COMPANY INQUIRY

Otago Daily Times, Issue 22352, 28 August 1934, Page 7

COMPANY INQUIRY

EVIDENCE HEARD IN SYDNEY A BROKER RECALLED / (United Press Association-) (By Electric Telegraph—Copyright. ) * '- t .... SYDNEY, August 27. (Received August 27, at 10 p.m.) The Royal Commission which is inquiringinto the activities of trust companies resumed its sittings to-day. V. M'lnnes, waS recalled ;to explain'thp,conference.he had Convened at, the time the Trust Building was opened.He said salesmen, and representatives of his organisation had been brought- from all parts-of Australia and New Zealand at a .cost, of £BOO dr £9OO. ; ' jir Monahan, K.C.: Where did the money conie from ? M'lnnes: -We paid it, but were reimbursed by. M-Arthur. , . Mr, Monahan: ' Qut ..of the debenture holders’ capital ? -. ■. M'lriries; I would.not say that.. , MTnncs was then questioned* regarding trarisactioris .between his firm and . a Mr Stevens. , He.said Mr Stevens, had been' a former .manager of the. Primary Producers*' Bank, and., later joined his staff. The bank, had gone, into liquidation. ‘ r’-. , '

Mr Monahan: Who gave you detailed information of all depositors and .shareholder# in the Primary . Producers’ Bank?';., ’ '.v - •; ’’V. 'MTnnes: Mr Stevens.

; MTn.ne# said that. Mr Stevens had propounded . a'. scheme, under , which MTnnes - should . put pp depositors’ interests on behalf of the Southern British Company/ - The - brokers were to receive 124 per cent, "for some of-the time, and 10-per cent, for the rest. Hitherto only 7i per cent, had been received, though not in cash.’ ; ‘. V . ~ -. V- - Dealing with operations conducted in Queensland in connection with the Primary PrhduCerß’ Bank, Mr; Monahan quoted from letters written, to MTnnes’s firmfrom the* State. J One contained, the passage: “If half of these overdrafts are received by the bank', they will he worth£2oo,ooo at least. Systematic and careful, preparation must be made and good propaganda ifiust be .prepared.” . Anotheif read: “If we don’t get in before this dividend .is paid, - they will expect a dividend instead of a call.”

Mr Monahan : In view of your secret and .official itaformation .of substantial unsuspected sums that the ■bank was receiving in payment: of , overdrafts, the ided was to purchase while the shareholders’ were still thinking they would' have to face.a call? ,1-. . • ; .I, MTnhts did not answer. .’/■

'Mr Mjohahan: And this propaganda. I suppose your salesmen were instilling fear into.the shareholders’ minds, so that th|y , 'would vote confirming the’ sale by the liquidators to the trust?. -; . • afTnpeS; There .was hoy;suggestion along those lines. M'lhnds was further: questioned- in' reference to correspondence on the subject of the Primary Producers! Bank. ; Mr Monahan: Why was there a suggestion,'that you- should■ hasten before the dividend was jiaidT ■ . .MTnnes: No dividend was paid. The .commissioner: Of course not, hut does hot.it convey that unless. you mOved quickly the shareholders would be more likely to ; retain their holdings than if you worked to induce them that their holdings were not so good as they , were when they bought them?;' , , ; . MTnnes-: Yes. . ’■ >

Mr Monahan;. ‘Ton were; anxious to get them- to agree to the sale of their; assets?; ,-'•■■■ ;;r----•i,2.'3iflnheß4,;,TKa't was.ohly,a Suggestion. .1 1 ’was not acted-upon. ;v; . Mr Monahan; Have yoji dealt with . the assets of the bank? ; .MTnnes: No.. .. . •’ Mr Monahan then quoted .from, a letter in which an agent of the company had' related 'that he ' had induced , a' Mr Heron ,to assign £8 interest in; the Primary Producers' ; Bank and had then gone to Heron, who had a much Target Sum—£27o—and by convincing her. of her. husband’s assignment had, in- 1 diiced her to assign her interest without reference to her ,husband. He was then able to inform Heron that, as his sum was less than £lO, it could not he accepted, . ■ Mr -Monahan : Do; you; regard that as gross fraud on Mrs Heron? MTnnes; No. " The commissioner:'Do you regard it as : honourable conduct? MTnnes: No.

