Evening star., 1954-05-02
|egoIn in Operating Capital Transit Senate Inquiry Finds
Managerial Attitude
Of Utility Group Is
Criticized in Report

IrIlIClzed IN Kep0Tf
Louis E. Wolfson violated no
laws in connection with his con-
troll Of Capital Transit Co. ac-
cording to yesterdays report Of
the Senate transit Investigators.
mo illegal actions on the part
Of Louis E. Wo1fson and his
associates were discovered in the
operation of the Capital Transit
Co.," the report declared.
"The subcommittee found,
however, that the general man
agerial attitude of the Wolfson
group was contrary to the man
agerial attitude which should
be held by the operators of
public transportation company"
the report added.
Took Over Control
The Senate subcommittee
reached its conclusion after de-
failing how the Wolfsons had
sworn they did not plan to
operate the mpany and
planned to put only four of their
representatives on the 15-man
board of directors.
Although the changes in the
board Of directors might have
gone unnoticed in an ordinary
business corporation" the report
said, "the completeness of the
turnover in the board of direc-
tors of Capital Transit is dis
turbing to the special sub
committee because of the scarcity
of men on that board who are
familiar with local transit needs
and problems without being
financially interested in the
company"
"There are but two directors
on the board today who can be
classified in Louis Wolfson's own
words as outstanding residents
of the District of Columbia who
are entirely familiar with the
civic and transit problems and
in whom the public will have
confidence"
Two Officials Mentioned.
The report named the two men
as Frank E. Weakly, hotel Off
cial, and Daniel w. Bell, pres
ident of the American Security
& Trust Co., the c. T. C.'s bank.
(Mr. Bell was replaced at
the company's April 6 board
meeting by Robert c. Baker,
executive vice president of the
American Security & Trust
Co. Mr.. Bell did not seek re-
election)
Among the companys officers,
| the report said. only E. c. Gid
dings, in charge of public rela-
tions. "has survived. Although
many of the officers retired VOL
UNFAIRLY, they were replaced for
the most part not with expert
enced transit men but rather
with Wolfson associates"
OF the new management's div
idend policy, the report said.
dividends have averaged 1914 per
cent of the Wolfsons' purchase
price, cover 10 per cent on the
highest market value that the
stock ever reached during those
four years." and IAN average
annual dividend rate Of over
nine per cent on the present par
value of the stock"
"This subcommittee" the re-
port said. "can view the recent
dividend policy of Capital
Transit Co. under the Wolfson
management only as a course of
action wholly inconsiderate of
the public interest, wholly in
consistent with the philosophy
of fair and reasonable return to
the owners of a regulated utility
and wholly inconsistent with the
stated intentions of representa-
tives of the Wolfson group"
Stock Transfers Listed.
The report listed C. T. C. stock
transfers by the Wolfsons to the
U. S. Wolfson Bros. Corp. and
the Southern Pipe and Supply
Co., both controlled by the
Wolfsons.
presumably" the report said,
zone of the purposes was to
avoid payment Of income taxes
by individuals on the dividends
received. The $1,000 shares
in the hands of these two cor
porations in January. 1852. when
the special dividend was paid.
received $4,000 from that one
dividend.
"The tax payable by in
dividuals on this amount would
range from a minimum Of about
$1,000 to a maximum of over
100000 depending on the in
dividual tax brackets Of those
who received the dividends. The
corporation tax on the other
hand would only have been
some $4,000"
Concluding the report, the
subcommittee prefaced its state
ment that mo illegal actions on
the part of Louis E. Wolfson and
his associates were discovered in
the operation Of the Capital
Transit Co." with these words:
Lest this report seem too
harsh on Capital Transit Co. and
the Wolfson group, the sub
committee states that the facts
have been developed and ana
lyzed to the best Of their ability
with the staff and time avail
able"