Further Evidence Before Company Inquiry

Manawatu Times, Volume 59, Issue 218, 18 September 1934, Page 7

Further Evidence Before Company Inquiry

Chairman of Directors of Two Big Organisations Examined

McArthur, Recalled, 'Produces Passbooks of Bank Accounts

United Press Assn.—By Electric Telegraph.—Copyright,

Received Monday, 9 p.m. SYDNEY, Sept. 17. The Royal Commission which is inquiring into tho operation of a group of trust and other companies, resumed proceedings this morning, Mr Justice Halsc Rogers presiding, with Mr Monahan as assistant. William Andrew Pilkington, chairman of directors of the Investment Executive Trust and the Southern British National Trust, was asked to explain his reasons for coming to Sydney from New Zealand. lie said that from Press reports and from propaganda distributed by a group of hostile companies known as “The Kelly Gang," he thought it his business to join his business associates whom ho regarded as brilliant men of absolute integrity. Mr Monahan: Did you not come here to sign some documents'! Pilkington: No. Mr Monahan: Do you know that McArthur used certain funds of the Investment Executive Trust to enrich himself? Mr Fuller and Dr. Louat objected to this question. The Commissioner (to Pilkington): You know that McArthur borrowed £50,000 from the Investment Executive Trust without security? Pilkington; The building was tho security. \ Mr Monahan: Do you think that the Investment Executive Trust should have its trust funds invested in the Trust Building? Pilkington: Yes. Exercised Own Discretion The Commissioner: We have had several members of these associations bore, and one and all have admitted that they exercise no independent discretion whatever. Are you in the same category? Pilkington: No. I exercise my own discretion. The Commissioner: Have you ever opposed any of McArthur’s schemes? Pilkington: I have never had occasion to. After 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 one of his duties was to recommend whether any of tho companies should bo wound up. If it- appeared that McArthur and Alcorn had in law no right to these moneys, that would be a very strong reason that ail the profits should bo diverted to tho de-benture-holders. If the deposit money was paid out without any security at the time it was paid, it should bo a matter for serious consideration what the ultimate effects were. Pilkington was questioned regarding the principles of tho Investment Executive Trust. The Commissioner; As I understand the scheme, there are very few shareholders in your company. Most of the share capital is held by two men? Pilkington: Yes. Debenture-holders Have No Say The Commissioner: So tho debentureholders have no say whatever in the control of the company? Pilkington: No. Tho Commissioner: Practically these investments of-your companies and the shareholders arc entirely in the control of one man? Pilkington: Yes. The Commissioner: You have debenture capital amounting to £400,000 and, as far as wo know, the real capital, subscribed by tho shareholders is practically' by'one man, who is inviting the public to place capital unreservedly at his disposal. Pilkington: No; he is subject to the directors. The Commissioner; Let us face the facts. If you opposed McArthur tomorrow on a matter of principle, I suppose you would go out? Pilkington: Of course, if lie wanted mo to. Replying to Mr Monahan, Pillrington said his co-directors in the Investment Executive Trust had been Pollard and McArthur. He had heard a rumour that Pollard had resigned. At the last meeting of directors at which Pollard was present a proposal had been put forward to give McArthur a power of attorney, but Pollard had taken the view that, since the Commission had begun its sittings, it would be dangerous to transact business of that nature. Further questioned, witness admitted that a power of atorney was prepared so that McArthur could perform in New South Wales any acts of a director. Mr Monahan: Pollard was not prepared to sign it, so you came over to New South Wales? ' Pilkington: I had arranged to come over before that. Retirement of Two Officers Mr Monahan: Did Hope, a former director, retire because the operations of the company were not to his liking* Pilkington: No; because they were too big for him. It had nothing to do with a balance-sheet. Mr Monahan: He retired at the same time as tho auditor, Anderson, got out. Pilkington was further questioned regarding the Investment Executive I Trust balance-sheet, to which Anderson had taken exception. He

said there had been a division of opinion as to the line of demarcation between brokerage charges and commission charges. Only 5 per cent, had been stipulated, but Mclnnes and Co. had received considerably more. Mr Monahan: Did you show Pollard a report scut by Anderson to the board? Pilkington: Y'es. Mr Monahan; I put it to you that Pollard was never told of the dispute with Anderson? Pilkington: I don’t know 7 . Mr Monahan: Anderson was invited to meet the directors, yet Pollard was not present? Pilkington:.! don’t remember. Medical Investment Trust Dr. A. E. Colvin appeared to explain his connection with the British Medical Investment Trust. He said Major Jarvie had told him that the trust wanted a medical man on the board. Major Jarvie had said the company was the same as the British Medical Investment Trust in England and that the company worked in conjunction with tho British Medical Association in England and that the new company w r ould work with the British Medical Association. Major Jarvio also informed him that Dr. Hunter, secretary of the British Medical Association, had told him it was a good thing that such a company was being formed to safeguard the interests of medical men.

Witness in consequence 'of certain things he had read, had subsequently suggested that, on account of his own ill-health, the matter of his association with the company should be left open for about 12 months, after which lie would see whether the company was working properly and with the approval of the British Medical Association. He had later withdrawn from being a director on it he ground of illhealth. McArthur’s Personal Profits McArthur, recalled, produced the passbooks of his bank account. Mr Monahan (referring to one of these): What is this cheque paid in for £1000? McArthur: That was an advance made to mp 'from either the Southern British National Trust or tho British National Trust. I can’t remember which. Mr Monahan: Was it not the balance of a mortgage advanced by the Australian Glass Company? McArthur; If it is, I paid £SOO as the procurator’s fees and repaid the other £SOO to the British National Trust. I was under tho impression that I had repaid it, though. I can see no record of it in any of these statements. Mr Monahan; I suggest you employed that for personal uses, but wo will go info tliat later. Continuing, Air Monahan, asked: “You and Alcorn have made profits on paper of £340,000, have you not?” McArthur: No. Mr Monahan: There was one for £287,000? AicArthur: Y’es. Air Alonahan: And one for £77,000 in connection with sales of Southern British Trust? AicArthur: That did not affect our position at all. It docs not mean there were any profits made. The share capital was increased. Air Alonahan; But that was only done after this Commission started. You appeared in tho Southern British National' Trust books as a creditor? AicArthur: Yes. Air Alonahan then questioned AicArthur regarding the exchango of certain cheques. The Commissioner: I may take it that all this was done because you did not wish the facts to be disclosed to anyone? AicArthur: Not to the banks. Tho Commissioner: Is not this scries of transactions a cloak over the fact that you have certain holdings obtained in this way? AicArthur: Wc did it to keep the true facts from our opponents. The Commission adjourned till tomorrow.