The Sauk Centre herald. (Sauk Centre, Stearns County, Minn.) 1886-current, 1939-03-30
State Highway Inquiry
Leads To Indictments
With Charges Filed Against
Five Former Officials and Con-
tractors, Legislative Committee
Digs Into Cost of Renting
Equipment

With indictments already return
ed against three former officials
of the state highway department
and two contractors as a result of
evidence it has uncovered, the leg
islative investigating committee this
week is digging into new phases
of the handling of state business
under the Benson administration,
dispatches from st. Paul report.
New revelations of waste and
mismanagement of funds may be
expected, Investigators for the COM
mittee said.
The evidence upon which indict-
ments were returned by the Ram
sey county grand jury had to do
with only one construction JOB.
To pay for work on a Northern
Minnesota road, awarded without
bids, false payrolls amounting to
$4,000 were prepared and paid by
the highway department, 1t is
charged. AS a consequence, the
following men are under indict-
ment charged with collision, MAX
ing and paying false claims and
converting wrongfully funds of the
state: N. w. Elsberg, former high
way commissioner; L. L. Allen, his
former maintenance engineer; John
T. Flanagan, former assistant
maintenance engineer; Samuel j.
Reader, Minneapolis contractor,
and William F. Fitzgerald, vice
president of the S. ]. Reader Co.
The committee did not stop with
discovery of the evidence leading
to the indictments, but is pushing
it's inquiry into other fields, with
further disclosures apparently in
the offing.
One of the revelations of the past
week that is attracting wide atten-
ton is the extent to which funds
intended for highway construction
were diverted to the maintenance
division, where it was spent for
construction work under the guise
of maintenance" without the COM
petitive bids that would be required
for construction projects. Much of
the money thus diverted was spent
for rental of equipment, the testi-
mony showed. The department
spent $1,747,4 for this purpose in
1886, 1887 and 1888, $456, ass going
to the Reader Company alone.
The Reader Company was paid
S76,9SS in seventeen months in rem
tai for a rock crusher which could
have been purchased new for S1S,-
1877, the committee was informed.
Nelson, Mullen and Nelson, Min
neapolis contractors, got $12,777
rental for a caterpillar tractor in
1887 and 1888, worth SALTS new
when purchased in 1884 and worth
now not more than $500, witness
es told the committee.
The highway department spent
So, 96S, 199 in three years for con-
struction work on federal aid roads,
not as approved construction pro-
jects on which it could get federal
aid, but under the guise of main
tenance work on which it could get
no federal help, the committee was
advised. The department did the
work by renting equipment and
hiring the labor in those cases.
o. L. Kipp, veteran construction
engineer of the department, said
tests made showed the cost of do
ing the work in this way was 40 to
500 higher. AS a result of the
diversion of construction funds to
and the payment of
much of it for equipment rental,
the committee was told, the state
was unable to match $2,500,00O in
federal aid that was available to
provide work and jobs here in 1888.
Legislative committees made pro-
gress during the week, but the Leg
islature itself passed few import
ant measures. The house passed
a bill appropriating S3,000,3 300 for
relief to meet the deficiency for
the current fiscal year, and the
measure now is before the senate.
The house civil administration
committee confirmed a position
taken when it amended
the senate bill on state unemploy-
ment compensation to relieve en-
ployers of less than five persons
from the payments required. The
senate had voted to eliminate en-
ployers Of less than eight. Com
promise proposals to reduce pay
ments substantially for those with
good merit ratings also are pending.
Cash benefits are paid job-hold-
ing expectant mothers in 80 coun-