ACTIVITIES OF COMPANIES

Southland Times, Issue 22998, 18 September 1936, Page 8

ACTIVITIES OF COMPANIES

the McArthur group EVIDENCE IN REDWOOD FORESTS CASE (United Press Association.) Auckland, September 17. Further information about the formation and activities, of a number of companies belonging to what is known as the “McArthur group” was given during the hearing of the Redwood Forests case in the Supreme Court. K. C. Aekins, solicitor, said he had been chairman of directors of Sterling Investments from its incorporation and still was a director. His co-directors had been C. G. Alcorn and Glover Clark, but Clark had resigned after about two years. No cash was subscribed by the shareholders at any time, and as far as he knew the cash to start the company came from the Investment Executive Trust. McArthur and Alcorn really ran the company and dictated all its policy and carried it. out. He never did anything on his own initiative, but on the instructions of McArthur or Alcorn. Witness said he knew the Sterling Company was buying Investment Executive Trust debentures and these were being bought by V. B. Mclnnes and Company and being taken over by the Sterling Company. He understood that the object of buying those debentures was to keep up their price. He remembered some transactions dealing with McArthur’s Hillsborough property, and he thought the Sterling Company took it over and also some Newmarket property that belonged to McArthur. Witness identified the signatures on a cheque dated February 28, 1934, of Sterling Investments to J. W. S. McArthur for £60,000 and also a cheque of the same date for £60,025 drawn by Wynwood Investments in favour of the Sterling Company. Accountant’s Evidence. Mr J. B. Johnston (for the Sterling Investments Company): I would like to see a cheque of this size. Mr H. E. Barrowclough (for the plaintiffs): My friend has not been long enough in this case or he would have seen dozens of them. That’s a mere bagatelle. Norman Alexander Duthie, public accountant, said he was one of the inspectors appointed by the Government to investigate the affairs of various companies. Witness described the origin of Kotahi Lands and said that Edgecumbe Forests acquired all the shares in the Kotahi Company. Witness said that in May 1931, 21,224 acres were sold to Timberlands Woodpulp Limited, for £33,350. Timberlands gave the mortgage back for £28,350, leaving £5OOO which was apparently 'paid in cash. The Edgecumbe Company was wound up in March 1933, and the books handed to the Sterling Company for safe custody. When £5OOO was paid back off the Timberlands mortgage it was in part distributed in loans free of interest to the shareholders and loans of £3O 8/- and of £750 were made to McArthur. Witness traced further repayments of the £5OOO off the Timberlands mortgage and said that £l5OO and £lO5O were advanced to T. R. McArthur who, he believed, was a son of J. W. S. McArthur. Sums of £4600, £7750 and £9OO were lent to Sterling Investments. “The Sterling Company,” said witness, “on March 6, 1933, paid the Edgecumbe, Company £19,300 in purchase of its assets. This was two days later lent back to the Sterling Company on deposit at call at 3J per cent. This £19,300 unsecured loan was an asset of the company and passed as such into the liquidators’ hands.” The hearing was adjourned.

The plaintiffs are Thomas Henry Dawson and Leonard Knight as trustees for the de-benture-holders of New Zealand Redwood Forests, Limited, and they are joined as plaintiffs by T. E. Jones, of Dargaville, one of the debenture-holders. The defendants are Sterling Investments Company (New Zealand), Limited, in liquidation, Wynwood Investments, Limited, and the National Investment Company of Queensland Proprietary, Limited. The action was brought by the plaintiffs for the purpose of having declared invalid a mortgage of £7500, which was given in April 1931, by New Zealand Redwood Forests, Limited, to Kotahi Lands, Limited, and on subsequent dates was transferred to various other companies. The Sterling Company is the present registered proprietor of the mortgage. Wynwood Investments, Limited, hold an unregistered transfer of the mortgage, and the National Investment Company is a substantial de-benture-holder of Wynwood Investments, Limited, and as such claims an interest in the mortgage. The plaintiffs alleged that there was a conspiracy between the defendants to defeat and delay the rights of the debenture-holders of the Redwood Company. They claimed to be able to show that these companies were members of a group controlled by J. W. S. McArthur, and that, although in the case of some of them McArthur was not actually a director, nevertheless the companies concerned acted in accordance with his wishes and under his direction and control.