COLONIAL BANK LIQUIDATION. GORE NEWS NOTES. (FROM OUR OWN CORRESPONDENT.) GORE, August 25.

Otago Witness, Issue 2685, 30 August 1905, Page 54

COLONIAL BANK LIQUIDATION.

GORE NEWS NOTES. (FROM OUR OWN CORRESPONDENT.) GORE, August 25.

DEMAND FOR AN INQUIRY. DISCUSSION IN PARLIAMENT. (From Oub Own Corbespondent.) WELLINGTON, August 25. - The Petitions Committee, having considered the petition fw>m certain shareholders in the Colonial Bank of New Zealand for an inquiry into the liquidation of that institution to-day, recommend that the Government should give effect to the prayer of tho petition. A discussion was raised ou the question by Mr Herdman, the member for Mount Ida, who said he would give a few facts which he thought would justify the Government in granting the prayer of the petitioners. He pointed out that at the time the bank went into liquidation it had according to the balance sheet, a capital of £400,000. and a reserve fund of £65,Q00, a total of £465,000. How much, he jfsked, had the shareholders received back out of that sum? They, had only received £110,000 in the shape o£ dividends, so that some £355,000 had disappeared. If that money had disappeared, then the shareholders had a right to assume either 1 that the balance sheet put before the public by the directors prior to the liquidation was untrue and a complete misrepresentation, or that the liquidators in managing the concern and winding it up and distributing the assets were guilty of gross and culpable negligence. In the interests of publio morality and of commercial morality, and in the interests of the shareholders, the Government should therefore give effect to the desire of the petitioners. There was one other matter he wished to mention. When, the balance sheet was published the publio had a right to assume that it was correct, and that if they purchased shares they were purchasing the shares of a solvent institution. People had purchased shares on the representation made in that balance sheet, had lost their money, and now, after 10 years, they were unable to get a proper investigation. Mr Seddon spoke at considerable length on the question, but repeated himself a good deal." He said Mr Herdman had placed the position fairly before the House, but he had only given part of the story. It was quite true that the capital represented in tho balance sheet was as stated, but he should have told the House what hadl occurred between the Colonial Bank and the Bank of New Zealand. If he had gone into' the particulars of that agreement he would have seen why the £400,000 had disappeared. Mr Herdman: Wo cannot get that.

Mr Seddon: Yes, it is public property, and I don'fc hesitate to say to the shareholders of the Colonial Bank that a good deal of their capital was lost in that arrangement with the Bank of New Zealand. There was a very heavy loss; indeed, I do not hesitate to tell the House and the country that I go further, and I say that in the adjustment of the carrying out of that arrangement in respect to a large number of these accounts in the A, B, and C lists, if the Bank of New Zealand had been dealing with its own, capital ifc would have dealt with it in a very different way. It was liberal in the extreme in dealing with some of these accounts, and it was by arrangement as between the institutions. If any fault is to be found, it should he in connection with the making of that arrangement. Mr Harding : Who made the arrangement ? Mr Seddon: It was made as between the directors of tho two institutions, and agreed to by the shareholders of the Colonial Bank. In this you have got the wholo thing. - Mr Herdman: The liquidators* report should show that, but it does not do it. Mr Seddon: It shows that they allowed certain amounts in connection with those lists. Mr Harding': Was it a false balance sheet ?

Mr Ssddon: According to the directors of the < Colonial Bank it was sound at the time it was made out. A\ the time the arrangement was made with the Bank of New Zealand there were altered conditions. The fact of ihe colony's doing what it did for the Bank of New Zealand depreciated the Colonial Bank stock and the bank itself. It has been contended that, had, it not, been iov, the

course taken in respecirto the Bank of New Zealand, there would not have boon any need for the Colonial Bank taking- the course it had to follow, and I believe there is something in it.

Mr Taylor: Very litile. Mr Seddon. I believe that had the Colonial Bank dealt with its own accounts there would not have been this demand for an inquiry. I hold no brief for either bank, but had the Colonial Bank gone on by increasing its capital I don't think the loss that subsequently occurred would have eventuated. Mr T. Mackenzie : Hoar, hear ; it would have pulled through. Mr Seddon : Yes. it would have pulled through. He would rather have had an official liquidator, because he recognised that private liquidators had dealt, with disastrous results, with large amounts of capital invested in companies in this colony. But the Colonial Banlrliquidators were tied up with the agreement he had referred to. Mr Wilford : One of the best of them was put out of it. Mr Seddon : I believe you are right. Had Mr Larnach been allowed a free hand a good deal of the difficulty would have been prevented. He was one who stood out against placing the value that was allowed to be piaced on the A. and C accounts. With regard to tho liquidators, Mr Seddon argued that, overything they did was done under the direction of, and with the cognisance of, the court. Mr Herdman by his remarks created an inference that was a reflection on the court. Afier the liquidation had gene on, after the official assignee had reported, after the court had come to a conclusion on the question, and the -Colonial Bank by the decision of the court was a thing of the past, what good could tbe Government do by instituting: another inquiry ? Mr Buchanan : The matter is still open. Mr Seddon: The bank is dissolved. Mr Herdman: But the records are there. Mr Seddon: The records won't brmg back the bank, and the Government is powerless in respect to the matter. — (Hon. Members: "No.") Mr Seddon added that he believed it would be a waste of time for the Government when it had no power to do anything to go through the accounts unless it could be shown that something tangible could come of it. He said it lay with the petitioners to show what could be done by an investigation; but the petitioners had not done that. He now stated, and he knew something of it. at the time, that had he been a director of the Colonial Bank he would never have made the agreement entered into between the Colonial Bank and the Bank of 'New Zealand. The position of the Bank of New Zealand to-day was a very favourable one for shareholders, and a good deal of the money of tho shareholders of the Colonial Bank was now held and owned by the. 'shareholders of the Bank of New Zealand. - Mr Seddon added that he did not th ,

