ROPELESS TANGLE

Otago Daily Times, Issue 22366, 13 September 1934, Page 9

ROPELESS TANGLE

TRUST BALANCE SHEETS A WITNESS’S ADMISSION < United' Press Association.l (By Electric Telegraph—Copyright.) SYDNEY, September 12. (Received' Sept. 12, at 8 p.m.) At the sitting of the Royal Commission which is. inquiring into the activities of trust companies, W. B. Hewitt was questioned with regard to the differences in the 'Sterling and British National Trust balance sheets. He said an unintentional mistake had been made in their preparation The commissioner: As a matter of fact, the' balance sheet is hopelessly wrong ? ; Hewitt: Yes. Hewitt set out to explain how the Sterling Company’s assets in the British National • Trust had increased from £90,000 to £120,000, and produced a number of documents. .Mr Monahan (after inspecting one of the papers); This has all been worked out in- the last few days? Hewitt: Yes. Mr, Monahap,: When was this transfer signed? Hewitt:' This morning. The commissioner; These papers are dated yesterday, yet the entries were made in the balance sheet as at June 30. - : ' .'/■ Hewitt: It had all been arranged, but not signed.•Mr Monahan: Is this not the result of Glasson’s evidence yesterday? Hewitt; No. ■ THE COMMISSION’S TASK ' SYDNEY, September 12. . (Received- Sept. 12, at 9 p.m.) After Hewitt had been questioned with regard, to. the balance sheets, the commissioner remarked: “I am instructed to investigate the companies’ activities, and I want to know whether the finances were in a-chaotic condition right up to the appointment of the commission. The inference one may draw at present — and M'Arthur does not throw any light upon it—is that, whatever may be the state of the investment register, all of. the involved transactions of the various companies are simply done at M‘Arthur’s direction and for his own purpose.’?

Hewitt; I do not think so. Alcorn, ■ ■ who was recalled, was examined .with regard to a transaction

between the Investment Executive Trust,

the Transport Mutual and General Insurance Company' (its subsidiary), and the Trustees, Executors and Agency Company. Witness said‘that the object was for the Transport Mutual to act for the Investment Executive Trust and to gain a substantia] interest in the Trustees, .Executors And Agency Company. ■ The commissioner :■ You can leave out the. Transport Mutual. It is only a dummy. . Replying to further questions, Alcorn said M'Arthur was to control the whole thing, but his name was . not to appear as coming into the business. There was no secret, however, that the Investment Executive Trust owned all the shares in the Transport - Mutual. Continuing, Alcorn said that travellers were supplied with cash and sent to New Zealand with instructions to buy Trustees, Executors and* Agency shares as cheaply as possible, but to buy them. The shares on the New Zealand Stock Exchange were at £3 ss, and those obtained by the Investment Executive Trust cost an average of £3 12s 6d. Replying to Mr Monahan, witness saidthey> had/acquired pbdut'4s per cent of the -shares, which he thought gave them control of the company. He agreed with M‘Arthur that; the present directors, who, he said, were more than 80 years of age, were not enterprising enough and should ■ be replaced. Mr Monahan then intimated that he could carry the matter no further until the balance sheets, had been completed.

i After further discussion the commissioner * said that' the commission was primarily concerned with ascertaining whether, the public was properly secured for money, it had subscribed. The. second Joint was wl >ther the companies had ten - improperly used for the purpose of personal gain bj'any persons connected with them, and if it appeared that th«*e companies were being properly

used,’ The third was to trace where the

money had gone,- and in doing so a great j number of difficulties arose. “In regard to two of the main companies,” the commissioner remarked, “ everything must he done to preserve their assets. As to some of the others, it might be-a good thing if they were riot continued. They have, been turning themselves into all sorts of. different companies and putting so many cloaks over themselves, so to speak. It is one of the abuses of the present company law, I think, that a single individual can call himself ‘ A i Company or ‘B’ Company or ‘C’ Company, and so avoid risking a great part of his assets in any speculation or trade. If anybody can suggest how legitimate companies can carry on without being hampered, and at the same time how these, companies, which are so liable to lend themselves to abuse, can be prevented from operating, I think the commission may do a very great amount of good. - The commissioner added that if Mr Monahan intended to make any charges in regard to the management of of the companies or in regard to the conduct of individuals in the course of his address at the conclusion of the commission’s sitting, it would be fair for him to formulate them beforehand so that counsel interested could address themselves to such, charges. Mr Monahan said he had fairly and plainly indicated them in his examination, but he would do as the commissioner had suggested. He proposed to proceed with M’Arthur’s examination on Monday. The commission adjourned until Monday.

