Gisborne Building Society.

Gisborne Standard and Cook County Gazette, Volume V, Issue 647, 15 August 1891, Page 2

Gisborne Building Society.

ANNUAL MEETING. Thb annual meeting qf shareholders in the above Society was held at the City Rink on Thursday evening. About 50 shareholders were present, the Chairman of Directors (Mr Townley) occupying the Chair. The Chairman read the report of the Directors, the main feature of which was the reference to the state of affaiis caused by the defalcations of the former Secretary, the total being £1,3X3 I7e Id, which ewept away the year's profits (£747 8s Id) and left a deficiency of £59() 9e, but it was con sidere’d that was good reason to feel confident of the future of the Society. The Chairman said they wore very sorry to have to make a statement of the kind. Ho had been connected with similar societies in England, but this was the first time he knew of any one having to present a report showing a loss. The erabeealements had extended over a long period, the deposit account being ohiefiy operated upoh. The thing had cbme as as great a surprise to the Directors as to anyone else—they had trusted Mr Pieese too much as if appeared. The money had be£n received by the Secretary, and the way he had worked ft was by not paying thb —amount into the Bank, The Chair-

man moved the adoption u, —. permit of discussion. Mr Finn seconded.

In reply to Mr F. T. Morgan the Chairman said the deposits taken by Piesse had all matured. In reply to Mr Mann he explained that the method of the fraud was that the amounts would be entered up all right, but then lesser sums would ba paid into the Bank —for instance on one occasion £9O was received and only £BO paid, then perhaps £l2O would be received and only £lOO be paid in. The other he would just put in his pocket. It would be replaced by deducting from the eume released from fixed deposit in the Bank, and the books would ba made to appear all right, though entry was not made in the cash book. , Mr Mann : Then it brings ns to the question upon which most of us have been wondering—are the rules defective, or have they not been properly carried out, that thia becomes possible ? The Chairman : I don’t know that the rules are defective—it is the Secretary that has been defective. (Laughter.) Mr Mann : Has the rule with reference to the directors’ duties been carried out ?—have two directors been present on the nights and kept a check on the Secretary 1 The Chairman said the directors had been present in accordance with the rule, but they had not kept the Secretary straight. They had seen the money paeeed through the ledger and accounted for, but where the trouble arose was that instead cf banking it he had put some of it into his pocket. Some shareholders contributed to the laxoesa in this way—they paid their money a day or two before or after, and the directors had frequently to check the Secretary for this. The money being paid in in this irregular way made it impossible. t«r the directors to be at the Secretary’s’ elbow, and he thus

got opportunities of taking emounts which they could not trace. In future not only would the directors have to attend to their duties better, but shareholders would have to pay at the proper time. It sherebolders paid in money after the regular deposite had been made in the Bank it would be impossible tor the directors to check it. There wee no doubt there had been loose work at both ends, and the Secretary had taken full advantage of it. , , , Mr Butt said he apprehended the net deficiency to be £596-if the bond was collected that would m >an a reduction to £846. Then taking the profit as the same, £747, and deducting £340 it ought to leave 5 or 6 per cent for distribution next year. The Chairman said that was so. Mr Butt said iu regard to the £650 invested on fixed deposit rather than investing on doubtful securities that offered it showed the fitness of the directors to attend to the work, He did not altogether blame the directors fot the way the frauds had been worked, though It was not pleasant to any of them. There was no use crying over spilt milk, and It devolved upon all to work together to furthes promote the welfare of the Society. (Hear, h6 Mr F. T. Morgan, while agreeing with what Mr Butt said, suggested that the rulee ought to be amended to more clearly define the directors' duties. The Chairman said that the whole rules would have to be revised—they had been left as they were from the first —and that would ooms up in the ordinary business. Ae to Mr Butt's remark about the future of the Society ha had no doubt that it would flourleh, When the Society started operations it had actually borrowed £5OO from the Bank, and though they had thus started in debt they had cleared it off and gone on well. Ae to the balanoe eheet the credit taken wae rathe* under-s'ated than colored. In reply to Mr Evans the Chairman said the total sums embezzled by the Secretary each year werelBB6-87, £110; 1837-88, £100; 1889-89, £2lB 8b 101; 1889-90, £264 18b Hd; 1890-91, £742 4s 41 Mr Evans; The question arleet how it was possible that these sums should have been abstracted and not discovered by the

