LOAM MYSTERY.

Dominion, Volume 3, Issue 846, 18 June 1910, Page 6

LOAM MYSTERY.

HARBOUR BOARD'S INQUIRIES. A LIVELY DEBATE. MR. MACDONALD'S CHALLENGE. MR. HARKNESS TAKES IT UP. Tho mysterious and unauthorised loan negotiations of Juno, 1909, were again tho subject of discussion by tho Harbour Board at its meeting last night. It appeared from correspondence submitted, and statements mado at tho board's meeting an May 25, that the Hon. T. Kennedy Jlacdonald, M.L.C., when in London a year ago, had a conversation with tho manager of tho London office of the bank with which the board does business. The representative of a firm of brokers was called in by the Bank Manager, and subsequently what purported to bo a draft prospectus for a loan of half a million, to be raised by tho.board, was prepared. Attached to this dociiment ivas a letter or certificate containing certain erroneous statistics, relating 'to the board's business, and purporting to be signed by Mr. T. ii. Wilford, the then chairman of the board, and addressed by him' to the National Bank. Mr. Wilford denied having signed any such document, and the bank denied having received anything of the sort from him. AVhen the subject was before tho board at its last meeting, tho Wellington office of the National Bank was still awaiting a reply from its London establishment to an inquiry concerning the supposed prospectus and letter or certificate. That reply lias since been received, and it canio before the Harbour Board last night. Explanation from London: . . The following letter, a copy of which had previously been sent jto each member of tho board, was' read: — Tlio National Bank of New Zealand, • . Ltd. General Manager's Office, Wellington,, 26th May, 1910. ' The Secretary, Wellington Harbour Board, _ Wellington. K .Dear Sir, —Referring to my letter of 7th inst., I have now pleasure in forwarding you tho appended reply to tho inquiry mado of our lie-ad office, London,, in respect to the "prospectus" in question:— ."Wo have made inquiry into this matter, and learn that when negotiations were in progress in June last while the Hon. Mr. Macdonald was in London, a copy- of a. circular drafted by 'Messrs. was handed to Mr. Macdonald for. perusal and return, tho intention being that ho should ma-ko such emendations or alterations therein as appeared to him necessary or desirable. It must bo this copy whieli has found its way into .Mr. Wilford's possession. As is frequently do.no in such cases, tho statistios of' the'port were quoted in,tho form of a. letter from .tho chairman.,' Messrs. —- being at'-tko time under tho impression that his signature to such a letter would bo forthcoming.

','As the negotiations.fell through, notiling further was done iii the matter. Tho document in question was new circulated, and the copy ha.nded to Mr. Macdonakl under the circumstances stated above was tho only ono that left Messrs. — ~'s ofßce." To this our London office have added tho following remark: "Wo' should not, of course, have sanctioned the issue of the circular in tho form originally drafted." /....' Yours faithfully, (Signed) JAMES COATES, ... General Manager. The Chairman's Remarks. Tho chairman (J[r. R. Fletcher) said iit seemed strange that any other copies of the document (tho draft prospectus) should have been obtained, seeing that the letter from the bank said that only one had loft the,office..' TJie ' words "only one" were underlined. That being so, very Little harm would have resulted at tho other side of tho globe through the proposed prospectus. He still maintained that at the last

meeting lio' fully- recognised . tho importance of the matter. He had recognised tho seriousness of bringing it betoro tho public in tho unfinished state it was then in. . That publicity, at a timo when the hoard was contemplating going on tho market for a loan, would probably do more harm than all the circulars that had been drafted or attempted to be drafted in London. Mi: Harknoss had sAid that ho got his , copy of tho prospectus, from London; and in view of the fact that tho bankers had said that only one copy left the office, it would be interesting to know .where Mr. Harkncss got it. That was a point that should be cleared up. Ho (the chairman) had gone to a good deal of trouble in this- matter, and it appeared to bo satisfactory that the document was a draft which would have been revised and made correct before being placed in circulation. Mr! Wilford Pleased. ■Mr. Wilford said ho felt' personally a good deal of satisfaction with tho bank's letter, especially as it was now admitted by tho bank that the signature "T. M. Milford" (not Wilford) was written in London and not in New Zealand. It was a picco of unwarrantablo presumption for anyone to endeavour to uso his name in that way. If a" firm of brokers would go bo far as to put a man's signature to a document, under tho impression that the signature would, bo forthcoming, things had come to a pretty pass. The board never embarked on a loan proposal of half a million, and never .sanctioned it. So soon as the proposal was made the board was called together, and they put an end to it. "I welcomethis letter," added. Mr. Wilford, "for if ever a man obtained an absolute clearance, it is here." Too Much to be Swallowed. Mr. C. W. Jones said tho letter alluded to a. time "while nogotiafsions were in progress in Juno last." -AVh.it they required to know was who authorised Mr. Maedonald to negotiate. 'Mr. AVilford: Mr. Maedonald has admitted that the board dkl not. Mr. Jones went on to say that Mr. AVilford's signature could not have-been obtained by anyone in London in less Ilian seven o:r eight weeks if they had cabled, and it would have taken three months by mail. Yet in the face of that, they had a cable, dated June 29, asking the board to authorise- Mr. Maedonald to approve of tho prospectns i"n<l conclude tho traji-saction. "I can swallow a gowl deal," continued Mr. Jones, "but 1 don't like to be treated quite like a child. , Tho letter is a charming example of an explanation that doesn't explain. "Will Mr. Harki«iss t<4l us where be got the prospectus? I think ho said ho'had seen it in print." "Some Amazing Points." Mr. J. G. Harkncss said that in his opinion there were somb amazing points in coiuiection with tho endeavour to float a loan in London in June, 100!), that needed to be explained. He could not Jielp roiiiarkinK that .Mr. Macdonakl, on his return from London, vouchsafed no explanation of his proceedings and hud not told tho Ijoa-rd ajiylhiug