they need have the slightest anxiety now that the matter had gone through the Supreme Court, especially when the head of that court was Mr Justice' Williams. After Mr Justice Williams had '.dealt with it he did not think there was much for the Government to dp. A dissolution of the bank would not have been granted by him if there was any further necessity for inquiry. Mr Taylor said that this was the third year in succession that the shareholders' petition had been recommended to ths Government for favourable consideration, and now the only answer they got was that the Government would look carefully into the mate. The report of the liquidator had given these unfortunate shareholders no information beyond the baid statement that the loss had been incurred. It was only reasonable that the Government should assist them to discover how the loss had been inexu-red and who was responsible for it. An opportunity had been afforded in 1897 of learning from Mr "Watson the truth of the inner history of the affair, but this opportunity was not taken advantage of. As to the Government looking carefully into the matter, he would predict that n. would do this until the 2nd of ISovemfcer next, "and that it would then be seized with a violent spasm and an effort to do justice. It would then, no doubt, be filled with an everlasting regret that ii was too late to do a duty which il should do right away. By that time the records would be destroyed by order of the court. Mr Wilford said he considered that the loss had been clue in a large measure to the careless way in which the liquidators carried out the disposal of various properties. Mr Duthie moved as an amendment that the following words be added to the motion:— "Aud meanwhile the- House desires the Government to take steps to prevent the destruction of the bank's books and papers with the view of having a thorough investigation and inquiry before the Ist of November next." The matter, ho said, should not be hushed up. It was in a most unsatisfactory position at present, and they sbmild have a thorough investigation. Mr Massey seconded the aniendment. Mr Laurenson urged that it was the duty of Parliament to assist the shareholders in finding out what had become of thek money. Mr Seddon said that the committee had not taken any cognisance of the altered conditions since last year which had been brought about by the order of the court in Tegard to the destruction of the papers. The committee had simply passed a resolution that last year's resolution should be agreed to. They had thus ignored the request made in. the petition. He objected to the House being asked to become a party to reverse the order of the court in respeot to the destruction of the papers, when they had not had a tittle of evidence and nothing to wai-rant such a course but the bald statement of the petitioners themselves. To do what was asked would be a slight upon 'Judge Williams, and this wag a step he was not prepared to take. Last year's petition was quite different, ,as the judge's order had not then been mad©. Mr Duthie: That is a mere detail.

Mr Seddon: It is not a detail, it is a question of principle. A grave mistake had been mad© in not treating Mr Lamach as ono of th© liquidators. The men who were appointed were men of good commercial knowledge _ and strict integrity, but they knew nothing about Qic matter which they had to deal with. Th© liquidation, however, had been carried out according to Jaw, and he declined to allow either the House or "Barron and Co." to place him ill tlig faljg p.o.ait'ip^ aimed, aj bj tl)«

J amendment. "When ho saw rhafc the amen<?j ment was movod by Mr Duthio and seconded by the Loader of the Opposition ii was Hoar that a deliberate attempt \va=»* made to place tho Government in a falso position. - Mr Hardy, a' a m-embor of iho com* mitiree, Bakl that the petitioa was on similar lines to that of last year, and the committee's resolution was agreed to almost unanimously. Mr Hall-Jones said thafc {he committee did not take more than about five .minutes to discuss the petition. The matter should ha\o been more closely dealt with. It was unwise to interfere with the order of the court unless some justification were shown. It would bo bettor to refer the petition back to the eommitt-eo again. MY Herdman said that he had appeared before the committee •with the object of. bringing: evidence forward, but he had bpen informed that the committee did nob desire any evidence, as it had all been taken last yea r. * The debate was interrupted by the hal£. past 5 adjournment.

The Gore Court was occupied all day yesterday and practically the whole of today in hearing a suit instituted by Messrs Tothill, Watson, and Co. against the Southland Farmers' Co-operative Association for the recovery of £26, value of lime supplied to defendants by plaintiffs from their Forest lli'l limekiln's. Defendants counter-claimed to the extent of £19 damages, on account of the alleged valuelessn-ess of the iirne and loss of commission. About 40 witnesses have been examined, including representatives of two firms of farmers, who had used th<3 lime both successfully and unsuccessfully, and three scientific experts (Professor Black and Messis M'Lidoe and Thomson). On tho judgment depends the question of the value, or otherwise of Forest Hill lime. The cace is one of considerable importance to tbe farming community. Two men—Alex and S. M'DonaJd—were charged at the court to-day with resisting and assaulting the police. The two offendors pleaded " Guilty," and were each fined £3 and costs. The following postmasters have been appoint?*! transmitting atf3 receiving officers for the purpose of dealing with ail notioes by telegraph sent under " Tho Electric Lines Act, 1884," or the regulations made thereunder, and or eigning suck certificates in relation to the service of any such notioes au? are required or* authorised to- be signed or given under fche act or regulations: —Alfred Cla,rk, Lawrence %_ John James, Naseby; William J. WaJsh,' Gore; and James Wyh'e, Port Chalmers.

So great are the ravages of black measles, yellow fever, and malaria at Ohagres, •Panama, t"hat a train is making from one *io four trips daily to the cemetery with ■tictims. American workmen have been ,syanie<j to avoid tli« Isthmus.

It is anticipated that the Kinloch Estate (Canterbury), recently acquired by the Government under the Lands for Settlement Act, will be thrown open for selection early next year, and that the successful applicants \vill obtain possession in April, '"" i