THE HONG KONG DAILY PRESS, TUESDAY, JANUARY 21, 1930.
THE MEANING OF "ACTUAL CASH."
FIRST STAGE OF TRIAL OF MR. NOEL INSTONE BREWER.
VIGOROUS REPUDIATION OF ALLEGATIONS BY PROSECUTION.
1.
42
Defending himself against a charge of perjury in connection with a statutory report filed · by him in 1997, concerning the affairs of the Instone Banking, Corporation, Mr. Noel Instone Brewer yesterday declared to the jury that the books of the bank were regularly and clearly kept, that there had never been any attempt to conceal anything, and that the directors could have had all the information they desired since they had full access to the books.
Mr. S. H. Ross, chartered accountant, was one of the principal witnesses called. and in the course of his evidency declared that he could not agree that the cash book was properly kept, as items which should not have appeared in that book were entered there.
ཐ
REPORT OF YESTERDAY'S
port.
PROCEEDINGS.
Before Mr. Justice Wood at the How Shares Were Acquired. Supreme Court yesterday, the |
Mr. Fitzroy then stated that trial opened of Mr. Noel Inatone people applying for shares only paid Brower, why is charged with 15 or 10 per cent. of the total value various offences in connection with of the shares, and signed a form the affairs of the Instone Banking for the remaining amount, which showed interest due at 8 per cent. Corporation. There are in all three The amount of shares actually paid charges against Mr. Brewer, and at for in cash was nowhere near the the outset Mr. Justice Wood in figure stated in the statutory re-. dicated that he would like to try
"Mr. Brower was the manager of them separately. To this course the Company, was president of the Mfr.-H. Somerset Fitzroy (for the Company, and was the life and the Crown) agreed, but Mr. Brewer soul of the Company," said Mr. Fitzroy. He knew everything (who is conducting his own de
that was going on when he filed lence) formally requested that the these returns, and be knew perfect- well that no cash whatever to indictments be taken together en
that amount was ever received. the ground that the evidence was
The Crown ask you (the jury) to similar, and that he might be pre- say that the statement is false in judiced by the course suggested. į a material particular, and is there-
fore false." He asked his Lordship to make; formal note of his request.
That the case is arousing a great deal of public interest, particularly
Mr. C. D. Melbourne and Mr. E. L. Agassiz, Registrar of Com- panies and Official Receiver resper- tively, produced the statutory re-
Witness said that that was nil, apart from cross-entries.
Speaking of the forms of applica tion for shares, witness in answer to Mr. Fitzroy stated that he had not been able to trace all the applica tion forms.
Mr. Fitzroy: I think the book shows that entries for loans and calls made in advance of capital are on the same date?
Witness: That is so.
These lonna, which you have told us amounted to nearly seven and hall lakhs, do they include $432,000 from Mrs. Brewer-Yes.
That again was a cross-entry Yes.
I
Mr. Brewer asked witness to refer to another name which was men- tioned, and it was found that this man also owed nothing to the bank.,
Mr. Brewer: When you received these forms they were kept in the safe-deposit vcult 48 valuable documents 1-Yes.
And you did not bother to make a list of what you received from us!
NO.
Loans Reduced,
.
On the statutory report these loans are given at the figure of $761,000. At the time of the balance-sheet (a year later) they are reduced to 8348,630 —Yes,
Mr. Justice Wood: That means to say that cash payments for the difference had been received-No, entries showing repayments have been made. The books show that these loans have been paid off in some way or other.
VISITS AND DEPARTURES.
MR. AND MRS. MOSS ·
LEAVING CANTON.
GENERAL CHEN MING SHU'S VISIT TO HONG KONG,
[FROM OUR OWN CORRESPONDENT,]
CANTON, Jan. 20. General Chen Ming Shu, Chair- man of the Civil Administration of Kwangtung, and other high officials are leaving for Hong Kong on Thursday. They will take the op- portunity to pay a visit to H.E. Mr. Brewer And I put it to Sir Cecil Clementi, K.C.M.G., the you that since that day and to-day further cash payments have been
Governor of Hong Kong, and General Chen will offer congratula- made, reducing these loans to a further point 7-I should say you tions to Sir Cecil upon his promo- ed the books after 1928, are right, but I have not investigation and bid him inrewell. Whether
!
Would you say that these loans had been treated consistently in the books as if they were debts due to the company Yes.
Can you say that the interest and payments due on these loans was duly and properly entered up on the books of the Company 1-I don't think I can agree on the method you employ as regards interest.
Have you found any loans on which interest has not been charg, 1-ed-No, I have not, but I may add I have not concerned myself with the matter of interest in investigat ing these books.
