H.—3o

34

So that the position was this, was it not: when this property was put up to auction through the Registrar, either it had to be sold to \ 7 esteys or else the bank had to buy in ? — Or sell to the farmers. At the top of page 1078 Mr. Coop is reported as saying, " We knew there would be only one bidder " ; and half-way down the page he is asked— But you have already told me that you recognized at that time that the bank was going to sell if you did not agree, and that there was only one buyer, and that therefore £225,000 which the buyer offered was the highest you could expect, and if that buyer's price was not accepted the loss of the guarantors would bo increased ? —But it does not follow that I told Mr. Jessep that. Mr. Lane, a gentleman who gave evidence at Gisborne, and who said that Mr. Lysnar had rung him up from Wellington and from Gisborne asking him to come and give evidence, was asked — Perhaps you can tell us whether you know if there were any other purchasers apart from Vestey Bros, who were willing to pay the price paid by Vestey Bros, for the Poverty Bay works which they now own : do you happen to know that ? —Not to my knowledge. I should think that at that time there were no buyers and no money available. Armours had been put out of business. They were the only other firm that might have bought the works, but for some reason they were not allowed to operate in New Zealand. Tn our opinion the possibility at that time of the farmers buying the Waipaoa works is not worthy of serious consideration. At page 1191 Mr. Cederwall the manager of the Kaiti works, was asked about a proposal contained in the letter dated 25th August, 1923, written by Mr. Lysnar or his company to Mr. Rowlands, regarding the possibility of Mr. Lysnar and his friends purchasing the Taruheru works. Mr. Cederwall, when speaking of money being available for this project, said, " We could not get it, and I do not think they could." And, further, he was asked— Was the position any different in February, 1923, to what it was in September, J 923 ?— No. But the position that year was such as to make it absolutely impossible. In February, 1923, and the whole of that year, it was practically impossible ? —Yes. When consideration is given to the evidence previously mentioned in this report, showing the financial stringency that existed in 1923, showing the position of various of the guarantors ; showing the difficulty the company had in getting calls paid ; showing the admissions of some of the directors as to why they opened negotiations with Vesteys ; we do not think there is any need for us to stress the position further. In our opinion " the farmers " of Poverty Bay were not then in a financial position which would justify a belief in their ability to purchase the works, and there was no reasonable likelihood of other purchasers than Vesteys being found willing to pay the price paid by Vesteys. Could Company have been expected to re-establish itself. In reference to the question as to whether the company could have been expected to re-establish itself in a condition of financial stability had the bank not exercised its right of sale of the company's premises, and whether the bank could have reasonably been expected to allow the company's indebtedness to t to be further increased, we propose to deal with this in two parts. First, could the company have been expected to re-establish itself if the bank had not sold ? As will be seen by other parts of this report, the financial position in 1923 was very different from what it is in the present comparatively prosperous year 1925. We have already dealt with the fact that there was one too many freezingworks in the Poverty Bay district in September, 1923. We deal at another part of the report with the disastrous way in which the shipping!venture had depleted the assets of this unfortunate company. Mr. Appleton was called by Mr. Lysnar, and he said, as reported at page 570 of the notes, that — I did the Gisborne Sheep-farmers' debenture issue. You got money for the Gisborne sheep-farmers : what amount did you get for them ? - I think it was £350,000. At page 575 he was asked — I do not know that I need trouble you much about your successful issues, but what year was the Gisborne Sheep-farmers' issue ?—1920.