STARTUP REVELATIONS.

Star (Christchurch), Issue 16331, 21 January 1921, Page 7

STARTUP REVELATIONS.

FARROW’S BANK FAILURE. LONG SERIES OF FRAUDS. Qj Telrgrapli— Pr«w Association—Copyright. Australian aod N.Z. Cab]© Association. (Received January 21, 9.20 a.m.) LONDON, January 19. Astounding disclosures were made at the Guildhall Police Court during the prosecution of Farrow’s Bank officials. »Sir Richard Muir, in his ojjening statement, said that in May. 1920, the New York firm of Norton. Read and Company, with a T.ondon house, agreed to acquire a controlling interest in the bank by providing half a million sterling, of which £400,000 would be placed to the reserve account, and £IOO,OOO used for compensation to Farrow and other directors who would retire. i Mi; Read, London partner of Norton, Read and Company, was dissatisfied with an examination of the hooks, some of which he withheld, and lie called in chartered accountants in November, who eventually informed him that the hank was hopelessly insolvent, whereupon the agreement was cancelled. Counsel suggested that Farrow’s and i (Notch’s idea was that when the crash came. Read, being enmeshed in this | fraudulent business, would shoulder the | financial .burden to save the honour and credit of his firm and prevent exposure. Crotch, who was a leading spirit in the concern, apparently owed the hank between £IBO.OOO a nd £200.000. of which £ 45,000 was still in the name cf a certain lady. Counsel said that with the exception, of the first portion of 190(8, the bank ! had done nothing but make losses, ranging from £II.OOO in 1909 to £203,000 jin 1920, aggregating £1,107,(MX), quite 1 apart; front the loss by depreciation of securities, which must he considerable. All this time the bank waa paying inj trrest to depositors. The shareholders I must have been paid out of capital* I and the losses concealed by fictitious ■ values of hook assets. One asset which appeared as £780*,000, due from a, cement company, was wholly fictitious. ! The reservo fund was also wholly t fictitious. A cupboard, which was broken open in flart’B room, revealed papers showing how the fraudulent balance-sheets had been prepared for each year. A document was prepared shotting Hie true position of affairs, from which Hart cooked the balance-sheet.