PERMAMENT INVESTMENT ASSOCIATION.

Globe, Volume VIII, Issue 884, 25 April 1877, Page 3

PERMAMENT INVESTMENT ASSOCIATION.

The adjourned sixth annual general meeting of t lie shareholders in the Permanent Investment and Loan Association was held last evening at; Mr Charles Clark's rooms. There was a large attendance of shareholders, the room being well filled. Mr Robert Wilkin, chairman of the Board of Directors, occupied the chair, and read the advertisement convening the meeting. Mr Lewis, the manager, then read the minutes of the preceding general meeting, which were confirmed. The Chairman said ho had no doubt they were all aware oi' the causes which had led to the adjournment of the general meeting. A\, that time, the directors were of opinion that the defalcations only reached the amount spoken of then. They had, in conjunction with the manager, instituted a rigid inspection of the books, and they found then that the large sum of £5516 Is 4d was deficient. The directors, before calling the shareholders together, wished to investigate the matter most thoroughly. No doubt great impatience had been felt by the shareholders, but the delay had resulted from the causes he had mentioned. As the shareholders had the report in their hands, perhaps it would be as well to take it as read, and the figures in the balance sheet also.

This was agreed to. The report was as follows : From what has arisen in connection with the affairs of the association, the shareholders will, no doubt, realise that the delays which have taken place in the submission of the annual balance-sheet for 187(5, have been unavoidable. The shareholders were made aware at the last meeting that certain embezzlements by Mr Herdson, who was acting-manager during MiLewis's absence in England, had been discovered. From what had then come to light, the directors felt it incumbent on them to have a searching investigation made into the affairs of the association, and to that cud appointed Mr Harley as special auditor. That gentleman, assisted by Mr Lewis, and the lattcr's employes, went through the books and examined the securities from the commencement, and it is the unpleasant duty of the directors to inform the shareholders that embezzlements amounting to =£5516 4s Id, and extending over a period of live years, have been discovered.

During part of the time within which these embezzlements took place Mr Herdson Avas not in the service of the association, and therefore for that period the association would look to MiLewis for any delieiencies that have arisen ; the remainder of the time Mr Herdson was the acting-manager, and any embezzlements then that were not covered by guarantee would be a charge upon the association's funds. [The report continued by stating that the directors had accepted Mr Lewis's offer to pay JJIOOO, which arrangement they considered to be a, wise one.] During the time that Mr Herdson was acting manager his fidelity was guaranteed by the Australian Alliance Assurance Company of Melbourne to the extent of ,£IOOO, but that company, taking advantage of"a clause in their bond that claims must he made within three months of the lapsing of the policy, have repudiated their liability, and the loss in consequence falls upon the funds of the association.

Towards the extinguishing of those embezzlements, the directors have in the first instance appropriated the reserve fund, and the amount which was at the credit of that fund (.£2016 10s 8d), with .£2600 0s 2d of this last financial year, added to the paymentsjto be made by MiLewis (.£899 7s 6d), has been found sufficient to meet the loss.

The directors feel flint they cannot point to a more satisfactory proof of fclio soundness of the association's position than the fact that such a lavpo sum can he wiped out in the lua.nner set forth in tlio preceding clause. The value of the shares is given on the tr.Hr anuoxed, and the directors hare to state that the

