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The Pamphlet Collection of Sir Robert Stout: Volume 75

Sixth Day—Thursday

page 59

Sixth Day—Thursday

On the court resuming at 11 a.m.,

Robert A. Anderson, secretary of the [unclear: wa]Farmers' Association, was called, and said the his age was 31 years. He had been associate for eight fears with Mr Ward, and for between 15 and 16 years with Mr Fisher. He [unclear: be] always been in the office with Mr Fight except on two different occasions, making [unclear: abo] three years altogether, and had been subject: his orders. Ever since be was 20 years of [unclear: as] he had been continuously under Mr Fisher orders, and had been associated with him [unclear: a] business. When the Farmers' Association [unclear: w] started witness was employed by Mr Ward's bookkeeper, Mr Fisher being the manager [unclear: a] the initiation of the Farmers' Association—for the first three or four months—witness kept to books, but owing to the increase of business [unclear: a] attended to the merchandise sales and: page 67 the local correspondence. If anything crapped up about the boots the bookkeeper would no doubt have asked witness about it. The several bookkeepers were named Ennis, Smith, and Royds, while the cashier was McIntosh. Each of them knew quite as much about bookkeeping as witness. He could not remember getting instructions from Fisher to make any of the entries in the books, nor did be give such instructions to the bookkeepers. Practically speaking, he (witness) had nothing to do with the books after the four months referred to. At page 163 of the book produced there were entries in three different handwritings—witness's, Mr Smith's, and Mr Royds's. These were supplementary entries. At balancing time, when the bookkeepers and everybody else were busily employed, one had to turn from the general routine and in a general way assist, Thirty-four entries in that book were in witness's handwriting, and were mainly correction of entries wronglydebited or credited, as the case might be. It was very likely that the mistakes were traced by the bookkeepers themselves. The item stated "Carswell's 1000 shares cancelled," but he could not say where he got the information. He might have got it from Air Fisher. The item of £1500 was not in witness's handwriting and he knew nothing about it further than that he saw it in the book. Very likely he saw it at the time it was made. It stated "salary and rent allowed," and what witness understood it to be was salary and rent allowed by Mr Ward. The words "salary and rent allowed, £1500," were in Mr Smith's handwriting, and witness had added "J, G, Ward." It appeared to witness that he was posting with the bookkeeper, and that on coming to this item be added "J. G. Ward." If the bookkeeper put in the first part of the item only he would know what the transaction referred to—he would know that the rent and salary were allowed by Mr Ward, because no ope else drew so much from the association. The amount was posted to the credit of goods account by the clerk. It was possible that Mr Fisher told him to put in Mr Ward's name.

Mr Solomon: Do you mean to say that this £1500 baa passed out of your mind? Do you not remember that Mr Fisher told you that Mr Ward wan going to allow the amount?—It is possible he did.

Of course he did; but is it not afact? Did he or did be not tell you so?—I have told you it is possible he did.

But did he tell you?—I have already told you I do not remember the circumstances.

But you surely understand what I ask you: Did Mr Fisher tell you that Mr Ward was going to allow the money?—I do not remember the circumstances.

Mr Cooper: Don't bully the witness.

Mr Solomon: If I am putting it too severely the court will interfere. (To witness:) Do you still say you do not remember whether Mr Fisher told you about the transaction of £1500 with Mr Ward?—I say that Mr Fisher is almost certain to have told me.

Was that before or after be saw Mr Ward in Wellington?—I could not say that.

Witness was examined in detail as to the list of advances against goods and produce afloat and ashore. So far as be could recollect he took the amounts down from Mr Fishar, who was conversant with the accounts. There was nothing in the details to show what was open and what secured. To the bent of his belief the items were true. He could not say whether the item "Southland Rope and Twine Company's account" was or was not against produce afloat or in store. He could not tell if the account was secured. He knew nothing more about the Hokonui account than appeared in the statement, and could not say whether it was secured or not. As to being secretary of thin company, he might say it was a purely nominal office, although his name appeared in the balance sheet as secretary. He could not tell whether the item £3900 waa a secured or an unsecured item. It was the cane that the Hokonui coal account was not secured on produce afloat or ashore. Respecting the item Southland Hope and Twine Company, he did not know that it was not secured. As be had said, the Ward Association stored targe quantities of flex and O.I. He did not know what advances were made. He could not say whether the item loan £3919 16s 3d (Hokonui Coal Company) and another item £2079 wtre back debits or not the figures referred to were made up by himself and Mr Fisher, and he believed they were correct. He believed the amounts to be correct, because Mr Fisher gave him the details.

