Whitaker Wright’s address to the meeting was probably one of the most important speeches of his life. Unable for once to rely for popularity on the promise of golden prospects, he set out to win the day with pure force of personality. He started with some good news. The directors ‘had practically arrived at an arrangement with the creditors of the company … and … “with a long pull, a strong pull, and a pull all together” their good ship would soon be off the rocks and sailing once more in smooth water’.19 Wright, who liked to take full personal credit for success, generously offered to take responsibility for failure, and then proceeded to blame it on everyone else. He blamed the mine engineers for an inaccurate report, he blamed the war for lack of confidence, and most of all he blamed the syndicate. He proposed to adjourn the meeting until 14 January, by which time all the company’s debts would be settled and he would be able to announce a scheme of voluntary liquidation followed by reconstruction to ensure future prosperity, pledging ‘his health, his strength, his life, and as far as might be his private fortune, to carry the enterprise to a successful issue’.20 There were rousing cheers from the floor, although not everyone was convinced. A Mr Seal suggested appointing an independent committee to look at the company’s affairs, but was shouted down by Wright’s supporters. Seal, who realised that any reconstruction scheme would require the shareholders to advance still more funds, commented: ‘If … they were prepared to throw their money broadcast into the sea, let them do so – nothing in the world perhaps would stop them until they had further adversity and further distress.’21 Wright was defiant, and his lies were bold: ‘We are not afraid of investigation. We have not a single transaction to cover up – everything is open to the light of day.’22 He himself, he claimed, had at first suggested the appointment of the official receiver, but the creditors and shareholders had implored him not to do it because (and here he raised a terrifying spectre) if that course was taken the shareholders would get nothing. The meeting voted for adjournment and closed with three cheers for Lord Dufferin.
The press was less sanguine about Globe’s prospects. The Pall Mall Gazette summed up the meeting: ‘there were generalities on assets, much skilful handling of an audience, various vague promises as to the future and that was all.’23 The Daily Mail was blunter still: ‘The directors’ attempt to have a voluntary winding-up is a little too transparent, and is the usual device of directors of companies when there is something to hide.’24
In May, with Globe shareholders still waiting for the proposed reconstruction scheme to be announced, Brit-Am suspended operations owing to ‘complications … in which liability is claimed against the corporation for the same shares in several directions’,25 and the financial papers demanded that all three companies of which Wright was the guiding spirit should be compulsorily wound up. At the end of May it was announced that Brit-Am was unable to meet its obligations, and on 3 June Sinclair Macleay, as chairman of Brit-Am, presided over a stormy meeting where it was explained that the company’s failure was a result not of its own mismanagement but claims made against it following the Globe crash and ‘complications’ on the Stock Exchange. He proposed voluntary liquidation to be followed by reconstruction. This proposal was seconded by Whitaker Wright, whose contribution was greeted by hisses. One shareholder, a Mr Stavacre, said he regarded the conduct of the company as ‘a disgrace to the commercial world’,26 but a Mr Atkinson urged the meeting not to be ‘led away by any spiteful feeling toward the directors’ and said that a compulsory liquidation would ‘wipe his shares off at once’. A cynic from the floor cried out: ‘They are wiped off already.’27
Whitaker Wright addressed the meeting, attributing the Globe crash to ‘the treachery and default of members of the Stock Exchange’,28 a comment that caused an angry outcry from the floor. Proposals for the reconstruction of the Globe business would be announced later in the month, and the company had ‘practically sold the Baker Street and Waterloo Railway for £500,000’.29 He advised shareholders not to ‘cut their own throats and rush hastily to a decision which they might regret afterwards’. The new company would, however, have to do without him. ‘Nothing under the sun would ever induce him to be a director again in any company in the city of London.’30 Once again, and to the regret and astonishment of the financial press, Wright carried the day, and the meeting voted for a voluntary liquidation to be carried out by a committee. When on 13 June dissenting shareholders petitioned for the compulsory winding-up of Brit-Am, it was revealed that the company had substantial creditors and only £157 in the bank. Soon afterwards Standard, too, went into liquidation.