Do you know, as a matter of book-keeping interest,, that these loans have been loaned out 1-Yes,
as far as I know,
Mr. Brewer's Questions, Mr. Brewer (cross-examining): When you said that you had not got. all of the loan application forms, do you suggest that there are any forios missing of loans which re- main unpaid Were you placed in possession of all applications for have been extinguished 7-Yes.
And in some cases these loans loans that remained unpaid -
Have you reason to believe that dan't know. I can't say.
You have checked the loans re- I cannot accept the cash book of the entries were false or fictitious?
such unpaid loans with the docu-record of the bank's transactions. inents No. I have not checked
or not General Chen's visit to Hong Kong this Thursday will be of a formal or of a private nature will be decided to-day."
General Chen Ming Shu will be accompanied by Mr. G. S. Moss, acting British Consul-General in Canton, and among the ladies making the trip will be Mrs. Mcss and Mrs. Chen Ming Shu..
A POPULAR CONSUL.
Mr. Moss and his family are leav ing Canton for England on six months' furlough next month. Elis place in Carton will be taken by Mr. Herbert Phillips, C.M.G., O.RE. Mr. Phillips has already
in Hong Kong' on January 31, by left England and is due to arrive
two or three days in Hong Kong, and then proceed to Canton to relieve Mr. Moss. Mr. Phillips was formerly Lospector-General of the British Consulates in the Far East and is a very, senior member of the British Consular Service in China.
in legal circles, is evidenced by the port concerned in the case, the training unpaid, have you checked the Company as being a proper the s.s.. Macedonia. He will stay
]
official report of the public ex-
fact that during yesterday's sitting amination of Mr. Brewer at the a number of barristers and solicitors Supreme Court, and various books were noticed in Court from time to of the Inston Banking Corporation. time" listening to the proceedings.
A Long Reading. Among those seen werd Mr. F. C. His Lordship (to Mr. Brewer): Jenkin, Mr. C. G. Alabaster, Mr. About the publie examination, how H. 0. Sheldon, Mr. Ghald you like that to go before the Tinson, Mr. D; J. Lewis, Mr. F.
jury't Nash, Mr. O. E. C. Marton, Mr. F. H. Loseby, Mr. P. M. Hodgson Mr. H. L. Denays and, Mr. H. C Lee.
The First Charge.
The charge on which Mr. Brewer was tried yesterday is as follows:
"For that you, Noel Instone Brewer, on the fath day of August, 1927, in a statutory report made and filed by you on the said date (which report you were authorised to make by the provisions of the Companies Ordinance of 1911), and on behalf of the Instone Banking Corporation, Ltd., did knowingly and wilfully make (otherwise than on oath) a statement false in a material particular, to wit, that the total amount of the cash received by the said Instone Banking Cor- poration, Ltd., in respect of abares issued wholly for cash, was 2876,750 this being contrary to section 7 of the Perjury Ordinance, No. 21 of 1922.**
Mr. Brewer: I would prefer it intact, my Lord.
His Lordship: Certainly. Mr. Fitzroy Is it going to be read to the jury by the Clerk of the Court!
His Lordship: That would be so unusual a procedure.
Mr. Fitzroy: I can read it to the jury
The Assistant Attorney-General then proceeded to read the report. This was at 11.35 am and half an hour later the Court inquired if Mr. Brewer wanted the whole docu- ment read, or whether he only re- quired the relevant parts read to the jury. Mr. Justice Wood pointed out that he was entirely in Mr. Brewer's hands.
the loans unpaid with the applica-
tion form's.
Then when you say that you are dot in receipt of all the loan appli cations, rot do not mean it, be- cause you do not know whether you have got all?-What I meant was that I have not seen applications in respect of all the loan
When you took over the special managership you received all the loan application forms-Yes.
Did you not check them over with the accounts of the bank to see that all were present ?—I had a list of persons to whom loans had been made.
Well, if there is any person who owed the firm fnoney and whose name did not appear there, you would have made a note of it? Not necessarily.
Can you tell me the name of any one person who owed the Company money and whose tame does not appear on that list I have not the list before me now.
As special manager, is it not your The latter indicated that he business to see that the documents would be satisfied with relevant
were in order when they were hand- extracts, and Mr. Fitzroy then pro-ed over-Yes, but I did not check ceeded to read such extracts, which them at the time. lasted another hour.
Have you since found names on the list for,which there is no appli-
cation form?
A Dubious, Point. Mr. Justice Wood (to witness): Assuming the books to be correct, there should be some fortno missing. That is your point, Mr. Brewer!
