ASTOUNDING DISCLOSURES.

Taranaki Daily News, 22 January 1921, Page 5

ASTOUNDING DISCLOSURES.

FAILURE OF FARROW’S BANK. HOPELESSLY INSOLVENT. By Telegraph.—Press Assn —Copyright London, Jan. 19. Astounding disclosures were made at the Guildhall Police Court during the prosecution of officials of Farrow’s Bank. Sir Richard Muir in his opening statement, said that in May, 1920, the New York firm of Norton, Read and Company, with their London house, agreed to acquire the controlling interest in the bank by providing £500,000, of which £400,000 was to be placed to the reserve account and £lOO,OOO to be used for compensation to Mr. Farrow and the other directors, who would retire. Mr. Read, the London partner of Norton and Read, was dissatisfied with an examination of the books, some of which were withheld, and called in chartered accountants in November. They eventually informed him that the bank was hopelessly insolvent, upon which the agreement was cancelled. Counsel suggested that the idea of Farrow and Crotch was that, when the crash camo. Read, being enmeshed in this fraudulent business, would shoulder the financial burden to save the honor and credit of his firm and prevent exposure. Crotch, who was the leading spirit in the concern, apparently owed the bank between £lBO,OOO and £200.000, of which £35.000 stood in the name of a certain lady. Counsel said that, with the exception of the first portion of 190 S, the bank had done nothing but make losses, ranging from £ll,OOO in 1909 to £203,000 in 1920, aggregating £1,107,000, quite apart from loss by depreciation of securities, which must be considerable. All this time the bank was paying interest to depositors. Shareholders must have been paid out ofcapital and the losses concealed “by ScmTous values of book assets. One asset, which appeared as £780.000 due from a cement company, was wholly fictitious. The reserve fund was also wholly fictitious. A cupboard broken open in Hart’s room revealed papers showing how fraudulent balancesheets had been prepared showing the true position of affairs, from which Hart “cooked” thij balance-sheet.— Aus.-N.Z. Cable Assn.