On 30 July the first meeting of the creditors of Standard was held under the chairmanship of Mr Barnes, the Senior Official Receiver, and for the first time the cloak of obscurity thrown over the dealings of the Whitaker Wright companies was pulled aside and the public were able to see what lay beneath. It was not an attractive sight. The directors had lodged a statement showing assets of £1,160,000 and liabilities of £362,000. As far as the assets were concerned, the figure was based on estimates made by the directors, ‘and he was afraid that they were quite impossible estimates’.31 Fourteen mines valued on the balance sheet at £767,000 were not earning any income. Many of them had had no money spent on them, and several should be regarded as having no value at all. He also revealed, to the astonishment of the investors, that none of the properties supposedly owned by Standard had ever been transferred to the company, all of them still remaining in the names of their original companies or those companies’ liquidator. The investments in shares were valued at £61,860, but most were being held as security by the liquidator of Globe. Most of the shareholders’ money had been lost in Stock Exchange speculation. More shocking still, while these vast speculations were going on, no record of purchases and sales could be found in the company’s books. As if this was not enough, Barnes now told his listeners that he had to refer to another matter he regarded as ‘extremely serious’,32 the transfer of Globe’s open speculations in 1900 to Standard and the writing-back of the transaction on 13 December. To date he had not received a satisfactory explanation of these activities.
Finally, he advised the shareholders to ‘consider among themselves whether there was any property worth saving, and whether it was worth while to put more money into the concern… . calmly and dispassionately’.33 No one was feeling either calm or dispassionate. Strong words were used in the ensuing discussion, and at one point several shareholders rose to their feet and, addressing those directors who were present (Whitaker Wright was wisely absent), ‘referred in vehement language to the conduct of the company’s business’.34 There were to be no more compromises. The meeting voted to retain the Official Receiver as liquidator.
Wright was still director of Le Roi Mining Company Limited, whose directors, on reading the revelations, politely asked him to resign. He refused, and they were obliged to hold a special meeting to remove him. Fresh petitions were now presented for the compulsory winding-up of Globe, which Wright tried to avoid by sending out proposals for reconstruction, but no one now believed him, and the winding-up order was made. At a meeting on 16 December 1901, Barnes revealed that Globe had unsecured creditors of £1,142,000. Assets were estimated at £424,000, but unfortunately these were partly made up of claims against Brit-Am and Standard totalling £210,000, which could never be realised, and shares valued at £121,000, which were worth rather less.
Barnes described how Globe’s funds had been dissipated in speculations, and exposed the complex cross-dealings that had taken place between the Whitaker Wright companies to make Globe appear solvent. There was virtually no mention of these enormous movements of debts and assets in the minutes, and he was satisfied that none of the other directors knew what Wright was doing. The meeting closed with the feeling that, shocking as the revelations were, the truth was beginning to emerge, and there was something the angry creditors had to look forward to: the courts had ordered that Whitaker Wright should submit to a public exami
nation.
Lord Dufferin’s sense of personal responsibility for the Globe crash led him, despite his own losses, to offer compensation to some of the shareholders. Touched by their unexpectedly friendly spirit, he remained grieved at the effect of the crash on his wife, and that her ‘life should be thus suddenly overshadowed, just as we thought to enjoy the evening sunshine of our days in our happy home’.35 Early in 1902, his energies exhausted, Lord Dufferin was compelled on the advice of his doctor to take to his bed. From there he continued to follow the inquiries, and on 22 January, now realising that he had been duped by a rogue, wrote to the Official Receiver stating that the Lake View speculations ‘were entered upon without my knowledge and consent… . I should have considered myself highly criminal if I had knowingly consented to the shareholders’ money being gambled away in such a manner’.36 He promised that, should he recover, he would offer himself for examination. Soon afterwards he suffered a relapse, and on 12 February he died.
