MEDFORD MAIL TRIBUNE. MEDFORD. OREGON
THURSDAY. MAY . 1163
C 9 1
Investigators Seek Fraud and Mismanagement in Highway Work
BY DANIEL RAPOPORT
United Preii Int.rnitlonel
Washington - (UPD - In a
dingy suite on the fourth floor
of a rickety onetime hotel,
Investigators are beginning
their fourth year of detective
work on one of the govern
ment's richest programs.
They are the staff of the
House Highways subcommit
tee, a special unit set up to
keep watch on a multi-billion
dollar road-building plan that
by 1972 is supposed to criss
cross the. nation with 41,000
miles of high-speed, limited
access expressways.
The subcommittee began Its
digging after the program had
been going four years. It soon
discovered that some parts of
the big highway project were
mired to the axel in mis
management and in some
cases fraud.
It is impossible to estimate
how much money the sub
committee wijl save federal
and state treasuries. But one
subcommittee source says the
savings already run well into
the millions.
Watt Lessened
What Is more important Is
the belief that from here
on the amount of waste in the
program will be lessened con
siderably. "The greatest good we've
done," said one subcommittee
staff member, "is that we're
in business and in the field.
It has a deterrent effect."
The subcommittee Is headed
by Rep. Josn A. Blatnik,
D-Minn. Its staff of 17 former
FBI agents, ex-detectives, law
yers and secretaries has head
quarters in the George Wash
ington Inn, a ramshackle,
white stucco building that has
been taken over by Congress.
It is marked for destruction.
But meantime it is used for
office space by several House
subcommittees.
Money Involved
Huge amounts of money are
involved in the highways in
vestigation. "Since the enactment of the
Federal-Aid Highway Act of
1956 more than $29 billion
has been committed to high
ways projects in the United
States," according to a com
mittee report.
Of that total the Federal
government has put up $20.5
billion under formulas b y
which it supplies anywhere
, from 50 to 93 per cent of the
funds. The stales make up the
difference.
During the next seven years
the federal government will
spend nearly $27 billion more
on the highway program. Most
of it will go toward comple
tion of the interstate system,
now targeted for completion
in 1972 at a total of $41 bil
lion.
From the size of the money
figures alone, it is apparent
that there is much room for
waste. But the possibility be
comes even more likely when
it is seen how thinly the su
pervision is spread.
While the federal govern
ment supplies the bulk of the
money to finance the road
work, almost all of the con
struction is supervised by the
stales. Ana the stales, even
more than the federal govern
ment, were totally unprepared
for the avalanche of funds
and road building activities
that overwhelmed them with
the launching of the inter
state system.
Poor Management
As a result, more money
was spent than should have
been on rights-of-way and con
struction. Usually this was be
cause of slippy management.
Sometimes it was because of
dishonesty.
In one state the investiga
tors discovered that impor
tant field testing was not car
ried out because state em
ployees were not qualified for
the work. In several states it
was found that the men who
appraise rights - of way lack
ed the necessary experience.
More glaring were the in
stances of corruption unearth
ed. There were payoffs to state
inspectors who passed .sub
standard work. There were
private deals between ap
praisers and property owners.
The Blatnik investigators
realized at the outset that
they could not check the
whole program. So they re
coded to concentrate on cate
gories, for example checking
on right-of-way acquisition in
two or three states. They did
the same with other big ex
penditures in road construc
tion. Patterns Sun
They found that patterns
existed. One report said: "In
the subcommittee's hearings
concerning the state of New
Mexico the subcommittee
found conditions in that state
to be virtually a carbon copy
of those previously exposed
in Oklahoma and Florida
with respect to construction
practices and to relationships
existing between contractors
and state personnel supposed
to be supervising their work."
The same report noted that
the subcommittee uncovered
a pattern in Massachusetts
"similar to the one previously
disclosed in Florida in the
matter of state disposition of
Improvements taken in con
nection with right-of-way ac
quired for federal aid projects.
Hearings Held
The subcommittee has held
hearings on highway work
i n five states: Oklahoma,
Florida, New Mexico, Mass
achusetts and West Virginia.
A hearing on Arizona began
April 30. Others can be ex
pected. Here are the high
lights of hearings - already
held:
Oklahoma - This was the
first state investigation for
the subcommittee staff. It
chose for close scrutiny a sec
tion of the inter-state system
known as the Skelly bypass at
Tulsa. Looking into com
plaints of inferior construc
tion it found that "controls
were so lax that they were in
fact almost non-existent in
some phases and of question
able value In others. ' One
expert witness said defici
encies in the road totaled
$524,000. The staff also found
that a highway commissioner
had a hidden interest in a
subcontracting firm which re
ported above average net
profits.
