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Mr. STROBEL. None whatsoever.
Mr. Scort. And did you directly or indirectly, either individually or as a member of the firm of Strobel & Salzman, receive any compensation for services rendered in this matter?
Mr. STROBEL. None whatsoever.
The CHAIRMAN. I agree with the result that the gentleman from Pennsylvania wants to bring about, namely, that there may not be any violation of the conflict-of-interest statute because you did not profit directly or indirectly, moneywise. But there is a question of delicacy here, to say the least, and that is what I want to understand, as to whether or not you should not have disqualified yourself in connection with the Petroff assignment. I think that is very important and very pertinent to these proceedings.
Mr. Scott. It was my thought, Mr. Chairman, that any witnesses brought up here ought not to leave the stand with these implications unresolved. In other words, if there is no violation of certain statutes, it was my intention to bring that out clearly, without knowing, of course, the answer in advance, in order to see that the witness has the benefit of a thoroughly fair exploration of these matters.
I am sure we all have that in mind. The CHAIRMAN. I think we all have that in mind. It was very good of you to have asked that question.
Mr. FINE. The chairman also remembers the difficulty we had in New York trying to get the Commissioner of Immigration not to go to 70 Columbus Avenue, and the chairman must remember that he was one of the instigators of that fight to keep Ellis Island alive. And he also must remember that if General Swing cooperated with us, with the General Services Administration, as he did with the delegation from New York, that Mr. Strobel was really put on a spot.
The CHAIRMAN. I do not agree with that characterization. I do agree with what the gentleman said in the forepart of his statement about Columbus Avenue. As a matter of fact, Columbus Avenue was finally discarded, was it not, as far as these offices were concerned!
Mr. STROBEL. The project was abandoned and accommodations were provided somewhere else.
Mr. MALETZ. Was a settlement reached with Petroff for the services performed?
Mr. STROBEL. As far as I know, it was, yes.
Mr. STROBEL. I don't know that figure. Mr. Lawton can answer that question.
The CHAIRMAN. I think it was $9,000 that he received for his work.
Mr. MALETZ. Now, Mr. Strobel, I think you have indicated that you offered the job of director of the design and construction division to Mr. Petroff
Mr. STROBEL. That is right.
Mr. MALETZ. Did you also offer the job to Mr. Henry Otis Chapman?
Mr. STROBEL. I did.
Mr. MALETZ. And he was the senior partner of Chapman, Evans & Delehanty?
Mr. STROBEL. Right.
Mr. MALETZ. I ask you to examine a document dated May 9, 1955, and tell us whether that is a copy of the letter you wrote to Mr. Chapman.
Mr. STROBEL. That is.
Mr. MALETZ. Is that an accurate copy of a letter which you addressed to Mr. Chapman!
Mr. STROBEL. I believe so.
Mr. MALETZ. Now, may I read this letter. It is a personal letter to Mr. Chapman:
DEAR MR. CHAPMAN: As per our telephone conversation today, I am sending you herewith a brief outline of the position of Director, Design and Construction Division, Public Buildings Service, General Services Administration.
I wish you would give this proposition your most serious consideration. We seem to be at the start of a minor public buildings program through the use of the new purchase-contract law. The position will, therefore, be one of great importance to the Government. I can say that the importance is in reverse to the size of the salary. I hope to hear favorably from you very soon. Very truly yours,
PETER A. STROBEL,
Commissioner of Public Buildings. Mr. MALETZ. Did you offer this job to anybody else? Mr. STROBEL. Yes; I did. Mr. MALETZ. And to whom else did you offer this job?
Mr. STROBEL. I offered the job to Mr. Reinhard. He is a very famous architect in New York City, of the firm of Reinhard, Hofmeister & Walquist.
Mr. MALETZ. Is that firm a client of Strobel & Salzman?
Mr. STROBEL. I offered the position to Mr. Otto Tegen, who for the last 5 years has occupied the position of university architect in New York State.
Mr. MALETZ. Strobel & Salzman has no relationship with him?
