PHANTOM FIRMS

New Zealand Herald, Volume LXXIV, Issue 22922, 28 December 1937, Page 10

PHANTOM FIRMS

FRENCHMAN'S FRAUDS DIVIDENDS FROM CAPITAL DIRECTORS* FEES AS PROFITS PARIS, Dec. 23 Phantom companies, imaginary boards of directors and amalgamations of companies that never existed—yet paid dividends—were described in an amazing Court case to-day, when Robert Annee, aged 55, a highly-respectable looking doctor of law, bachelor of science, and former secretary-general of a prefecture, was charged with having obtained money by false pretences. Annee entered business in 1919, creating the Parisian Rice Company. Fifty subscribers took up shares with great eagerness. Then he launched the French sugar■works, the Seme-et-Oise Agricultural Company, and tho Dusol Foodstuffs Company. Announcing that these companies had failed, Annee returned the subscriptions and collected the share certificates, which he used as capital for new companies, the Sugar Refineries of France, and the Farmers' Society of Seine-et-Oise.

He issued prospectuses and invented a notary to draw up articles of association for two purely imaginary boards. Meeting "Under Hat" The "directors" then invited the shareholders in tho four defunct companies to subscribe—which they did. In 1928 Annee "amalgamated'' two non-existent companies, holding "under his hat" a general meeting of ghostly directors, who voted an increase in capital to 5,000,000 francs. He accepted the resignations of the phantom directors and staffs. The new society, showed a profit of 533,811 francs, justifying a fat dividend. The shareholders were delighted. In 1931 Annee gravely advised them that tho chairman of directors, 31. Pluchet, was dead. Wreaths from tho grateful shareholders covered the phantom coffin of the imaginary Pluehet. Two new directors, "M. Harrot" and "M. Giffard," were appointed, Annee choosing the names from a cataloguo of agricultural instruments. Irregularities Discovered

Finally, a letter from the phantom chairman of directors, "M. Caffin," informed the shareholders that "M. Giffard" was dead, and announced the discovery of grave irregularities whereby the deceased had embezzled 293,367 francs. Then someone woke up.

Annee was arrested. He had been directors, staff and everything else. From the five millions capital he had returned in dividends and bonuses more than four millions.

His profits were directors' fees and expenses amounting to 70,000 francs a year.