The Waterbury Democrat., 1940-05-02
thought things would adjust them- selves," was the reply.
 Admits Dividends
tNEA Photo

| thought things would adjust them. selves," was the reply.
 Admits Dividends
 Rowley w. Phillips admitted four times yesterday afternoon when under cross-examIna ton by U. s. Atty. Irving Kaufmann that on four different occasions the al. rectors of McKesson's Ltd. of Can ada, of which he was one, voted dividends when the balance sheets Of the company, at the times the directors voted, showed that there was insufficient cash on hand to meet tho dividends.
 In reply to questions by the gov- ernment attorney as to why he as a director had voted the dividends Phillips said In each instance that the cash balance shown on the bal- lot sheets at the time Of the votes was not tho real important thing. He said that he and the McKesson Ltd, directors knew that the coin- pany at the time the votes were taken had enough current assets to take care of the situation. "fhe cash balance isn't the only important thing when a dividend Is being voted MT. Phillips said.
 Atty. Kaufmars evidently thought that 1t was and he took each bal- ance sheet in turn and questioned MT. Phillips on 1t and dwelt at length on the figures on the sheet. Questioning along this line took up a good portion of the court time yesterday afternoon. The cash shortages to make up the dividend in the four instances amounted In each case to between 5000, and $i3,000.
 U. s. Atty. Kaufman got more dramatic as he took up each balance sheet and when MT. Phillips ad- mitted that he as Q director voted for dividend when the cash wasn't there.
 Phillips lawyer Philip Corbin in each insatnce read figures Into the record showing that when the divi- dend votes were taken the company had large surpluses.
 Alleged Dummy Firm
 Atty. Kaufman questioned Phillips yesterday afternoon on many other matters. He asked the Waterbury broker If he was present at the di- rectors' meeting at which Manning and Co. of Montreal and New York made the depository of the Canad- ian McKesson. This is the alleged dummy firm through which Coster is supposed to have maneuvered his $2l 100000 swindle.
 Phillips said he was present at the meeting.
 You arc banker aren't you" asked Kaufmann. You know about banks? McKesson's had a deposi- tory in Canada. Didn't 1t strike you strange that the depository was being changeG.?"
 ,l Phillips declared that 1t did not and that he did not suspect that there was anything wrong in Can- ada and had faith in Coster. Well you and Mir. Merwin (of the Bridgeport Trust Co., a co-director with Phillips in McKessons Ltd.) know all about banks don't you? At least you know the New York banks. You would know if there was a Manning and co. or w. w. Smith Co. in New York, and all about them and yet you voted to make a bank you didn't know anything about depository for McKesson Ltd. venture.
 Phillips replied that there are many banks in New York that he doesn't know anything about and stated that he had no reason to doubt that there was anything wrong n Canada and that he trust ed Coster.
 Atty. Kufmann also asked Mir. Phillips if the meetings of McKes- sons Ltd. all held in Bridgeport were "cut and dried affairs"
 Phillips said Mo-
 Were these meetings ever held by telephone? asked the govt. att ney. Phillips replied in the nega- tive"
 | "Cut and Dried"
 Atty. Kaufmann then read from Grand Jury minutes to show that Phillips testified that the meetings were "cut and dried"
 Mir. Phillips stated that he stated to the truth before the Grand Jury and before the present court.
 You can jump the fence pretty well can't you" said Atty. kaut- man.
 Phillips denied that he was jump ing the fence. He said that sosne- times the metings would be short but that after adourning the direc-