TRUST INQUIRY

New Zealand Herald, Volume LXXI, Issue 21910, 20 September 1934, Page 11

TRUST INQUIRY

A TANGLED SKEIN efforts to unravel SYDNEY COMMISSION MR. McARTHUR'S DEALS SEARCHING QUESTIONS By Telegraph—Press Association—Copyright (Received September 19, 6.15 p.m.) SYDNEY. Sept. 19 , Th e Royal Commission which is inquiring into the activities of 31 companies continued its investigations today. Mr. Justice Halse Rogers presided gg Commissioner, Mr. W. W. Monahan, K.C., and Mr. J. B. Collier appeared as counsel assisting the commission, Mr. R. Windever, K.C., and Mr. B. Fuller for the Investment Executive Trust of New Zealand, Limited, and the Southern British National Trust, Limited, and Dr. F. Lonat for three other companies. Mr. J. W. S. McArthur was further questioned regarding the issue of debentures of the British National Investment Trust, Limited.

Eighteen Missing Debentures Mr. Monahan said that 410 debentures for £IOOO each had been issued, but 18 had not been accounted for in the balance-sheets of the other companies. Furthermore, the balance-sheet of the Southern British National Trust showed its holdings "as 115, while the British National Investment Trust had the figure as 166. Mr. McArthur said he could not explain the discrepancy, but he thought the 18 missing debentures probably were those owned privately by Mr. C. 6. Alcorn.

The commissioner said he had repeatedly asked how much money Mr. McArthur had ever put into any of the companies since 1922. Mr. McArthur replied that his activities had begun long before that date t the Selwyn Timber Company havI ing been started in 1907. That had been his "lifo's work." Ho Cash Pat Into Companies

Mr. Monahan: How much actual cash have you put in Bince the Investment Executive Trust of New Zealand, Limited, started? Mr. McArthur: I have put in assets. But how much of your own personal property in cash? —No cash, but many assets.

Mr. McArthur added that the assets he had put into the Sterling Investments Company (N.Z.), Limited, had realised £28,000. He had been credited with a "nominal considerationf" Mr. Monahan: How much? Mr. McArthur: £6OOO. Questioned regarding Redwood Forests, Wynwood Investments, Limited, snd Modern Homes, Limited, / Mr. McArthur said he had been v troubled financially when Modem Homes was floated in 1931. He practically controlled Modern Homes, but could not explain how 19,000 shares had been acquired in Hedwood Forests. Irofit on Sydney Building Continuing, Mr. McArthur stated that a sum of £60,000 he had received from the British National Trust represented part Of the profit made on the sate of the Trust Building in Sydney. The money had come from the Investment Executive Trust, which had purchased Sterling Company debentures. Mr. Monahan: You used the Investijent Executive Trust's capital to rescue your own private, assets ? Mr. McArthur: They protected me, but the.v had a good investment. They got 14 per cent interest altogether. But I suppose you admit that a considerable amount of debenture interest was paid out of capital?— Yes. k Interests of Debenture-holders

While Mr. Monahan was questioning Mr. McArthur about the Investment Executive Trust, Dr. Louat took exception to a statement by Mr. Monahan "That this tangled skein was to be worked out so that Mr. McArthur would get tie whole of his assets back to himself."

The Commissioner remarked: It has been a tangled skein for days past. One of the points of differenoe between Mr. McArthur and the New Zealand Stock Exchanges was that he refused to make available his investment schedule. It seems likely, added the Commiseioner, that I shall report that the whole of the transactions of the Investment Executive Trust were subsidiary to Mr. McArthur's personal interests, and if I do not report that way, he will have to help me to form a different conclusion. 1

Mr. McArthur: I can show you that the interests of the debenture-holders are protected.

Commissioner's Strong Comment The Commissioner retorted: The de-benture-holders' interests were only protected secondarily and because Mr. /McArthur had made a very advantageous deal, although that depended on the value of the former Daily Telegraph Building. ' Apparently Mr. McArthur used the Investment Executive Trust's money for private his first object being to make a profit for himself. ' Mr. McArthur: No. I had the idea of making a profit for the debentureholders, but main object was to build up a strong trust. The Commissioner: Your method of hiding yourself behind aliases does not inspire confidence. At a later stage the Commissioner f said he had ample evidence that Mr. McArthur was an expert in company matters, but there was no evidence that he was an expert in real estate in Sydney. //