Mr Solomon: So the whole thing again comes to this: the whole correctness of these figures rests on Mr Fishery word, and you, like Mr Ward, believed in it implicitly?—Of course I would take any statement Mr Fisher made as correct.

Witness continued: It had not occurred to him that proper schedules should bemade up showing advances and securities. He was not supposed to know the position, but accepted the word of his superior officer the item 1st October, 1895, £10,000, was the amount due to the Colonial Bank fur the purchase of Carswell's stock, and he knew that amount was owing. The statement as to the consignment was in his handwriting. It did not mean that £2120 19s 104 had been overdrawn and was owing by the association; the amounts were drawn against oats in store. According to the statement produced £42,000 was owing, and they bad £40,000 of goods, so that on that £2000 was owing. On the grain and railage page 68 account £9975 was owing to the Colonial Bank. The produce Account represented the balance of oats in store; and be believed they went in store. the put doe bills had been debited pro forma to the customers' accounts.

Mr Solomon: I want to know what the fact is?

Witness; The books show,

And they, therefore, came in as assets it) this this?—Yes.

Hence, this amount would be a liability Actually due to the bank?—Only so far as being discounted bills. They have never been debited to the account.

With the bank?—With the bank.

But it was money actually owing to the bank, because you have already received cash for them, and, besides, taken credit for them, not that so?—Yes.

That means, therefore, that this is a debt owing by the association?—Only in the sense that they are discounted bills.

Take it in any sense at all, you owed the money directly to the bank Indirectly; the bank would look to those people,

But you have treated it as a liability on the very next page There it is—£10,000. Now, is it not a fact that in view of the process adopted, of taking credit for these aft assets, you must treat the past due bills account as a lability to the bank?—I do not think so, I think they are treated exactly in the way of discounted bills.

I will show you that you have yourself treated it as a liability.—I do not think so.

We will see. What does this mean? This A statement 21, advances against produce in store and afloat—as per statement No, 6 £29,000 odd, and produce account £18,000, lens amount as per statement No. 20, £10,436, past due bills; No. 17. grain railage account, £9000; and as per statement No. 11, overdraft on shipments, £3120. I ask you what that means? Who told you to prepare that statement, or did anyone tell you?—The balance sheet was drawn up by Mr Fisher.

Be kind enough to answer my question. Did anyone tell you to prepare that statement? If so, who?—Mr Fisher would tell me.

I ask you not what "would he," but what was done. Did he tell you to do so?—Mr Fisher would give me a skeleton of the balance sheet and ask me to make up the details.

Did he ?—Hedid.

Did he giro you this (statement produced)? What was the skeleton, by-the-bye, of the balance sheet? Have you got it?—I have not.

What did the skeleton contain?—Practically the draft balance sheet; that is what it meant. It would be practically the same as the printed balance sheet.

Do you know whether that is in existence now?—If it is it will be in the office.

Mr Fisher gave you a draft balance sheet, and practically you made ap the details?—Yes.

Is this what you mean. Mr Anderson—the balance sheet of 1895?—I do not know whether it was exactly in that form.

But those are the figures?—As they came out, yes.

He told you to make up that item, for instance (item indicated). How were you to make up the details, or did he tall you? What information did be give you by which to make them up?—I expect the totals of these would be made up from rough sheets before being finally prepared.

And the result of each of these items would be made out?—Yes.

How did you get at that figure, for instance?—From the list.

Did you only get it from a little calculation made—by subtracting one lot of figures from another tot?—Quite so; but they would be practically made out from the rough sheet.

You say again "would be." I ask, Were they?—I do not remember whether they were or not.

Now we come to this item (indicated). Who told you to do this calculation?—The manager.

Did he tell you why, and did he tell you to bring this result out there? Did he tell you why that calculation was to be made?—I cannot say that I recollect.

Did you not know that it was a very wrong thing to do—that that calculation alone was a wrong thing to do? Do you swear that?—I say that to the beat of my knowledge and belief it is correct.

What is correct?—The statement there.

