FOUR YEARS FOR FARROW

Otago Witness, Issue 3525, 4 October 1921, Page 41

FOUR YEARS FOR FARROW

HIS DRAMATIC SPEECH. “MY FINANCIAL CHILD.” (Fkou Ouß Own Correspondent.) LONDON, July 6. After an Old Bailey trial lasting for 12 days the curtain has fallen on the last act of the tragedy of the Farrow Bank case, with its accompaniment of ruined homes. Vt hen the bank closed its doors about Christmas time the deficiency was estimated at nearly £3,000,00-0. The sentence cannot be said to err on the side of severity, but Mr Justice Greer remarked that the disgrace which the defendants had brought on their families was part, and perhaps the greatest part, of their punishment. Thomas Farrow (founder and chairman of the bank), William Walter Crotch (a director), and Frederick Duncan Tabrum Hart auditor) were all found guilty on the charges of conspiracy in connection with the bank —Hart from 1918 only. Farrow and Crotch were found guilty of publishing fraudulent statements, and Hart was found guilty of aiding and abetting. The jury recommended Hart to mercy. Mr Justice Greer passed sentence thus: Farrow, four years’ penal servitude; Crotch, four years' penal servitude; Hart. 12 months' imprisonment. FARROW’S BELIEF. Counsel for Farrow said the only question for the jury was: “Was Farrow fraudulent'.-'’’ Submitting that he was not. Mr Whitelev said if there was one strong- element in human nature it was paternal affection, and tie quoted from a letter Farrow had written io Read when the latter was negotiating for the purchase of the bank asking, as a condition, the future association of his sons with the business. “Do you believe,” counsel asked, “that if Mr Farrow really knew the bank had been a dishonest concern for the last 10 or 12 years he would have sought to introduce his two sons into that damnosa hereditas? Farrow’s whole attitude was ‘ I believed in this bank; 1 believe in it stiil. I believed it had a great future. It may be I thought I was building on a rock, whereas I was building on sand; but whatever may be said against me or my colleagues, I believed it was sound.’ ” TWELVE YEARS OF DECEPTION. Sir Gordon Flevvart (for the Crown) referred to the "writings up,” and asked: "Is it credible that any sane man, whether a business man or not, could have supposed that the profits from them would wipe out losses in money and justify the payment of dividends and interest in money?” It was sau.l that Furrow was innocent and trusting. If he had no knowledge of the deception which had been practised on the public, why did he not have an accountant in a position of independence to succeed Mr George Hart Crotch had expressed sorrow for his negligence, and said he trusted the other directors and the officials of the bank. Could they attach the slightest importance to his excuses? The most pathetic figure of the three was, perhaps, Frederick Hart, who asked to be excused on the ground that he couid not be expected to think that he could be wrong in following closely a system adopted and pursued by his predecessor, his own father. They might wonder what strange fate had brought together two men so closely resembling each other a-s Farrow and Crotch in that adventure, and, stilt m-ore, what extraordinary fate had brought within their reach a man like Hart. Without somebody in his position the frauds might have been conceived in the directors’ room, but they would not have had contact with the public. “If,” said Sii Gordon, “you are driven—and who can fail to be on the evidence? —to the con elusion that each of these three defendants was engaged in this colossal and protracted fraud —the stage management, the stage hands, and the property room of which you have had to contemplate—you will not hesitate to say so.” MR FARROW’S “FINANCIAL CHILD.” In his summing up (which took four hours) Mr Justice Greer said that the defendants were, before the present charges were brought, men of irreproachable character. Hie case was one of great gravity. If the defendants were found guilty, Uie interests of the public demanded that the kind of conduct alleged against them should be treated with severity, so that peoples subjected to similar temptation should resist it in future. The jury might think that when the defendants first embarked on this fallacious method of dealing with the bank's properties they did not think it would be necessary to go on year by year taking in larger sums from these imaginary reserves to meet contingencies, but, “having found that this was the only way to keep alive Ibis financial child of Mr Farrow, they decided to keep on until they were found ont.” MR READ’S lIALF-MILLIOX. Referring to the evidenue of Mr W. A. Read that Crotch said when the real situation of the bank was discovered that if he believed in a hereafter he should know what to do, the judge said he thought the witness must have been mistaken. If a man believed that when he died he would have to face his Maker and answer for the misdeeds of hie life, it was the last- thing he would do lo commit suicide. But the real burden of Mr Read’s evidence was that Crotch acted on that occasion like a man who knew he had been doing wrong from rear to year, and at last had been found Dealing with the subject of valuations, Mr Justice Greer said the defendants were justified in asking the jury !o say that it was quite possible for honest men in their position lo have accepted these valuations as a justification for relying on tiie properties as a kind of reserve so as to give a dividend in lean times. It was easy to see now how wrong they were, but it was for the jury to soy whether, at the time, they really did think it was a profit so certain that they could put it in the balance sheet. People had luck on the racecourse, 1 u they must no! value their speculations as if the horse had won and the money was in their pocket. Passing io “Read’s halfni'Tlion,” which he described as a very important part of the case, the judge said no one could treat that, offer ns a promissory note, that the money would !o available in am - event. Was anyone rending the agreement with intelligence and treating it honestly entitled to regard that sum ns an asset avail -hi.- I'.v R.> e-t in.-., ion of the profits of 1920 and for distribution to the eha rehnlders and par mont of f '-editors: That i; \yn impi-onor. irregular, and grossly negligent there could hardlv be two opinions,

