SALE OF VEHICLES

Otago Daily Times, Issue 26245, 31 August 1946, Page 8

SALE OF VEHICLES

COUNSEL ADDRESS INQUIRY

CIVIL SERVANT’S POSITION

MERELY VOLUNTARY WITNESS

(P.A.) WELLINGTON, Aug. 30. Mr W. E. Leicester, resuming his address at the inquiry into the sale of United States Army vehicles, criticised the War Assets Realisation Board for not having conducted pilot auctions to test the market. He remarked that the Minister of Finance, Mr Nash, who was chairman of the board, had not pursued with the board the suggestion in the auctioneer’s letter that auctions should be held after an unfavourable report to which insufficient attention and inquiry had been given. The general manager had feared the amount of after-sales claims with disposal in smaller lots, but out of 17,000 army vehicles sold only 20 claims had arisen,. He submitted that the evidence proved the advisability of selling in smaller lots. . 1 ' Counsel said there would have been no difficulty in valuing the scrap metal and motor parts. They had been inadequately advertised and described to tenderers. . After reverting to the policy of settling at £ls a ton when the tenders were unsatisfactory the board had four days later decided to sell the 200 tons to Mr Gillies at £SOO without the available details of the scrap having been considered by the board. There had been no justification for selling material worth upwards of £3OOO for £SOO to a man who himself had admitted it was worth £ls a ton. Mr P. B. Cooke, K.C., for the Crown, drew the commission’s attention to the evidence of Mr Carter, whose appraisal of the jeeps had been rather cursory, but counsel contended that that had not reduced the strength of his earlier submissions concerning the valuations. The Disposal of Scrap Mr R. E- Harding, counsel for Mr W. P. Warner, submitted that his client had not been an officer of the board. In the handling oi the scrap at Paremata and of the Dodge cars and jeeps for Archibalds, Mr Warner had shown himself competent. Whether it was relevant or not, Mr Warner’s conduct in connection with the disposal of the scrap at Camp Bunn had been referred to. in a public hearing, and he,was entitled to show that no exception could be taken to his actions. Counsel submitted that there was nothing even faintly discreditable to Warner shown in the evidence.

The commissioner, Mr J. R. Bartholomew, said he considered the topic outside the scope of the inquiry except for the earlier specified reasons. Mr Harding submitted that there was nothing wicked in Mr Warner's selling vehicles for Archibalds with the board’s knowledge. There was in the evidence to show that anything done by Mr Warner was even improper, let alone criminal. Mr L. G. Rose briefly submitted that notice should be taken of the fact that Mr George Laing, Government inspector of motor vehicles, had no part whatever in the-whole. transaction, although he had been criticised outside the commission., . Mr Bartholomew agreed. On behalf of the board’s secretary, Mr O. Conibear,' Mr J. Meltzer said his client was exculpated from any blame whatsoever as his contact was purely in regard to handling what were to him routine office matters. The Government Inspector

Mr L G. Rose, for Mr G. Laing, Government inspector of motor vehicles, said he had not intended to address the ' commission in view of suggestions made last Thursday, Dut his client was very concerned at the way his name had been mentioned *n connection with this transaction. Counsel still did not desire to address the commission, but with its leave would make a request. During the debate in the House which resulted in the commission being set up, counsel said, Laing was criticised for the part it was suggested he took in the sale of the vehicles. He was a civil servant and unable to reply to matters raised in the House. The Minister in charge of his department did not defend him or make it clear that Laing had taken no part in valuations, counsel continued, nor did he explain that Laing was not even asked to take part. Laing felt obliged to appear at the hearing of the commission, first, to offer evidence which he thought should be presented to the commission; secondly to refute any allegations made against him. No allegations were made at the hearing, and from the evidence given by both the general manager of the War Assets Realisation Board and Laing it was apparent that Laing was not asked to value and was not asked to advise the board, even though his services were available. Counsel suggested that there could be no doubt of his qualifications for his position, but it was apparent from what he told Mr Leicester that he received specific instructions not to exercise his powers as general inspector of Government vehicles. In those circumstances counsel asked the commissioner to make it clear either then or in his report that no blame in this matter could be laid on Laing, that he was in no way concerned with the sale of the vehicles, and that no reflection was cast on his personal integrity or his professional reputation. The commissioner said Laing had merely volunteered to give evidence. Beyond that he did not come within the scope of the inquiry. The Board’s Position Mr T. P. Cleary, counsel for the board, said that at the outset of the proceedings some people thought the hearing would bring out evidence discreditable to the board, but the inquiry had shown nothing reflecting on the board. All that could be called into question was its conduct of its business transactions—extraordinary business transactions—and whether it had obtained the best results from the methods it adopted there had been no suggestion that .the board had not acted honestly and in good faith, though doubt had at first surrounded its most ordinary and innocent acts. That was why. at the opening, he had said the board welcomed the inquiry. The inquiry, he continued, had resolved itself into an inquiry whether the board had exercised due diligence and had conducted its affairs in a businesslike manner. The board was not to be judged by a more severe test than the civil courts had drawn up for the paid board of directors of an ordinary limited liability company. The transactions were commercial and should be judged on the basis of a paid directorship. Counsel submitted that in the first place, the decisions taken were the right ones and secondly that If they were not the right ones, they were not so plainly wrong, in the circumstances with which the board was faced* as to make them negligent or culpable. It was necessary, he said always to remember that the vehicles in question were fairly described by the authorities who knew their' constitution as “ wreckage of war. , The United States authorities described the vehicles as having been sent for complete tear-down and rebuilding. Though repairable for war. they were not, in the view of the motor position in the U.S.A.. fit for peace-time reconditioning. Although it was perfectly true that the majority of sales from Seaview Park had been of vehicles not reconditioned, Mr Cleary said, they had been reconditioned by the purchasers before being put to use. They were looked upon by the Munitions Control, the Americans and the trade in New Zealand as junk. The Americans had first offered to sell them at £42 and £33 respectively per vehicle. The board knew the price that had been placed upon them by the Americans and knew that the Government and the motor companies had refused them once. The companies had been reconditioning such vehicles for 18 months They were in the best position to know the value and the potential market for them. That fact was one to which the board was entitled to give weight The next fact was that the Government did buy the vehicles for £13,500, a book cost that did not indicate that any great worth could be attached to the material, he said Finally, all the information available to the board indicated that, at best, there was an uncertain and limited market. Expectation Nullified Counsel said he was not concerned whether the weight of evidence showed a wide demand for G.M.C.’s. What was the information available to the board from those in a position to speak before the board took them over? At the beginning of the year, the general expectation was that vehicles much more suitable than tlie G.M.C.’s for general New Zealand needs would be here shortly,

though that expectation was nullified by subsequent circumstances. including strikes. The non-arrival of those expected trucks was the greatest factor in Gillies’ disposal of the trucks. Further, a large number of army trucks were frozen under lease-lend. Gillies had sold many trucks free of this competition. The trade had under-estimated the demand for second-hand vehicles. The board undertook the sale at a time when it could not have anticipated the conditions which arose. „ During a detailed examination of the question whether auction or tender was the best means of disposal, counsel said that Eder had not come before the commission to justify his championing of the auction method. Counsel said that, even ii it had turned out that auctioneering was the Alternative, at the time the board made its decision, conditions were suen that it could not be charged with making a wrong and unbusinesslike one. Counsel concluded his address with a detailed review of the questions of valuation and selling in smaller lots in dealing with which the board met the circumstances as best they could be met at that time, he said.

The commission rose till 10.30 a.m. on Monday, when further addresses by counsel will be heard.