The calculation? Do you not know that the ersult of that calculation is that, instead of allowing the assets and liabilities of the association, you simply show the difference between asset* and liabilities?

Witness: That is not a fair way to put it.

Don't trouble your head about that. Please answer my question. Do you not know that, instead of showing the assets and liabilities, you simply show the difference?—I do not think it is.

Do you swear that?—I say 1 believe it to be a correct statement.

The question was repeated two or three times in its original form, and at last

His Honor said that witness should give as answer and make any necessary explanation afterwards.

Witness then replied that the result of that calculation was certainty to reduce the assets—that is, on the face of it. The deductions he considered legitimate, and he did not think it an improper thing to do. He thought it was legitimate, so far as those items were concerned, to put the assets on one side and the liabilities on the other, subtract the difference and so present it. Past due bills were treated aft bills. discounted, in order that they might not be lost sight of; but so far as the bint was concerned they were left oat of [unclear: it] page 69 balance sheets. The item of grain railage account" was, he believed, secured by the association and treated as a special account. That item was treated in exactly the same way as Mr Coot had prepared his statement of March 20. He admitted that there was nothing in the balance sheet to show that the item was a debt due to the Colonial Bank, Certainly the shareholders would not know it from that statement; they bad no means of knowing it, He wan not supposed to give opinions on matters of that sort. It was not for him to say what was right and proper information for him to give to the shareholders. He had already said that the office of secretary did not carry such responsibility with it. He was secretary of the association, but the position did not carry any salary. It was a formal office, it being necessary under the articles of association to have one in order to complete legal documents, which had to be signed by two directors and the secretary. He believed the statement in the balance sheet bo be correct. No one told him that it was a purely formal matter to put his name to the balance sheet, and that doing so carried no responsibility with it.

His Honor: I see by section 112 of the articles of association that it has to be signed by the secretary and two of the directors, but it is not signed by two of the directors.

Mr Solomon: That is one of the things that 1 shall come to by-and-bye. It is not in the articles of association, but one of the first resolutions recorded in the minutes is that all cheques shall be signed in a certain way, but immediately afterwards the cheques are signed in a totally different way.

Witness continued: He did not remember till the fact was pointed out by bin Honor that the balance sheet had to be signed by two directors as well as by the secretary, He repeated that be put his name to the balance sheets simply to complete a legal document, and it was done in a formal way.

Did you not pause, before you allowed these things to pass from your bauds, to inquire whether or not you were doing an improper thing by biding this item of £9000 from the shareholders; or, again, did you merely take Mr Fisher's worth and did what he anted you to do?—I took his word.

Is it not a fact that Mr Fisher asked you to make that calculation, and you did so?—I believed it to be correct, and did so,

You believed it to be correct just because he told you that it was correct?—Quite so.

So that we have at last got this: This item of £40,000 rests on Mr Fisher's word?—Yes.

Witness continued: He understood from Mr Fisher that goods to the extent of £10,000 were held by the Colonial Bank as security for the payment of the promissory note given for the purchase of Cornwell's business Ho did not remember the exact date of the purchase of those goods, but be believed it was in 1893. He could only say that he believed that the bank was so secured—that was what the manager told him. He did nob know himself whether it was true or not. He admitted that that £10,000 item was not shown to, but not that it was concealed from the shareholders, The difference was this: when you wanted to conceal a thing you specially wished to hide it. Nor would be admit that this £10,000 was effectually kept out of the sight of the shareholders, Though the goods were specially secured to the Colonial Bank they did not belong to the bank practically. By no process of reasoning could be explain the fact that the Farmers' Association owed the Colonial Bank the £10,000 on the date mentioned. Nor could he by any process of reasoning away from the fact that the balance sheet did not show that item. He did not know what ought or ought not to have appeared in the balance sheet.

Do you mean to tell me, as secretary of this company, that you do not know what ought to appear in the balance sheet?—Not in every case.

After having had 10 years' experience as an accountant, under the guidance of Mr Fisher—at the end of that time you really mean to say that you do not know what ought to be put in the balance sheet?—I do not say that.

Will you swear, if you did not think it was a proper thing to be shown, that that was a proper thing to do?—I am not bound to express an opinion.

Now that the facts are known to you, if the balance were to be submitted to you to-day for your signature, would you sign you name to it?—That is a question of opinion, which I am not supposed to answer.