Contractors Involved
Florida - Here the subcom
mittee concentrated on the re
lationship between contrac
tors and state personnel. It
found that supervisors ac
cepted tens of thousands of
dollars in money and other
things of value from contrac
tors performing work under
prime or subcontracts involv
ing more than $60 million
worth of federal aid highway
projects." The subcommittee
heard of one case in which the
supervising state engineer on
a $6.2 million bridge project
was paid more than $3,000
for "professional services" by
the contractor. "The end re
sult," the subcommittee re
ported, "was a structure with
decks so rough that the (Fed
eral) Bureau of Public Roads
and the state have been re
ceiving complaints ever since
the bridge was open to the
traveling public."
Falls Apart
New Mexico - The investi
gators discovered conditions
in this state "to be virtually a
carbon copy of those in Okla
homa and Florida." In addi
tion, it was found that "con
tractor influence" over the
policies of the state highway
department reached such a
degree that there was evi
dence that one contractor was
able to choose what engineer
was assigned to his project.
The subcommittee thus de
scribed the state's most pub
licized road failure - the
highway literally fell apart
at the very time the state was
accepting it."
Massachusetts - mis hear
ing exposed the state's right-of-way
acquisition operation
as pockmarked with incom
petence and wrongdoing. Very
few appraisers were qualified
to do their job, and "the vast
majority were employed on a
temporary basis and obviously
on the basis of the political
strength they could c o m
mand," the staff noted. "This
was a situation of long stand
ing and prevailed during both
Democratic and Republican
administrators." Hearings
showed that state negotiators
were shaking down property
owners by offering them a
higher price to? their property
if they would pay part of the
additional money to the em
ploye. Th staff also noted
that up until 1958 the state's
right-of-way engineer was an
acknowledged expert who had
set up excellent procedures.
The difficulty, the subcom
mittee discovered, was that
no one followed up to see that
the procedures were carried
out.
West Virginia - This, the
most recent hearing complet
ed, also concentrated on right-of-way
acquisition. Here the
investigators found that "pur
ported appraisals were a con-
n y 1 1
COMPANION Del Davidson, a veteran of World War I
and a victim of arthritis, has been confined to a wheel
chair for about 13 years. A constant companion of Davidson's
is "Blackie," a cocker spaniel who was abandoned as
puppy. The dog is always seen with Davidson, a companion'
ship encouraged by the Southern Oregon Humane Society
during Be Kind to Animals Week this week.
glomeration of deliberately
distorted figures completely
disregarding the essential and
recognized approaches to de
termination of fair market
value." Subcommittee mem
bers were critical of the fact
that neither the state nor the
bureau of public roads had
done much about a 1059 bu
reau appraiser's report that
described the West Virginia
system as "without doubt the
least efficient right-of-way op
eration I have ever encountered."
Subcommittee investigators
are convinced that similar
practices have existed In many
other states. But at the same
time they are not condemning
all of them and acknowledge
that there are good highway
administrations.
In criiicizlng the manner in
which Florida sold the homes
thit it obtained during right
of-way acquisitions, the sub
committee staff said the
state's record "contrasted
sharply with the experience
of the federal government
with the same problem in
California." Through the re-
sale procedure, California
was able to pay back 6 per
cent of the money the federal
government invested in the
state's rights-of-way, while
the Florida return was less
than '? of 1 per cent.
Hearing Results
What have been the results
of the hearings so far?
In all the states that the
subcommittee looked into, ac
tion has been taken on a stale
level. Procedures have been
tightened up, personnel re
placed and in some cases re
organization has followed.
There have also been state
prosecutions but the most sig
nificant legal steps taken have
been by the federal govern
ment. The Justice department ob
tained Indictments against 14
individuals and two corpora
tions in connection with the
administration of the Massa
chusetts highway program.
All but one case has been
heard and all of the defend
ants were convicted of either
perjury or conspiracy to de
fraud the government.
The department started Its
investigation before that of
the Blatnik subcommittee but
a Justice department official
said the evidence turned up
in the congressional probe
was instrumental in winning
convictions.
Hold Up Funds
The federal government is
also holding up the payment
of $7 million to Massachusetts
for property the state acquired
in building highways. The bu
reau of public roads is with
holding the funds until an In
dependent firm reappraises
the property.
In the bureau itself there
have been some changes. Its
supervisory branch has been
beefed up and the bureau is
demanding more substantia
tion from the states than It
did in the past before it allo
cates funds. In addition, ac
cording to a subcommittee in
vestigator, the "bureau's atti
tude has definitely changed."
He said the bureau, originally
dubious about the need for a
broad Inquiry, now is giving
the subcommittee the fullest-'
cooperation and has shown,
that it wants "to put its housa
in order."
The most important result '
of the hearings, In the opinion
of the staff, is the effect that
it has had on the states that
have not been studied.
"A lot of state officials '
have gotten out of their ivory
towers," as one investigator .
said, "and have come to the
conclusion that it could also
happen in their states. They're
going through a period of self'
examination."
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