MILLIONS OF POUNDS LOST

Taranaki Daily News, 13 September 1934, Page 11

MILLIONS OF POUNDS LOST

BANK TRUSTEES BLAMED.

DISCRETION ALLEGEDLY ABUSED.

Perth advices August 3 state that the report of the Royal Commission on the Western .Australian Agricultural Bank contains severe criticism of the trustees of the bank It is recommended that the trustees be retired and that the management be vested in a board of three members free from political control. The report states that the AuditorGeneral had been guilty of culpable negligence, which appeared to have been acquiesced in, if not approved, by the trustees of tire bank. The Commission found that the capital loss made by the bank, the soldiers’ settlement scheme, the Industries Assistance Board, and the group settlements was £6,619,621, to which the Commonwealth Government contributed £972,921, and that £4,695,653 was written off the group settlements’ indebtedness prior to the bank taking over the control of the group settlement. In adidtion to £1,983,436 from loan moneys, the trustees obtained from the Industries Assistance Board from 1916 to 1913 £1,193,224, in repayment of interest due by settlers under the board to the bank. The sum of £2,375,538 was due to the bank and its allied institutions by clients for accrued interest, and it was estimated that on that amount there would be-a loss of £1,338,907. The principal sum now due to the bank and its allied institutions was £13,712,553, on which it was estimated there would be a

loss of £4,782,793. A loss of £6,121,700 might therefore be anticipated on collections and on realisations of land repossessed by the bank or in the writing down of bank securities. The accrued actual and estimated loss on account of the bank and its allied institutions was £12,304,600, on which £650,230 would have to be found yearly by the State to meet interest and sinking fund. The trustees of the bank had absolute discretion vested in them by Parliament to make advances to applicants for assistance, states the report. That discretion had been recklessly exercised, and the trustees had committed grave; breaches of the trust reposed in them by Parliament. The statements of the trustees that in advancing money recklessly they did so under Ministerial direction, had not been proved by evidence, except in three settlements. They' should have reported this to Parliament. From 1914 the trustees showed lack of financial and administrative ability in the conduct of the bank’s affairs. For many years prior to 1930 the affairs of the bank, were slowly drifting into bankruptcy, and it could only pay its way with the continual aid of loan money. From 1914 to 1932 the trustees did not place the true financial position before Parliament in the yearly balance-sheet. The annual audit of the accounts of the bank was conducted in a most incomplete manner.