Evening star., 1942-02-11
|UntoId Millions
In War Profits
Laid 10 Brokers
House Report Asks
Funds Reeopture,
, End of Waste
BY the Associated Press.

By the Associated Press.
A congressional c I'm mittes
charged today that defense bro
kers have amassed untold mil
lions" profiteering on war con-
tracts, and demanded immediate
steps both to get the profits back
and to prevent exorbitant COM
missions in the future.
In report based upon weeks
Of investigation and public hear
ings the committee told Congress
it had uncovered evidence that
commission brokers-some of them
without previous experience in the
work-had obtained commissions
ranging from 3 to rs per cent on
defense subcontracts.
The House Military Affairs Sub
committee studying procurement of
defense materiel called for:
l. Complete reorganization of the
control and supervision by the War
Department of the performance OF
-plus-a-fixed-fee contracts for
the operation of ordnance plants.
Would Collect on Losses.
2. Action by the War Depart
ment or the Justice Department to
obtain reimbursement OF losses to
the Government resulting from fail
ure of corporations, individuals. or
partnerships to perform properly
the services stipulated In their
contracts.
8. A provision to permit the War
Department to deduct from future
contracts all profits over / per cent
obtained by commission brokers
handling subcontracts.
The greater part of the commit
tees recommendations and findings
were based on its inquiry into the
huge munitions contracts awarded
the Remington Arms Co. of Bridge
port, Conn, and subcontracts han
died for Remington by Leon K.
Shanack of New York. subcontractor
and commission agent.
The committee said that: "Unless
1t Remington) undertakes to cor
rect the practices which the testi-
mony and evidence have disclosed
IN the hearings to date, the tax
payers bill for waste will be a
considerable one which will involve
millions of dollars"
"a Per Cent Profits.
The committee explained that Mr..
Shanack "farmed out" orders for
Remington to concerns which we're
as available to the arms company
as they were to him. 1t added that
Mr.. Shnack received procurement
orders at one time when he DOS
sessed no personal manufacturing
facilities; that his background was
that "of a truck salesman and fight
promoter; that his profits in some
instances amounted to more than
"a per cent, and that he made a.
profit of 24,74322 on a total of
1858 666.83 on orders in the first 10
months of 1941.
1t asserted that certain officials
OF the procurement and inspection
branches of the Remington Arms
Co. were in all probability Influenced
to some degree" by Mr.. Shanack,
and that one buyer for the arms
company had been entertained by
Mr.. Shanack and had been an over
night guest at his home.
Anxious to make clear that it was
not insisting upon the pursuit of
any parsimonious program which
might impede the armament pro-
gram" the committee said it would
continue its scrutiny to save money
now rather than to discuss in
estlmable losses when the war is
over and the hundreds of millions of
dollars irredeemably lost"
1t stressed also that there was a
place in the defense work for "ex-
perienced, responsible commission
agents under proper repula :
tion,' but suggested that their abili-
ties should be enlisted for a stipu-
| (Caa DDnDEDC n.~. =