STERLING COMPANY

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

STERLING COMPANY

TRANSFER OF ASSETS EXCHANGE FOR OTHERS TRANSACTION DEFENDED COMMISSIONER'S ATTITUDE By Telegraph—Press Association—Copyright (Received September 19, 8.15 p.m.) SYDNEY, Sept. 19 In the course of the examination of Mr. J. W. S. McArthur at to-day's sitting of the Royal Commission which is inquiring into the affairs of certain companies the witness was questioned about a transaction with the Sterling Investments Company (N.Z.), Limited.

Mr. Monahan (holding up some papers): This is a memorandum in your own name of the assets taken over from the Sterling Company. Were they fair valuations at the time you made them ? Mr. McArthur: They would be later. They were the prices at which they were taken by Wynwood Investments, Limited. I was Wynwood. Motive for the Transaction Mr. Monahan said the property had been taken over for £50,000 odd. He asked whether the assets taken out of the Sterling Company had been worth about £90,000. Mr. McArthur: No. Not at the price at which they stood in the Sterling Company's books. Replying to further questions Mr. McArthur said he had transferred debentures in exchange for the other assets in order to better the position of the Investment Executive Trust's debenture-holders. He was giving them revenue-producing assets for non-revenue-producing assets.

The Commissioner: It will take a lot to convince me that that was your motive.

Mr. McArthur: 1 can assure you it was. I wanted to strengthen the position of the debenture-holders. Witness admitted that a substantial State forest debt had been wiped out in the transaction. Instructions to Mr. Alcorn

The Commissioner: What holdings had you in Sterling Investments at that time?

Mr. McArthur: I held debentures. I wanted to leave Sterlings in a position where the only assets they had were connected with the trust.

But ultimately the result was that they retired the debentures and you got the assets belonging to Sterlings. Who conducted the transactions on behalf of Sterlings?— Mr. C. G. Alcorn, I think.

But he says he knows nothing about it. Sterlings were making the sale to you and you got those assets. Did not you send Mr. Aicorn a list of the assets you were to take over and tell him to sign the necessary documents?—lt may have amounted to that, but it was quite an equitable transaction. How could it be from Sterlings point of view, when nobody on their behalf considered whether it was fair value or not? What interests me is that every transaction in the case appears to be done entirely at your dictation.—Yes. Most of it. The commission then adjourned until to-morrow. COMPANY LAW AMENDMENTS PLANNED AUSTRALIAN STATES SYDNEY. Sept. 19 The Sydney Morning Herald says the State Cabinet is drafting an amendment of the company law. A bill will be introduced into Parliament when it meets at the end of this month. Under the bill there will be drastic alterations in the present law. Ample protection will be given to the investing public, and the hawking of shares will be prohibited or restricted. There will be restrictions on statements in prospectuses. There is a proposal to place certain control over the financial arrangements of companies and to make it impossible for profits to be absorbed in unreasonably high directors' fees and salaries. It is probate that when the capital of a company exceeds a certain amount the company will be required to employ a qualified secretary. Similar legislation is contemplated in other States, to make the law uniform throughout the Commonwealth, as the Federal Government has not the power under the constitution to legislate on company laws.

PURCHASE OF LAND 1 TIMBERLANDS WOODPULP STATEMENT BY SECRETARY Following is a statement by Mr. E. B. Brown, of Auckland, Now Zealand secretary of Timberlands Woodpulp, Limited: — Referring to the evidence given by Mr. J. W. S. McArthur to the Sydney Royal Commission concerning moneys paid to Sterling Investments, Limited, by Timberlands Woodpulp, Limited, the position is that in April, 1931, my company agreed to purchase from Edgecumbe Forests, Limited, and Kotahi Lands, Limited, a block of land comprising 21,000 odd acres, situated between Te Teko and Murupara, known as the Matahina block. The purchase price was £33,350, payable in various instalments up to the last day of May, 1934. By direction of the vendors, the balance of the purchase moneys was payable to one only of the vendor companies, namely, Edgecumbe Forests, Limited. Mr. McArthur's signature appears on the agreement as a director of the vendor companies. Several payments of purchase money were made to Edgecumbe Forests, Limited Then I received a letter dated April 28, 1933, from the liquidator of Edgecumbe Forests, Limited, notifying me that this company was in process of being wound up, and that it had sold its assets to the Sterling Investment Company (New Zealand), Limited, to whom the remaining payments were to be made. Accordingly, my company paid the balance of purchase money to Sterling Investments. _ My company bought the property in question for afforestation purposes, and has already planted approximately 10,000 acres of it.