Mr. BROOKS. Would you consider a hundred thousand dollars a year rent as a fairly good sized lease? Mr. ARGANBRIGHT. Yes, sir. Mr. BROOKS. Would you think that should be looked over? Mr. BROOKS. Normally would they request you to look over one of that nature? Mr. ARGANBRIGHT. Well, sir, I can't very well answer that be cause Mr. BROOKS. In your experience here, when they have leases that will cost the U.S. Government in excess of a hundred thousand dollars a year Mr. ARGANBRIGHT. I suspect our records Mr. BROOKS (Continuing). Has your record reflected since you have been here that they normally have the Mr. ARGANBRIGHT. I think in the majority of cases, yes, sir; that would be the case. Mr. BROOKS. Was a lease from the Third Recon Corp. submitted to your office for approval? Mr. ARGANBRIGHT. Not that I recall. Mr. BROOKS. Do you think you would recall it if it had been submitted? Mr. ARGANBRIGHT. I think I would; yes, sir. Mr. BROOKS. Would you say then, no, it had not been submitted, or it had been submitted? yes, Mr. ARGANBRIGHT. I would say not that I can recall. If you would like, before you put me on record there, I would like to search my file. But I do not remember this morning of having done that. However, I would like to get in here, for your attention, the Rice and Ray who are the principals in this case, I did make extensive investigations of their financial worthwhileness in at least two other instances. Mr. BROOKS. Did you know that this lease offer was accepted, was about to be accepted, and that this would occur without the approval of your office after it had been processed in the Department? Mr. ARGANBRIGHT. Well, no, sir. I do not know. The comptroller doesn't usually project himself into the operating man's business to that extent. Mr. BROOKS. Did you inquire as to why it wasn't referred to you? Mr. ARGANBRIGHT. No, sir. Mr. BROOKS. You just stayed out of it? Mr. ARGANBRIGHT. Yes, sir, which I think is what the comptroller should do. When he attempts to run the operating man's business he ceases to be a comptroller. Mr. BROOKS. Even when he suggests that he might be helpful in his legal capacity as a comptroller to examine a lease that is going to be in excess of $100,000 a year net cost to the Government? Mr. ARGANBRIGHT. We are willing at all times to help out if they want us to, of course. Mr. BROOKS. You are fairly familiar then with the financial condition and capitalization of the Third Recon Corp. on the date the bid was accepted, August 14? Mr. ARGANBRIGHT. No, sir. Mr. BROOKS. You are not. Had it been submitted to you, do you think it would have received your approval? Mr. ARGANBRIGHT. That would depend on the extent to which the corporation was capitalized, or the amount of assets the corporation would have. Mr. BROOKS. It was capitalized for $500 at the time. Mr. ARGANBRIGHT. That is what you would call a thin corporation, would it not? Mr. BROOKS. It would be pretty thin, I would think. Mr. BROOKS. This doesn't necessarily reflect the business acumen of the people who put it together. Mr. ARGANBRIGHT. However, sir, I find that as a matter of business practice that there are a number of small corporations like that founded for business purposes, it is not an uncommon practice, and the tax benefits that accrue therein are extensive sometimes. They do operate in that fashion. I want to refer again to the Rice and Ray gentlemen. They have excellent credit references and they are men of some substance, according to their credit reports. if Mr. BROOKS. I notice that you did mention that again. I wonder you have some records on those individuals that you have worked up and investigated? Mr. ARGANBRIGHT. As of right now, this morning, I can recall in my file a credit investigation on the air route traffic control center that we made on account of Rice & Ray bidding on the contract. That is located at Olathe, this new air route traffic control center. FAA is now building it. GSA is not in that contract. Mr. BROOKS. How about for the Omaha building? Mr. ARGANBRIGHT. No, I don't recall anything about the Omaha building. Mr. BROOKS. Would you please send us some legible copies of those reports? Mr. ARGANBRIGHT. I will be glad to. Mr. BROOKS. Would you also verify your own files as to whether or not you ever received a request to go over that? Mr. ARGANBRIGHT. Yes, sir. Mr. BROOKS. Your recollection