New Britain herald. [microfilm reel] (New Britain, Conn.) 1890-1976, 1918-12-20
NO CRIMINAL LIABILITY IN
HOG ISLAND SHlPYARD WORK,
GOVERNMENT SLEUTHS SAY
Most Searching Examina-
ton Fails to Show Evi-
dence of Amy Fraud or
Secret Profits.

awaited report OF the Department Of
Justice on the governments great
Hog Island shipbuilding project made
public at the White House today on
wireless instructions from President
Wilson says searching investigation
has disclosed no criminal liability, but
recommends that board of arbitra-
ton determine what part, if any, Of
the more than 100000 the plant
COS. was in excess Of reasonable ne
cessity and should be. demanded Of
the contractors by the government.
In brief, the investigators report:
No Fraud or Secret Profits.
That the facts do not Justify GRIM
inal process and that no fraud or Sc
cret profits has been established.
That the probable cost of the plant
will be about SCI, 100000 Cncluding
$6,000,000 for additions by order of
the Emergency Fleet corooration),
compared with an original estimate Of
$21, 900 and d revised estimate of
$27,0OO,O0O.
That no clear explanation of this
discrepancy has been forthcoming.
That prior to February 1, last, a
condition existed at Hog Island which
"superficially at least would impress
anyone as an organized riot tangled
mass or stage Of chaos"
Cost Was Minor Importance.
That the contractor or agent, the
American International corporation,
in substance has taken the position
that since this was a war job cost was
of minor importance; and
That the question OF reasonableness
OF the expenditures should he referred
to board of arbitration provided for
, in the contract, proceedings to be
closed if the board finds the expendi-
lures reasonably necessary or. other
wise, payment Of the excess to be de-
manded by the government.
Was TO he Done in September.
The report, which is dated Septen-
Der II, 1918, also stated that the
4plant would be completed in Septem-
her; that the contract substantially
was being complied with and that the
controversy hinged mot so much upon
the question of accomplishment but
upon means. methods and expendi-
lures But attached is q letter from
the investigators dated September q,
which the attorney general trans
mitted to the president, referring to
press reports that the program is fall
ing behind schedule and calling atten-
ton to the fact that the report was
based upon conditions as they ap-
peared early in July.
so Days More Needed.
General Manager Piez, of the
Emergency Fleet corporation, appear
ing yesterday before the senate COM
merce committee, testified that the
Hog Island yard would be completed
in about go days; that the cost would
be about $63, 900, 900, and that the
plant had delivered one ship and laid
SO keels.
The Department of Justice investi-
cation was made by two assistants to
thc attorney general-G. Carroll Todd
and Mark Misunderstanding last
February, when President Wilson
asked the attorney general to get into
consultation with Chairman Hurley,
of the Shipping board "about the
whole matter with q view to insti-
'uting criminal process in case tho
facts justify It," Charges of graft and
gross waste had been made in an In
quiry conducted by the senate COM
merce committee
Contract Is Explained
The report describes at the outset
the contract entered into by the Emer-
Gercy Fleet corporation on Septem-
ber 13, 1917, under which the Amer
lean International corporation Of New
York agreed to purchase SAG acres at
Hog Island to be utilized for the pur-
pose of the contract upon a six per
rent. rental basis; to build on this
tract with funds furnished by the
Emergency Fleet corporation a ship
yard Of so ways, and to construct
with funds supplied from the same
source SO or more steel cargo ships
at an estimated cost of $1,100, 900
each. On October % the Fleet cor
pOratlon placed an order for 70 addi-
tIonal steel ships estimated to cost
8 5000 each, and on May Z, an Or
der for so more ships to cost S1,425-
100 each. All Of the $50 ships were
TO be completed by August 4, 1919.
These orders necessitated construction
Of longer ways and piers and more
shop and storage capacity.
Maximum Fee Is $14,44O,OO0.
The contracting company's compen-
sation for building both the ward and
the ships was fixed at percentage OF
the estimated cost Of the ships, with
premiums for early deliveries. or say
ings in cost and penalties for delayed
deliveries or Increased cost. The max
imum fee under this arrangenn en- t
would be $14,44O. 900 and the mini
mum fee s8,91o,O00. Mr.. Piez testi-
fed yesterday that to date the COM
pany had been paid nothing.
This is the conclusion as to crini-
nal liability.
Minor Payroll Frauds.
-'Tn response to the question sub
Initted by the president, our conclu-
&GentazazseA on Esssysps1s RaEea