The Pattison Crash
last updated March 25th 2015

THE TRIAL - 5TH DAY

"What Happend When?                        The indictment
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Mr David Wilson from Clydesdale Bank was examined about the second charge (The promissory notes) and said that "The application for advance was made by the limited company, and it was entirely on that footing he agreed to it. Not for a moment was there a suggestion that the advance was for the Pattisons individually."
He was also wasked by Mr Ure (defending Walter Pattison) if it was the bank who suggested that the sum should be £40.000 as the brothers had only asked for £25,000, but said it was difficult for him to remember.

Another clerk of Pattisons, Mr Gentle described the procedure in the bond stock department and was asked:
    "Did you ever hear it suggested in the office that anything had been done that was not perfectly straight?
     — No".

He was re-examined, and he said that it was not possible that a dozen of invoices could go amissing the month of December, 1895.

Mr Young who was broker for the company and later secretary of the Company spoke to the correctness of all minutes. He told that the preference shares went to a premium, above £11 and that the twoi managin directors (Robert and Walter) just took £100 as salaries.

A bond assistant (Robert Nicol Robertson) said that brothers never intervene when the stock books were made. He was asked about the valuation of whisky in stock 31st December 1985 and told Messrs Leechman & Gray, Leith put in the prices for grain and malt whisky and that Robert Pattison valued the blended whisky. He did not know upon which basis Robert valued the blended whisky. In 1897and 1898 he valued the grain and malt whisky and added 5 percent per year on the cost price. Also these two years 1897 and 1898 Robert valued the blended whisky.
He said the Glenlivet vat (3rd charge overvaluation) which consisted of two-thirds of Avoneil and Londonderry grain whisky (bought at 11 1/2d per gallon) was sold for in April 1898 for 9s 6d. See (Glenlivet vat). He also explained that it was well known that blends under particular names and with a particular reputation fetch a price in the market quite apart from the prices that may have been paid for the individual constituents. He said that same blended whisky was sold to one buyer at 1s 10d and to another buyer for 3s 6d.
He had talked with Robert Pattison about the valuation of Glenlivet Vat after the stoppage and Robert said that some of the blended whisky might had been overvalued. Robertson said that the price for blending was from 1d to 3d per gallon and that Robert gave some instructions as to what the whiskies were to be composed of. The number of invoices per week varied from 100 to 150 and he was not surpried of some of them passing through so many hands went amissing. He and Walter Pattison had after the stoppage examined the stock books and he said that he did not think that Walter knew about the omission and the effect of them.
Re-examined by the Solicitor-General

Mr Murdo M'Gregor, correspondence department told that when was going over the stock sheets and was in constant contact with Robert Pattison. He described that the prices first were filled in by pencil in the stock books and after their accuracy had been ascertained the amounts were filled in in ink. He had made a remark to a collegue (Mr Malcolm) that "there must be some valuable, whiskies in those blends bring out the prices, because he thought they were very high". He also said that Avoniel was one of the chepiest whiskies they had and "anyone knowing his business would not give more than 5s a gallon for a whisky in which Avoniel formed such a large part". Before working for Pattison Ltd he worked 13 years with Robertson, Sanderson & Company and gained experience in valuation of stocks. In this company blended whisky was valued at the average net cost of the the whiskies composing the blend. In the example of the Glenlivet vat it should have been valued at 2s 3 1/4d (or 2s 6s if the age is considered) compared to the 8s 6d. His experience was doubted ny Mr Guthrie (defender fo Robert Pattison) and he had to admit that he was dismissed from Robertson, Sanderson & Company for giving way during business hours. Guthrie asked if a whisky with a ready sales in a prosperous market should be valued what it would fetch, but M'Gregor said it was not correct.

Next witness was Robert Alexander Murray, one of the liquidators. He expained that the creditors would get a total of 8s per pound (67%). He told in detail about different cheques related to the floatation and how this money had been used for private use but also for payment of bills to Pattison, Elder & Co with the intention to keep the money out of the books. He also explained the differencies in true and false profits.


He also stressed that he and the other liquidator Mr John Scott Tait had different opinion. They had a meeting 6th January 1899 with the creditors and the statement says: "Mr John Scott Tait, C.A. Edinburgh briefly explained the circumstances under which he and Mr R.A. Murray, Glasgow, had been asked o look into the affairs of the Company, and to report thereon for the information of the creditors. In presenting their report, he said that it was the accountants' opinion that the company should go on. It woul be nothing short of a national calamity to allow a business like Pattisons Limited to go to the wall". He said that this was Mr Tait's opinion but not his own. He admitted that he did not expressed his opinion and he said nothing during that meeting. During this meeting the letter from Robert and Walter Pattison questioning the values of certain properties and stocks (for example Glenfarclas) was discussed. He was asked if the business was totally mismanaged and replied that the business was enormous but said that they never made a sixpence in profit.

Next witnesses were former Pattison clerks who also were asked for details about the valuation of the blends. One of them George Hope Malcolm denied that he had discussed the value of Glenlivet vat with Mr M'Gregor (see above).

Next witness was James Campbell Dewar who was trustee on the sequestrated estates of Robert and Walter Pattison. He said that he was unable to get explaination what happend to the £150,000 in cash paid to them by the floatation as vendors. He said that he had not been able to trace payments to W. Grants, Avoniel Distillery and Distillers Company from the limited company but that these had been paid by Robert Pattison to keep them out of the Company´s books. He also told about a visit to Leith (sometime after 15th of January 1900) together with Walter Pattison to find out details about the payment to Planat & Co (Cognac). Previous to that Walter had no access to books because the liquidators refused access. Walter did not knew anything about these payments.

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Sources:

Aberdeen Journal - Friday 12 July 1901
Aberdeen Journal - Saturday 13 July 1901
Advocates Library/National Library of Scotland