CASE FOR INQUIRY

New Zealand Herald, Volume LXXI, Issue 21874, 9 August 1934, Page 14

CASE FOR INQUIRY

MR, COATES' REVIEW SIGNIFICANCE OF EVIDENCE SHARES IN CANBERRA CONCERN [BY TELEGRAPH —PRESS ASSOCIATION] WELLINGTON. "Wednesday In a statement introducing the bill, Mr. Coates said the measure arose out of the report made by tho commissioners after making investigations into tho affairs of one group of timber companies and one group of financial and investment trust companies, which were practically under the control of a few men. They found a very disquieting state of affairs aud decided to adopt the unusual course of making an interim report on these matters. Tho companies were associated as parent and subsidiary companies, or as ! affiliated companies, and freely sold [shares in other companies of the group. The device of parent and subsidiary i companies was often used for questionable practices, and had been so frequently. associated with financial ■ scandals that proof of the existence of a group made at least a prima facio case for further inquiry. " So-called Insurance Company " " This case for inquiry begins to bo strengthened," said tho Minister, " when it is discovered from records and from evidence of witnesses on oath 'that a so-called insurance company, ) forming an apparently important unit ,in this group of companies (the Transport Mutual and General Insurance Company, Limited) had a registered ; memorandum, of association signed by seven "dummies," and that three of the "dummies" are appointed directors. Two of ; them were girl clerks, one of jwhom was a minor. The Investment Executive Trust made a direct investment 9f fairly large sums in a company registered at Canberra, said Mr. Coates, the invest- ! ment being both in debentures and ! shares. In addition, another Auckland company, Farms and Farmlets, Limij ted, had invested .over £50,000 in shares of the Canberra company. Farms and Farmlets, Limited, however, was a small private company, with an original I capital of £IOOO, held, in equal shares I by a solicitor named Hewitt and his I wife. Hewitt was tho solicitor for many l of the companies in the group the House was dealing with. Information Not Gained When information was sought about Farms and Farmlets, Limited, continued the Minister, it could not be obtained from the company's office, the reason being that Mr. Hewitt was in Sydney. This private company, had registered with the registrar of companies as a charge against assets £IOO,OOO in 500 bearer debentures of £2OO each. Would it be denied, asked the Minister, that a case was made out for an inquiry to answer the questions? "From whence did this small private company obtain over £50,000 to invest in shares of the Canberra company. If it is by issue of these bearer debentures, who has taken up the debentures?" . In referring to a share deal wincn he described as remarkable, the Minister said that the British National Investment Trust was a New Zealand company with a capital of 250,000 ordinary shares of 2s each and 150,000 preference shares of 10s each. A total of 250,000 shares was held by the Canberra company, and were allotted, with a comparatively trifling exception, to Mr. McArthur and Mr. Alcorn as paidup at 22-5 d per share in March, 1933. Within a few weeks they were sold for cash to the Canberra company for about 23s a share.

In other words, they were bought by Mr,. McArthur and Mr. Alcorn for approximately £3OOO and sold some days later for £288.000 to a company controlled by Mr. McArthur and Mr. Alcorn. This was strong evidence of use of funds of an investment company for speculative purposes and provided strong ground for inquiry. , CLOSING OF COURTS 'HEARING OF FAMILY CASES MRS. McCOMBS* BILL [BY TELEGRAPH —PRESS ASSOCIATION] WELLINGTON, Wednesday Leave to introduce the Destitute Persons Amendment Bill was moved by Mrs. E R. McCombs (Labour —Lyttelton) in the House of Representatives to-day. Mrs. McCombs said the aim of the bill was to exclude from the Courts during the hearing of family matters all persons who were present only from curiosity or who are morbid-minded. Every opportunity should be given for the parties in the dispute to reunite. The bill was introduced and read a first time. ; t . - , /i

WORKERS' COMPENSATION AMENDMENT OF ACT URGED • POWER TO REOPEN CASES ( , [BX TELEGRAPH —SPECIAL REPORTER] WELLINGTON. Wednesday A recommendation that the Workers' Compensation Act should be amended to provide for the reopening of cases in which it was found that the compensation paid was inadequate <vas made by the Public Petitions Committee in the House of Representatives to-day. The committee was reporting upon the petition of C. Leathern, of Hawera, praying for a compassionate allowance in respect of injuries allegedly received while he was employed by the Public Works Department. Several members strongly urged the Government to give effect to the recommendation. TRANSPORT BOARD BILL CROSS SYSTEM OF VOTING POWER FOR USE SOUGHT [BX TELEGRAPH —SPECIAL REPORTER] WELLINGTON. Wedneaday "Two main points are included in the Auckland Transport Board Amendment Bill," said Mr. H. G. R. Mason (Labour —Auckland Suburbs) when interviewed to-day after he had intimated in the House of Representatives his intention of introducing the bill. "In the first place," said Mr. Mason, "provision is made for the GovernorGeneral to make any alteration that may be necessary in the representation of the different constituent areas as a result of any changes that may occur through an alteration in tho size or boundaries of the constituent districts, or through one merging with another. "The second point in the bill is provision to enable all local bodies within the board's area to use the cross method of voting if they so desire, with a view to securing uniformity of method. At present the right to use the cross system applies to all areas in which tho Auckland City Council is in charge of the voting. To prevent confusion, it is necessary to extend this to those areas included in the Transport Board's district, but outside the area afiiected by the City Council's resolutioa to uso the cross system,"