MR G. BUCKLEY'S DEFENCE. (From Our Own Correspondent.) Wellington, July 7.

Otago Witness, Issue 1901, 10 July 1890, Page 16

MR G. BUCKLEY'S DEFENCE. (From Our Own Correspondent.) Wellington, July 7.

In answer to the statements in the New Zealand Times on his conduct with reference to the Bank of New Zealand, Mr George Buckley published to-day in that journal the following defence, which has created considerable sensation in Wellington and has been the chief topio of conversation all day : —

To the Editor of the New Zealand Times.

Sir,— My attention has been drawn to a aub-leader in your issue of the 27th June in whioh you make the fact of Mr Fisher's notices of motion about the Bank of New Zealand and its affairs the peg on which to hang a series of violent personal attacks on myself. Although averse to newspaper correspondence, I must request permission to defend myaelf against the imputations you— at whose instigation I will not venture to surmise— have cast upon me. But before I deal with the main question at issue I must congratulate the shareholder! on the good fortune which has apparently lately befallen the bank, I say apparently, in the hope that it may not prove more apparent than real ; for, sir, it waß known to every second man one met in the street in Auckland that two members of the present Government of this colony were largely indebted to the Bank of New Zealand, and it was equally a faot, sir, that when the circumstances surrounding the indebtedness of one at least of these gentlemen became known to the Board of Direotors, of which I was a member, I wbb impelled to intimate ;thnb I would nob remain on the board unless he resigned, and "resign" he did. The Hon. Mr Hislop now denies the indebtedness of the two gentlemen, consequently either (1) they have paid the debts, (2) they have been paid for them, or (3) they have been wiped out by some other process. If either the first or second plan has been adopted, it should be good news to the shareholders. If the third, possibly the gentleman referred bo will enlighten others similarly situated how the " wiping out " process was accomplished. For my own part I cannot believe the bank's claims have been paid. The news is too good to be true. Now as to the real question at issue. You say I attaoked the Bank of New Zealand. I repudiate the charge absolutely. Whab are the faots ? At the meeting of April 1888 things came to that pass that the Board of Direotors recommended the appointment of the Shareholders' Oommittee. We w*ere appointed and set to work to inquire into the state of the bank. In order to prepare our report, considering the time at oar disposal (really four months), we had reports prepared under special infractions by the responsible officers of the bank, and on these reports we based our recommendations. We had no reason co expect or suspeob that these reports were not reliable. We considered that the men in whose hands the vast business of the bank has been placed were to be entrusted not only as regards integrity, but also as regards business capacity, knowledge of the values of the properties, and probabilities of the bank's ouitonaers meeting their engagements and of the extent to which they were likely to be able to meet them, hence we accepted their statement. Whab else could we have done? In October 1888 our report wat laid before the shareholders. Without doubt that report jwas inacourate, bub that was solely because tho committee based their report on inaccurate and unreliable data. We misled tbe shareholders because we were ourselves misled by the bank officers. Had we had the faintest suspicion that the reports we had reoelved were erroneous we •hould have imisted on longer time given us in whioh to prepare our report, as we would have been obliged to personally verify every statement whioh came under our notice. As it was, we did what all business men do under similar olroumstances— viz., we accepted the statements handed to us by the responsible officers, and reported on the assumption that they were correot. But we soon found out bhat bhe figures supplied to us were inacourate. For example: On an Auckland aocount, Owen and Graham, we were informed a loss of £30,000 was likely to be made. The actual loss was some £60,000. There were a number of other accounts in different parts of the colony which showed a similar tremendous excess of loss over bhe estimates of the officers. Well, sir, when facts of this kind came under our notice we felt a grave sense of responsibility, and wondered where it was going to end. We were simply staggered by the knowledge that unwittingly and through relying on bhe ability and knowledge of the officers of the bank, we had misled the shareholders. Three of the shareholder!' oommittee— Mr Justice Gillies, Mr John M'Lean, and myself— insisted on the true state of matters being made known, with the result, as far as I myself have been concerned— abuie. vilification, and worry. Simply because I would nob call, " Peace, peace," when there was no peace. I have had bo pub up with all kinds of misrepresentation, and nave been charged with attacking the bank, whereas, all I did was bo insisb on doing whab bhe Shareholders' Committ&e were appointed to do, namely, lay aa far as poisible a "correot and brue" abatement of its position before bhe propriebors of bhe bank. To describe this procedure as attacking the bank is nonsense. If the Shareholders' Committee were nob meant to give a true report what were they appointed for ? Surely lb was better to know the real facts than to go on in a fool's paradise only to be ended by a most serious result to the bank. Well, sir, what was the result of the last meeting in October? I estimated the addibional loss on the globo account ab £354,000, while Mr Hean, in his report, estimates ifc at £349,000. I think it will therefore be admitted by any impartial person bhab bo say I "attaoked" the bank, is a mere fiction intended to draw attention from the real issues whioh are these:— (l) Were the Shareholders' Committee justified in accepting the reports of the bank affairs aud basing their recommendations on them, having had no cause to suspect those reports were inacourate? (2) Having ascertained through incorreob data they had misled bhe shareholders, were bhe committee justified — were bhey required — to make known th« real facts of bhe bank's business and standing so far as time had developed them,? Whatever you may say, sir, I am quite prepared to leave bhe matter to the public. Bub I will even go further and venture to say that had the proposal I made at the October (1889) meeting been accepted, and a small committee appointed to go into the state of the bauk's business, their inquiries would have supported every assertion I made as to the state bhe bank had been allowed to drift into.