The purely nominal position of the company directors was fully exposed at the public examination, which commenced in January 1902. Asked what the directors did at board meetings, Macleay replied: ‘We confirmed past transactions of the managing director,’ and Worters, asked if the directors ever saw the company books, said: ‘Not to my knowledge. They may have seen the outsides.’37
Gough-Calthorpe, director of both Globe and Standard, and present when on 16 November 1899 £250,000 had been transferred from Globe to Brit-Am, had supposed ‘that the Globe was so rich it could afford to do anything’.38 The reasons for the transfer had not been explained to him, but he did not think he would have understood if it had been, ‘as it was a matter of City finance’.
‘May I ask what were the duties of the directors?’ asked Mr Barnes.
‘As far as I could ascertain my only duty was to sign my name many thousands of times to the share certificates,’ replied Gough-Calthorpe.
‘You did not guide the policy of the company in any way?’
‘Oh dear no!’ said Gough-Calthorpe.39
When the companies were finally wound up, it was apparent from the report of the Official Receiver that assets worth £5 million had been irretrievably lost in just two years. Total debts were close on £3 million, with payments to creditors ranging from a few pence to a few shillings in the £1. The shareholders had lost everything.
Whitaker Wright took the stance that he maintained to the end – he was innocent of any wrongdoing, and his actions were simply standard business practice. Errors had been made by the accountants, for which he was not responsible. He had more difficulty in explaining away payments made to financial journalists. These were disguised as share deals, the shares having being sold at a discount and repurchased by the company. Wright denied all accusations, but Barnes proved him a liar by producing the contract notes. Wright simply shrugged these off – journalists, he said, would not take an interest in a company unless they owned some shares. Barnes pointed out that in the case of one contract the repurchase had taken place on the following day. When the inquiry closed at the end of February, it was clear that the failure of the companies had been the responsibility entirely of Whitaker Wright, and, although failure was not in itself a crime, attention now focused on the false balance sheets, and both press and public felt that there was ample material here for a criminal charge. The difficulty was that in 1899 and 1900 it was not a criminal offence to issue a false balance sheet.
Wright stood firm, pinning his hopes on legal proceedings to recover damages of £1,000,000 from the syndicate, but in June 1902 the final decision went against him. Wright must have known that, in England at least, he was finished. Quite what he did over the next few months is unknown, but by the end of 1902 the outward trappings of substantial wealth had disappeared. The yachts were sold, and his estate, by now heavily mortgaged, was vacated. The family relocated to nearby Tigbourne Court.
Meanwhile, efforts were made by the shareholders and creditors of Globe to persuade the Attorney General, Robert Bannatyne Finlay, to authorise legal proceedings. On 20 December 1902 stockbroker John Flower, a leading campaigner for the prosecution of Whitaker Wright, received a letter from the Treasury stating that papers he had transmitted to the Attorney General ‘contain nothing to alter his conclusion that this case is not one which should be taken up by the Director of Public Prosecutions’.40 The decision was deplored by the financial press, and questions were asked in the House of Commons, but Prime Minister Balfour merely regretted that company law was inadequate to deal with the matter, an anomaly he promised to rectify. Flower was persistent, however, and he organised meetings of interested parties to raise funds for a prosecution under the Larceny Act of 1861, under which it was an offence to make a false statement with intent to deceive or defraud. Early in 1903 Flower was able to apply for a direction to prosecute before Mr Justice Buckley. Wright became increasingly concerned. The hearing on 17 February was adjourned, and on 19 February the case was discussed again in the House of Commons. On the following day Wright drew a cheque for £500, and on 21 February he sailed for France, reaching Paris four days later. His wife kept him informed by telegram of the progress of the proceedings. On 5 March she cabled: ‘Case to prosecute settled today: everything looks bad.’41 Wright quickly packed his bags and cabled back. ‘Give Florence five hundred pounds she sails tomorrow Friday evening will meet her Havre forward no more letters.’42 He was on the run. ‘Florence’ was Florence Browne, Whitaker Wright’s American-born niece, who was to be the go-between in her uncle’s flight from justice.