is that you did not, but you want to verify it before you finally go on record? Mr. ARGANBRIGHT. I think that would be only fair, sir. Mr. BROOKS. We would appreciate that. Do you have any questions, Mr. Wallhauser? Mr. WALLHAUSER. No, I do not. Mr. BROOKS. We might try to ascertain, since the Recon Corp. had submitted a bid, why you happened to investigate individuals rather than a corporation. Mr. ARGANBRIGHT. May I answer that? Mr. BROOKS. Please. Mr. ARGANBRIGHT. This Rice & Ray, at the time they bid on this air route traffic control center at Olathe, that investigation and bid was submitted with Rice & Ray as a partnership. Mr. BROOKS. It wasn't submitted as Third Recon? Mr. ARGANBRIGHT. As a partnership. Rice & Ray as a partnership. Mr. BROOKS. How was the contract signed when they signed it up? Mr. ARGANBRIGHT. There was no contract. They merely bid on this. Mr. BROOKS. So you looked into them just as individuals? Mr. ARGANBRIGHT. Yes, sir. I did make that investigation for PBS. Mr. BROOKS. You questioned it? Mr. ARGANBRIGHT. There were three of those centers contemplated. The construction was contemplated throughout region 6. One in Minnesota, one in Olathe, and I forget where the third one was. We did make investigation on those. Mr. BROOKS. We sure do thank you for coming down this morning. Now we would like to call Mr. Earl H. Lund, regional director, public buildings service, if he is here. We are happy to see you brought your files. Will you raise your right hand and be sworn? Do you swear the testimony you are about to give before this subcommittee will be the truth, the whole truth, and nothing but the truth? Mr. LUND. Yes, sir. TESTIMONY OF EARL H. LUND, REGIONAL DIRECTOR, PUBLIC BUILDINGS SERVICE, GENERAL SERVICES ADMINISTRATION, REGION 6, KANSAS CITY, MO. Mr. BROOKS. I might add at this point that I noticed, Mr. Lund, that there were some comments in the paper this morning attributed to you and your superior, Mr. Jay, to the effect that you had not been questioned or given an opportunity to testify, a general complaint of the method by which we are trying to conduct this hearing. I want to make it perfectly clear that the next time I investigate anything connected with you and Mr. Jay, I personally will try and see to it that you are first to testify. This instance is one in which I thought it would be only fair to the people who are directly concerned for them to hear whatever charges or allegations were made, whatever the complaints were from Mr. Warren, whatever anybody had to say about it, so that you in your position as theoretically a Government servant would then be in a position to explain, to refute, to deny, to admit, whatever the charges might have been. And I thought that this was the fair way to give you and Mr. Jay an opportunity to hear what people thought about some of your activities before asking you to testify on them. This apparently was not well received by you and Mr. Jay, and I would assure you that in the future I will give you an opportunity to testify first under oath. This time I am sorry that you were delayed until today. I had hoped that we would get to you yesterday, and we could conclude this thing in 1 day. But it does seem strange to me that people who are involved in something would want to testify first rather than hear, as we are committed to do-rather than hear the complaints. Hear what people have to say, try to get the facts, before you ask the people who are theoretically in charge and who are responsible for the operation to testify. Would you please identify yourself for the record, officially? Mr. LUND. Yes, sir. I am regional director of the Public Buildings Service, General Services Administration, Kansas City, region 6. Mr. BROOKS. You came to Kansas City as regional director about the time that Mr. Thomas Jay became the Commissioner, didn't you? Mr. LUND. Yes, sir; I came the same day. Mr. BROOKS. What was that day? Mr. LUND. June 3, 1957. Mr. BROOKS. June 3, 1957? Mr. LUND. Yes; June; that is right. Mr. BROOKS. Shortly after you came here didn't you purchase a home, naturally, through Mr. Jay's wife? Mr. LUND. I purchased a home, but Mr. BROOKS. I mean in the normal course of things you wanted to buy a house when you came here to live. Mr. LUND. When I first came here we lived in an apartment hotel, and then we lived in an apartment. We had to find