Mr. KEATING. Mr. Chairman, just before we adjourn, I know the chairman wants to adjourn over to Friday, but I think perhaps if Mr. Strobel has anything further to add to matters about which he testified this morning we should give him the opportunity at this time to do so. Perhaps it was completely covered by his statement originally.
Mr. STROBEL, No. Thank you, Mr. Chairman.
The CHAIRMAN. If at any time, Mr. Strobel, you feel that you want to break in and make an explanation, you have a perfect right to do so.
The committee will now adjourn until Friday morning at 10 o'clock. You will return, Mr. Strobel.
(Whereupon, at 1:05 p. m., the subcommittee adjourned, to reconvene at 10 a. m. Friday, October 28, 1955.)
CONFLICT OF INTEREST
FRIDAY, OCTOBER 28, 1955
HOUSE OF REPRESENTATIVES,
Washington, D. C. The subcommittee met, pursuant to adjournment, at 10:20 a. m., in room 346, Old House Office Building, Hon. Emanuel Celler presiding:
Present: Representatives Celler (chairman), Rodino, Fine, and Keating
Also present: Herbert N. Maletz, chief counsel, and Kenneth R. Harkins, cocounsel of the subcommittee.
The CHAIRMAN. The committee will please come to order. Mr. Strobel, will you take the stand again? Mr. ROBB. Mr. Chairman, there were a couple of items in the record which Mr. Strobel having read the record thought he might perhaps. make more clear to the committee. Might he do that at the outset ?
The CHAIRMAN. After I make a preliminary statement, yes.
I indicated at the last hearing that in this case there is a question of delicacy to say the least, and I said that that was an understatement. Let me make it clear that what I was referring to was the propriety of Mr. Strobel's official conduet in recommending to a subordinate that he award a governmental architectural contract to a very active client of his firm; namely, Serge Petroff. That may not be a violation of law, but it scarcely seems in keeping with the ethical standards. demanded of Government officials, and I might add there appears to be a conflict of interest in fact if not in law. Furthermore, lest there be any misunderstanding, I do wish to point out, Mr. Strobel, that your activities in prosecuting a claim before the Corps of Engineers, on behalf of the firm of Strobel & Salzman on May of 1955 may be more than a question of delicacy and conceivably may involve a possible violation of the Criminal Code, section 283 of title 18 of the United States Code which reads as follows:
Whoever being an officer or employee of the United States or any department or agency thereof or of the Senate or House of Representatives acts as an agent or attorney for prosecuting any claim against the United States or aids or assists in the prosecution or support of any such claim otherwise than in the proper discharge of his official duties or receives any gratuity or any share of or interest in such claim in consideration of assistance in the prosecution of such claim shall be fined not more than $10,000 or imprisoned not more than 1 year or both.
That statute refers to any claim, howsoever it may have arisen,
Now, you may have acted in utmost good faith, Mr. Strobel. I don't express any opinion on that.
This is not a case where you were prosecuting a claim solely for yourself. If that were the situation, I would not think there would be any violation of statute involved.' The fact is, however, that you were prosecuting a claim on behalf of the partnership of Strobel & Salzman and on behalf of Mr. Salzman as well as on your own behalf.
Now we have a number of questions this morning for you concerning many matters which were not covered on Wednesday, but before going into that, Mr. Robb, if you want to make some corrections in the record, we will be very glad to have you do so.
Mr. ROBB. Yes, sir.
Mr. Strobel thought perhaps the record was not entirely clear on one point and on another point, Mr. Chairman, where Mr. Strobel said to the best of his knowledge the list shown him of present clients of the firm was correct.
The CHAIRMAN, Let Mr. Strobel then make the correction.
TESTIMONY OF PETER A. STROBEL, COMMISSIONER OF PUBLIC
BUILDINGS SERVICE; ACCOMPANIED BY ROGER ROBB, COUNSELResumed
Mr. STROBEL. I'm referring to page 13.
Mr. STROBEL. There Mr. Maletz brings out the point that the present clients of the firm amount to 32. I want to make a correction on that.