Do you mean that you will not answer?—I am not bound to express opinions,

Mr Solomon submitted that be was entitled to pet an answer from the witness, and

His Honor expressed concurrence.

Do you, as an experienced business man, say you have any doubt for an instant as to whether you would sign a balance wheel that showed a debt to the bank of £1100 when the debt was ££20,000 at least?—I believe that if the items were specially secured it was not an absolute necessity to state the amount on the balance sheet.

Then all specially secured liabilities disappear from the balance sheet altogether—Not necessarily so.

Do I understand you still to say that all the length you will go is that you have a doubt as to whether you would now sign the balance sheet or not?—With the information I had at the time I signed it, and I have no different information to-day, and would still sign it.

Further examined: The item of debentures, £40,000, was specially secured over capital and appeared in the balance sheet, but the other page 70 accounts were more specially secured. The securities were realisable in a different way to the uncalled capital. He did Dot know that the Colonial Bank had no security over Cardwell's goods in respect to the item of £10,000. Assuming there was no security over the stock, he would ask for the amount to be included in the balance sheet. In the book produced wan an entry to transfer to No. 2 ledger, folio in the bookkeeper's handwriting, and in the middle of the entry was a space, which was afterwards filled up by witness with the words "J. G. Ward's account," The bookkeeper was not kept in the dark. He was opening a new ledger, and would think it was going to Brooks's account in another ledger, but it was afterwards altered. It was transferred to Mr Ward's Account on instructions from Mr Fisher, It did not occur to him as strange that he and net the bookkeeper had been asked to make the transfer, for, as he had said, he often made entries at balancing time. He did this because he was Asked by Mr Fisher to do it. On the 30th of June, 1895, there was a net sum of £6500 transferred again from the credit of Connell And Co. to J. G. Ward. The entry was made on the balancing day, and the effect was to reduce the credit standing to the account, and At the flame time to reduce the amount owing by Mr Ward to the association. It was beyond his province to inquire into the foundation of the instructions be received from Mr Fisher, and he did not think it was bis duty to make inquiries. He knew nothing further about the matter now than he did then, The item £18,000 had been transferred the day before the balance sheet to Mr Ward, and the day after the whole thing was put back again.

Mr Solomon: Does not that strike you as suspicious?—No.

Do you think that an ordinary transaction?——Yes.

Witness continued: He had nob trade inquiries about it since, and had no suspicions about it even now. He knew nothing mere about it now than then, and had no suspicions then or now. Witness had kept Mr Ward's private account from July, 1895. The entry of £1500 on July 1, which was taken into the balance on June 30, was simply a misdating—an apparent clerical error, and so far as witness was concerned it was an ordinary error. He could not remember the circumstances under which these alterations were made. So far as be could remember, he was not told to make them and put them straight again the day after the balance. He put the entries there at Mr Fisher's dictation, but he believed at the time that they were ordinary transactions. He did not remember the circumstance of Mr Fisher statin? at the time why it was put back to July 1. go far as he remembered he was not told, but he would not swear.

Mr Solomon: Did you know anything about this £30,000 draft? Had you any knowledge about it it all?

Witness: Not about the transaction.

Do you know what the effect of these two entries in the book is?—What two entries?

Those two entries (indicating two entries in the book).—Their effect is to reduce Mr "Ward's account—to credit the account.

The effect is for one day to reduce Mr Ward's account.—to reduce the account that Mr Ward owes the association by £24,000 roughly. and at the name time to reduce the amount that is owed by the Ward Association to Brooks by £18,000, and to reduce the account owed by the Ward Association to Connell by £6000,—That is the position.

For one day alone Yes.

And you have no suspicion about that transaction now?—I have no further knowledge now than what I had then.

That iff not what I aabed.—I have no suspicion at all.

I want to ask you, Mr Anderson, whether, as secretary of this company, you had no means of knowing whether Mr Fisher's statement that these three accounts—Brooks and Co., Connell and Co., and Wart?—were not one?—No; I had no means of knowing.

As secretary of the company, did you know anything about, those leaves being torn out of the ledger?—Yes, After it had been done my attention was called to it.

By whom?—By the gentleman who had dona it—Mr Smith.

Yes, well?—He told me his reasons for doing it. He said that he had spilt ink on the page., and he did not like to see the book in such a mess, and he took out the pages. Immediately the question cropped up in court I sent him a telegram to where he is non, and if you have no objection I would like to read it.