about the matter until it was brought up a couple of months ago. Ho had professed to represent the board m London. Mr. Macdonald: I didn't profess anything of tho kind. . . Mr. Harkness took no further notice of this interruption than, to repeat his last preceding words. Mr. Macdonald had professed to represent the board in London, and had cabled to the. chairman to call the board together and authorise the raising of the'loan. Tho letter just read did not givo the information which.the hank had in its possession, and which it ought to give. The firm of brokers would never have signed Mr. Wilford's name unless they believed it was done with tho authority of somo person. Ho was prepared to prove that he had seen threo separate copies of tho document, one being printed and two typo-written. Mr. Jones: Could they have been reproductions? Mr. Harkness: They were not reproduced here. What confidence (ho continued) could they have in a letter like that which had just been read, and which professed .to givo full and correct information, and did not do so? An Intolerable Position. Mr. Cohen said he was somewhat with Messrs. Harkness and Jones in this matter. Tho letter did not give tho information which it ought. Mr. Macdonald had stated at tho last meeting that after his conversation at the bank in London, the brokers wero called in. Now a firm of brokers of such standing as to bo connected with a leading bank could hardly bo supposed to have attached Mr..Wilford's name to a document without having somo authority for doing so. Tho erroneous statistics had been explained. Thoy wero prepared. in tho brokers' office, and Mr. Macdonald was not responsible for. the errors not being corrected. The publication of incorrect statistics was very bad indeed,, and that any member of the board would allow a prospectus of such a character to bo circulated was bad enough.. Ho would absolve Mr. Macdonald of everything else, but it would bo intolerable if any member could go away from tho board thinking ho could go and discuss financial arrangements for tho board in another part of tho world, as Mr. Macdonald appeared to havo done, without authority. Mr. Macdonald was perfectly in order in discussing the hoard's affairs with those who wore largely wrapped up in its financial transactions, but ho had been indiscreet in allowing the discussion to go beyond a certain point. It clearly appeared from tho lotter before tho board that negotiations wero started in London. The word "negotiations" was mentioned twieo in tho letter. It could not be merely a figure of speech. Any member would bo going beyond his privileges and his powers if he discussed tho board's finances to such an extent as was done in this ease.

Mr. J. W. Jl'Ewnn said the letter in | no way caused him to alter tho views he had expressed at the previous meeting. On Mr. Macdonald must rest the responsibility of setting those negotiations afoot. He had committed,a gravo broach of propriety, and tho facts tliernselves, which could not be glossed over, strongly condemned Mr. Macdonald s action. Mr. Macdonald "Amused." Tho Hon. T. K. Macdouald, M.L.C., said ho was rather amused by. tho turn tho debato had taken. Considering tho letter from tho bank and Mr. WilforiVs explanation, be thought- apologies would have been forthcoming from some of the gentlemen who spoko on this matter at tho last meeting. Mr. Cohen: Good gracious, mol On what ground? Mr. Macdonald': On Iho ground of tho absolute inability of some gentlemen to understand common'senso. Mr. Cohen: You never made a greater mistake. The sooner Mr. Macdouald drops that tone the bettor.' Mr. M'Ewan (to Mr. Macdonald): Other people have common sense besides yoixself. : / : . • ' A Challenge. : . Mr. Macdqnnld: I object to people of no commercial experience expressing sueli opinions as they did tho other day. They wero entirely erroneous and falso opinions. If they think I have been guilty of any impropriety, let them say so straight out. Mr. M'Ewan: I did. Mr. Macdonald: Ok, I don't take any notice of you. Tho Mayor of Pe r tono has no experience of -financial matters, but I am surprised that Mr., Cohen has not got more sense. I challenge them to put a series of resolutions before the .board, or before tho 'public, and I shall know what to do with them. I will sue them for libel if they like. I will'thresh it out in any way they liko. that a man leav- : ing this city and leaving the Dominion —a man who has occupied the position that I have occupied—is not entitled to accept tho invitation of the manager of one of our' leading banks us I did, is evidenco of their utter want of common senso and understanding of the position. If these gentlemen will formulate a resolution, I shall bo pleased to deal with it in a way they may understand a good deal better than they understood the position now. Tho Challenge Accepted. Mr. Harkness asked leave to make an explanation. He would have been .prepared to let the matter drop and leave the public to judge, but Mr. Macdonald had uttered a challenge. . He would take up that challenge. Mr. Cohen: I'm prepared to second that. ' • ' . The board then went on,to the next business. .- . ■