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CASE-BOOK OF SIR PATRICK HASTINGS
CHAPTER 11
The Royal Mail Steam Packet
ORD
Company's
Royal Mall Steam Packet Company and Mr H. J. Morland was a partner in one of the largest and
GO
усать, μετουσ
periods the
to make up losses.
He pointed out, with
Balance-sheet
most respected firms of ac- siderable force, that unless this was at once clear that the secution's witnessco
Company.
one
achievement, pank, which would be unfair Morland were well recognised ing in the police court.
and the Investing in
It was alleged that they had wilfully deceived the share holders by representing that The company was prosperous when they knew it was on the
verge of ruin.
The trouble arosc balance shoots for 1920 and 1927.
circles, and accountancy
sumclent to give notice
in which
were of the manner truding loss
Relied on them into in apparent proft.
the
Frank replies
Lord
had been turned Infinite labour was expended
Moreover he maintained that
tice
rolied on them to see that the company's balance sheets were properly prepared,
From the outset st was ap- parent that the main burden of this part of the trial would fall on Mr Stuart Bevan, K.C.. over the and me, who were representing the years Mr Morland, and we looked to
him for more thorough elucida In 1926 the company asked tion of the facts. the Treasury to extend the Although Mr Morland period during which certain re- doubt an admirable accountant, payments of Joans
were due as a client he was a little try- from the company to the Trea-
Ing. Being completely con- sury.
scious of his own integrity, ho treated all the allegations with supreme contempt, and ab- solutely declined to recognise the danger in which he stood.
for
I did not envy the Attorney- General his task of trying to establish
criminal dishonesty against Mr Morland,
As I called Mr Morland into
any
in
11
the first He
Jury retires
1
-
"a mosty, stuck-up, ten-ahuling-a-lb. bird,"
London Trpreet_Berntza.
NERO HAUNTS
HIM
man named Mervyn LeRoy, one of the top producers of Hollywood.
મ
the epic to.
from them that there had bean KLYSANT was it was accessary, from a bus the proflt had been arrived at of his ruling, none of the coun-
#cl present could take any a transfer from an excess profits the chairman of the ness point of view, to accumu- only by using reserves.
late largo reserves in Kr03 Lord Kylsant had nothing further part in the hearing, and duty or other reserves, which
be small or large?- that
to do with the in- we all left the court in a pro- might in whatever
Certainly. no com- cession. company serted words, mado leaner
final on them, and the
I immediately communicated That was all we could have should be able to draw on them ment
balance sheet,
published, with the Attorney-General and hoped. Mr Bevan's relief war.
for my quite as great as mine. permission Mr Morland's addi- obtained con- contained
solfeltors to interview the pros when I sat down he whispered:
to obtain "That has done them!" course was adopted an un- countants in the world.
After that evidence, how was butored body of shareholders, whole
turn on the statement of their views, defence must Both were pillars of respec faced with a sudden drop
or which the Lord Mayor's action it possible to contend that Mr question of whether the tability. Lord Kylsant's career
their anaual profits, might
used by Mr had prevented us from obtain- Morland had deliberately pre- had been
the words of personal
not
pared that phrase to hide an triumph and
uncary conscienco? culminating in his elevation to to them the peerage in 1923. Mr Mor public. land was a man whose private and publie life had earned the respect of all who know him.
Yot, on July 20. 1931, they
Plender, perhaps the stood side by side in the dock
by the solicitors instructing me dozen of accountants, was the the witness-box anything less
we really wanted to fraudulent Court at the Central Criminal
appearance and. before the pre- see. He, also, had
verined would be impossible to imagine, By R.M. McColl charged with publishing false his company had employed the to obtain instances of the prac witness and fraudulent balance-sheets best possible Arm of accoun- liminary police
court hearing, balance sheets containing words His demeanour was precisely
similar to those as it had been on substantially of the Royal Mall Steam Packet tants as auditors, and that he had been provided with, amplained of. In the present occasion I had seen him.
PARIS. pile
balance
all of
sheels,
accordingly a care treated more or less to the same effect, case, and
allegation with TN a luxury suite of the- questionnaire which to cross-examine fully prepared with
indifference and supreme
I George V. Hotel I talked the distinguished accountants was submitted to bim.
garded his accusers almost with to a weury blue-eyed little The replies were absolutely good-natured contempt. who would be witnesses for the
trank and, in our opinion, prosecution.
The next great difficulty we entirely satisfactory. It was on faced was whether or not to the material he supplied that discluse our main defence at our defence was mainly based.
The trial took place on July Although cross-examined the preliminary hearing. We
He has just finished eight decided to risk the prosecution 20, 1931, at the Central Criminal some length, he declined to months' work in Rome on hearing our defence, and sub- Court, before Mr Justice budge one inch and, when asked sequent events proved we were wright and a jury.
"Quo Vadis," about his interest in the com- well advised to do so.
