enlist the sympathy and support of debenture-holders resident in New Zealand, I should imagine that it will not attain its object. What the New Zealand debenture-holders require is funds in New Zealand, and it is difficult to see how' the transfer of funds from New Zealand to some other place abroad can assist New Zealand deben-ture-holders to obtain payment of any interest due to them. Moreover, the

Act places no restriction, or imposes any penalty on the remittance of moneys within New Zealand. ‘‘Regarding the series of suggested questions which members’ constituents are invited by the chairman of the Investment Executive Trust of New Zealand, Limited, to request their member to ask me, I desire at this stage simply to say that it will be time enough' for officials of that company to interrogate the Government when they have satisfied the Royal Commissions now sitting in Australia and the inspectors appointed under the Act recently passed here that any injustice has been done to their company, and that the investigations -now being made here and in Australia were not justified.” Investigation Opened Per Press Association. AUCKLAND, Sept. 6. The inspectors appointed to investigate the affairs of the companies named in Parliament last night began work this morning. No other information is available, the inspectors being officers of the Court. A lengthy statement by Mr. M. H. Hampson, who is mentioned in the Commission ! s second report, was issued today, and is being posted to all newspapers.