value as- given in past years is not in any way affected by the embezzlements referred to; and the value this year is only affected to the extent of loss of part of the profit of the financial year. Under all the cireumstances of the case, the directors feel that the shareholders will approve of their action in connection with the losses referred to. They wish to state that a warrant has been issued for the apprehension of Mr Herdson, and it is for the shareholders to say whether it shall be followed up by an endeavour to bring him to justice. The directors who retired were Messrs Reeves and Blakiston ; and at the meeting held on the 7th of February, the Hon. J. T. Peacock and Mr C. R. Blakiston, being the only candidates, were duly elected. The Chairman then said he or some of "the Directors would be glad to answer any questions which might be put. In reply to Mr Stevens, The Chairman said that there were 5550 shares in the Association. Mr Stevens said that he had asked the question to see what the rate per share of the loss would lie. He would like to say a word as to the manner in which the Directors intended to meet this deficiency. He saw that £2016 16s 8d of the reserve fund, with £2600 Os 2d of the last year, together with the amount from the manager, was appropriated to cover the defalcations. He should like to know whether the £2600 0s 2d was the same sum as that set down in the balance-sheet, £2685 12s lOd, as profit for last year, because they did not agree. The Chairman pointed out that there was a small balance to be added to this, which made the amount. In reply to Mr Dale, The Chairman said that the defalcations had swept away all the profits of last year, except £BS 12s. In reply to Mr McConnell, The Chairman said the directors thought that to take the profits of last year was the proper course to take. It would be absurd to show a profit on one side and a loss on the other. Mr McConnell could not sec that this was fair to the new shareholders. It appeared that the defalcations extended over five years, or since the first starting of the society. Was it fair therefore to the new shareholders to sweep away all the profits from them to keep up the profit to the ancient shareholders? The Chairman could not sec this. All would participate equally in the loss. Mr Cowlishaw thought the chairman was scarcely right. The old shares would be worth £2l as against £1 for the new ones. It therefore followed that the older shares had to bear the loss in the proportion "of twenty-one to one which showed the justice of the arrangement proposed by the directors. The Chairman pointed out. that the whole profit of the year was divisable amongst the shareholders. Mr Mitchell thought Mr McConnell forgot, that all started on the same footing on Ist January, 1877. The Chairman —Besides this the older shareholders had a greater share in the loss, because they had so large an interest, in the reserve fund, which has been entirely swept away. The Chairman then said that the directors wished to ask the shareholders to instruct the directors as to the course they should pursue with regard to the apprehension of Mr Herdson. It would be attended with great expense, and the directors would not go into it unless so instructed. In reply to Mr G-eorge Booth, Mr C, W. Turner said that the fraud was not discovered until the policy under which Mr llerdson's fidelity was guaranteed had lapsed more than three months. The Australian Alliance Company, however, took advantage of a clause in their policy, and at, once declined to pay the guarantee. He thought it was a disgrace that an association like this which had taken so many premiums out of tho place should deliberately repudiate their liability on a clause in their policy. [Hear, hear.] The matter was in the hands of their solicitor, and they would push the matter to the utmost. [Hear, hear.] In answer to Mr Cooper, The Chairman said that Mr Craig and Mr Harley had audited tho accounts this year. Mr Craig had audited the accounts since the commencement. Mr Wright, who was with Mr Craig, had resigned, and Mr Harley was appointed in his place. The Rev. C. Fraser said that he thought, the guarantee policy should have been kept up until the time of the year's accounts were concluded and finally passed as correct. The Chairman pointed out that Mr Herdson was guaranteed as acting manager ; so soon as Mr Lewis came back he was no longer acting manager, so that the guarantee could not be continued as acting manager. Mr McConnell enqiurcd when the directors were first made aware of the refusal of the Australian Alliance Company to meet the guarantee ? Mr Hill said that this was done some three weeks back. In reply to a question from Mr McConnell, Mr Turner said that at the last meeting he held in his hand a balance-sheet signed by the auditors, stating that, the defalcations were some £6OO, which was covered by a guarantee of £IOOO in a company which, up to the time, they had considered a respectable one. In reply to Mr Malet, The Chairman said that the Directors had not submitted the bond at the time when it was taken to their solicitor. Mr Walton said he believed that all defalcations which took place during the currency of the bond was recoverable notwithstanding any condition on the bond. In answer to Mr Malet, The Chairman said the only step which could be taken as to recovering anything from Mr Herdson had been to attempt to get hold of the property settled by Herdson on his wife. Their solicitors, however, advised them that they could not interfere with theproperty unless they made Herdson a bankrupt, or proceeded against him criminally. The directors did not, feel however inclined to go to law, and throw good money after bad. In reply to Mr Booth, The Chairman said that Mr Lewis, their present, manager, was having a bond for £101)0 prepared. As lie had explained, Herdson at the Lime he ceased to he acting manager hail no connection with the society. Dr Prankish asked whether it was in the knowledge of the directors that a clerk of Mr Lewis's had formerly embezzled money from Mr Lewis, and that the money and cheques <d!: the association were passing through his hands ? The Chairman said that the directors were so aware, but the party named had embozzled Mr Lewis's money, but none of that of the a 'sueiation. Rev. C. Fraser asked whether it was in the knowledge of the directors that Mr Herdson

came here under circumstances of suspicion from Sydney. Mr Garrick explained that tins was not Hie case. He (Mr Q-arrick) knew the whole of the circumstances of the case. Mr Herdson was in the employ of the Mutual Provident Association, and lie left under certain circumstances which appeared suspicious. On making enquiries he (Mr G-arriek) found that Mr Herdson had been made the dupe and scapegoat of Mr Thomson. He (Mr G-arriek) was so highly in favor of Mr Herdson that he would have been willing to guarantee Mr Herdson's fidelity. Mr Hill said ho would like to mention one fact, and that was this, that Professor South, who was now one of the directors of the Mutual Provident Association, had endeavoured to get Mr Herdson appointed as one of the responsible officers of the association just recently. Dr. Frankish said that he would like to say that he was in the habit of paying his monthly subscriptions by means of crossed cheques to Mr Robinson. When however he went while Mr Herdson was away to pay in his subscription by means of crossed cheque he was told that it could not be received, in consequence of irregularities in the office. Now, it seemed to him that the accounts of the association should have been investigated when Mr Robinson went away. The Chairman said that, there was no doubt it was most unfortunate that Mr Herdson had ever gone into Mr Lewis's employ, or had had anything to do with the Association. Mr Lewis had been a heavy sufferer, and so had the Association. The only thing they had to console themselves with was that he had sold them all; even his most intimate friends. Mr George Booth said that he thought justice ought to be satisfied by bringing Herdson back. If they allowed him to go scot free, it would be like offering a premium for swindling. In reply to questions, Mr Garrick said that Mr Herdson was in Virginia City. He was not sure that the extradition treaty was in force as regarded the colony. Hon. J. T. Peacock said that it would be far better to leave the matter in the hands of the directors, who would perhaps sec their way clear at some future date to bring Herdson to justice. On the motion of Mr Booth, it was resolved that the question of proceeding criminally against Herdson should be left in the hands of the directors. Mr Dale moved the adoption of the report and balance-sheet. He thought the directors had done very well in meeting this unfortunate affair as they had done. Mr Walton seconded the motion for adoption of the report and accounts. In reply to Mr Mitchell, The Chairman stated that the star in the balance-sheet as to the value of the shares under Ist July, 1874, referred to the shares reserved for those who had not been in the association three years, and who remained until the end of that term. In reply to Mr Tombs and Rev. C. Fraser, The Chairman said that the assets had always been put in the hands of the auditors. The assets were formed by the bank balance and the securities, which were shown each year to the auditors. Mr Dale's motion was then put and carried. A vote of thanks to the chairman concluded the meeting.