Your second charge is that I published the confidential letters of Mr Murray, written to mo in my offioial capacity. This, you say, " Makeß one'a hair to stand on end to even think of." Regarding this matter there ib aUo another eide, and first; : Does it nob strike you that you draw a very particular distinction when you write of confidential letters written in au official capacity P The letters of a statesman to a member of hit party or of a principal to his subordinates are privileged by the laws of honour; so are many other classes of correspondence, even without being marked "private." But what was my position ? A great financial institution had by frightful mismanagement and a considerable admixture of something worse been brought into a difficult and dangerous state. I aud others had the pnus placed upon us of putting matters right, or at any rate of trying to see how bad they really were. Our position was still further complicated by the knowledge subsequently gained that we had been fooled through our relying on information supplied to us by men who were paid to know the bank's business and how Its customers stood,, JJo only so ;

but the bank, because, of its large share Hat, the ramiications of its business, and its essentially colonial charaoter, held an unique position, and so did the Shareholders' Committee. , We stood, in fact, between the few men who had preyed upon the bank and had brought itjto the brink of ruin and the whole outßide interests— the depositors, shareholders, and the colony generally, which would be affected ruinously by the downfall of the bank. To suppose, under these, circumstances, that any letters which would tend to thrpw light on matters re the bank were to be looked up for ever, especially letters written to me whilst holding the onerous position of president, is absurd. But even these I refrained from using in any way until I was absolutely compelled to. Again, I ask what are the facts? Simply the«e j That at a meeting last Ootober (1889), instead of answering my objections to the balanoe sheet and report, or discussing business, Major George and Mr Bell were allowed the widest latitude in personalities regarding myself of a false and malicious character. Mr Murray knew these statements were false. He could in five minutes have put me right with the meeting ; but no I Instead of doing that he 'joined in the attack. It is unnecessary I should refer to this. He said, " the officers would bear him out that bis instructions were to allow Mr Buckley the fulleßt and most unreserved information." He then proceeded to refer to the report of the Shareholders' Committee, quoting our statement that we were satisfied, ' ' that under good management and judicious realisation of securities the amount named (£800,000) should cover all losses." That is quite true, but it must be remembered this report was entirely based on our acceptance bb correot of the Btatements of the bank officials. Mr Murray then went on to say :—" Then after another six months' experience— i «., from October, 1888, to April, 1889— when nearly all the deficiencies which he now referred to had developed themselves, he delivered the speech from theobair at the last meeting (April, 1889), in the responsible position of president, saying nothing about what now exercises his mind." With reference to these remarks of Mr Murray's', I felt (1) that whatever Mr Murray's instructions were to his subordinates, there was no doubt « c were deceived ; (2) that our report represented exactly what we then believed ; (3) that the mere fact that the immense deficiencies had developed themselves in six months after our report was made, showed how greatly we had been deceived. What wonder, sir, that! was indignant at Mr Murray thus coolly throwing the responsibility on my Bhoulderß T I then and there gave notice that I would use his letters to defend myself, and show the real facts of the case, and have done so. Would any man of honour, if placed in my position, and holding the proofs I did, have acted differently ? I think not. In May of last year I wrote to Mr Murray, who was then in London, and referred to "the false position the Shareholders' Committee had been placed in owing to the real state of the bank's affairs not being more fully disolosed to them before they made their report in October 1888." Replying to me on July 3, 1889, from London, Mr Murray said:— " What I desire to see is the bank carried on without further dislocations in the hope that time will set it right. This, for two reasons: First, the interest of shareholders who