N.Z. OILFIELDS

Dominion, Volume 7, Issue 2125, 17 April 1914, Page 5

N.Z. OILFIELDS

PUBLIC INQUIRY

\ * . ■' AN INTERESTING EXAMINATION.

On March 5 a public inquiry was held at tho London Bankruptcy Court into tho promotion and collapse of the Now Zealand Oilfields, Ltd. Tlio liquidation account showed a deficiency of £137,126 with regard to contributories. Replying to tlio Official Receiver, Mr. Macdonald said ho took part ia tho promotion-of the New Zealand Company as representing certain companies, ana ho acted first as director and subsequont.lv as managing director. The company was formed in April, 1910, with ii. nominal capital of £200,000, m shares of 2s. each, to acquiro c«rtam concessions to search for petroleum near Gisborne, New Zealand. One of tho original directors wa9 Major-General Sir Norman R. Stewart, who resigned in ' May, 1911.' All the directors held the qualifying shares of £100. Mr. Burgess: Are you aware that the M.T.M. Syndicate paid for Sir Norman Stewart's shares P Witness replied that ho was not aware of that fact, although-it appeared so from the company's letter-book. >_The company was promoted by tho M.T.M. Syndicate, Ltd., and G. M. Oilfields, Ltd. The letters M.T.M. stood for Macdonald, Taylor, Mexico, while G. M. represented Georgo Macdonald. The M.T.M. Syndicate was -registered in. 1908 with a nominal capital of £100, to carry on financial business and definitely to deal with an important Mexican oil proposition known as Port _ Angel, which, however, did not come into being. The G.M. Oilfields, Ltd., was registered in Juno, 1909, with a nominal capital, of . £28,000. Witness was its managing ' director and was entitled to share up to 25 per cent, of any profits mado on its promotion.

New Zealand Property. The New Zealand property • consisted of. 150,000 acres. It was introduced to witness by Mr. F. G.' Clark, an advertising and financial agent, whom he had known in the city for many years. Tho property had'been obtained by Mr. W. Lissant Clayton from the various owners and tenants. Witness paid Mr. Clark £100 for a three months' option to purchase the property'for'£62,ooo made up of £2000 cash and £60,000 in fully-paid shares of a to bo formed. • He assigned tho benefit of the contract to the G. M.' Oilfields; Ltd.,' on whoso behalf he had .investigated' oil propositions in Russia, Persia, America and all parts of the world. Asked why ho personally parted with the option, witness pointed out that he was interested in tlie profits mado by G. M. Oilfields. The latter company sold their rights in the concession to the M. T. M. Syndicate for £85,000 in cash and shares, thus making a profit of £23,000. On the other hand they spent £8000 in launching tho New Zealand Company. The M. T. M. Syndicate in its turn sold tho property to' tho New Zealand Company for £110,750 in cash and shares, thus making a profit of £25,750. \

The Official Receiver: That was double the price paid to the original vendor?— Yes, and the property was worth it. The vendors; subscriptions for £70,000 in consideration of ijp underwriting commission of 5 per cent, and an over-riding commission of 2J per cent. The £70,000 was ovof-subscribed by the public, and consequently -the M. T. M. Syndicate; were not called upon to take up any shares in return for thoir commission of £5250. The first business transacted ;by the •■ New Zealand company was to'. underwrite £5000 of the shares of Algerian Oilfields, Ltd.

A Cheque for £7500. Tho Official Receiver: That was not the main object for.which the company was formed ?—No; but the board entertained it on my recommendation. I know a good deal of tho Algerian possibilities, and thought it good business for tho company to take up. In October, 1910, witness introduced to the hoard a proposal for tho company, to acquire the assets of the Gisborno" Oil .Company, Ltd., another Now Zealand company,, at, the prico of ~ £7500. A chequo for that amount was drawn by the secretary, and signed by witness as managing- director and Sir Norman Stewart as chairman.

Die Official Receiver: Why did you send that cheque to Sir Normajti Stewart for signature?— Because he was the handiest, I suppose. Was it not because ho was .the least capable member of tho board ?—No. Was not he your nominee?— No. Had ho previously signed cheques on your application in the samo way s — les, once. fJ V p--nn d l d 7 0U "til'tint cheque coimt V "" t0 "Wo™ ac

Asked what became of that money witness at first-said he drew ciaSo against it at once for the purposes of tno company but, p resse d on the point, acknowledged that ho then had moro than sufficient ot tho companyfs money in hand to covor that. £1000, and that a portion of tho UtoUQ went in a payment to tho Algerian Oilfields. lid No part of it went in the purchase of tno uisbornc property, wiucn waß tlronped upon an uiitavourablo report lieiiiu received regarding it. Witness did not hand back tho s/000 to tno company because he thought that ho might, as managing director, utilise it in making liandsomo. profits tor the company. Tfio (jflicui. Receiver: Do y uu suggest you woro the banker to the company?— "No. ' Tho directors requested him on December 20, Ml, to repay tho amount, but ho then had only about £1000 to Jus credit and could nob comply with tho request. They afterwards pressed repeatedly for tho money."

Set-on of Shares,. Has tho money ever been repaid?— "Up to date, no." wero raado bankrupt in July, 1911?—"ies."

How much money did you owe to tho company at that dater— "Ji7bW." I'Jio witness added that arrangements woro made for tlio cancellation ot tho debt by various shares and guarantees, in .December, 10x0, tho board were asked to Jend. £12,000 to tho Li.M. Uiifleias, which was then engaged in the Dotation ot a Russian company. Had tdaf promotion been successful witnoss would liavo earned a commission of £100,OOU. flie Official Receiver: Your company would Jmvo nothing to do with it?— "No; they turned tne proposition down. It was a great pity they did. ' In spite of tho board's relusal, witness obtained a cheque for £4000 from tho secretary and got Sir Norman Stewart to sign it, although the latter was at the meeting when tho board refused to lend tho £12,500. The £4000 was repaid in March, 1911, with interest, ana in the meantime tho company held security for tho full amount, of tho loan." Re-examined by Mr. Macoun, tho witness said tho profits made by the M.T.M. Syndicate and G.JI. OilHelds were disclosed in tho prospectus of tho Now Zealand Company. He had never received ono penny in respect of the 25 per cent, share of profits to which he was entitled in the G.M. Oilfields.

Managing Director's Powers. With regard to tho £7500 cheque, lie thought as managing director of tho Now Zealand Company that ho had powers sufficiently wido to deal with the monoy so long as he acted in tho interests of tho company. In June, 1911, an agreement was entered into between G.M. Oilfields, tho Now Zealand Company, and anotlior company whereby

the liability of £7500 was provided for and accurod by the deposit of £30,000 shares in tlio Saliany Oilfields and £40,000 shares in tlio Climax Gold Mines of California. In the statement of affairs lodged by the New Zealaud Company that debt of £7500 was treated as a good book debt, and within tho lost few days the liquidator had applied to witness to assist him in realising tho securities. Whon ho paid tho £7500 into his own account ho had a largo credit at tho bank, and, in fact, his account during 1910 ran into a quarter of ''a million pounds. It followed tliat, had it been necessary; lio could in 1910 have raised tlio £7500 and repaid it to the company. Until Sir Norman Stewart joined the board of the New Zealand Company, witness had not met that gentleman, and thcro was no reason other than convenience that operated his mind in asking Sir Norniatt to sign tlio cheques ia question. Tlio inquiry was closed.