TRUST INQUIRY

New Zealand Herald, Volume LXXI, Issue 21938, 23 October 1934, Page 10

TRUST INQUIRY

LIST OF CHARGES METHODS ADOPTED MB. McABTHUR'S POSITION THE DEBENTURE CAPITAL SERIES OF ALLEGATIONS By Telegraph—Press Association—Copyright (Received October 22, 7.25 p.m.) SYDNEY, Oct. 22 The Royal Commission which is inquiring into the activities of 31 companies continued its investigations today. Mr. Justice Halse Rogers presided as Commissioner, Mr. W. W. Monahan, K.C., and Mr. J. B. Collier appeared as counsel assisting the Commission, Mr. R. Windeyer, 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. Louat for three other companies. The Commissioner announced that he had received a letter from New Zealand referring to some committees of debenture-holders in the Investment Executive Trust of New Zealand, Ltd., which apparently were being formed. Apparently debenture-holders in New Zealand were being circularised and asked to vote for certain people in different centres to represent their interests. " A Little Premature " " I think this is a little premature," added the Commissioner. " I shall hand the letters and papers to the Crown to show to counsel." Mr. Monahan intimated that be had decided to address the Commission first and formulate charges to which counsel would have an opportunity to reply. His charges related to five companies: The Investment Executive Trust, the Southern British National Trust, the British National Trust, the British National Investment Trust, and Sterling Investments, Limited. The charges were:— (1) That the establishment of the main companies was devised by Mr. J. W. S. McArthur and carried out with the aid of his satellites to salvage his personal assets, which were in jeopardy, and to enrich himself by the manipulation of capital subscribed by the public for trust investment. (2) That the methods Mr. McArthur adopted were invariably crooked and in many instances fraudulent and dishonest. (3) That the methods he adopted constituted a gross abuse of the Companies Acts. Form of Balance-sheets (4) That the balance-sheets issued and filed were known to be false and misleading. (•5) That no books or records were kept which would have enabled a skilled accountant or auditor to form an opinion in regard to the affairs of the companies. (6) That the system of getting debenture capital from the public was ruthless exploitation, the methods in some instances being declared criminally illegal under recent British company legislation. (7) That out of a total debenture capital of £648,000 subscribed by the public, £283,000 had been spent and was not represented by tangible assets. (8) That the present control of the companies constituted a grave menace to the safety of the remaining debenture capital. (9) That all the directors and officers of the companies who were called before the Commission were actuated by a desire to stifle the truth, and were guilty of gross prevarication, if not of actual false swearing. Comments by Commissioner Mr. Monahan addressed the Commission along the lines of his charges, tracing the history of the companies at length. The Commissioner said he had been struck during the cojirse of the Commission by the dangers in any system of putting off debentures on the public. An enormous amount of debenture capital had been subscribed by persons who had not the slightest control of these companies. This business of selling debentures was really a new idea, and he might call it "the New Zealand system.'' However, New Zealand Redwood Forests seemed to be a genuine commercial company. Mr. Monahan: I think so, too, but when it fell on evil days it formed the basis of subsequent devious transactions, , The Commission adjourned.