THE LYSNAR CHARGES

Dominion, Volume 18, Issue 182, 4 May 1925, Page 9

THE LYSNAR CHARGES

A LENGTHY SITTING i WITNESS DISCUSSES SHAREHOLDERS’ LOSSES CRITICISM OF MANAGEMENT By Telegraph-—Press Association Gisborne, May 2. The commission appointed to inquire into charges made jn the House of Representatives by Mr. Lysnar, was engaged from 5 p.m. till 10 p.m hearing the evidence of F. S. Bowen, ex-director of the Poverty Bay Farmers’ Meat Company. He claimed that the shareholders of the company had lost £498,000, and with the bank’s loss this made a total of £541,000- The loss was due to inefficient management, the purchase of an unsatisfactory steamer, and the laxity of the National Bapk in controlling Mr. Lysnar in connection with the overdraft. Mr. Lysnar dictated' to everybody. Of the 42 works in the Dominion theirs was the only one which quarrelled with the Government during the commandeer. After the Admiral Codrington purchase Mr. Lysnar, wanted to buy another steamer, also to open a coal mine at Codrington, on the West Coast, and construct a railway to it. The claims on shipment of meat sent to America amounted to £20,000, and Mr. Lysnar delayed a settlement for two years. Meanwhile buyers would ( not operate the works. Balance-Sheets. Witness detailed conversations with the local manager of the bank regarding the manner in which the finance to purchase and insulate the Admiral Codrington was obtained. He had no knowledge of the business, and did not think the other directors had. He had criticised the management Slid detailed the steps Air. Lysnar had taken to have him excluded from the directorate. The directors had pressed Air. Lysnar to produce a properly-audited balance-sheet-regarding the Admiral Codrington. He presented a statement showing a credit of £27,000. The directors pressed for an audited balance-sheet, and when this wak presented it showed a loss of £24,000. During the time the works, were operating, Air. Lysnar presented six .balance-sheets showing a profit and two showing a loss. Witness alleged that Air. Lysnar’s friends had got preference in meat shipments. Witness was satisfied the company could have been more successful by good management. The works were recklessly run. Cross-examined by Mr. AL Myers, K.C., witness said lie did not pose as a financial expert. He was one of the stoutest advocates for the purchase of a steamer, provided it was a first-class vessel, and when the Admiral Codrington arrived he saw his money was gone. He did not know it was contrary to the bank’s advice that the steamer was bought. To Air. Lysnar witness said he had supported the resolution thanking him (Air. L.vsnqr) for his efforts in connection with > the steamer at the annual meeting. He had put the facts before the shareholders, and was at the hottom of the poll. That was not a fair indication of what - the shareholders thought. He admitted unwittingly making a statement to the inspector of the bank that the company would lose £20.000, and that had gone about, dis. brediting the company. Company Manager’s Views. Th& Commission adjourned at 10 p.m., and the first witness called this morning was W. F. Cederwall, manager of the Gisborne Sheep Farmers’ Frozen Meat Company, who stated his company controlled three works —at Hicks Bay, Tokoniarw Bay, and Kaiti. The works were opened by the who did no bnving 011 their own account. In reference to Air. Jones’s statement that the Aleat Board had been responsible for the reduction in killing charges, witness did not think the board was entitled to any credit for that, as the company entirely.fixed its own charges. His company did, not pay any commission to the merchants for buying, and this placed thegi at a disadvantage, but' the directors strongly refused to give treatment to merchants and not to farmers. If commission were paid it must be paid to all. This would increase charges to producers. Witness said his company could not follow Vesteys practise of purchasing on the hook. Mr. Lvsnar read a cable sent by Air. Jones to Air. Forsyth Fraser regarding Vestey’s purchase of the Waipaoa works, stating that Gisborne sheep farmers would prefer Vesteys to take over Lysnar’s works than to build new works. Witness said he had made careful search, and could find nothing recorded to give anyone authority to make such a statement on behalf of his company. Early and Regular Shipments. Cross-examined, Air. Cederwall agreed that there was not room in the district for three large works. If Vesteys hadconstructed new works, witness believed the two farmers’ companies would have gone out. If Vestevs had remained at Taruheru, the purchase of Waipaoa would not have been a good investment for anyone. This being so, he thought the correct valuation was the market value at the time, and it might have been hard to find a purchaser, iwe works could easily handle the stock in the district. The witness said he did not think it profitable to have one ship to transport the output of the works. It was essentia! that early and regular shipments should be mode. Shipping Department Blamed. A. C. Steele’, sheepfarmer, called by Air. Bowen, said-that when he was taking shares in the company Air. Lysnar informed him that the shipping would be kept entirely free from the works account. He considered that the shipping department was largely the means of wrecking the company. He was not satisfied with the way the works were being run, and sold his stock elsewhere. Even the directors of the company did that, so the shareholders could not be blamed for disloyalty. Position of Killing Sheets. William Richmond, a sheep-farmer and meat exporter, living in Poverty Bay, and operating also in Gisborne, gave evidence in regard to the practice with killing sheets. I He s.-jid he claimed the right to say where his killing sheets should go. His clients would get sheets direct from him ; the works were not supposed to divulge his killing sheets without his consent. In February, 1923, witness met Messrs. Withers, Coop, Lysnar, and Carnev in Napier to discuss the proposal that Armours should advance money towards paying the bank off, and take security over the works. Air. Carney sajd he could not undertake a proposal o( any description unless Mr. Lvsnar got the consent of the Prime Minister. At tllat time witness was a partner with Armours in the Hawke’s Bay business, but he was not a partner now, nor had he been for two vears. At a later interview at Hastings, Air. Carney was against the ac-

