Charges Against McArthur

Manawatu Times, Volume 59, Issue 247, 23 October 1934, Page 7

Charges Against McArthur

Mr Monahan Formulates Series of Accusations FIVE COMPANIES NAMED United Press Association. —By Electric Telegraph.—Copyright. Received Monday, 11 p.m. SYDNEY,' Oct. 22. AVhcn the sittings of tho Eoyal Commission. which is inquiring into the operations of certain trust companies resumed to-day tho Commissioner announced that he had recoved a lottcr from New Zealand referring to some committees of debenture-holders in the Investment Executive Trust which were apparently being formed. Apparently debenture-holders in New Zealand were being circularised and asked to vote for certain people in different centres to represent their interests. ‘‘l think this is a littlo premature,” added tho Commissioner. “I shall hand the letters and tho papers to the Crown to show to counsel.” Mr Monahan intimated that he had decided to address the Commission first and to formulate charges, to which counsel would have tho opportunity of reply. His charges related to five companies:— Tho Investment Executive Trust. The Southern British National Trust. The British National Trust. The British National Investment Trust. .Sterling Investments, Ltd. The charges were:— 1. That the establishment of the main companies was devised by McArthur and carried out with tho aid of his satellites to salvage his persona: assets, which were in jeopardy, and to enrich himself by the manipulation of capital subscribed by the public for trust investment. 2. That the methods McArthur adopted were invariably crooked and in many instances fraudulent and dishonest. 3. That the methods he adopted constituted gross abuse of the Companies Act. 4. That ■ tho balance-sheets issued and filed were known to bo false and misreading. 5. That no books or records wore kept which would have enabled a skilled accountant or auditor to form an opinion in regard to tho affairs of the companies. G. That his system of getting debenture capital from the public was by ruthless exploitation methods and in some instances had been declared criminally illegal' under the recent British companies’ legislation. 7. That out of a total debenture capital of £048,000 subscribed by the public, £255,000 had been spent and not represented by tangible assets. 8. That tho present control of the companies constituted a grave menace to the safety of the remaining debenture capital. 9. That ah' directors and officers of the companies who were called before the Commission were actuated by a desire to stifle the truth and were guilty of gross prevarication, if not actual false swearing. Mr Monahan addressed the Commission along the lines of his charges, lengthily tracing the history of the companies. The Commissioner said he had been struck during tho course of tho Commission by the dangers in any system of putting off debentures on the public. An enormous amount <of debenture capital had been subscribed by persons who had not had the slightest control' over these companies. This business of selling debentures was ; really a new idea, and he might call it ‘'the Now Zealand system.” However, New Zealand Eedwood Forests seemed to be a genuine commercial company. Mr Monahan: I think so, too; but when it fell on evil days it'formed the basis of subsequent devious transactions.

The Commission then adjourned,