I.—3a.

6

[W. H. GRACE.

Hon. Sir Apirana Ngata.\ What was the amount of the second debentures under the Duncan project ? —The original arrangement was for an " A " series of £300,000, which would have provided the new company's working capital, and a " B " series of £200,000, which would have gone to the The syndicate reserved to itself the light to issue a further series of £50,000, which was to have priority over the other two series, to secure overdrafts with the bank and suchlike. It was only to be a temporary charge. How much further writing-down was there to be for cash ? —I do not suppose the interested parties would write down any more for cash. Surely Government bonds are the equivalent of cash. That paragraph proceeds— These £180,000 bonds will settle claims which now aggregate some £320,000, and among the creditors will be the Egmont Box Co., which will receive for itself some £15,000, and for its debenture party another £16,000. It would be just as well if I went more into detail with regard to the manner in which it was proposed to deal with the creditors under the project. The creditors of the company were divided into six classes. The first class comprised the creditors of the Native owners and their connections. Under the project those creditors would have been paid in full, naturally. As a matter of fact, the Native owners insisted upon it. The second class comprised what the syndicate called the " workers the men who started the company, and who rendered services solely with a view to keeping it going. All they wanted was a reasonable return for their services ; they were not looking for huge profits. That class comprised the Ileuheu-Grace party, who have been with the company from its very inception —as a matter of fact, for five years before its inception —and right up to the time when the company's rights were cancelled. This second class also comprised the company's solicitors (Messrs. Findlay and Moir), and the company's officers (Messrs. Atkinson, Martin, and Ross). Under the Duncan project the claims of all the members of this party were written down 20 per cent. The third class comprises creditors who had advanced moneys which were paid to the Native owners. That class consists of what is known as the Iloufton-Chapple party and Mr. Bertram Philipps. The Houfton-Chapple party found £36,000. This money went to the Native owners in the form of royalties. That money carried 10 per cent, interest. Under the Duncan project the party would have received £50,000 —£36,000 on account of their principal and £14,000 allowance on account of interest. Mr. Bertram Philipps paid over to the Board £10,900, which also went to the Native owners. In addition to that, he incurred over his own venture to float, a new company out-of-pocket expenses of about £3,000, making a total outlay of roughly £14,000. The Duncan syndicate allocated to him £20,000. The fourth cla,ss comprises what, were called the speculators. They were Messrs. Armstrong, Whitworth, and Co., Messrs. Cammell Laird and Co., Mr. Bertram Philipps, and the Houfton-Chapple party. The Armstrong, Whitworth Co. came into the matter about 1923. Their venture concerned the formation of a new company which would take over the rights of the Tongariro Timber Co. They sent out here a huge staff, which conducted its operations on a most lavish scale —such, for instance, as engaging suites of rooms at the Midland Hotel. They investigated the position, and finally turned the whole proposition down. Notwithstanding that, they put in a claim for, I think, £15,000. The Chairman.'] What service do they suggest that they rendered ? —Their claim is based upon out-of-pocket expenses, largely due to the lavish way in which they went about things. Under the Duncan project they were to receive £8,000. Hon. Sir Apirana Ngata.] Why ? —As a reimbursement of some of their out-of-pocket expenses. I think it was too much ; but, still, the provision was made. We wanted to be generous. The position of Cammell, Laird, and Co. was exactly the same as that of the Armstrong, Whitworth Co. I think their expenditure was not so great. Their claim for services was between £6,000 and £7.000. The Duncan syndicate allocated to them £4,000. The Houfton-Chapple party, in addition to finding the £36,000 I have mentioned, has also come into the matter as company-promoters, and, among other things, I think the party induced Cammell, Laird, and Co. to come into the matter. For their services in that connection, and their services in connection with the finding of the £36,000, which undoubtedly saved the company at the time, the party was given by the Tongariro Co. some inchoate royalty rights, and in respect of those rights the Duncan syndicate allowed the party £10,000. Mr. Langstone.] Did they receive any other commission ? —I do not know, but the syndicate allowed them £10,000. I might mention that the syndicate was prepared, instead of paying them the £50,000 and the £10,000, to let them have the cutting-rights over a portion of the territory known as the Western B Block. It happened to suit the syndicate to do that, but it is not possible now. The Native owners, rather than allow that to be done, would sooner reserve the Western B area from the sale to the Crown. Mr. Williams.] Is there any evidence to show that the gentlemen you have mentioned were prepared to accept the sums you had set down ?—No. I say that the provision made for them was in effect an ultimatum from the Native owners. They had to take it or leave it, There is no evidence that they were satisfied to take it ?—No positive evidence. We understand, as a matter of fact, that it would have been acceptable to tliem. Mr. Bertram Philipps came into the matter in 1925. Like the others, he was going to float a new company, and to that end acquired from the Tongariro Co. an option over its rights. One of the terms of the option was that, he should form and register a company. He formed and registered a company, but it had no capital, and, practically speaking, it was never in a position to go on with its undertaking. Later he dropped out. As a matter of fact, he was pushed out by the Tongariro Timber Co., but to get him out they had to agree to pay him £15,000 damages. Under the Duncan project he got nothing, and under my proposition he gets nothing in respect of this claim of his for damages. The fifth class comprises theEgmont Box Co. Their position is entirely different from that of the other creditors. They appear