ouisition of the works by Vestevs, as it would interfere with the arrangements for the season. No Cause for Complaint. ' Tn October, 1923, witness was in Gisborne, and in company with Air. Car■ney met Air. Lvsnar.' There was a general discussion on the same lines, except that file price offered by Vestevs to the bank was known, and Air. Lvshar’s suggestion was that Armours should offer the same sum. That proposal twas deferred, and it was suggested that a joint proposal be made by Borthwicks, Sims Cooper, ■Vestevs,' and Armours; but that also was turned down. At no time did Air. Lvsnar suggest selling the works to Armours. " The onlv suggestion was mortgage and preference shares in regard to the management of the Povcrtv Bav Farmers’ Aleat Works. Witness had no cause for complaint. He had arrangements to Fill 20,000 sheep, and was contemplating an increase to 150,000 if the works had been carried oh. To Air. Tavlor. witness said that, at the meeting in Gisborne the suggestion was made that Armours should advance £225,000 on loan. He and Armours were to get the advantage of the. lowest rate prevailing at the works if this were put through. Witness admitted that he and Armours would be getting an advantage Compared with actual shareholders. ! /Machinery in Good Condition. George David Lidgett. formerlv chief engineer at the T’overtv Bav works, gave evidence that the iiiachinrv in the mechanical Portion was in excellent condition. He got all he required, for the stores. Tie did not agree with Air. Jolly’s statement that the works had been starved for some vears. There bail been several improvements in the works during his term of office. To Air. Tavlor, witness said it was j,iossible that' Vesteys might have to spend some nionev on the works, blithe could not agree with Air. Rowland’s estimate that £30,000 would . be tequired. One speaker at Air. ATichael’s recent meeting at Dcvonnort said (reports the Auckland "Star”) that members of municipal bodies usnallv made more |linn one speech when thev spoke. There was the speech thev had prepared, the speech thev delivered, the speech thev made on their wav home, nnd. best of nil. the sneech thev rend in the naner next dnv Public men did not know how much thev owed to the newspaper reporter, who nut tbeir speeches in proper sequence for them.