Certainly. I have no objection.—It is to Mr A. W. Smith, Booth and Macdonald, Christchurch. "See Times report re missing folios. Kindly explain why and how you took them out." The reply that be sent is: "I removed pages owing to accidentally upsetting ink over them. Any entries thereon were made onfresh pages at the time.—A. Smith." The thing was pointed out to me after the pages were torn out.

That was after it was done?—After it was done.

Your statement written down there at that time is that there were no entries on the page. Yes, I believe it was.

You see now by that telegram the statement is not true.—I knew what be meant. His meaning was that no permanent entries were mads on that page.

What do you mean by permanent entries?—No entries that had not been transferred on to the other page.

page 71

The page that was substituted?-Yes.

In reply to further questions, witness said he did not take any steps to see if the statement that no entries had been made on the pages was true. He took the statement to mean that no entries were made that affected any account. He knew of one other instance in the affairs of the association when a leaf had been taken out of the books. In that case be took a leaf out of the minute book himself. This was a minute of a meeting of directors held on May 29, 1896, at which there were present the five directors and Messrs J. B. Reid, A. Lee Smith, and Mr Woodhouse, solicitor. Mr Woodhouse made out a rough draft of the agreement between Reid and Smith and the Colonial Bank for the purchase of the estate of the Ward Farmers' Association and the Ward accounts. From this he did not gather clearly what was the meaning of the agreement. He had not seen the agreement itself. After having entered the minutes Messrs Reid and Smith asked him if he would send them a copy of what he had recorded in the minutes. He did so, and they immediately wrote back saying that there was a mistake in the copy of the minutes he had sent. The mistake was that he had recorded in the minutes that Messrs Reid and Smith were to receive £6000 in cash. Witness did not know what was meant in the minutes by the statement "£6000 in cash." He did not know where the original minutes were. When he left the company's employment he left the original draft in the books. He (witness) took the names of those present at the meeting. Mr Woodhouse did not take the rought minutes, but he wrote out from memory the substance of what he (witness) recorded in the minute book.

Mr Solomon: Did Mr Woodhouse not take the rough minutes of the meeting?

Witness: No; I took the names of those who were there, and you will find that there was nothing else done.

Further examined, witness said that Mr Woodhouse took a note in his own handwriting of what took place, and from his own note of the commencement and Mr Woodhouse's note of the conclusion he (witness) had prepared the statement of the minutes. The mistake which Messrs Reid and Smith said he had made in the minutes was that he had stated that Messrs Reid and Smith were to receive £6000 in cash. Messrs Reid and Smith said they did not want to have a minute recorded which would convey a wrong impression he did not ask anybody about it, but altered the minutes in accordance with the request of Messrs Reid and Smith.

Mr Solomon: Why did you not alter the minutes and leave the page in the book?

Witness: I left the original draft of the minutes in the book to show that I had no wrong intention.

Mr Solomon: I will read you the original that Mr Woodhouse wrote: "Messrs Reid and Smith said that if they purchased the debt due by the association to the Colonial Bank of New Zealand, amounting on the 20th March last to £92,179 9s 2d, they would release it to the association on the following terms:-£50,000 to be paid either by present debentures or by the issue of £50,000 substituted debentures payable on demand, bearing interest at 6 per cent. per annum, and charged on the assets of the company, to be issued to them in exchange for the existing debentures if required, and secured by a trust deed; £32,000 to be applied in payment of the amount unpaid on Mr Ward's 8000 shares, the shares to be afterwards transferred to the association; £6000 to be paid to Messrs Reid and Smith; the balance of the debt to be released; Messrs Reid and Smith to be elected directors and managing directors of the association; no shares to be transferred in trust without the consent of the trustees of the debenture deed; the name of the association to be changed; the articles of association to be altered so as to give effect to this agreement; Messrs Smith and Reid's expenses to be paid; an agreement embodying the above terms with the necessary provisions to be prepared by Messrs Reid and Smith's solicitors and signed by all parties; moved by Mr Green and seconded by Mr Baldey-'That the offer of Messrs Smith and Reid be accepted.' This (Mr Woodhouse's rough draft) was found among the papers of the association. After the words "the debt was to be purchased" you added the words "for £56,000." Why did you do that?-Witness: Messrs Reid and Smith, when I sent them a copy of the minutes, said that they did not show clearly the position; that it was open to inference that they were to get £6000 for doing the business, for which they were to get not a solitary cent.

