The New York herald., 1921-01-21
SCHWAB ASKED TO
EXPLAIN $260,O00
EXPENSE ACCOUNT.
Walsh Investigators Hear
of Months Bill Sent
to Ship Board.
ON STAND WEDNESDAY,
Former Emergency Fleet
Directors Voucher Is
Hazy to Auditors.
ABADIE CHARGES FRAMING
Says His Ousting Cost L. ).
S1OO,O00,000 by Change
i'm Auditing Method.
ABADIE CHARGES FRAMING

4
Bethlehem Shipbuilding Corporation
and formerly director general Of the
Emergency Fleet Corporation, was
called yesterday TO appear next
| Wednesday as a witness in the In
vestigation which the Walsh Con-
gressional committee is conducting
| into the activities of the United States
Shipping Board.
Mr.. Schwab will have an oppor-
| tunity to make any explanation he
may wish concerning voucher about
which Col. Eugene III. Abadie, for
merly general comptroller of the
board, testified yesterday. The wit
ness had been told by Perley Morse,
head of firm Of licensed public ac-
countants. that in an audit of the ac-
counts Of the Bethlehem Shipbuilding
Corporation one of his employees had
found voucher drawn by the Beth
lehem concern which read:
1.-TWO hundred and sixty thousand
dollars for personal expenses Of
Charles M. Schwab for the month Of
October, 1918"
Col Abadie testified that 100000
of the s260,0O0 had been charged to
the Bethlehem concerns account for
"ship construction" which would make
it ultimately a charge upon the Emer-
gency Fleet Corporation. Though the
witness did not know how the remain
ing s160,000 had been set down, he
said he supposed it was charged to the
account of some other work upon
which the company was then engaged.
| schwab's Expenses DeIved Into.
| Mr. Walsh. chairman OF the commit
| tee, called attention to the fact that at
that time Mr.. Schwab was director gen.
eral of the Emergency Fleet Corpora
ton.
us it not probable that in that capac-
| ity." asked the chairman. "Mr. Schwab
had to travel across country frequently,
visiting and inspecting work not alone
in his own plants but in others that
We're doing Government work.
True" replied the witness. but
cannot conceive any mission in which
Mr.. Schwab could have been engaged
for the Fleet Corporation which would
have justified personal expenditures to
the amount of 100000 for single
| month And even If all those expenses
had been incurred in his capacity as
head of the Fleet Corporation they
should then have been paid by the Fleet
Corporation, and through the medium
of q Fleet Corporation voucher. which
Is the only way in which we could have
honored the charge. 1t should not have
been paid by charging 1t against the
ship construction account of the Beth
lehem Shipbuilding Corporation"
Col Abadie emphasized the statement
that the auditing forces of the certified
public accountant were unable. accord
ing TO Mr.. Morse's information to the
witness. to find any supporting papers
in explanation OF the voucher in ques-
ton. The explanation proffered by the
employees of the schwab corporation
was that the supporting papers prob
ably had been mislaid
Earlier in his testimony. when he had
resumed the witness stand for his third
consecutive day. Col. Abadie had told
of startling revelations disclosed IN
the audit OF the books OF the Bethle-
hem corporation. He had described the
abrupt calling off of the proposed audit
under ''insidious propaganda" and ex-
treme pressure brought to bear by rep
resentatives of the big steel concern. in
cluding its general counsel. Paul ID.
Cravath
s1OO,0OO.OOO saving Prevented.
lie asserted that IL the audit had been
permitted to proceed along the lines he
had projected for II there would have
been laid the basis for the recovery by
the United States Government OF at
least sl0o. 90. 600 improperly paid on ship
construction accounts by the United
States Shipping Board and the Elmer
gency Fleet Corporation.
A similar audit OF the construction
accounts Of the other shpbuilding con-
Germs. the Colonel stated. II conducted
by a disinterested public accountant OF
recognized standing would have paved
the way for the Government salvaglng
hundreds of millions OF dollars" The
witness led up to all this In telling the
story how he had been "railroaded" out
of the Shipping Board as a result of
what he chose TO regard as a frame
up engineered by Col. AbadIe's pet
aversion, Martin J. Cillen. who was then
special assistant TO the chairman OF the
board. John Barton Payne. The witness
also charged Mr.. Giilen with much OF
the influence which resulted finally in
changing the character OF the ship con-
structon audit and rendering Il. in the
cpinion Of Col Aba1ic. comma ratiyelv
useless. lie added:
II never learned until after my resig-
nation. which was rendered at the re-
quest Of the board. that Il had been
forced by a frameup engineered by Mar
tin ]. Gllen. my pseudo friend. was
framed and my resignation was re-
Continued on Fourth Page.