Lord Plender was the first pany, said he had no interest end all epics. witness and his evidence for financially, or otherwise, except
cannot relax any the prosecution
merely to the extent of his auditor's
more." LeRoy complained' examination that everything As this was sharell with all ns he sipped some Ice- depended.
the many partners in his firm, water. The preliminary hearing took
I do not remember ever ap- it resulted in a benefit to him Guildhall before the
cross-examination of only £20. place at
the best im- proaching a Lord Mayor, and
anxiety, and, as At last the jury retired, and portant witness was 3ir Witam with more
the questions and answers were absent some hours, well-
formed the basis of the whole The period of waiting while a However, we eventually dis- McLintock, head of the
firm of accountants covered that the accounts had known
defence, I give them in full; jury is considering its verdict is Is it quite a usual and a one I have always hated. In this been propared in the office of bearing his name.
In front of me were piles of the Royal Mail and the balance
sheets, some audited proper thing for companies to case I hated it more than ever, sheet subenitted to Mr Morland balance
large sums against I was so determined that my set aside Anal by Sir William himself, and it their liability for excess profits clients should be acquitted, and for hts
and certificate
was fairly obvious that the
duty and income tax?--Yes. approval.
the jury was out so long. WAS Jikely Mr Morland knew that re- cross-examination
If they were not required All the devoted band of skil- perves had been used to in- to be prolonged.
for the next year, could they ful lawyers who had worked so crease the profits for
But, as soon as I asked my DORTHC
our properly be brought back into hall and helped me so much. ог question based years before 1920, and said that first
profts for subsequent years? shared my anxiety. Nerves the use was quite usual and main defence, that the actual That would be quite
A began to tray and tempers be "including adjustruent
he said. Some words
came short. Mr Morland alone friends took me to a famous of taxation revenues" were the
maintained his attitude of con-Paris night spot. As soon as we used by words customarily
fidence, almost amounting to in- got inside in simallar
thought I was back wise acountants circumstances. the magistrate
difference. In fact, it became again in the Circus Maximus. I ́
nim tired of crowds and people. adopted what was, to my mind,
intolerable, and when we dis- covered that his exasperating So I bolted out again. an extraordinary and
unprece
would they confidence extended to his homo, dented course: he refused to
people complete not be disclosed la a profit the fecitation became more than strangers-come up to me and allow any of the questions as
and loss account AS having those instructing me could bear, talk about Quo Vadis. They been brought into credit?-
While the jury was still out stop me in the street and start- profit, Mr Moriand considered Air Phene Neal was
Sometimes no reference 13
a telephone call from Mr Mor-asking me whether all the statis that the time had arrived when Lord Mayor. He was also
generally speaking, innd's home was put through ties are really true. solicitor, and perhaps a little-made but,
it will be found that a trans-
get indigestion from ome indication of that fact
his own
to my solicitor.
much?" should be given to the share-conscious of holders.
tance, but how in the world fer has been indicated.
Do I understand you to mean So, when the draft balance he took on himself to reject,
a preliminary Inquiry, sheet was submitted to
The Treasury decided to hold an inquiry into the company's financial affairs, and appointed an accountant to look into their books.
In addition, being a devoutly religious man, he was convinced that divine interference would
Running at loss decide the issue,
The
balance sheet showed that the company earned a trading prodit of £499,000 in 1920, but the Goverment in quiry discovered that in fact the company had been running et a loss.
The alloged proflt was shown by crediting the accounts with £750,000 drawn out of tax re- serve, and that instead trading profit of £439,000, the proper. company had really incurred a loss of about £300,000.
of a
out the Treasury In consequence maintained that the balance shoet was fraudulent, and de elded to institute criminal pro- coodings against Lord Kylsant,
Using reserves
But in 1926, as it was pro- posed to use so lange a sum as £750,000 to change an admitted
SPAL
Left the court formal. It was on his cross- fco,
as chairman, and Mr Morland, trading loss into a declared being irrelevant. as auditor.
At the outset the **se ap- peared difficult, and it was necessary to make careful in quiries, not only into the gen- eral practice of preparing balance sheets, but also into the precise figures in this particular
case
kim, at
then
a
impor
regular credit.
No exception
In many cases,
that if the secret or inner re- He was wrong
Mr Morland wrote In the cross-examination obviously "Including adjustment based on the considered opinion Lord Kylsant's view was that words:
of a large number of eminent great fluctuations in the carn of taxation reserves."
of shipping inga
companies He did this entirely on
his counsel, has always passed my said that comprehension. were only to be expected, and own initiative, and
words were the опея His
201 ruling necessitated gave no indication to the true those
usually financial position.
employed by Recoun- immediate decision. I saw at defence might to share once that the His experience had taught tants to give notice him that periods of prosperity holders and anybody concerned benefit extraordinarily from his declared profit that action. I rose, said that, in view occurred in regular cycles, and with the
WHAT THEY CALL PEACE
By JAMES DOW
the central
Behind this peace, there is no expense spared. Note how eager Poland was to offer a ship and Czechoslovakia a feet of planes to take the Shefeld worshippers to Warsaw,
Someone very
powerful and
"The worth, as we
only choice say, keeping in
behind this world (they bet) is with, must be
Someone business. Peace resolute and reckless
was that war was inevitable..
server are used for that purpose, they might probably come 3 time when an auditor would say dressed him: "Could you kindly A sweet and gentle voice ad- that some indication should bo given to the shareholders that tell me if Mr Morland is likely those transfers are being mate? to be late for dinner?"
