The Waterbury Democrat., 1938-05-20

His (Spellacy's) employment by
 the mayor and the comptroller
 was violation by them of the city
 charter :"
 counsel for these purposes. Such services as were rendered were ob- viously not properly the function of any agent, agency or department of the city government, but were of a purely political nature.
 For many years close personal friend of Mayor Hayes and of Comptroller Leary's and a heavy stockholder in the Electric Steam Sterilizing Company, private en- terprise of Leary's, has been Thon- as J. Spellacy, Mayor of the City of Hartford. In 1885 the law firm of Spellacy, Ryan & Yeomans received $l1,000 from the City of Water bury, in part, for MT. Spellacy's services in holding the Democratic members of the General Assembly together in legislative matters. His employment by the Mayor and the Comptroller was a violation by them of the city charter. The Grand Jury has discovered no legitimate reason nor legal justification for the ex- penditure of this large sum of the city'S money for this purpose. The services were not of such nature as to have required payment of any money by the city to any person.
 A close personal friend of the Comptroller's for the past nineteen years has been John s. Johnston, of New York City, now president of the Electric Steam Sterilizing Com pany and for a number of years en- gagged in the brokerage business. In 1930, Comptroller Leary contacted Johnston and asked him to assist in securing short term loan for the city of Waterbury.
 New At Business
 Johnston had never before handl- ed matters of this nature for any other municipality and has not since handled any such matter for any municipality, so that his em- ployment as an expert in municipal finance can hardly be justified. The first loan required about three days services and thereafter the attempts to obtain credit became progressive ly easier and required progressively less time and effort. The Grand Jury has reason to believe that through out the period from 1930 to July | 1937, Johnston devoted slightly over two weeks in the aggregate of actual time in performing these al- fNy. tah hn yfync c paid $191, ,747.06 by the City of Wa terbury.
 The exact nature of his services has not been satisfactorily explain ed to the Grand Jury, and Johnston has no records which indicate what, ! if anything, he actually did in re- turn for this money. Practically | every check which he received from i the City of Waterbury he cashed 1 through Carl D. Olsen at the Water bury Trust Company and 50 far as is known, not one of the payments to him was ever approved by the Board of Finance. l
 This employment of Johnston is | particularly interesting in view of | the observations of Mayor Hayes ! in his inaugural message to the 1 Board of Aldermen on January 4, l932, at which time he said in part: |
 "At the beginning of our first
 administration program of rigid
 economy in city affairs was iI;-
 sisted upon. That it has been
 faithfully adhered to is manifested
 by the fact that the thirty y-f0ur
 mill tax rate for 1882 represents a
 reduction of eight mills from the
 tctal levy for 1930.'
 "The financial operations of the
 past year have been well conduct
 ed under extremely difficult condi- tiers. We were authorized by the 1881 Legislature to sell one million
 in funding bonds for the purpose
 of eliminating the balance of our
 inherited burden of temporary
 debt, several million dollars of
 which had been paid by us in 193O. Due to the general depression; it
 has been impossible to secure any
 bids for these bonds, as result
 of which we have been compelled
 to cope with the situation by the
 sale of tax warrants. It is pleasing
 to note that these have been ac-
 cepted by financial authorities in
 New York in preference to those
 of many other cities because of the confidence felt in our financial
 future. As result of this program
 of ec0nOmy"""""
 Sought JOhnstOn's Aid
 The Mayor neglected to state to the Board of Aldermen that from July 1930 to tho date of this message in January 1892, he and the Comp troller had sought the assistance of Johnston as so-called expert in municipal finance, and between July 1930 and November 1881 had authorized the payment to Johnston of $25 000 of the city'S money in Se- curing the short term loans of which the Mayor spoke with such pride.
 It is the belief of the Grand Jury that in Johnstons case, therefore, substantial portion of the $l91,- 74706 paid by the city, presumably to him, was split with certain city officials who were responsible for his employment in these matters. The Grand Jury has found no req sonable basis for the employment by the city of Johnston to assist in securing credit for the city. The fact that the Hayes-Leary admins tration did not follow the practice of prior administrations and the &C., cepted rule in all other municipali- ties in utilizing the talents and contacts of the Comptroller, City Treasurer and Board of Finance in securing credit for the city. deserves in itself the severest censure.
 Another beneficiary of the Hayes Leary administration was Harry A. Hanigan, a personal friend of Comptroller Leary and the Mayor. In October 1885. Hanigan came to Waterbury from his home in New York at the request of Leary and since 1885 has resided in Waterbury. r., 1OQA Aha fsnv.. yafr rnlIn,. xxy Lani |