IN DEFENCE OF TRUST

Taranaki Daily News, 11 September 1934, Page 5

IN DEFENCE OF TRUST

MR. McARTHUR’S CHARGES ALLEGATION OF A CONSPIRACY. POSITION OF THE CONCERN. An urgent appeal to debenture-holders in the Investment Executive Trust of New Zealand, Limited, not to part with their holdings at a sacrifice is made by the managing director, Mr. J. W. S. McArthur, in a lengthy circular of 18 mimeographed foolscap pages. Mr. McArthur makes a sweeping attack upon the Companies Promotion Commission and the Government, which, he alleges, has allowed itself to be made the instrument of parties hostile to himself and his enterprises. He states that the directors of the trust have’ not approved any transfers of debentures since August 9, and expresses the hope that Parliament will immediately pass legislation to invalidate transfers.

“A great deal of energy and mental agility has been expended upon an endeavour to create an impression in the mind o’ the public that trust debentures are valueless,” the statement begins. “Let me say then at the outset that the money that you have invested in the trust is not, and never has been, in danger of being lost ‘The list of investments held by the trust and secured to debenture-holders shows an appreciation resulting in an excess of £30,000 over and above the total debenture capital subscribed, after providing for all brokerage establish-. ment and working expenses to date.” “THREE YEARS’ HOSTILITY.” Mr. McArthur goes on to allege that “the biggest conspiracy that we have; ever known in New Zealand has been perpetrated.” It has not been staged by himself, but by the Parliament of New Zealand, at the-behest of a group “known throughout the length and breadth of the Dominion as the ‘Kelly Gang,’ ” He adds: “I am. determined that whatever may happen to me, the wrong that has been done by Parliament to you must be righted, and when the facts are known I firmly believe that we have fair-minded public men who will demand that justice be done. “For three years now a strenuous effort has been made by hostile propaganda in the form of whispering campaigns and the use of half-truths in the press to break down the confidence which the public has been pleased to . accord the Investment Executive Trust of New Zealand Limited. . . . The immediate result of the political action was a stampede by a number of you to realise on your debentures at any cost. I could not stop that, owing to one phase, of our opponents’ coup, by which they ensured that no opportunity would be. given for . defence before the loss of confidence was effected.” - WHY ACTIONS WERE SETTLED. In reviewing the alleged attacks upon himself and his companies, Mr. McArthur states that a man at Timaru, who had invested in the trust was induced to commence an action. The trust settled this action and benefited financially from the settlement. The Guardian Trust later commenced action on behalf of an elderly lady, Miss Smith, Christchurch, who had invested substantially in the Investment Executive Trust. In this case the action was settled on terms involving a financial loss to the trust, but his directors and he believed that this loss would be infinitesimal compared with the loss that would accrue if their energies had to be devoted for many months to expensive and well advertised litigation. v . “The legislation which is formally known as the Companies (Special Investigation) Act, 1934, is opposed to all the' principles of British justice,” the statement continues. “The debentureholders of the trust, who had every con-' fidence in the management, could, not be induced to make any application to the court, and .so it was necessary for . the attacking parties to find some other means,, and by the much-advertised ‘spectacular political coup’ this way of getting round the authority of the court was effected.” NO BAN ON TRANSFERS. Mr. McArthur reiterates the charges of bias and interest made against the commission before the Full Court, and describes the interim report as “a mass of innuendo and misrepresentation.” He blames the Government for not including a clause in the Act to prohibit the transfer of stock during the period of investigation and to avoid a stampede that must spell ruin to many innocent investors. It suggests that an effort will probably be made later to require deben-ture-holders to be represented by trustees associated with Mr. McArthur’s alleged opponents. Mr. McArthur makes a final appeal to the debenture-holders for support. “If you retain your confidence and support the present directorate,” he declares, “no attacks can avail. . . . It is impossible to forecast how long the present inquiry will continue, or what indirect legal actions may result, but ' you may rest assured that at the earliest possible moment my directorate will submit accounts showing in detail the present financial position, which I summarised on the first page of this message. Prior to the enactment of this legislation, the Trust was negotiating two large transactions which would add very substantially to the capital of the Trust and would show a profit of 30 per cent, to debenture-holders. “The stoppage of business and the heavy cost we must bear with as much equanimity as possible, but I wish ,to assure you that with your continued support and confidence we' will surmount all our troubles and mutually continue to prosper.” Mr. McArthur expresses sympathy particularly with those who have parted with their debentures at sacrifice prices. •He adds that the directors have endeavoured to rectify this by not approving of any transfers and that they hope Parliament will immediately pass legislation to invalidate all transfers since August 9. “To those of you who have steadfastly held to your debentures I find it, difficult to express my appreciation for your continued confidence,” the statement ends. “I can only say that I willreserve my thanks, for I will meet you face to face at an early date.” ’■ ;