The commissioner: Oneof your officers reports it as though it was good business. Would: you regard it as good business ? ,

MT hues did not reply. A. H. Hill, secretary of MThnes and Ga; Ltd!, and liquidator of V. B. M'lnncs (Australia), Ltd., said the Capital subscribed in the latter company at, the time it, went into liquidation alhounted to about £2500. The capital had gone into a number of investments at the time of the liquidation;;-

’ Mr Monahan : What has been done to protect the interests Of the shareholders? Hill: Some of them are directors in the; new company, and are aware of the facts. , • / '> . '

- Mr Monahan; Was a. protest made by a Mr Morrison?

s. Hill; :Yes. He seemed'to think paymeiits/wete tq be: 1 made in. cash immediately. ■■ ■, '.'yj-: r i ■

• Mr Monahan : Did Mr Morrison later oil : move that the , option ; granted by MTnhes (Australia); Ltd., be exercised? . ' :

Hill: He spoke' of the fact and demanded payment of £IO,OOO so that he could get his money back. Mr Monahan: And no one seconded the. motion? Hill; No. Mr Monahan: Why was the option not exercised?

Hill: It: was accepted. I overlooked recording .it. The commissioner: Why did you omit entering-it in the minutes? • Hill:, It was just negligence,, I suppose,'' ; .

Mr Monahan; You made au entry, “Xo seconder ”? . : • , %

•. Hill: Yes. That was the position at the meeting. ' ", >.' v -

Mr Monahan; Wlijch.df your state ments is true ? . .• ‘ ' \

Hill: Ata nieeting on June 6it was decided to exercise the option. Mr Monahan: That explanation will not help yoii. The option did not expire till June 13. ' i .

.Witness, informed the commissioner that the option had been exercised. It was put in order on August 14. Mr, Monahan: But it had lapsed: then by effluxion of time. . . The'commissioner: You ’say yon are tp prepare an option which has already been accepted? ' Witness: 1 am acting under orders entirely. . , ..

Tlie commissioner; Whose orders?

Hill: The directors’,

The commissioner: ’ Under whose orders are ,y6u' preparing the option? Hill: Under my own as liquidator: v I The commissioner: Do you expect me to believe what you say?

. Hill: Yes.' . , / U ■ The commissioner: Then I am afraid I do not. A. D. C. Dunn said he was branch manager for New South Wales for MTnncs and Co. He had been in Queensland for 10 months.

Mr Monahan: There was a scheme to get in touch with elderly ladies and get them to part with their deposits in the Primary Producers’ Bank?

Dunn: I don’t know that there were many, elderly ladies in the bank. The depositors were mostly men. - Witness admitted writing a letter, in which he had recommended a man named Crowley for appointment as ho was “ exceptionally well fitted for approaching ladies.”

Mr . Monahan questioned Dunn concerning transactions with Mr and Mrs Heron. - Witness.said it was an honest transaction. He had informed Mr Heron that the Southern British Trust would take over the deposit if it was more than £lO,-but if it was below that amount the trust probably would not do so. He did not. know at the time what the exact amount.was. After taking over Heron’s deposit he had gone to Mrs Heron and had shown her that her husband had transferred his deposit. That was defjmte evidence that, the husband agreed with the proposal. - The commission adjourned till Thursday. The commissioner requested counsel for .the investment companies to. report by then as to the progress made in producing balance sheets, of the various companies as at a given date. Dr Louat said; he did not think he would be ready to proceed-.then. The, commissioner requested that the balance sheets be handed to him when they were prepared.