CO129-535-5 N.I. Brewer- transcript of trial and evidence 1-1-1929 - 31-12-1931 — Page 225

227

Also the balance sheet is absolutely misleading as regards the assets, in that the assets and the liabilities conceal the Company's principal weakness, which was at all times lack of working capital - that fact is studiously concealed

in this balance sheet ? Without desiring to be repetitious, I can only say I was assured by the auditor that it was not misleading.

-

-

Did the auditor dictate to you what you should do Did he run your company? No, I told him here are our books put

them together and make out a balance sheet. If there is anything wrong with my book, I accept full responsibility.

Do you agree that this is a proper definition of a balance sheet: "Now, a full and fair Balance Sheet must be such a

Balance Sheet as to convey a truthful statement as to the Company's position. It must not conceal any know cause of weakness in the financial position, or suggest anything which cannot be supported as fairly correct in a business point of view" ? I agree that is the kind of balance sheet I would like to issue for my company.

Do you agree that this balance sheet is misleading? I agree that to an Englishman reading this balance sheet, it is utterly misleading, but there is not a word of untruth in this balance sheet and there is nothing to justify my asking for them to be returned after they were published.

Judge:- Do you not think it was an important matter to have recalled this balance sheet when you found it was misleading? After considering the matter whether I should send out and cancel the balance sheet as I found there was no lie about it, although it was misleading the auditor advised me it was the customary way among the Chinese and

let it go at that.

-

-

Judge:- As a result of this wisleading balance sheet - if you knew it was misleading at the adjourned meeting why did you declare the dividend ? The dividends were genuine and had been earned.

(Mr. Brewer explains to Judge).

Judge:-

You call tilat a faked entry on your liability side, and yet you incurred the responsibility of taking that balance sheet and causing it to be filed by the Registrar

signing it without saying a word - is that so.

is that so. Take this balance sheet with the item which you acknowledge was faked ? Faked, was the wrong word My Lord, I meant misleading.

Judge:- What is the difference between something which is misleading and something which is a lie ? A great deal of difference.

I am putting to you the Statutory Report NIB 4 filed by you on 16th August, 1927, paragraph B says the total amountb of cash received by the Company was $876,750.00 ? That is the correct figure.

I put it to you that under two lakhs of cash had been received by the company at that time the statement was filed ? That statement is true.

That statement is not true.

Was 7 lakhs of this $876,750.00 or a considerable portion of it, was that passed to these shareholders on loans,

36.