а. Instead of 32, it is only 17.
Mr. MALETZ. That is 17 active clients at the present time; is that right? Mr. STROBEL. That is correct. Mr. MALETZ. What about a case where
have a client under contract to do a job, but the job has not been started? Would that be in addition to the 17?
Mr. STROBEL. I don't think so. The list of 32 was taken out from the list made up by the office of Strobel & Salzman. As far as I know that includes also clients that were clients before July 1, 1954. In other words they were carried over.
Mr. MALETZ. That is correct. I asked Mr. Schwarz to prepare a list of all clients of the Strobel & Salzman firm from May 1, 1953, to the present date. Is the list which is now in the record an accurate one on that basis?
Mr. STROBEL. I can't answer to that because I didn't make the list, and I hadn't examined that in detail.
Mr. MALETZ. Mr. Schwarz will testify to that at a subsequent time.
Mr. ROBB. We have this list that Mr. Strobel referred to. Would the chairman like to have that for the record ?
Mr. FINE. He wants to offer the list that he has now compiled.
OCTOBER 27, 1955. The clients Strobel & Salzman are now doing work for are as follows: Contractors: John W. Ryan Construction Co.
Architects : Eggers & Higgins, Maurice R. Salo, Fellheimer & Wagner, Brown & Guenther, Lathrop Douglass, Ferrenz & Taylor, Chapman, Evans & Delehanty, very well
Fordyce & Hamby, Irwin S. Chanin, Serge P. Petroff, William Fuhrer, Kelly &
Engineers: F. L. Smidth & Co. (also doing work for them as owners), John
The CHAIRMAN. Do you want that at the point you indicated or now in the record ?
Mr. ROBB. It doesn't make any difference to us whichever way the Chair prefers.
The CHAIRMAN. It will be put in at this point.
Mr. STROBEL. There is one other point, that even though the testimony as it was given the other day is technically correct, the impression that has been made by the press is completely erroneous.
The CHAIRMAN. We can't take any responsibility for any impressions gathered by the press. That works both ways.
Mr. STROBEL. Let me withdraw that reference.
statements have been misinterpreted. I think the press does a very fine job. These are very fine fellows around the table, and they do the best they can. They may not agree with me or with you. Impressions are not matters of record here and we cannot change whatever the impressions may have been in the minds of the reporters.
Nr. STROBEL. Mr. Chairman, let me make my remarks to say that I would like to add to the statement clarifications as to the full percentage participation of the partners of Strobel & Salzman in the firm's net profit. I have no quarrel with the press, and I certainly don't want to get into any such argument. However, the 90 percent was mentioned. The facts are these. In 1953 the percentage distribution between Mr. Salzman and myself was 24 percent to Mr. Salzman, 76 percent to me. In 1954, which is after I came down here the distribution was 40 percent to Mr. Salzman and 60 percent to me.
The CHAIRMAN. Were the terms of the agreement changed?
Mr. STROBEL. No, that has nothing to do with the change of the agreement. The CHAIRMAN. That was the net result of all the transactions?
Mr. STROBEL. That was the net result. In other words, instead of saying I have a 90 percent interest in the business, it must be explained this way,
interest varies from actual losses out of my pocket in case the business shouldn't make any money
The CHAIRMAN. I think you did say that Mr. Salzman when he brought in business, that increased his percentage of the intake.
Mr. STROBEL. Under any normal conditions, the percentage of Mr. Salzman could not be much less than 20 percent.
Mr. MALETZ, Mr. Strobel, is it not true that on January 3, 1955, you entered into a new partnership arrangement with Mr. Salzman?
Mr. STROBEL. That is correct. There was a change.
Mr. MALETZ. Is it not correct that under the terms of that arrangement you owned all the assets of Strobel & Salzman?
Mr. STROBEL. That is correct.
Mr. MALETZ. Is it also not true that under the terms of the arrangement Mr. Strobel and Mr. Salzman are each entitled to a drawing account of $12,000 yearly?
Mr. STROBEL. I don't think so. I think it is $15,000.