COMPANIES INQUIRY

Waikato Times, Volume 116, Issue 19364, 18 September 1934, Page 9

COMPANIES INQUIRY

HOSTILITY. ALLEGED. Pile ARTHUR IN BOX. OPERATIONS OF TRUST. (From a 'Correspondent). 'SYDNEY, September 11. In a statement from the XVitness box at the Companies Royal Commission to-day, Mr .1. X\ r . 'S. McArthur said that every penny of the debenture holders' money was fully protected and secured by sound investments, which exceeded in value the sum charged upon them. McArthur said that he had to 'fight 'the hostility of the New Zealand Insurance Company and the Stock Exchange, which were known to the people of the Dominion as “The Kelly Gang.” John XXL S. McArthur, in a statement from the witness-box, said the •total amount subscribed by the public ' for debentures In the Investment ■Executive Trust and the Southern British National Trust amounted to £648,194, while the book value . of the investments at cost was £649,153. The present market value of the investments held on behalf of debenture holders was much higher than the value set against ■ them in the commany’s books. The assets behind tho debenture capital of the two companies showed a substantial surplus over liabilities to debenture holders. Witness said the debentures of the British National Trust were supported by a great deal more in the way of substantial assets than the Trust building alone. Witness said that it must be admitted that, on a general view, the relations of the various companies, one with another, might seem to be needlessly and even purposelessly involved. Many matters had true explanation in the condition under which the Investment Executive Trust had been compelled to operate. A brief survey of the conditions with which the Investment Executive Trust, Ltd., had to contend over the last three years gave the true explanation of much of the multiplication of companies and complexity of transaction?, which had admittedly introduced a confusing element into the present position. , It was impossible to understand many of the matters before the inquiry without understanding also the nature of the forces which had been working against the Investment Executive Trust since its Inception. '• “Attempts to Injure.” ■McArthur gave instances of “strong influence at every point of the financial and political life of New Zealand against the trust companies.” He gave instances of “deliberate attempts to injure the Investment Executive Trust by making it'appear that its debentures had been sold below par value.”

Suggestions had been made during the inquiry that the financing of the Trust building involved some misuse of the money subscribed by the public, and that a portion of that money had been transferred from the debenture fund to 'Mr Alcorn and himself. There was not the faintest foundation for any such suggestion, he said.

Speaking of the Sterling Investment Company, McArthur said that throughout the series of transactions the function fulfilled by the company had been a primary one of conserving the interests of debenture holders by doing what the Investment Trust Company was not able to do for itself. In the early stages of the life of the main company, the Sterling Company was used to purchase certain assets of his, said witness, at the same time taking over liabilities secured on them, in order to frustrate those who desired to strike at the Investment Trust by accomplishing his own financial ruin. Case of Miss Bmlth. McArthur said that a further purpose for which the Sterling Company was employed, was, in a few cases, to purchase from individuals who were dissatisfied and were threatening action against the Investment executive Trust Co., debentures held by them. The hostile condition with which the Trust was surrounded made it even more important that no weapon should be given to opponents with which they could stampede the debenture holders. 'Referring to the case of Miss Elizabeth Smith,, of Christchurch, a wealthy elderly lady, who had been mentioned before the inquiry, witness said she had taken debentures in the Investment Executive Trust, totalling £20,000, in 1932. The Guardian Trust and Executors’ Co., of N.Z., Ltd., obtained control of Miss Smith’s estate and a writ was issued against I lie Investment Executive Trust, seeking to recover tlie securities which had been transferred by Miss Smith to the Trust. In this case the directors knew, he added, that whatever the issue of a trial, the ultimate' result would be to injure the company and debenture holders, for whose interests witness was responsible. The claim was accordingly sellled for a sum of £29,000, which "represented substantially the value of the securities originally transferred lo the Investment Executive Trust, and the amount by which they had appreciated. Witness said the inferences at the Inquiry regarding Miss Smith were unwarranted and damaging, and he detailed the activity of the Guardian Trust Company, one of Ihe adversaries against which lie had lo eon'eml. ' McArlliur said Unit the president nf Hie. Christchurch branch of Ihe Stock Exchange, which had shown such hostility to himself, was Mr V. E. Graham, now aclually a member of the Commission appointed by Ihe .New Zealand Government to inquire into investment trust companies. Bank Account. “You wish Unit to lie taken as your sworn evidence?” asked Ihe Commissioner, when McArlliur completed his statement, which took more than an hour lo read. "Yes,” replied McArthur. . The Commissioner: Lm you produce your hank account?—No. 1 have not got it yet. 1 hope to have it tomorrow. The Commissioner: I asked you for it three weeks ago. •Mr Monahan said he would like a short adjournment before be questioned McArthur on his statement. He intended, 1; iwrver, lo re all other witnesses to-morrow. Tim Commission adjourned until id a.in. to-morrow.