Mr Larkworthy.

Manawatu Herald, 28 June 1894, Page 3

Mr Larkworthy.

Everyone who has watched the proceedings in England in connection with the New Zealand Loan and Mercantile Agency Company Limited, has been anxious, not only as to the outcome of the investigations as to the Company as a whole, bub as how the verdict of the Judge would affect the character and position of its officers. Mr Larkworfchy was well known to the colonists years ago, but his eldest son was more intimately known from having developed and managed the Motoa and Carnarvon estates, and the many friends he made here were more or less anxious as to how the inquiry would affect the high commercial standing of his father, at one time the managing director of the institution. By mail yesterday we are in receipt of the full fcexfc of Judge Vaughan Williams' statement on the examination of the directors, as it appears in the Financial Times of May Bch, and give in lull that portion in which Mr Larkworthy is referred to : — Mr Justice Williams said he would next consider the questions— how far tho company had failed to disclose matters affecting its financial position, which it ought to have disclosed to the shareholders ; how the balancesheets it from time to time issued were positively misleading ; and how far the directors were justified in paying the dividend declared in 1893, and the interim dividend of June, 1892. It appeared in October, 1888, the Board desired Mr Larkworthy, the managing director, to proceed to the Australasian colonies to carry out some proposed change in the management and to inspect and report on the business of the company. He was satisfied from the evidence that in Mr Larkworthy the J company possessed a most valuable and trustworthy servant, and it was tolerably plain from the evidence that if he had continued to be the managing director and had not been forced— for that was the only word which described the true state of things — to leave, the company in all '. probability would not have been in liquidation at the present moment. He could not help seeing from the mode in which some of the directors gave their evidence, that they felt that Mr Larkworthy, in making the statements he had made on the re quisition of the Official Receiver, had been guilty of some sort of disloyalty towards them. In his judgment, Mr Larkwortby showed no i disloyalty whatever to these gentlemen. His tendency, if wrong, was rather in the direction of trying to shield them respecting matters as to which they undoubtedly deserved blame. If Mr Paul, the manager, had taken the same view of his obligations of frankness, the examination would probably not have lasted nearly the length of time which it had. The question afterwards arose as to how far it was proper that the result of Mr Larkworthy's invests gations should appear in the report to the shareholders at the commencement of 1892. The advice of Sir Thomas Paine, the solicitor, was sought upon the point, and Sir Thomas dratted the following paragsv.nli : --" Tho Inisiinoss of tho com pany continues to increase, and as lha latest accounts frmn tho colonies arc most encouraging as to the prospects of this season, the directors think themselves justified in expressing the confident hop? that it will continue to increase, and that the long series of unfavourable years is coming to an end. But it is impos* !

sible to hope that a period of depres sion can pass away without some unfavourable results, and Mr Larkworthy's investigations in the colonies have led the directors to the conclusion that there are several heavy accounts the realisation ol which must be more or less uncertain, though there is reason to hope that with a reurn to a more prosperous period of business, a fairlj satisfactory result may ensue, Under these circumstances the directors feel that the safe and more prudent course would be to limit the dividend now declared to the rate ol ten per cent per annum, without the customary bonus, but they are satisfied that this is in the share holders interest, and will ultimately strengthen the position of the company." Anyone reading that paragraph would feel that it had been prepared on the principle which Sir Thomas Paine declared ought tc guide directors in giving information to shareholders — that was to say, it was not too strong. Eventually, however, it was resolved that instead of a paragraph to appear in the report the chairman should include in his speech a statement referring to the result of Mr Larkworthy's investigations, This reference in itself seemed to show that the directors had no substantial doubt as to the accuracy of Mr Larkworthy's conclusions. The report appeared to have been drafted by Mr Thomas Russell, who was responsible for the following passage in the speech of the chairman : — " Well, gentlemen, of course there are some accounts relating to stations which have suffered greatly, and with regard to which we have had tc make special provisions, but we have every confidence that all these accounts will work out satisfactorily with the provisions we have from time to time made, and which we are now in our increased prosperity making in larger measure." Unless, said his lordship, he had been told that that passage referred to the investigations of Mr Larkworthy, he certainly would not have guessed it. It was difficult to find a reference to investigations in Sir James Fergusson's speech as to find the object in a puzzle sketch. Nor was effeot given to Mr Larkworthy's investigations by the reduction of the dividend to ten per cent, it having been previously, with the bonus, fifteen per cent, for at the date of Sir James Fergusson's speech in 1890 it waa known that the losses wore actual and not contingent.