Why did you add this amount of £56,000?-Because £50,000 debentures and £6000 make £56,000.

Was it mentioned at that meeting that £56,000 was the purchase money?-It was stated clearly that Messrs Reid and Smith were to be paid nothing.

Is that in Mr Woodhouse's minutes?-I do not know that Mr Woodhouse's are the only minutes.

Where are the others?-I have no others.

Were there any others?-I cannot say at this date.

Where did you get these words from?-I believe that either Mr Reid or Mr Smith said that.

You are sure?-To the best of my knowledge.

There is not a word ofit in Mr Woodhouse's memorandum or in yours?-That is not conclusive proof that the words were not used. I think it is only fair that this should be submitted to Mr Woodhouse and that he should be asked it it is correct.

page 72

Mr Solomon said lie had suggested that they should ask Mr Woodhouse about it, but he did not know what Mr Woodhouse would say

Mr Macdonald said that Mr Woodhouse did Dot know all that took place, but he thought the minute was a correct one.

Mr Solomon said the whole point in the matter wu the insertion of the words in ink, which ho complained of more than of the tearing out of the Leaf, and probably there was a simple explanation of it to be given. The reason it was obscured was that both debts were bought at the name time—Mr Ward's debt of £60,000 or £70,000 and the association's debt of £90 000, It was proposed to buy the two of them for £62,000. and the question was, How was that apportioned? It was possible that it was apportioned that the £90,000 should be sold For £56,000 and the £60,000 for £6000, but they were not able to find that out.

His Honor said there was no particular reason why that should not be so, looking at the securities at the back of the amount.

Mr Solomon (to witness): I want to know; Was it stated at the meeting that the amount to bo paid by Reid And Smith for the association's debt was £56,000?—I believe it was.

After a discussion, it wan agreed to ask Mr Woodhouse, who was in court, to explain the matter.

Mr Woodhouse said the explanation was this:The debts owing by the Ward Association and Mr Ward to the Colonial Bank, which were the subject matter of the agreement with the liquidators, were to be purchased in globo for £62,750, and the arrangement which Messrs Reid and Smith made was that they would release to the association the Ward Association debt for £56,000, and release Mr Ward's debt for £6750. The association would pay Held and Smith £50,000 in debentures and £6750 in cash, Mr Ward would pay them £6000 in cash, and they would take that money to the Colonial Bank and get the debts, handing over one to the association and the other to Mr Ward, Messrs Reid and Smith would get nothing out of the transaction.

Mr Solomon said the matter was one that required explanation, which the liquidator was entitled to, and that explanation bad now been given. (To witness:) Now, Mr Hannah, the auditor, says he passed these cross entries between Brooks and Co. and Connell and Co. because an officer of the association told him the accounts were all the same. Was it you?—No; I do not think it was.

Did you have conversations with Mr Hannah when he was taking the audit?—Not about the audit He usually had another room.

Did you have any conversation with him When he was auditing the 1895 balance?—In what respect?

Did he make any inquiries as to whether the statements in the balance sheet were correct?—Not to my knowledge

Now, take the produce account of 1895. [unclear: Tht] amount (pointing to the book), which is the debit balance of the produce account—that is the excess of the debit side of the account over the credit side—is taken credit for in the balance sheet as as asset?—Yes.

You have heard about these amounts being debited to this account from time to time?—Yes.

Losses on shipments from time to time?—Yes.

Is it a proper thing to do?—Yes.

And after debiting a loss on a shipment to that products account is it a proper thing to take the debit balance forward as an asset?—It is a proper thing if there is stuff there to represent it.

But it would be a vary simple matter [unclear: t] arrive at that. Toe proper method was to [unclear: ta] stock, bub you did not do that. All you [unclear: d] was to take the back entries as assets whether? there was stock there or not?—How do you know that the stock was not there?

We know you were £16,000 worth of [unclear: stoe] short according to the books, as noon as If Cook took possession?—I do not know that.

But I know it, You asked me and I [unclear: tel]you. But do you not know that stock was no taken on the balance, that you only took [unclear: th] book entries?—I do not know that at all.

Do you know that stock was taken?—I know that Mr Fisher said that oats represented [unclear: th] balance.

