ARMS FIRM’S GAINS

Wanganui Chronicle, Volume 86, Issue 307, 30 December 1942, Page 3

ARMS FIRM’S GAINS

DRASTIC SHEARING £1,700,000 CUT TO £90,000. London. The Government has cut the profits of an armament firm from £1,700,001) to £90,000. This was revealed in a White Paper issued after the Government had taken action on disclosures about contracts made in the recent, report of the Public Accounts Committee, specially in the case of the British Manufacturing and Research Company, Ltd., of which Mr. W. D. Kendall, M.P., is managing director. The White Paper reveals that new prices have been settled on the basis of actual costs, plus profit at the rate of 4i per cent, on cost tor 1940 and 3} per cent, on cost for 1941. The total profits for 1940 and 1941 respectively will be £38.745 and £51.600 on sales of £899,745 and £1,525.600. For the two years this is a profit of about £90,000 (before taxation). A Hold-up Impression This compares with what would have been a total of nearly £1,700,000, if the prices originally arranged remained final. As part of the general settlement, the Government will purchase from the company at cost less depreciation certain capital assets previously provided by the company for the purpose of extending their capacity. The committee had found that in relation to one contract entered into before the war lhe company gave the impression that they would not deliver guns to the Air Ministry until a price had been fixed. “Excessive Prices.” There was no restriction of production or failure to deliver. But the committee felt that the officers of the Air Ministry in charge of the negotiations were influenced in concluding a price by the urgent desire tn secure Immediate deliveries. The committee also found that the Ministry had difficulty in securing all necessary information, and the company's refusal to give full access to their accounts and records was indefensible. Finally the committee stated that the investigation recently made for the first time into actual costs discloses that the prices hitherto demanded by and paid to the companyhad been altogether excessive. As a result, large sums which greatly exceeded any reasonable remuneration were in the hands of the company. The committee considered that the whole matter called for an early adjustment between the company and the department.