In the event Buckley’s decision was not made until 10 March, when he directed the Official Receiver to institute a prosecution against Whitaker Wright. A summons was quickly obtained, but when an official was sent to Tigbourne Court he found only Mrs Wright, who declared with gracious dignity that her husband was an honourable man and had gone to Egypt for the sake of his health. Soon afterwards banknotes known to have been in Wright’s possession were found in Paris, and he and Florence were traced to Le Havre, where it was found that on 7 March they had booked a suite under assumed names on a liner, La Lorraine, bound for New York. Wright’s distinctive description was cabled to the New York police, who boarded the liner on its arrival. Wright submitted quietly to arrest, and, charged with being a fugitive from justice, was taken to Ludlow Street Jail. Florence, left standing on the pier with the luggage, eventually took a cab to a hotel. Questioned by the police, she maintained that, of the money (£710) found on Wright’s person, £100 was hers and £500 had been provided to her by Mrs Wright. Eventually, £600 was returned to her and she was released. What she did thereafter is unknown.
After several months of fighting extradition proceedings, Wright agreed to return to England voluntarily. Arriving on the Oceanic at Liverpool on 5 August, he was placed on an express train and faced the London magistrates that same afternoon. His defence counsel, Richard Muir, who later achieved considerable distinction as Senior Counsel to the Treasury, was a man who, having taken up the cause of a client, would always believe the best of him. Muir deplored the suggestion ‘promulgated by the baser class of newspaper’43 that his client had confessed his guilt by absconding. Wright, he said, had simply decided to start a new business life in America. His eloquent pleading was successful, and Wright was granted bail of £50,000.
Early on, Muir decided that it would be in the best interests of his client to have the case heard not at the Old Bailey but at the civil court in the Strand, before a special jury who would be more likely to understand the financial intricacies. It was a decision that would have momentous and unexpected consequences. The trial opened on 11 January 1904. Wright arrived dressed in the flowing frock coat of a City man, a little thinner and greyer than the public remembered him, and sporting a small pointed beard known as an imperial. Since it was a civil court, he was permitted to sit in the well of the court among his legal advisers. For a time, it seemed that he was the calmest person there.
The prosecuti
on team was formidable. Rufus Isaacs (later First Marquess of Reading) was experienced in complex financial cases, with a mind that was able to follow a multitude of separate threads while keeping the overall picture clear. His approach would be essential in steering the jury through the maze that was Whitaker Wright’s financial dealings. He was quiet, courteous and unruffled. ‘His tactics’, wrote his son, ‘were never to bludgeon his man, but to lead him gently and politely to destruction.’44 The crown witnesses were to be examined by Horace Avory (later Mr Justice Avory), who was also adept at handling the complexities of such a case.
Justice Bigham (later Lord Mersey), who was to hear the case, was for Wright an unfortunate choice. It became obvious in the early stages of the trial that he was hostile to the defendant, and made frequent interruptions, usually to clarify dubious transactions for the jury’s benefit, though he could not resist the occasional stab of dry humour. When Isaacs showed how the 200,000 £1 Victorian Gold shares were manipulated to a value of £800,000, giving a paper profit of £600,000, Bigham’s comment was: ‘I observe that they did not propose to pay any of it in dividend.’45 Isaacs’s opening statement was a masterpiece, detailing exactly what manipulations had taken place. The jury, even if unable to commit the torrent of figures to memory or make notes in the time available, were still left convinced that there had been a series of complex transactions in which every cheque had been signed by Whitaker Wright. Expert witnesses were now produced – Mr Waterlow, who had printed the accounts and spotted amendments in Wright’s handwriting, cashiers, who testified as to the cheques drawn by Wright, and Globe’s secretary, who took minutes at Wright’s dictation of a directors’ meeting that had never happened. Arthur Russell, the senior examiner to the Official Receiver, was a particularly devastating witness as he laid bare the maze of transactions unrecorded in the company books, all with the unmistakeable touch of Whitaker Wright. The assets of Globe, said to be worth £2,332,632 in the company’s 1900 accounts, had, he told the court, been found to have a value of nearer £1 million. Lawson Walton, who led Muir for the defence, did his best. When Bigham commented that many of the companies promoted by Wright were ‘only shadows’, Walton protested that there were boards and shareholders in each case. Bigham retorted that ‘if there were real boards he would like to see the minute-books’.46
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