DEBENTURE DEAL

New Zealand Herald, Volume LXXIII, Issue 22596, 8 December 1936, Page 11

DEBENTURE DEAL

FRAUD ALLEGED SEQUEL TO TRANSFER CLAIM FOR RETURN CASE AGAINST COMPANY [j)Y TKLEGRAPH' —PRESS ASSOCIATION*] CirRISTCHURCH, ..Monday Allegations against the operations of the Australian Investment Corporation, Limited, and another company concerned with the assets of the Investment Executive Trust Company of New Zealand, Limited," were, made in the Supreme Court to-day before Mr. Justice Northcroft, when George Ernest Argvle, of Ashburton, a printer, petitioned for the return of in the Investment Executive Trust to the value of £l7O. the allegation being that lie had transferred them in consideration of debentures to the same nominal value in the Australian Investment Corporation, which company was the defendant in Jthe action. Plaintiff's claim stated that he had been induced to make the transfer by the misrepresentations of Osmond Arthur Bridgewater and of William Munro, admitted agents of the defendant company. " One of Ten Cas<ss " " This," said .Mr. Young, counsel for plaintiff, " is one of ten cases which will be brought against th 3 defendant company. The allegations are all based on similar fraud and misrepresentation."

"Bridgewater," Mr. Young continued, " is a super, high power salesman, and must rank in a class hv himself in New Zealand." A slimmed door .and a shout of "No" memt nothing to him. By glamorous representations and returning again and again he achieved his object. " The Australian Inveslment Corporation," counsel said, "was founded in 1935. The self-appointe:l managing director was 0. A. Bridgewater, the chief salesman was 0. A. Bridgewater, and the managing director of the broking firm handling the debentures was 0. A. Bridgewater. fn fact the whole thing was 0. A. Bridgewater." Further Allegaticns Counsel said that Bridgewater had been connected with McArthur, as would be proved. He was McArthur's agent for Canterbury, South Canterbury, Marlborough, Nelsor., and West Coast. Debenture holders in the Investment Executive Trust knew Bridgewater was hand in glove with McArthur, and consequently when he came to them in 1935 they were suspicious and pressed him on the point. Bridgewater told them le had been caught in McArthur's ccmpany, and had transferred all his shares to the new concern.

"Actually he had held forty debentures," Mr. Young said, "and to show his confidence in the nev r concern he had not transferred a singl; debenture." The defendant company, counsel continued, had collected debentures in the Investment Executive Trust to the face value of £85,000. It was known then that only 12s 6d in the pound would be paid to the unfortunate investors. In April the Public Trustee paid a dividend of 2s in the pound. Figures from a Bala:ice-sheet The annual meeting of the Australian Investment Corporation had been held some months ago, said Mr. Young. The balance-sheet revealed that Bridgewater or his promoting company, 0. A. Bridgewater and Company. Limited, received £IOOO for establishment costs and over £IOOO commission, this being later deducted from money which had come from the public by way of dividend from liquidated companies. By securing the transfer of debentures in the Investment Executive Trus - ; the corporation had received about iJ27,000 in the distribution by the Public Trustee. The balance-sheet also showed that £3250 had been invested in the Investment Development Corporation of New Zealand, Limited, a company which had been formed in Wellington on June 5, 1936, continued counsel. Shares in this company were also held by the McArthur Trust, formed by J. W. S, McArthur in Queensland, where no legislation similar to that of New Zealand and New South Wales had yet been enacted. The first proof of a definite connection between Bridgewater and McArthur was obtained on July 15, 1936, when their names were entered with the registrar of companies, Wellington, as directors of the Investment Development Corporation. Cancellation of Contiact Sought

The representations complained of had been made to plaintiff by Bridgewater in August, 1935, said counsel. Plaintiff believed that Bridgewater was a loser through the McArthur transactions. A transfer was effected and it was not until the following April when he found that another debenture holder who had not transferred his holding received a dividend from the Public Trustee that plaintiff's suspicions were first aroused. Plaintiff's claim was for cancellation of the contract between plaintiff and the defendant company for the transfer of the debentures and for the return of the debentures. Evidence on lines indicated by counsel was given by plaintiff, who said that after he consulted his solicitor with a view to recovering the shares he was interviewed by Bridgewater. Bridgewater represented to him that the solicitor, Mr. Young, had lost interest in the case and that several other persons who had consulted Mr. Young had since withdrawn the matter from his hands. The hearing was adjourned.