Oh ! again that depends on Mr Fisher word?—Whose word should we take if not manager's?

Yes; you only had Mr Fisher's word for the fact that the oats were there, and if the [unclear: at] were not there it was improper?—If the [unclear: a] were not there the balance should not go [unclear: in] the balance sheet.

Witness was then examined as to the [unclear: exten] of the sales and as to the non-taking of [unclear: st] As to stock he admitted that he had depends on Mr Fisher's word. He had never [unclear: a] tended meetings of directors, and [unclear: repeated] that his position as secretary was [unclear: mer] nominal.

Mr Solomon: Who attended meeting beside the directors?

Witness: The manager.

You never attended meetings of the director although you were the secretary?—Quite so.

You were never asked for any particulars never called in to give any explanations?—No

Who attended the meetings besides [unclear: th] directors?—The manager.

And the managing di rector?—If he was [unclear: the] his name would be in the book.

Do you not now think it strange that you the secretary of the company, should not has attended the meeting, kept the minutes, as page 73 so on? Who kept the minutes?—The minutes were taken by the manager and afterwards Written up from rough drafts by me.

How do you know that they were correct?—I do not know whether they were correct or not. I can only assume they were correct, because when they went before the next meeting they were confirmed.

You do not know whether it is the rule for the secretary to be in the confidence of the director!?—I believe it is the rule.

Can you conceive why you should not have been?—I can only say that 1 all along looked upon the office of secretary as being purely nominal, as I told you this morning.

You recognise now, that whatever your appointment may have been, your actions as secretary were merely nominal. Who acted as the real secretary of this company None of the directors acted as secretary?—, on.

Did any of the clerks act as aecretary?—No.

Then we come back again, the real secretary was Mr Fisher That is so.

Mr Solomon: Be was a regular Pooh Bah.

Witness continued: He did not believe he had been intentionally kept in the dark, or that those who had got him to sign the statements had made use of his same, and purposely back from him what wan the real state of affairs.

Mr Solomon: Bat do not you now know positively they did not tell you the real state of affairs?—I say I did not know of the transactions of the company.

Quite so; you did not know the transactions of thecompany, and yet they used your name as secretary. Do not you think, Mr Anderson, that the secretary ought to know every transaction of the company? What is be there for?—Well, 1 do not know. It depends if the man appointed as manager is really the man who has got to do with the company.

Mr Solomon: Quite so, and the secretary as well, surely. Do you moan to tell me that a man can perform his duties as secretary of a company and be kept in the dark as to the real state of its affaires? In order to earn your salary and perform your duties as secretary did you not think it necessary to be informed of all all its affairs?

Witness replied that he had plenty of work to do without that, and, as a matter of fact, he was not informed of all its affairs.

Would you take a position as secretary on the tame terms again?—I would consider it.

Witness continued: The reverted entries of £21,000 on the eve of the balance sheet of 1893 were entered in the baud writing of Mr Innes, who was the bookkeeper at the time. The hooks were open for the inspection of witness at any time be wanted to see them. He could not say when he first knew of the transaction, but it was shortly afterwards.

Had you any idea that that was a balancing transaction?—No.

Did not the coincidence occur to you or the payment on the day of the balance and the redebiting on the day after?—I do not know that I would see if it was drawn out on the dayafter.

If you saw the entries you would look at the two together. But you say that you did not know that it was going to be done. Did they never take you into confidence as Monetary and tell you this was going to be done?—No

You were perfectly in the dark?—1 did not know that anything wan going to he done.

Take the 1891 balance sheet. Did you know that anything was going to be done there? The £35 000 cheque: whose entry is that (referring to the ledger)?—Mr Smith's, He was the bookkeeper then.

Were you told that that was going to be done?—No, 1 was not.

Were you told that it had been done?—I was not told anything at all about it.

When did you first find it out?—I do not remember when I saw it.

Taking this transaction in conjunction with the last one—namely, that Mr Ward's account was credited practically with £21,000 at the balance of 1893, and redebited on the day after—taking that in conjunction with this, when you did find it out, what did you think about it? Does it not occur to you that that was a balancing transaction?—I would want to know something more about it.

Well you have sat in court all these days and you have heard Mr Ward's explanation. Have you any doubt about it now, that that was a balancing transaction?—Well, that is a very difficult thing to answer. I would not know what was in the minds of other people.

