CHARGES OF FRAUD

New Zealand Herald, Volume LXXIII, Issue 22351, 24 February 1936, Page 9

CHARGES OF FRAUD

PEPPEK TRANSACTIONS GAOL FOR DIRECTORS PUBLIC'S MONEY LOST By Telegraph—Press Association—.Copyright LONDON, Feb. 21 Garabad Bishirgian, a director of James Shakespeare, Limited, which i firm was heavily involved in the ( London pepper crisis of last year, its ( winding-up eventually being ordered, , and a co-director, Howeson, were ( sentenced to-day to a year's im- - prisonment, and a third, Hardy, was ( sentenced to nine months in gaol, all in the second division. Bishirgian was charged with circulat- f ing a prospectus knowing it to be false in a material particular, and the others with aiding and abetting him. Leave to appeal was granted. ; The case had lasted nine days. It arose out of dealings in shellac and pepper by Williams Henry and Company, of which Howeson held two-thirds of the shares, Bishirgian one-third and Hardy was managing director. Bishirgian, acting as broker in a series of transactions, bought 66,800 bags of shellac for £500.000. of which £109,500 was paid, and also 11.245 tons of pepper, at a cost of £967,048. Nature of a Prospectus The Attorney-General, Sir Thomas Inskip, who prosecuted, explained that Will iams Henry and Company estimated that there were only 12.000 tons of pepper in the world, but the new crop was larger than was expected. While 6000 tons of the old crop were still unsold in London, a further 6000 tons were released by Chinese and other sources. When prices improved Williams Henry and Company got into difficulties and arranged to buy the old-established business of the metal brokers .Tames Shakespeare and Company, which Howeson then controlled and to which he could transfer Bishirgian's commodity business. When James Shakespeare was publicly floated the capital was £400.000. The prospectus did not mention the pepper and shellac commitments. The Attorney-General contended that defendants saw further stocks of pepper coming along, and accordingly took steps, in view of the necessity for making further purchases, to protect the price. The evidence disclosed that James Shakespeare and Company eventually bought a further 12,340 tons of pepper and went bankrupt with liabilities amounting to £7*5,000 and assets £235,000. £400,000 Lost in Few Months Mr. Justice Atkinson, in summing up, referred to the attempt to "corner pepper and said there was no law against "cornering," although it might not be thought very nice. He pointed out that £400,000 had been taken out of somebody's pockets and lost in a few | months. In delivering sentence, he said the prisoners had held great positions, carrying great responsibilities. Sir Patrick Hastings, K.C., who defended Bishirgian, an Armenian, said his client started work at the age of 12 and built up the commodity business. He spent nearly £IOO,OOO in making good the pepper losses and was now penniless. Howeson, described as the "tin king," was a director of 19 companies, chairman of 12 and adviser to 20 others. He concentrated on building up the Anglo-Oriental tin-mining group, with £20,000,000 capital. He began in 1929 to obtain world-wide co-operation to counteract over-production, resulting in the Government's backing of the scheme at present in operation. It was estimated that he had saved Empire producers £40,000,000. - Laws Require Revision The Daily Herald says the Government will be urged to take drastic action to prevent a repetition of the pepper gamble, including tightening up legislation relating to dealings in commodities. The Board of Trade may be asked first to institute an inquiry regarding "unhealthy" speculation in commodities. The News Chronicle urges that the law ' should be altered to prevent "cornering." The Times says it regards the case as another of the pitfalls of finance following the Bottomley, Hatry and Leopold Harris cases, which have alarmed investors in recent years. The journal adds: "In the interests of shareholders the company laws require consideration regarding the identity of corporations. James Shakespeare, Limited, within a few days changed from the role of a sober concern to the nom de guerre of a group of reckless gamblers." The costs of the case will total £30,000.