FAKED BALANCE SHEETS

NZ Truth, Issue 978, 23 August 1924, Page 7

FAKED BALANCE SHEETS

Company Director Wain Subterfuges

Second Trial C

lears Secretary Of

Suspicion.

(From "Truth's" Taranaki Rep.)

There is one young man who should not fly so high m Taranaki, or anywhere else for that matter, for some time. He is Cyril Louis Wilson, late managing directors of Wilson's Motor Supplies, Ltd., Eltham (m liquidation). He had his wings clipped by Sir Rob'-.; crt Stout (Chief Justice) at New Plymouth last week by a sentence of twelve months' probation and two orders, one for £25 towards the costs of his prosecution and the other for the refund to the company of £222 is 3d, the face value of a promissory note of the theft of which he was convicted. He has to pay the £25 within one month and the £222 Is 3d within nine months. . , I . Wilson was indicted at the previous session of the Court on charges of theft of £190, for which sum he discounted the promissory note, and a sum of £20, part of a payment of £140 made by M.* J. Dromgool, of Strathmore, on a motor lorry. Alternative charges were the fraudulent convei-sion of the money to his own use. He was also further charged with having falsified the books of the company, with the intent, the Crown contended, of concealing the thefts. The first trial presented some sen • sational features, particularly when Mr. Justice MacGregor examined ' Wilson and when, m his summing up, he said that had Wilson come forward honestly and said he had taken the money because he thought he had a right to it, one would have felt sorry

for him. The non-appearance' for either side of Frank Foss, public accountant, of Wellington, one time secretary; of the company, and j the production of a letter he was alleged to have written to Wilson, asking if Wilson could '.tell a few lies, were also responsible for adding interest to the trial, the interest being heightened by the dramatic appearance at the last moment of Mr. L. M. Moss to address the jury on Wilson's /behalf. On that occasion the jury disagreed, and; a new trial was ordered. For the second contest Foss was present as a witness for the Crown, but there was no mention of the letter which had figured so prominently In the previous hearing. Wilson showed signs of the strain when he stepped into the dock; and broke down when attention was drawn to the way m which he had ruined himself, his father and his brother, both of whom had been forced into bankruptcy as- a result of his crash. He was acquitted oh the charges m which the £20 was concerned, but found guilty on the other lot. CONCEALING HIS TRACKS. After recounting what he knew concerning the entries . m the com-: pany's books with regard to the promissory note, Foss said that one day, some time after he -had left the company, Wilson met him m Wellington at the Empire Hotel and' asked him to look over^some papers he had prepared with regard to his bankruptcy. He said he looked them over until he came to a reference to a promissory note having been discounted and then refused to read any further. Wilson asked him to endorse the papers as to their accuracy, but witness refused. Wilson said:' ''You know my future is at stake?", and he (Foss) replied: "If you choose to discount ,a promissory note. for your own use, that <1s your funeral. You must stew m it." How a mistake of £1500 m a balance sheet had been discovered, but had been kept secret from the auditor and the shareholders, was also related by Foss: He Baid he prepared > the sheet m September. 1921, from the books, the value ,of the stock being given to him by Wilson. About six days before the balance sheet was put before the auditor, Parrott, he had discovered that a £1500 lorry on consignment had been included m stock. The rectification of the error would have reduced the profit; shown on the balance sheet from £2196 18s 6d to £ 696 18a 6d. Foss said he drew. Wilson's attention to the error, but Wilson said he. had shown the sheet to the bank manager and that it would be as well to let it go. This balance sheet was placed before the shareholders, but no reference was made to the mistake. He affirmed that Wilson knew of the error and said ho considered that m going to Wilson he had gone far enough. He had, therefore, let the matter drop. : The cross-examination was directed to show that Wilson's drawing account would have been m credit had Foss put through the credits to the account at the right times. ■ Fosa denied any remißßness"in his duties and that his refusal to sign the statement produced m Wellington by Wilson was due to his knowledge that there were accountancy errors m the books. He had not known there were any mistakes m the books. Mr. Moss: When was the £1500 mistake discovered? — It was discovered about six days before Parrott, the auditor saw the balance sheet. Did you tell Parrott of the mistake? No. You recognised the seriousness of the mistake? — Yes. And you did not tell Parrott? — NoI couldn't go beyond what the managing director had told me. Parrott gave a clean certificate to that balance sheet? — Yes. You wore afterwards appointed auditor? — Yes. ; Foss added that during the time he was auditor he had no necessity to give a certificate to a balance sheet He knew that the error had been corrected m the books. That Wilson had been quite open m all his dealing with the money mentioned m the charges, and if his actions were those of a guilty man they were as clumsy as could be, was the keynote of the address to the jury by Mr. Moss. Ho urged that Wilson's drawings account had been mado a "clearing house" for other" accounts and that to commit Wilson, the jury would have to do so on the mistakes of Foss, the accountant. • Mr. C. H. Woston, Crown Prosecutor, did not address the jury. FOSS'S CLOUD REMOVED. Did Wilson, as managing director of the company, have a right to take the £20 and make it a charge against the company, and was the transaction with regard to tho promissory noto an hon-

est one? were the issues put to the jury by the Judge m the course of his summing up. His Honor said that Wilson's account was never m credit, even allowing for the credits that the defence said should have been srlvei. him Regarding the debiting of tho account of Sir Walter Carncross, who had discounted the note- for Wilson, with the amount of the' note, his Honor said that that entry should not have been made, as Sir Walter had given his cheque for the note That entry had remainod undisturbed for eighteen months. It was quite clear that Foas knew nothing of the transaction or he would have corrected the entry. It was nothing to him. Wilson as managing director of the company, had control of its finances and must have known the entry was there' yet nothing was said about it nntil'lt was discovered by the liquidator (J. L- Weir). If the transaction was honest the books would have shown it to be so. There was not a tittle of evidence that what Foas had said was wrong and the best proof that what ho said was right w»» the books. "I hope this will bo a lesson to you and that you will understand that the successful management of a business requires brains, great skill and grent care," said "his Honor when he passed sentence. Ho said he did not intend to send Wilson to prison, but thought he ought to pay something towards tho loss ho had brought about. He accordingly made tho orders as stated.