A HUGE SWINDLE

Hokitika Guardian, 21 January 1921, Page 1

A HUGE SWINDLE

i .-.—. 1 • farrows bank disclosures. !BY TELKGRAI’H—PRESS ASSN., COPYRIGHT, j APSTBAUAN AND N.Z. CABLE ASSOCIATION. I (Received this day at 9.30 a.m.) i LONDON, January 19. : : Astounding disclosures were made at ] Guildhall police court during the prosecution of Farrow’s Bank officials. Mr Muir in his opening statement, said, in May 1920 the New York firm of Norton' Read and Company with a. London House, agreed to acquire a controlling interest in the hank, by providing half a million sterling, whereof four hundred thousand were to be p aced to reserve account and one luindr’d thousand be used for compensation to Far- . row and other directors, who wculd re- . i tire. j Bead, tile Ixindon partner of Norton ; j and Read was dissatisfied with the ex- ‘ animation of the books, some of which l were withheld, and called in chartered accountants in November, who even- i tuallv informed him that the bank was hopelessly insolvent whereupon the agreement was cancelled. i Counsel suggested that Farrows and Crotch’s idea was that when the crash 1 came Read being enmeshed in this frau- ’ dulent bUsiness, \doukl ishouider the financial burden to save the honour and credit of bis firm, and prevent exposure. , Crotch, who was the leading spirit in the' concern apparently owed the li-ink between £IBO,OOO to £200,000. ! whereof £4.),000 was still in the name of a certain lady. Counsel said villi the exception of the first portion of 1908, the Bank had done nothing, hut make losses, ranging from £II,OOO in 1909 to £204,000 in 1920, aggregating £1,107,000, quite apart om the loss by depreciation of securities, which must be considerable. All this time the bank was paying interest to depositors. The l shareholders nr:-t have been paid out of capital and the losses concealed by fictitious values of book assets. On asset which appeared as £780,000 due from a cement company was wholly fictitious. The re- ( serve fund was also wholly fictitious. A cupboard broken open in Hart's room roveajed papers showing how the frau- ( dulent balance sheet bad been pren.ued for each year. A document was prepared showing the true position of . affairs from which Hart cooked tile ] balance sheet. j