MOTIVES OF COMMISSION

New Zealand Herald, Volume LXXI, Issue 21899, 7 September 1934, Page 14

MOTIVES OF COMMISSION

VENT3LATING THE FACTS VALUE OF HEALTHY PUBLICITY [BX TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Thursday The concluding section of the second interim report by the Companies Commission was as follows:—" The transactions detailed in the report begin in 1925. Most of them lie in the period between 1925 and 1930. Many of them have been the subject of inquiry by interested parties, and there have been several attempts to procure further inquiry and to secure a reversal of some of the transactions. Some of the points raised have been keenly debated and strong feelings aroused. New interests have arisen and the older interests have tended to weaken. The new trustees are earnestly endeavouring to maintain and improve the position for the debenture-holders. "These aspects of the situation suggested to us that there was much to be said for the policy of leaving the problem where it is and allowing the interested parties, if they wish, to seek their own remedies. Our minds have been exercised by these considerations and a' strong inducement to act on them was afforded by our desire to avoid even the appearance of victimising the principal party in the series of transactions. "Certain contrary considerations have, however, led us to conclude differently. The first is that unchecked and undisclosed transactions lead to a gradual lowering of the standards of commercial morality. Their continuance in this case has been possible only by the fact that a policy of compromise and private settlement without publicity has been followed and in many cases inquiry has been successfully burked. It is possible that there are other companies whose alfairs show transactions and policies as reprehensible as those of New Zealand Redwood Forests, Limited, but, if so, X»ur attention has not been directed £o them. "In the whole course of our inquiry we have found nothing at all comparable with the foregoing facts and transactions in relation to any existing company. The only comparable case is that of the group of companies which ended in liquidation in 1930 and which will bo referred to in our final report. The inquiry' culminated in a law suit which would have exposed the whole scandal, but the matter was settled by private compromise and did not reach hearing in Court. " It is probable that if the matter had then been properly ventilated in healthy publicity the subsequent history of company promotion would have revealed higher standards and more honest methods. " Secondly, it is desirable to safeguard the position of the existing de-benture-holders while avoiding the necessity for the continued sale of debentures to other individuals whose investments might bo subsequently endangered." "Finally, certain of these companies are inter-related by their transactions with some of the companies listed in the schedule of the Companies (Special Investigations) Act, 1934. In these circumstances, we have no doubt as to where our duty lies. We have 110 discretion to compromise public interests i and we believe that such interests de- j mand full inquiry."