would suffer grievously if the existing bunk dropped to pieces, if even it were reconstructed, which would be a difficult and perilous process ; second, for the sake of the committee, because whatever may be said of the mistaken estimates of some managers the new shareholder* will certainly say ' the committee, after six months investigation and having all the materials ab their disposal to enable them to arrive at a conclusion, made a certain report as their report. If it •turns out that they merely accepted without cheok or verification the estimates of managers, of what use were they except to create a wrong impression.'" Mr Murray significantly added to this extraordinary paragraph these words:— "Please note that I am not now raising or discussing that question. All that I aim at is to point out to you how Important it is even from the committee's point of view that the bank be carried through and the question not raised at all." I will not stay now to point out how fully Mr Murray had admitted in that letter that the shareholders committee had been misled. He even counselled our keeping quiet over the matter in our own interests lest we should be blamed for not knowing of the mistaken estimates and so on. That is to say, he thought In order to save our own skins we should be prepared to suppress the huge mass of faots whioh went to prove how completely rotten the management had been for many years, and whioh culminated in our being deceived by figures supplied by managers, verified by the inspectors, and verified by accountants as to the many large accounts whioh have so greatly swelled the losses on the globo account. I, at any rate, was not prepared to eit under the imputations hurled at me, and when Mr Murray sat quietly and heard charges levelled at me whioh he could in a moment have refuted, I felt that my good name required me to use any proofs I had that the bank's officers bad been utterly at tea in their estimates , and bad misled the committee. Of course this exposure refleoted on Mr Murray. That was inevitable. He was the chief officer of the bank, and the one to whom the shareholders and committee looked, above all others, for correot and reliable information. Was he deceived ? If he were, can he wonder that we were deceived also ? If he were not deceived, and really knew that false statements had been supplied as the basis for our report, his conduct can be easily characterised by any business man. His idea that the Shareholders' Oommittee should perpetrate a fraud on the shareholders by keeping baok the real facts was simply monstrous. I have now, I think, showed clearly that I had a perfect right to use the letters of Mr Murray to prove that the responsibility of the underestimate of the losses on the globo account was not ours, but the bank's officers, aud I appeal to all who are fair and impartial as to whether my aotion was not justifiable.

Finally, sir, I have one word more to say. We hear something about questions of " taste," matters of " honour," and so on. But what of questions of honesty, robbery, and spoliation ? In Auckland the shareholders of the bank must have been spoiled first and last of at least a million of money, so that all the accumulated profits and over half the capital of the bank have been lost. The proof lies in this : The Tcommittee wrote off the capital in October 1888 £300,000, and Mr Hean estimates the additional loss on the globo acoount at £319,000; total, £649,000. I ask is there no thought for the families whose capital was invested in bank shares, and who, by this kind of thing, have been reduced to starvation from a position of comfort. The Shareholders' Committee, which included one of the ablest judges who ever adorned the benohin New Zealand, recommended a " more specific action" as regards some of the principal of those who had dipped their hands up to the shoulders in the bank's till whilst holdiDg positions on tb.9 board of directors. Why hat this " more Bpecifio action " not been taken ? Is it because some of the parties involved hold suoh high positions that they are unapproaohable by the ordinary legal processes? I venture to Bay that when the full and true history of the Bank of New Zealand comes to be written, or unfolded in our courts, things will be revealed whioh will literally " make the hair stand on end," and that it will befound the very worst pages in the record of the City of Glasgow Bank failure have their counterpart in the actions of certain persons who were conneoted with the Bank of New Zealand.—lam, &c, Geo. Buckley. Ohristchurch, sth July.