It was the last straw. --Yes,
"Yes, madam," he repiled, "I Are there not many cases in
should think about which a reserve of this kind is months late."
the credit of the made into year's profit and loss and no mention is made that reserves
arg such cases,
But he was wrong.
twelve
.
Those horses.....
"Oh, those horses. Oh, those thousands of people.
"There
extras,
were 18,000 and 130 a day used to faint on an average in Rome's summer heat. Oh, those costumes. the worry of it all."
Oh,
He stretched out on the sofa · and stared at the ceiling. He camelhair wore
dressing- own with his initials boldly gown, woyen over the heart..
"Listen.
Old Nero
eating so
selling papers on a San Fran-
LeRoy, who started as a boy
clsco street corner-ho nover
string of 12 horses in Hollywood. went to school-owns a
An expert
New
"I am sailing back to York. Everyone keeps telling me there will be a whole lot of people I know on the liner. And
what they are-
The jury returned a verdict you can guess of Not Guilty, and both Mr going to start talking about," he have been called upon?-There Morland and Lord Kylsant said.
Is it done by Arms of the very highest reputo?--Yea
were acquitted,
Unhappily for Lord Kylsant, that was not the end, Against it is your view that no excep him alone there was a further tion could be taken to that prac- charge and be was
convicted tice?-As u principle, no excep- and sentenced to a term of im- tion could be taken.
prisonment.
Aro
Relief
there common
phrases
Former M.P. Mr Konnl governments are afraid that if THERE is no doubt about
ank
Might there come a time when of the they fight the Soviet Union, the Zlacus, turfed it, we are getting peace Labour Party for his part in war will bo turned into a civil the auditor would say: "Now 17 stuffed down our gullets previous Peuce Congresses, war by the Communists and the these reserves are to be used these days. Yet are we must know
this Partisans of Peace in their own again come indication must be more about not making a mistake by than we do. Mr Zilliacts has countries."
given to the shareholders that account is continuing to think that explained why he recently re-
the Peace
That is why the power behind the profit and loss signed from
Com-
from by transfers this is merely a matter of mittees. He says
doesn't augmcated peaco compaign (in a letter the
the
The the excess profits duty reservo"?- consider
expense. cranks and well-meaning if published recently):
purpose la more practical than Yes. befuddled idealists?
you talked to these the vain hope of persunding Partisans of Peace in private, Britain to join the Soviet blee. tacy argued that issue in the (peace) campaign leading French Communists, M. It was given by one of the
a declara- Waldeck-Rochet, in and that one had to choose on tion that has been reprinted in used by auditors to indicate cuch peace which side one stood.
Soviet
by the papers, and
augmentations in one or other French paper. L'Aube without of these forms: "Excess profits denials by Waldeck-Rochet or duly
After adjustment." the the party.
adjustment of reserves for ex- Taxation "We can be certain," he said, cess profits duty."
"Adjustment of ex- client and political vassal of "that Д year of guaranteed adjustment." pense as the Power who per- the US, or of forming part of peace is a year utilised to the taxation reserve"?—Yes,
Are all these phrases comTM 'pence with the suaded the Chinese to send tho
Soviet utmost by the Soviet Union to Union at its head."
reinforce its army. It is tomonly used by auditors to in- troops into Korea.
profit That is Mr Zillacus's final permit this development of the dicate transfers to the
account from taxation reserva? actively continuo our-That is so. in his CHS with satlefaction
own peace campaign. Peace for Pro- must
And those transfers, accort. newspaper that Chinese troops fessor Bernal's Britain and for propaganda in favour of peace. had "liquidated" 4,000 of the Professor Joliot-Curie's France "Do you not see that this is ing to the facts of any particular
means. nothing more or less the best means to meagre Tibetan peasant soldiers,
ensure the case, might be either small or than
Large?-Yea. becoming part of the destruction of our enemies?" The same
That being so, if you saw such powerful
Soviet bloc peace-
This is what they call peace lover who pulls the strings to But the most sinister words This is the kind of peace they words as those which
in a profit and lo keep the laughter going in in his letter describe the parti. want to bring us, to stud down described Malay and Indo-China,
sans belief that the capitalist our gullets with a bludgeon! account, would you understand
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Snip
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The Barmaid And The Pearls
Then the little man-50 and greying grinned boyishly.
well, I have become
pert
En ex--
One night in the Colosseum a gulde started to show him what
he described an Nero's seat
LeRoy told him "Listen," "This Colosseum was built ···
years after Nero died." *-.
Sald LeRoy: "He just stood there open-mouthed "
London Express Service)
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