a home. I learned that Mrs. Jay was selling homes in the area in which I was interested. Mr. BROOKS. One you were interested in? Mr. LUND. Yes. Mr. BROOKS. She sold homes out there? Mr. LUND. Yes; in that area. Mr. BROOKS. Did anybody else sell them out there? Mr. LUND. Yes. There may be all kinds of people. I don't know who sells them all. Mr. BROOKS. Would you just tell us the circumstances? I would be interested. Mr. LUND. Why sure. I was looking for a house and she operated, as I learned, in the area in which I was interested, and I asked her if she thought she could find me a home. Mr. BROOKS. And she thought she could help you? Mr. LUND. She did. Mr. BROOKS. That was nice of her. What was the purchase price of the house that she helped you locate? Mr. LUND. Oh, including all the furnishings and everything, about $22,000. Mr. BROOKS. Completely furnished? Mr. LUND. Yes, sir. Completely; rugs furnished, not the furniture in it. That's right. Mr. BROOKS. Did you get drapes, too? Mr. LUND. No, sir. I brought those from Chicago. Marshall Field drapes. Mr. BROOKS. Now, Mr. Lund, we have had quite a bit of testi mony Mr. LUND. I want to add on there that Mrs. Jay got no commission on that deal. Mr. BROOKS. Why not? Mr. LUND. I don't know. I just know she didn't get any. Because the realty company, when I closed, told me that she didn't get any. Mr. BROOKS. Normally the people who are selling the house pay the commission to the agent. In east Texas, when you sell a house for $10,000, you pay that agent, you agree to pay him, in the contract, about roughly 5 percent. Then the seller, when he pays for the house, doesn't pay any particular fee to the salesperson. Mr. LUND. I appreciate that. But the company that she is the saleslady for, when they were selling me that house, told me first that I got a very, very good buy. The house had been sold for more money a few months previous to the time I bought it, and they said: "You got a very good buy. You must know Mrs. Jay, because she isn't getting any commission." Mr. BROOKS. She must have known the people she was selling it for. She was both friend of the owners and the people she was selling it to. Mr. LUND. I assume she knew the people she was selling it for. Mr. BROOKS. It is a very worthwhile thing to do, I guess. Does she do this traditionally? Just habitually, help people sell their houses and not collect any money for it? Mr. LUND. I really don't know. Mr. BROOKS. It would be unusual, wouldn't it? I mean, most of the social workers in my part of the country don't get into the house selling business. They help people and they contribute their time, but they don't compete with the real estate folks who are trying to make a living at it. We have had quite a bit of testimony and, as you learned yesterday, you were involved in most phases of it. But before getting down to specifics, I just wondered if you might tell us, since you are directly responsible to Mr. Jay, if you feel that you keep him fully informed as to the activities of your division? Mr. LUND. Well, I try to. The routine activities I don't call to his attention. But anything special and unusual, that somebody may talk to him about, yes, I have always done that. Mr. BROOKS. You try and keep him fully informed? Mr. LUND. I try to keep him informed so that he knows what is going on. I don't go into details with him. Mr. BROOKS. But he always knows what is going on? Mr. LUND. I hope so. Mr. BROOKS. We hope so, too. But you make a special effort to bring to his attention anything that is of an irregular or unusual nature? Mr. LUND. Yes, sir. Mr. BROOKS. First, we would like to hear what you have to say about the Mart Building project. Would you tell us offhand if you consider the O'Brien and Henges partitions as equal, in the GSA use of the word? Mr. LUND. Yes. Mr. BROOKS. You do? Mr. LUND. Yes. Mr. BROOKS. Would you like to comment on the action of the Henges Co. and the evident belief by some that the Henges Co. had special influence with the top echelon of the GSA? Mr. LUND. If he did, I have never known of it. Mr. BROOKS. Did you hear about it? Mr. LUND. No, I never heard about Henges or O'Brien partitions until they were installed in the St. Louis Mart Building. Mr. BROOKS. Did you hear some allegations that the Henges Co. had some influence with the GSA, yesterday? Mr. LUND. I learned that they did. |