13

H.— 30,

Mr. Clarke was at a disadvantage in conducting liis investigations into the financial position of the company for a reason which will be mentioned later on — viz., the absence of a Private Journal. Mr. Lysnar raised very strenuous objections to the other counsel engaged having right of access to certain documents which were collectively referred to during the inquiry as the " Admiral Codrington file." This file was produced to your Commissioners on certain conditions, and we have had to conduct our investigations into that particular part of the questions submitted to us without having had the assistance of the counsel engaged. Since the taking of the last evidence certain further statements as part of the " Admiral Codrington file " have been handed to the Commissioners by Mr. Lysnar, and a perusal of them tends to show that the opinion of Mr. Clarke was correct, and that, apart altogether from loss in capital value, the actual working of the steamer has shown a loss. The evidence shows that there was friction between the National Bank and Mr. Lysnar in respect of demands made upon the bank to find money in connection with the financing of the steamer's voyages. In 1921 Mr. Jolly says that he told Mr. Lysnar that the steamer was going to put the works on the rocks (see page 613 of the notes). Mr. Jolly also said that he told Mr. Lysnar, during the following session of Parliament, that the ship had put the works on the rocks. Mr. Jolly further stated that in 1922-23 the company was driven to the bank for financial assistance to clear two trips made by the ship, and that was the reason why the bank did not want the steamer to come back on the New Zealand run. Various attempts were made to sell the steamer. Mention was made during the proceedings of an offer for the steamer in July, 1922, at a price of £65,000. In November, 1922, cable advice was received in New Zealand relative to a possible sale of the steamer at £150,000. Mr. Lysnar and his directors delayed dealing with the matter until the 28th November, when they authorized the bank to accept £150,000 net. The prospective sale did not eventuate because the buyers decided that the ship was too slow. On the 17th October, 1923, Messrs. Wilson and Foulis, who are the solicitors to the Bank of Scotland, the mortgagee of the steamer, advised the London office of the National Bank that " their clients had been disappointed in the failure to effect a sale of the steamer under their mortgage." " The best figure that was offered would not let them out." The letter goes on to say, " Our clients were advised it would be to the advantage of the steamer if she was kept trading, and we authorized Messrs. Workman, Arbuckle, and Mackinnon to effect a charter for a voyage out to the River Plate, at a freight, we are advised, which will show some small profit." We point out specially that Messrs. Wilson and Foulis were the solicitors for the mortgagee, the Bank of Scotland, In view of the wording of the letter of these solicitors, the mortgagee had apparently gone into possession of the ship, or, at any rate, was taking those steps likely to be taken by a mortgagee in possession. Note that "We authorized Messrs. Workman, Arbuckle, and Mackinnon to effect a charter," &c. This point must be borne in mind when we come to deal with certain actions of the Meat Board, which will be dealt with in a later part of our report. Before leaving the subject of the steamer " Codrington " we desire to draw attention to Mr. Mountfort's evidence as to the value of the steamer. In the balance-sheets of the company she was valued at cost —viz., about £400,000. The bank in estimating the company's position in September, 1923, valued her at £70,000. In dealing with the bank's estimate Mr. Mountfort took neither book nor cost value of the steamer, but took the value of £150,000. So far as the steamer was concerned, he drew an inference as to her value from the fact that £60,000, as he put it, was loaned on the steamer by a bank mortgagee ; but he admitted (see page 895) that he did not know the date of the advance —that he thought the date was sufficiently recent to justify the valuation ; he thought tire date was about the year 1920.