auditor. „„ The Chairman: That is a more difficult question to answer. Mr Evans: It seems to me there is no use mincing the matter—the auditors have certified to the accounts year by year, and now we have it coming like a thunderclap that there is a deficiency of £I3QO or £l4OO, and yet the thing ought to have been discovered the first year of the deficiencies. The Chairman said he could simply read the certificates declaring the accounts to be correct. In reply to Mr Mann, the Chairman said the quarterly audits provided for by the rules had not been parried out, as it had been decided that half-yearly was sufficient and would save expense. Quarterly audita would have made no difference in this case. Mr Mann : Have the auditors not Riven some reason why they gave it as a true account ?- -They admit they did not disqqve* the) disnepancies, and express their reqret qi the loss. Mr Maynard: They could not hive gone through the accounts, or they would have seen the defalcations. The Chairman said the auditors explained that Piesse used to lay before them a statement of the amount of fixed deposits, and these were compared with the books and found to be correct, but they had not made comparisons with the butts of the deposits—they had not seen these deposit* for e long time,. until he (the Chairman) brought them out a little over a week ago, Piesse had made out and given the auditor* this statement each year, and the book was produced for the first time when the discrepancies were discovered, Mr Maynard: Then the audit was made by Mr Presse himself—not the auditors, (Laughter.) The Chairman! I would hardly say that, Mr Maynard : It appears to be so, if they never saw the butts, and just took his word. Mr Morgan : He was in the habit of signing the receipts himself without the directors ?—That is so. Mr Morgm: If he had that permission there rnighi be 'a thousand audita and UC auditor would discover it, Mr Menu: Are we to understand the directors are dissatisfied that the accounts are not properly audited, or do you think • they have been ? The Chairman : In answer to that I can only lay the etatement before you—w 4 are very dissatisfied with the whole business! There is not much satisfaction in It for sojfone, least of all tq the aqdltotj. Mr Mann i That is scarcely the question--do you think the auditors have done their duty? If they had these documents would this deficiency have been possible ? The Chairman : If the butts of this book had been audited every half year, it must have been found out.

Mr Evans asked if they were to understand that these books had never been brought to the cognisance of the auditors. The Chairman ssi<] that for a year or two the books had been' checked, and not that, Mr Evans: Then the most Important books of the Society, in which there should be a record of the largest sums of money, the fixed deposits, have not been before the notice of the auditors in the previous years That is a fact. And wire these gentlemen the same auditors ae in the previous yean in which theee defalcations occur ?—Yes. Mr Evans : It is most inexplicable that the directors did not have a list of all theso books, and have handed them to the auditors. Mr Butt thought the blame could scarcely be taken off the auditors and thrown on the dlrootors. The system of fraud wee ths easiest one to do without detectlop, and in nearly even- instance of fraud thia was the first method, where there were fixed deposits and a receipt given, afi4 nothing further heard of the money till the deposit was matured. If the auditors did not see the book they could not plead Ignorance of it, because having seen a state, ment of the deposit account they must have known there were deposits, and if so that there must have been a book,—and any book of the kind he had ever seen had butts. There was no blinking the question that the auditors bad shown some laxnsaa. Mr Maynard was quite right—the endit seemed to have been Conducted by Piesse. Mr T. Morgan thought the Chairman'* reply had led to a misunderstanding by Mr Evqns. It had first been stated that tfie buttt b«d been checked once or twice, afifi 44aaa«t;auti~lhMM'jrt then the praom.- :;; the auditors must have known ol it.

The Chairman eaid the book might then have been before other auditors. So far as he knew the present auditors had not seen the book until the deficiency was discovered—the plain fact was that the statement of deposits prepared by Piesse had been taken as being correct, and the butts in the deposit book had not been touched at all. Mr Morgan : The last time I think it was checked was in 1885 or 1886. Mr Evans wished it understood that he was not blaming the auditors, but it was dearly the duty of the directors to have placed all books before them, and then it was for them to examine all these books irrespective of directors, secretary, or anyone else. In reply to Mr Greenwood the Chairman said the deposits taken had been replaced year by year from capital, until so much had been taken that the supply fell short. In re-depositing money it should have been shown in the cash book.

Mr Evans thought the most equitable way to meet the deficiency would be to write it off the capital at once, and not make new shareholders pay too. Mrs Fraser: As a shareholder I would object to writing the loss off the shares. The Chairman took it that those who had been in the Society the longest would lose the greater proportion—the small fraction new shareholders would have to pay was not worth speaking of. It would be mainly paid by the large shareholders who bad been in for years past, during which time they had had fairly good interest. The chief anxiety in the minds of the directors was as to how to deal with the permanent shareholders, who were the greatest sufferers, and had been looking forward to obtaining this interest. These were mainly lady shareholders, and it was sad to think that no interest could be given them this year and probably not much next year. If any shareholder could suggest a means ot overcoming this difficulty they would be glad to hear it. Last year £460 5s had been paid away as interest on these shares. When the loss appeared to be only £3lO they felt they could devise a satisfactory scheme, but as the defalcations were ascertained to be so large, nothing could be attempted. Mr F. T. Morgan said it was absurd to talk of writing off capital—they simply owed the money to themselves—the liability to the public was more than provided for. Mr Butt agreed with thia view, and the report was adopted. Mr Butt, on the principle that a burnt child dislikes the fire, proposed the re-elec-tion of Messrs Townley and O’Meara as directors.—Mr Maynard seconded. Mr Friar proposed, and Mr Finn seconded, Mr Maynard. The three gentlemen named were unanimously elected. Mrs Fraser nominated, and Mrs Mitchell seconded, Mr Warren as auditor, Mr Evans suggested that the remuneration be fixed first, He did not think the sum paid sufficient for the responsible duties, and be proposed that it be eight guineas each per annum, the books to be audited quarterly. Mr J. W. Johnson did nottbink any accumulation of audits would protect them from robbery, while the expense would be great. They would have to depend on the vigilance of the directors, which he believed they could rely on in the future. It was decided to take the election first, and then Mr Millington proposed, and Mr Peterson seconded, Mr McKay. Mr Warren was elected.