Mr. Brewer: That is just the opposite of what I make it. (Laugh witness has said that there are people in the books who owe the Company money, but whose names do not appear in the list
What Cash Really Means. Have you any reason except pre- judice for not accepting our cash book 7-Items have gone to the cash book which to my mind are not cash transactions.
Are you referring to the items which are in the statutory balance sheet or to any other items —Yes, to the report. I find that the com- pradore paid $45,000 in cash. That is hard to believe.
I see, you find it hard to believe. Now, I ask you, is there anything in the cash book which is anta- gonistic to the explanation given by me at the public examination 7-No, nething.
The coming departure of Mr. and Ms. Moss for England will be greally regretted both in local offi- cal circles and among all foreign nationale. Mr. Moss has done splendid work and is greatly ad mired by all the Chinese, from The question of what is cash has General Chen Ming Shu downward. been brought up once or twice. Ile understands Chinese people and has done much to promote Sino- am going to put it to you that the definition cash is
British friendship. air. Moss hoa coin, or the position to command coins taken a keen interest in the local Y.31.C.A. work and was a promin. don't think I am in a position to
ent figure in its last Snancial and define cash.
Canton's membership campaign. appreciation of Mr. Moss' work here will be shown in a series of parties and banquets which are being given in his honour. To- right Mr. and Mrs. Mces will be the guests of honour at a banquet given by General Chen Ming Shu The Mayor of Canton, Lid Wan Koi, the Police Commissioner Au Yang, and the Centon Y.M.C.A. have also invited him to farewell dinners in the course of the .next week or two.
In your opinion, is that a fair definition 1
Mr. Justice Wood: It is a matter for the jury,
In re-examination by Mr. Fitzroy, witness said that the reduction from $750,000 to $300,000 odd in the loans account was mainly due to 8-432,000 reduced from Mrs. Brewer's ac
count.
CBSC
MR. BREWER'S DEFENCE.
The
for the prosecution closed" at the conclusion of Mr. Ross's evidence, and Mr. Brewer
submitted that there was no case to go before the jury.
Mr. Justice Wood thought it was
essentially one for the jury, adding that perhaps Mr. Brewer knew that as well as his Lordship.
Mr. Brewer: The point is, in every one of these cases the people who had sent applications were genuine people, and as such were inble to execution
A Slight Misunderstanding. Case for the Crown..
In the course of his reading, Mr. Outlining the case for the Crown, Fitzroy was interrupted by Mr.. Mr. Fitzroy sail that according to Justice Wood with the worls:- the laws of the Colony it was neces~
Reat, rest." His Lordship was 21ry to hold a statutory meeting drawing attention to the omission within a certain period after a of the word "rest" from a se- company commenced business. A tence, but Mr. Fitzroy misunder- report which contained certain standing stopped altogether. Mr. particulars had to he made, and Justice Wood read the sentence inter.) My sole point is this. The a.copy filed with the Registrar of question, but still Mr. Fitzroy did Companies. One of the variety of not proceed. When told to do so, matters which this report must be looked surprised and observed: contain was the amount of cash "I beg your Lordship's pardons received by a company in respect I thought you were giving me Mr. Justice, Wood: Your point is of shares issued wholly for cash,
rest!"
that you have supplied all the ap Mr. S. H. Ross, chartered acplications. Mr. Rose says that if In the case before the Court
the list of borrowers is correct, then- such a report was filed on August countant, was called as a witness
the afternoon.
he has not all the applications. 16, 1027, and it showed that the Instone Bank had received, in res-
Mr. Ross: I should like to point pect of shares issued for cash, the
out that some the loans might suny of 8876,750 The Crown's con-
have been repaid. tention was that the statement was said he had examined the books of missed altogether. My point is
Mr. Brewer: The point is being fore one for the jury. faise and antrue, and that the ac- the bank, and found that the that every person who had a loan cused knew, when the statement amount of cash received in respect was made, that it was false and of shares issued for cash did not duly signed a proper raper, and agree with the amount appearing that all the papers belonging to in the statutory report under that those who were still owing were heading. It seemed that only handed over. 848,050 was actual cash
untrue.
a
in
Mr.
What is Actual Cash ''? Answering questions by Fitzroy and the Judge, Mr. Ross
Some epeculation is going on as to the possibility of Sir Cecil Clementi making another visit to Canton before he leaves for Siaga- pora and His Excelleney will cer tainly have a very cordial welcome if he makes the trip.
THE REV: F. C. YOUNG..
Mr. Justice Wood: It is a point IMPROVEMENT MAINTAINED. for the jury.
Mr. Brewer: It is a point of facta.
