COLONIAL BANE LIQUIDATION.

Poverty Bay Herald, Volume XXIII, Issue 7657, 16 June 1896, Page 2

COLONIAL BANE LIQUIDATION.

THE PROPOSED SALE OF WARD FARMERS' BUSINESS.

JUDGE WILLIAMS REFUSES THE APPLICATION.

THE JUDGE SPEAKS PLAINLY.

A DISHONEST BALANCE ■ SHEET.

Dunedin, to-day. Judge Williams refused the sale of the Ward Farmers' Association accounts, with costs. Later. Judge Williams, delivering judgment, said he did not think it had been shown that the result of the Association going into liquidation indirectly affected the liquidation of the Colonial Bank on the whole. If the only alternatives were either to carry out the proposed agreement or for the Association to go into liquidation, the former would be more beneficial pecuniarly for the Bank, but it was contended • that there were other aspects of the case the Court was bound to j consider. Then proceeding to criticise these, he said that in the Association's balancesheet of June 30th, 1895, there was an item of £1834 bills receivable, arrived at by deducting the undisclosed amount of bills receivable. Any person with an elementary knowledge of accounts must see that this process was illegitimate, and was a falsification of the balance-sheet, and a practice obviously dishonest. Furthermore, it was almost certain that this proceßS was followed in other items, namely, drafts, shipments, and advances against produce. The balance-sheet also showed a liability to the Colonial Bank of £1185, only Mr Vigers had told them how, immediately before the Association's balancing day, the Bank was induced by a fraud to reduce the account by £30,000. The Bank had discounted the draft on the London house for £30,000, and in support had received warrants purporting to represent oats, which ultimately turned out to be non-existing. This fraud was not discovered by the Bank till some months later. The balance-sheet was not laid ■ before the shareholders till September 7, and it was exceedingly strange that the directors of the Association had not by then discovered that something was wrong. Further there was a profit of £6516 shown, and the report of the directors recommended the payment of dividends and bonuses. Yet Mr Cook valued the aßsels on March 20 at £64,241 against liabilities of £167)947. It was impossible to suppose that the framers of this balancesheet, wbenthey put itforward on September 7, were not aware that it was utterly false. What was Mr Ward's connection with the sheet ? He was absent when the fraud in respect of the oats was perpetrated, but the. report was feigned by him as chairman of directors. Mr Ward had said he had nothing to do with details and could not give the business any large personal control, but he was managing director at £500 a year and held a iurgo stake, in considering which, according to his own statements, he seems to have known uncommonly little about its affairs. The Judge proceeded to deal with the way in which ihe Association traded. Mr Cook had found no securities after 1894, and out of £85,070 book debts deemed it necessary to write off £37,374 as absolutely worthless. Indiscriminate credit had been given and little or no security taken. It could not be suggested that this state of things had heen caused by the freezing works as titey were Mr Ward's private venture. The Association was £48,486 to the bad after closing all paid-up capital, in addition to £55,152 of Ward's debt in its books. These resultsjhad been arrived at in the short period of three years.