The appointment of Secretary was then dealt with. The Chairman said that only subscribing shareholders were entitled to vote. The voting was by ballot. The applicants were:—D. Morioe, H. M. Porter, John Coleman, W, Ratcliffe, J. 0. Bernard, E Parnell, Cecil F. Lewis, R. J. Shanks (Kaiteratahl),. D. A. ChinneryRrown. G. H. Wilson. The Chairman proposed each applicant, five of whom were seconded—Mr Porter by Mr F. T. Morgan, Mr Coleman by Mr Friar, Mr Ratcliffe by Mr Petersen, Mr Lewis by Mr Rosie, and Mr Brown by Mr McLean.

Mr Porter was elected, with 24 voters representing 131 votes. Mr Coleman came next with 18 voters, representing 94 votes. Mr Butt moved that the premium for file bond be deducted from the salary. Mr Johnson seconded, saying that this wonld be in accordance with the advertisement, Mr Bushnell proposed, and Mr F. T. Morgan seconded, that half the amount be deducted from the salary. After some disonesion the motion was carried. Mr Evans voted that the auditors’ fee be eight guineas each per annum, the books to bp audited quarterly, The motion was lost. On the proposition of Mr Morgan, and seconded by Mr Maynard, it was resolved that the fee be six guineas, with quarterly audits. Mr Butt suggested that the directors be empowered in exceptional cases !to _ allow holders of shares to get a loan on their permanent shares at 5 per cent, the amount to be spread over three years, the loan not to exceed 9 per cent of share, The Chairman said it was simply borrowing their own money at a lower rate of interest.

Mr Evans seconded the motion, which was carried unanimously, (The Chairman then made reference to the letter containing scrip, which had been received from Piesse, Mr Collins, through whom the letter had come, had written an explanation to the effect that be had been imposed upon in the matter. He bad another parcel which Piesse had left him, and which Piesse stated contained £3O, but he would retain possession of it, leaving it sealed, until he decided as to some proper authority to whom it should be handed, fiiere ueitog mare creditors than the Building Several of those present indulged in some very plain talk on thia subject. It was considered that Mr Collins might possibly have by mistake opened the letter addressed to the Chairman, but some of the shareholders used language that canid not (re understood in reference to Mr oollins getting a third person to re-address the the letter, and not only that, but detaining it for a week and then getting it posted on the Friday, when it was supposed it would have come by that afternoon’s Auckland mail. It was glao staged that fiie’r was no telling butthat other documents might have been also despatched and not sept on to the Chairman, and It was pointed out that it was by accident it had been ascertained that Mr Collins had sent the letter in Giahome. It was unanimously decided to leave the whole matter to the directors to deal with, whether by consultation with the poiice. or'as they thought fit, ' The directors were also authorised to take what steps they thought proper in the matter of the bond, about which it appeared that legal action might have to be taken. ' ghatehoiderp expressed themselves quite jofigdint a* to the future of the Society, and a vote of confidence was accorded to the directors, and a vote of thanks to Mr Shelton for the assistance he had kindly rendered the Society. As it was nearly eleven o’clock—the meeting having opened at seven —it was decided the amending of the rules to a Special meeting at some future time.

7fie following political news was crowded ent ot our last issue '—There appears to be no prospect of the Civil Service BUI passing this session, owing to ths fact that the suggestions made by the Government officers are so nnmerous that they cannot be taken into consideration this session. The Post and Telegraph Classification Bill, however, has |>ean very favorably received, both inside and outside of tbs'- Rouse, -and is not likely tp encounter any serious opposition. Strenuous pbnejition will ha ebownj to several ‘ Bills iiitrpducgd by the Government, not only from tbe Opposition side at the House, but also on the part of their own sup pcriets, The report of the Commutes on ths naval and military servants* claims was agreed to this morning. It is in favor Of setting up a Royal Commission to consider every claim, embracing those rejected by the Crown Landa Oommlssieners In the rerespective districts, and any other profferred settlements. These claims will involve to the country a cost of at least £120,000, but there is a coaMßsus ot opinion of the House that they must be settled in some way, and the Committee entertain the hope that if their rsijjrt i| given effect to. finality will at length pe atieinea. Tbs Committee wil) report that gid elaiSM- favorably reported Upou by the should be given effect to by