WRITS AGAINST COMPANIES BRISBANE, September 12. Mr James Cork, a retired fanner, of Mal'eny, has issued a writ out of the Supreme Court against the Southern British National Trust, Ltd. He claims recession of an assignment made on May 3 last purporting to transfer and assign to the company all bis moneys due to him by the Primary Producers’ Bank of Australia, Ltd. (in liquidation). An action setting forth a claim similar to that made by Mr Cork has also been instituted by Mr John Daniel Sommer, .dairy farmer, of Maleny, against the Southern British National .Trust.

INTERESTS OF BONDHOLDERS QUESTION IN THE HOUSE. (Pee United Pbess Association.) WELLINGTON, September 12. In the House of Representatives this afternoon Mr C. L. Carr, the Labour member for Timaru, asked the Minister of Finance whether he was taking any stops to conserve the interests of the debenture and bondholders of the various companies dealt with in the interim report of the Companies’ Commission.

Members, he said, were being besieged by constituents whose interest payments wore being withheld. The Minister of Finance (Mr J. G. Coates), in reply, said; “ Tho Act places no restriction nor imposes any penalty on remittances of money within New Zealand, and if a company has funds in New Zealand properly available for the purpose there is no reason that I am aware of why the interest to New Zealand debenture holders should not be paid if it is due.” Mr Carr asked if the Minister would do anything to help people to get their interest, but Mr Coates did not reply.

TRUSTEES EXECUTORS COMPANY DIRECTORS’ SAFEGUARDING ACTION “ The statement that the Executive Investment Trust has acquiree 45 per cent, of the company’s shares is absolutely incorrect,” said Mr P, O. Smellie, manager of the'Trustees Executors and Agency Company last night, when Mr Alcorn’s evidence was referred to him. He reiterated the statement published yesterday that only three transfers, comprising 125 shares out of a total capital of 10,000 shares, had been passed by the directors during the past 12 months.

It was known, Mr Smellie said, that shareholders bad been approached to sell their shares, but until the transfers were passed it could not be said that the people at the back of the buying movement had acquired any interest in the company. The company’s articles gave the directors ample power to reject transfers, and this power had been and would still be rigorously applied to prevent control passing into different hands. The board, lie added, had been fully alive to the situation for some months past.

OPERATIONS OF BUYERS CASH PAID FOR SHARES PASSING OF TRANSFERS REFUSED.. It is interesting to recall that a few months ago the operations in Dunedin of two nicn, who were strangers to the city and whose names had never before been heard of in connection with commercial transactions, excited a good deal of curiosity in business circles. The strangers were interested in the purchase of shares in the . Trustees Executors and Agency Company. They had evidently secured, or. been provided with, a copy of the share register of the company, and they approached several shareholders with offers to acquire their holdings. They were not concerned to offer only the price at which the shares were quoted on the Stock Exchange. They offered tempting prices. A local shareholder with whom one of them sought to do business asked tor a bank reference before be would discuss a transaction with a person who was wholly unknown to him. To his surprise, he was told that he would not be paid by cheque, but in cash, and his visitor produced from his pocket rolls of hank notes in support of his assurance. ’ , ' ’

Each of the shareholders who agreed to sell was actually paid on the .spot in bank notes of large denominations, and in each case a transfer form was produced and the transaction was, save for the supposed formalijty of its being passed by the directors of the company, completed there and then, . Many hundreds of pounds in cash changed hands in the course of these transactions, the explanation of which, then wrapped in mystery, is apparently being provided by the evidence before the commission in Sydney, where the impression would seem to have, been erroneously conveyed that the transfers were passed by the board.