Do you not think you could perfectly well divine that?—No, I am not a diviner.—(Laughter.)

And you, as secretary of this company, were kept quite in the dark about it, and you do not know what is meant by these entries? Do you really want us to believe that, Mr Anderson? You have no suspicion about why that £35,000 was paid in on the day before and taken out on the day after the balance?—Apparently, on the face of it, it was given to reduce the account.

For what purpose? Do you not see that the obvious purpose was to prevent the shareholders knowing that Mr Ward owed so much to the association, and at the name time to prevent the shareholders knowing that the association owed so much to the bank?—Of course it is quite plain that it is to reduce the account.

The result of that was to show that Mr Ward owed £35,000 less than ha owed. The result is that £35,000 is placed to the credit of the bank account and that account showed that on that day the association owed £35,000 less than it did owe. In the face of that on the eve of the balance sheet, can you doubt that the object for which it was done was to conceal the state of page 74 the batik account?—I do not know what the object was, but that looks like the object.

Replying to further questions, witness said bo knew that in January, 1893, £50,000 worth of debenture were handed to Mr Ward to dispose of, but he did not know anything about the ledger entries respecting them. He did not see the credits Tot some months afterwards as he was absent in Australia from February until some time in June. Trial balance sheets were taken out every month.

But we have been told that there were debentures credited to Me Ward by the association. Could that be the case in face of the monthly balance?—Yes, the man who made the entries might believe they were to go to Mr Ward's account.

But the monthly accounts would be submitted to Mr Fisher as managing director, or to Mr Fisher as manager, or to Mr Fisher as secretary. They must have come before him in some capacity, and he must have known it was wrung, la it not a fact that be must have seen it was wrong?—If he bad seen the balances and had known the balance to Mr Ward's account be must have seen that Home big credit had gone to it. A trial balance is for the bookkeeper to see if all entries are made.

But is it not submitted to anybody I do not know; not necessarily.

When you were bookkeeper, did you submit it to anybody?—No; I did not,

Mr Solomon: So that, according to you, Mr Ward's account might have been wrongly In credit £40,000 for months, and nobody know anything about it?

Witness replied that unless Mr Fisher went to the balance of Mr Ward's account no one would know anything about it. He could not say from his own knowledge whether the directors knew anything about the position of Mr Ward's account, Nor could he say that he, as secretary, ever submitted to the directors anything where from they could gather Mr Ward's debtedness to the institution. He did not attend directors' meetings, consequently did not know what was done. He did not know of anything thing being kept in the association's office that would show the true state of the association's affair. He acted as manager of the association during October and November, 1895, while Mr Fisher was in Australia. By that time Mr Ward's account was paid. He never heard from Mr Birch, on behalf of the Colonial Bank, how Mr Ward's account stood. He did not come into contact with Mi Birch, except when Mr Fisher was away in Australia.

Mr Chapman said that his learned friend (Mr Cooper) and he would like to consider whether they would re-examine Mr Anderson.

Mr Solomon would not object. In order not to waste time—he proposed to examine Mr Fisher next day—he wished his friends on the other side to know that he proposed to ask Mr Fisher what was the total amount of [unclear: goi] sold to the Australian agents of the association?

Mr Cooper: You mean produce?

Mr Chapman i In connection with [unclear: the] series of 41 drafts you have already [unclear: ma]

Mr Solomon: No; the total business [unclear: don] Australia and the total amount drawn upon;

Mr Cooper; The total sold in Austria during the whole period of the associate operations?

Mr Solomon: Yes' and the amount of [unclear: a] drafts drawn upon these goods.

Mr Cooper: It is very possible, four [unclear: Hose] that we shall conclude that we ought not toe examine Mr Anderson.

Mr Solomon: I hope, your Honor, to [unclear: be] now to get through by next Monday. I try to get through with Mr Fisher to-month Before 1 can complete Mr Fisher's [unclear: examina] shall want that statement I have already [unclear: asih] for of what Mr Ward has done with [unclear: the]£55,000 and that £12,000, and in order to [unclear: a] time as much as possible I shall want an [unclear: op] tunity of considering it.

Mr Cooper was understood to say that [unclear: th] turn would be ready before the examination [unclear: a] Mr Fisher was finished.

At 3.40 p.m. the court adjourned till 11 [unclear: a] next day.