Honorable S.H.S. Hughes
The Collapse of Atlantic Acceptance Corporation
This was my first case after a “Big 8” audit partner had challenged me to decide whether I wanted to drive rally cars or be a professional auditor. Well, I moved on when the late Brian McLaughlin asked me to join their insolvency group in February 1972. At the time, Brian was working on a Public Inquiry.
My first assignment was to proofread a draft report of the Public Inquiry entitled ‘Report of The Royal Commission Appointed to Inquire into the Failure of Atlantic Acceptance Corporation Limited’. By way of background, in June 1965 ‘Atlantic’, a major Canadian finance company with C. Powell Morgan as President failed to meet a $5 million matured secured note and three days later it was placed into receivership. Its collapse shook Canada’s financial community and a $20 stock became .65 cents.
I found the findings to be most fascinating. Topics in the Report like “The Five Wheels Transaction and its Reversal” made references to names such as Commodore Business Machines, Allen S. Manus, a Toronto stock promoter, Jack Tramiel, and the Grand Lucayan Beach Hotel in the Bahamas. In one day, one amount of $750,000 was processed through six transactions called “A Financial Merry-Go-Round.”
The Report stated the collapse represented a loss of some $70 million and labeled Morgan as inventive, ingenious, incompetent, corrupt and a swindler. Morgan died in October 1966 after the Public Inquiry was underway.
Obviously, this material captured my interest even though at the time I had no idea that financial investigations would become my career and forensic accounting would become my profession.