On enquiry at the Matilda Hos. Mr. Justice Wood: And there- pital at a late hour last night we were informed that the condition said that the case was one of per-
Addressing the jury, Mr. Brewer of the Rev. F. C. Young remained much the came. While definite jury, and it was not suficient to
progress could not be reported the prove that a atatement was false, recent improvement in" his condi Mr. Fitzroy went on to say that
but that such statement was made tion had been maintained. the total amount of eash received
knowingly and with mens ren, Mr. Ross: I have handed them that was to any, with evil intent. by the Instone Bank up to the end of July was only $59,340.58.
Mr. Justice Wood: What do you think there were one or two missment challenged was in fact true. all to the Officin! Receiver, but I The defence was that the state- Continuing, Mr. Fitzroy stated; mean by "actual" cash?
Witness: It appears to be eithering. that at the commencement of the Company's operations there was cash or cheque
an agreement between Mr. Brewer Mr. Justice Wood: What you
really mean to say is that the major balance is not cash, not that the $48,850 is enah -Yea
The major
Alleged Missing Documents. Mr. Brewer then asked for the names of the persons whose forma were alleged to be missing. After referring to the books witness gave
and other members of the Con- pany that the former would assign to the Company a right to sell cer- 'tain bonds för. "$00,288.03. This portion purporting to be cash re the following names:-MessTB, Li amount appeared in the statutory ceived was in effect cross-entricsShiu Hung, Li Ping, Lui Ki Man, report, but soon after the Company made in the books. was formed it appeared that the Mr. Fitzroy You have examined Poon Yik Man, Kwong Ling Shi and
R. A. Starling. other members thought the agree the books, was the Company ever ment, was not worth so much, and in a position to make loans up to after letters had been exchanged. $750,000 1 Mr, Brewer offered to refand 885,000. This sum was transferred to Mrs. Brewer to be held by her to the order of the firm, and to be applied in whatever manner, was considered most advantageous to
Cash for Loans,
The loans should have been treated
BA cash, and the statement in the statutory report was true; had any nther statement been made it would have been untrue.
firm's existence, and any misrepre sentation in that report would con- vey the idea that the company was formed for an evil purpose." It may be assumed," said Mr. Brewer, "that the man who signed his name at the bottom of the report did so for a fraudulent purpose, and would not have done so for the purpose of making his company a by-word in this part of South China."
"It will be shown," continued
who paid money were genuine in dividuals and, in the main part, men of standing and in every case men of full age, entitled to enter into loans and liable to pay for the loans which they contracted."
Complete Consistency, Then there was a very much stronger point, which was the con- sistency which occurred throughout the books, which showed these Mr. Justice Wood: Those six loans to be cash transactions. Mr. Brewer, "that the persons ретворе had outstanding loans He had made the fullest possible which had no applications? Yes, explanation seven months ago in his Mr. Brewer: You are, quite sure public examination of what the Mr. Justice Wood modified the of that?-Yes. question, and asked if the Company
items were. The jury would have Well, take the shareholders' | evidence submitted to them that the ever had cash in hand to make lonas ledger and look up the name of books were kept in a regular and up to $750,000! Witness replied R. A. Starling. How mach is he clear manner.
Mr. Brewer then pointed out that that it never had so much cash in owing to the firm 1--The book does Evidence would be also brought | he had confidence in his directors, hand.
not show.
to show that the books were not so much so that he had permitted The net result of the correspond- Witness in answer to other ques Will you look at the loan ledger kept secretly, and that there had his wife to take shares worth up ence, said Mr. Fitzroy, was that tions stated that the cash received-He is not owing any money. never, been any attempt to conceal to $480,000 without any security Mrs. Brewer acquired 4,800 shares in Tune was 203,387. The cash in bfr. Justice Wood: The qucation anything; further, that the direc- from the directors except a letter of of the Bank, valued at $460,000 hand on June 1 was 80,330. The Mr. Brewer asks in, is there any tors had the fullest possible access indemnity signed by them," If Mr. against which there was an entry of amount received during July in cash person who owes money at the pre- to the books, and would know exact- Brewer could have sufficient trust. $432,000 advanced to Mra. Brewer was only $19.38.
sent time whose form you have notly what was in them,
in these directors na to allow his receiicopa
Conting off brower pointed wire to take inere Ruurde, nu could out that the statutory report was trant their loans. filed in the early stages of the The hearing will be continued this (Continued at foot of next column). Imorning at 10.30.
the firm.
in order that dire might take the – Begarding die sigaret for day shares fully paid-up. The case for His Lordship asked if that was the the Crown was that no such money total amount shown in the bank ever passed.
books as received in July, 1927
Witness replied that he could not reply without reference to the books and documents.
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