b it it did not follow that it was fraudulent Du the other hand, the jury mignt think that it was put in the balance sheet with the object of continuing the system, which had been m existence tor years, of paving dividends when the yearly working ot' the bank showed a loss. FARROWS APPEAL FROM THE DOCK. ihe jury were away for an hour and 20 minutes. Farrow maue a 2C-niinutes’ speech from the dock, iu which at tunes big voice V - JH overcome with emotion its began: buttering us lam just now from tiie effect ot this terrible verdict, with all the strain of the past seven mouths, and the complaints of bronchitis and insomnia 1 can hardly trust myself to speak. 1 must Pay tfus tribute to the jury, that they listened with great- attention" to all that has been said in rnv favour. But I do deeply regret the verdict. 1 never knew i should live to see the day when 1 should be declared a criminal, i have, of cou>se deplored the result to those ’unfortunate depositors who through the sudden stoppage of the bank lost their money, but the loss of my life s work is to me hell indeed, i did hope I could build up an institution to which my children could one day point with pride, and say, ‘My lather built it.’ • • • • 1 do assure you 1 found the task of running this bank a colossal one; rile responsibility of handling £4,(100,000 of the people's money sometimes seemed too great a -V '( ic ‘ eil -, i made the bank my financial child, anti you- can understand the extrao. dinar y feelings tliat nave come over me here when I found that child being discredited and denounced, and 1. being"innooent —and 1 say it with all sincerifv - deemed to be a criminal. I had no idea there could be found 12 of my fellow-countrymen who would unanimously say Farrow "is a criminal. ... 1 had faith in the assets of this bank. If circumstances had permitted me I would have devoted my life to seeing that everybody was paid to tho last penny, and that nobody would ever be able to say that he lost by being connected with Farrow’s Bank. Now I am denounced as a criminal, and all those things i should have described as difficulties overcome are held up to my everlasting shame. The idea of prison life lias awful terrors for me. 1 don't know how I shall face it. I ask you to enable me to get from prison as quickly as possible, so that l can hoid up my head once more.” “PUBLIC SERVICE.” Crotch also addressed the judge, saying he never intended to inflict any injury on the public. He had had great dreams in his life as a young- man of public service, ancl he had tried to render public service. During the war iie was instrumental iu raising £25,000 for cur blind soldiers and sailors, and lie also went to India and assisted the Government in raising a loan. “My one desire,” he added, “now that the jury, as I think wrongly, have found me guilty, is that you will give me the opportunity of coming back soon to a decent and useful life'as a good citizen.” The judge, in passing -• ntence on Farrow and Crotch, said his duty was painful, and it. was not made easier by their appeals. “You are both of you men ol great intelligence, man who nave done useful things in the course of your lives, and I take this into account, as lam entitled to do. I also am entitled to take into account the fact that neither of you, so far as can be ascertained. has lived an extravagant life and Used the moneys of the bank for your own personal gratification. But ut the same time it is my duty to regard tiie effect of your fraudulent acts, as the jury have found, and with which on the evidence J am bound to agree. You have brought distress and, in some cases, ruin upon the very people for whom, I believe, you started this bank with a notion that you were going to help, t hese acts have gone on from year to year, the.-e false statements having- been made in the hope, as Crotch said on one occasion, that something would turn up to enable the situation to be straightened out. Tliat- is no excuse in law for the offences of which you have been found guilty. . . And I cannot pass u less sentence than that you both bo kept in penal servitude for four y ears.” Farrow and Crotch, who received the sentence calmly, then turned and left the dock. Addressing Hart, the judge said his offence was of a less serious character, as he did not originate the false and fraudulent scheme under which the balance sheets were prepared from year to year. But trie purpose of an auditor was to protect the depositors and shareholders in the bank and. the public generally from the fraudulent acts of those who managed the company, and it was impossible to pass over his offence without a serious term of imprisonment. The Financial Times recalls tiie fact that it has repeatedly warned the public of the risk they were running it) committing their funds —in this case frequently hard-earned savings—to the care of institutions of mushroom growth, whose only attraction was that fhev offered high interest on sma:l current accounts. Banking cannot be conducted with safety on such lines; neither, is it a business the art of which can be. easily acquired. “Herein lies Farrow’s mistake. He started on a business of which he know little, and with only a meagre amount of capital. To attract the public he adopted means which no wise banker would have droamf ■f. The fact that year after year a trading loss was incurred .should have warned him of the fate that must overtake hi? ‘ financial child.’ but the warning was unheeded, and to conceal losses resort was had to the expedient of writing up assets to provide the estimated profits required to balance the accounts. Once started on this road there was no turning track, although he must have known it led to destruction. T he result of the trial ranv lie poor consolation to those who have 10-t their in one v, hut we trust the lesson will not bo lost on the public.”