Goroka Coffee

Mr. Powell Is "Out"

Bitter Dregs For Goroka Coffee Scheme

The widely and expensively

promoted “get rich quick”

Goroka Coffee project has

struck trouble, and the future of

the whole scheme is in doubt.

ALSO in doubt is the future of the money, totalling almost £300,000, that the public put up to finance a project that many people decided had looked like a “wildcat” from the start.

Floated in 1958, the company has already stopped paying dividends, for the time being, at least, and is short of money.

In addition, a number of its directors, and its auditor have left, or are leaving the company’s ranks for a variety of proclaimed reasons.

One who has left from the hierarchy is Mr. Frank Powell, who signed himself as the company’s Field Supervisor, and whose resig nation has now been accepted.

The company first came under notice in the first half of 1958 when, as Goroka Coffee (Holdings) Ltd., its promoters began an extensive cam paign aimed at selling the public “units” in a plantation at Kinjibi for £2OO each.

Particularly active in this cam paign, as well as in making field arrangements in New Guinea, was Mr. Frank Powell.

"Under Fire"

The company’s proposition soon came under heavy fire in sections cf the Australian Press.

In addition, the company was severely criticised in the New Guinea Legislative Council.

Despite this barrage the pro moters persisted with their cam paign, and ultimately raked in the best part of £300,000 from a public that succumbed to the “get rich quick” lure of a ‘“guaranteed 20 per cent”.

In the meantime, the directors of the company gave it a new name, Kinjibi Holdings Ltd., while most of the units sold in the old company were exchanged for £1 shares in Kinjibi Holdings.

It did not take long for the blow to fall on the subscribers.

In December, 1958, they got a 10 per cent, payout but this fell to 5 per cent, in August, 1959. Since then there has been nothing, and it is clear that future dividends, if any, will be much smaller than the 20 per cent, the holders were promised. (Over)

Payment of these dividends has taken £25,973, and even this is de

scribed as “possibly overgenerous”

by the new managing director, Mr.

F. J. Hibbett.

High "Establishment"

This “possibly overgenerous”

dividend payment to the people who put in the money contrasts strongly with the unusually high figure of £86,572 shown in the company s balance sheet as having been spent on “establishment account”.

This figure is almost one-third of the money put in by the public and is more than three times the dividends they have received.

At the annual meeting in Sydney late in March, shareholders re peatedly quizzed the chairman, Mr.

Hibbett, on this expenditure, and demanded an inquiry into how it had been spent.

They were told that most of the money had gone in advertising and in commission for share salesmen, and that a general inquiry would be made into the company’s affairs, past and present.

Highlight of the meeting was the presentation of three reports which told of changes in the personnel of the company, and irregularities in auditing and equipment.

The first of these presented by Mr. Hibbett, revealed that a director, Mr. D. M. Clarke, had re signed because of ill-health, and that two others, Messrs. P. Patroni and M, F. Kellner, were not offer ing for re-election.

Mr. Hibbstt’s report also showed that the resignation of Mr. Frank Powell had been accepted, and that the auditor, Mr. E. Davis-Raiss was not offering for re-election.

It also broke the news that no dividend was recommended at pre sent and only a small dividend at best could be hoped for at the end of the next 12 months.

"Needs More Money"

To wind up the parade of bad news came the fact that the com pany needed more money, although in another part of the report it was stated to be more highly capitalised than most New Guinea plantations.

Shareholders were asked to take up another £50,000 of shares but at the meeting this was later with drawn when it was stated that the company was “negotiating with a bank for loan funds”. The bank was not named.

The next report to raise the eye brows of shareholders at the meet ing came from a director, Mr.

R. H. S. Gray, and the plantation manager, Mr. H. J. Perkins. Both are continuing with the company, «■, Perkins is now a director T Them rep £ rt states ’ Ult would be less than honest if it were not observed that the best advantage has not m the past year been taken

(Continued on page 147)

available advice in matters of :cy and purchase of plant and [.pment”.

Whatever the available adviC3 iht have been, the results, as de id in the report, were: The factory taken over was not designed for efficient and domical operation.

A new warehouse, built of pre dicated aluminium on a concrete s was not entirely satisfactory.

A new diesel-electric engine ined larger and more costly to rate than was required.

A coffee grader has been in lied but was not satisfactory.

A new disc pulper was due for r very soon. It was questionable ether this was fully justified at -sent but it would be, at least, a lul and efficient adjunct to exist equipment. i addition, shareholders were i in this report that the planta <l was originally believed to be acres of mature or nearly mature I ? 00, fie report says that at this time was impracticable to arrange a ivey in this part of New Guinea when the survey was made the mtation was found to contain »y about 62 acres of mature coffee i about nine of immature coffee, apparently, the difference be :en 100 acres and 70 was not iily discernible. mother report to the meeting :i that the audit of the company

t 3 incomplete as certain docu

ints were not available.

"or the future, the company’s :ectors are talking of buying all : native coffee it can find, and ;ting it through its plant

There is also a programme of more plantings to offset what is now admitted to be one of the highest capitalisations of a coffee estate in

P_Ng

But' even if all this succeeds, directors stilladmitthatshareholders must expect lower returns L h The t Ma e te« y To run the company they now have some of the old connections, plus some new directors who were elected at the meeting.

These are Mr. S. E. Baume; Mr.

C. W. Ford; Mr. H. J. Perkins, the plantation manager; Mr. J. H. Lee; and Mrs. C. D. Rankin.

All, with the obvious exception of Mr. Perkins, come from Sydney and have no apparent connection with either the Territory or coffee.

If the company is ever to achieve anything like the glowing results

promised by its promoters the new board and administration will have to work wonders, Already too much capital is in vested and more is needed; the plant and equipment are admittedly unsatisfactory in many respects;

andsatisfied *that^he o changed

gcom

p e ' is to be hoped that the new board can achieve the rehabilita tion of the plantation and the re sumption of dividends to share holders. incidents such as the Goroka coffee affair could be damaging to investment prospects in the Terri tory in general, and the coffee in dustry in particular, But until solid results are visible it is difficult to feel any real optimism about the future prospects of the project.