COMPANY INVESTIGATON

Nelson Evening Mail, Volume LXVI, 11 August 1934, Page 6

COMPANY INVESTIGATON

N.S.W. ROYAL COMMISSION J. W. S. McARTIIUR’S EVIDENCE CONTINUED (United Press Association—By Electric Telegraph—Copyright) SYDNEY, 10th August. When the Royal Commission resumed at 11 o’clock this morning an officer of the Auditor General’s Department asked the Judge (Mr Justice Halse Rogers) for further assistance from the Public Service Department. He estimated that two men, working twelve hours a day, would take six weeks to examine the books and papers of seventeen companies into whose activities the Commission was inquiring. , His Honour agreed that it was desirable to deal with important details as soon as possible in order that the companies’ business should not be interfered with unnecessarily. John William Shaw McArthur, managing director of the Investment Executive Trust of New Zealand Ltd., and also of the Southern British National Trust, continuing his evidence said the business of the Executive Investment Trust of New Zealand Ltd., was to make purchases of investments from capital obtained from debenture holders and sell as opportunity offered and tak e the income. The share capital was £IOO,OOO. McArthur said lie was paid in cash for his service of compiling records. He used that cash to. purchase shares in th e company; £26,000 worth of shares were taken up. He took most of them. Judge Halse Rogers: “What was your quota?” McArthur.: “About four-fifths.” Mi- Monahan, K.C. (who is assisting the Commission) “What investments did you hand over for the £20.000 ! McArthur: “Debentures in the British National Trust.” Mr Monahan: “Was that all the actual investments put in?” McArthur: “There were £7OOO worth of preference shares subscribed by the public and that was all the liquid capital.” Mr Monahan: “To what extent were debentures taken up bv the public?” McArthur: “A little more than £400,000. Judge Halse Rogers: “I take it these two companies do exactly the same business?” McArthur: “Yes, they both have the same function. The capital of Southern British was subscribed by myself and Alcorn.” Judge Halse Rogers: “What was the necessity for the two companies? ’ McArthur: “There ar e 'advantages in registering a company in Australia. There is also the psychological advantage. Australians prefer their own companies.” McArthur replying to Mr Monahan said the New Zealand Company was controlled by the New South' WalesCompany and practically the whole £20,000 had been transferred. It was not thought necessary to advise tile debenture holders that the shares had been transferred. Judge Halse Rogers: “What was the object of the transfer?” McArthur: “To make money for the debenture holders.” McArthur went on to say the -New Zealand company had investments in more than .200 companies in various parts of the world. He held’ abdiit" 200,000 2s shares in the British National Investment Trust. When the transfer of the “Daily Telegraph” building was effected, the shares wore exchanged for investments. The face value of bis holdings in the three companies in the past three years was about £30,000. McArthur added that as director of Wynwood Investments Ltd., h© held practically the whole 9,900 £1 shares. The money for the purchase of the Wynwood properties, McArthur thought, came from the- Sterling Investment Coy.

Victor B. Mclnnes said he came from New Zealand and formed V. B. Mclnnes (Australia) Ltd. There were seven to ten debenture holders in the company. He sold the shares for the various companies on a commission basis. Special salaried officers carried out a definite selling campaign. Approximately 90 per cent, was sold in the cities of New Zealand. He was still disposing of shares, both in Sydney and Canberra.

Explaining that he became associated with the Southern British National Trust 18 months ago, -McArthur said that about £95,000 worth of 5s shares issued were paid for by the exchange of British National debentures —the Canberra Company—but no money was put up by the public. Mr W. Monahan, K.C.: “The only real property you have is the King street’;” McArthur: “Yes. Its book value is £450,000.” At a later stage McArthur said £200,000 cash was paid to the Canberra Company b> the public, which ’was mostly spent on alterations to the former “Daily Telegraph” building in King street, which cost £IOO,OOO. The Canberra Company in return received debentures. Air Monahan: “How did you get 9900 shares v ”

AlcArthur: “I subscribed for them.” Judge liaise Rogers: “Then it is a one man company ” McArthur: “Yes.”

Prior to the adjournment Lewis Baker, an officer in the; Auditor-General’s Department, said ho had visited the companies’ offices and had made a list of eight pages of securities handed him. Those were mostly share certificates.

AlcArthur as well as Glasson were recalled and were informed by the Commissioner. They said they had commitments to meet within a fortnight, and therefore desired to have access to the books. Glasson said it was intended to sell about £16,000 worth of assets. „ Tile Commissioner, announcing the adjournment until Atonday week, said a digest of the Audit officer’s reports and the results from their investigations would be available to legal representatives at the next sitting. Meanwhile the Government sanctioned the appointment of three officers and there typists to expedite the work. He gave no ruling in regard to the application for access to the books by the companies’ directors. The sitting adjourned until the 20th inst.

EIGHTY-TON YACHT PREPARATIONS FOR TRANS-TAS-AIAN RACE (By Telegraph—Press Association) AUCKLAND, 9th August. The- eighty-ton schooner yacht Alorewa, owned by Air J. \V. S. AlcArthur, who is now in Sydney, is still hauled up on tin: Harbour Board’s slipway in Freeman’s Bay, where alterations are being made to prepare her for the trans-Tasman race, in which she is to take part early next year. This is the yacht referred to by the Company Promotion Commission in its report! on the Investment Executive Trust of New Zealand, Ltd., and its subsidiaries. Tt is understood that the alterations will involve the expenditure of about £IOOO. The principal alteration involves the extension of the counter to

improve the behaviour of the vessel in a following sea, while the stepping of the mast is to be altered and a bowsprit to he fitted to conform to a changed sail plan. In addition to this her high deckhouse is being lengthened and a rearrangement of tho interior fittings is being carried out. AUCKLAND INVESTIGATION NO INFORMATION AVAILABLE , AUCKLAND, 9th August. An investigation of the affairs of the Investment Executive Trust of New Zealand, Ltd., and its subsidiary companies was commenced in Auckland to-day bv the four inspectors appointed by the Executive Council under the Companies (Special Investigation) Act passed by Parliament last night. The offices of the companies are grouped in three city buildings—Yorkshire House in Shortland street, the National Bant Buildings in Fort street, and the Colonial Mutual Buildings in Queen street. It is understood that the inspectors visited the various offices at 9 o’clock and informed representatives of the companies that investigation would commence an hour later, when documents giving them the necessary authority to proceed with their task would be lodged with the Supreme Court at Wellington. On the occasion of the first call representatives of the companies were warned that no documents relating to the affairs of the various companies must be removed or destroyed. The investigation was later commenced, and the inspectors were employed for the greater part of tile day. No information as to the progress of the investigation or its possible duration could be obtained from the newlyappointed officials.