Mr. BARTLETT. I would think it is in the vicinity of 40 or 60. It is in the record, Mr. Lanigan.

Mr. LANIGAN. I have an ad here that appeared in the Home Journal of St. Thomas for Friday, July 20, 1956. It is an invitation to bid issued by the Corporation and it states that the bids will be received. by D. O. Bornn & Sons, agents for the Virgin Islands Corporation. I am sure you are familiar with this and other similar advertisements? Mr. BARTLETT. Yes, sir.

Mr. LANIGAN. Could you tell us what the relationship is between D. O. Bornn & Sons, and the Corporation?

Mr. BARTLETT. D. O. Bornn & Sons acts as an agent for the Corporation in St. Thomas.

Mr. LANIGAN. What does it do?

Mr. BARTLETT. They are in charge of the overall dam-construction work. They handle any of our problems over there. Mr. Bornn handles any problems in connection with complaints of any nature, such as in connection with the power department, does a number of sundry jobs, serves on the loan committee there, for the approval of Joans. He investigates loans for us when they originate in St. Thomas. Mr. LANIGAN. Do you pay D. O. Bornn & Sons for this service? Mr. BARTLETT. Yes, sir.

Mr. LANIGAN. You pay them as a firm or partnership?

Mr. BARTLETT. No; it is a straight fee of $2,400 per year.

Mr. LANIGAN. You pay it to the firm of D. O. Bornn & Sons?

Mr. BARTLETT. To the firm of D. O. Bornn & Sons.

Mr. LANIGAN. You said Mr. Bornn is on the Soil Conservation Board, and he also has charge of the equipment and use of equipment of the Virgin Islands Corporation.

Mr. BARTLETT. Of the Virgin Islands Corporation.

Mr. LANIGAN. Which Mr. Bornn is that?

Mr. BARTLETT. D. Victor Bornn.

Mr. LANIGAN. Is he the same D. Victor Bornn who is on the Board of Directors of the Corporation?

Mr. BARTLETT. Yes, sir.

Mr. LANIGAN. Does he receive any salary from the Corporation for his services, or is all the money paid to D. O. Bornn & Sons?

Mr. BARTLETT. All the money is paid to D. O. Bornn & Sons. Mr. LANIGAN. What compensation does he receive as a member of the Board of Directors?

Mr. BARTLETT. Only his travel expenses in connection with Board meetings.

Mr. LANIGAN. Does he receive a per diem when he is at the Board meeting?

Mr. BARTLETT. Yes, sir.

Mr. LANIGAN. Does he receive a travel allowance plus per diem, or is that travel allowance alone?

Mr. BARTLETT. No; just a straight travel allowance.

Mr. LANIGAN. How much is that?

Mr. BARTLETT. The usual government rates, depending on where he goes.

Mr. LANIGAN. That would be how much?

Mr. BARTLETT. $12.

Mr. LANIGAN. Plus his transportation?
Mr. BARTLETT. That is correct.

Mr. LANIGAN. Have you ever discussed with the Board of Directors the propriety of his acting through D. O. Bornn & Sons as agent for the Corporation on St. Thomas?

Mr. BARTLETT. The question was raised by the General Accounting Office and was on the agenda of a Board meeting.

Mr. LANIGAN. What occurred at that time?

Mr. BARTLETT. The Board discussed the recommendations of the GAO that the position be abolished. A committee was appointed, consisting of Secretary McKay, at that time, and Mr. Ward Canaday to study the situation and to report back to the Board. Mr. LANIGAN. Was a report back made?

Mr. BARTLETT. Yes; at the following Board meeting a report was made that Secretary McKay and Mr. Canaday had determined that there was no conflict in the situation, and they recommended the continuance of Mr. Bornn as agent on St. Thomas.

Mr. CHUDOFF. Did you notify the General Accounting Office of that report?

Mr. BARTLETT. They were-I am not sure they were formally advised of it. On their next audit the question was again raised by the GAO, and I resubmitted it to the Board again; they continued the same policy which had been established.

Mr. CHUDOFF. In other words, the Vicorp is operating the same way as the government of Virgin Islands, the recommendations of the GAO meant nothing, if you decided you had the right to do what you were doing?

Mr. BARTLETT. It was a policy matter for the Board of Directors. Mr. CHUDOFF. I am not directing that at you personally.

Mr. BARTLETT. I understand.

Mr. KNOX. Were there any objections from GAO?

Mr. BARTLETT. Not after the second turndown. They have never raised the question again.

Mr. CHUDOFF. But they did object twice?

Mr. BARTLETT. Yes, sir.

Mr. LANIGAN. Do you have copies of the minutes in which this was considered? I don't mean with you at the moment.

Mr. BARTLETT. I have a full set of minutes with me. I can probably find them very quickly.

Mr. LANIGAN. Do you want to have them read here?

Mr. CHUDOFF. Rather than take the time of the subcommittee, you have already told us about it, and I think if you take the excerpts of those minutes you have and supply it, we will put it in the record.

Mr. BARTLETT. The excerpts of the meeting in regard to Mr. Bornn? Mr. CHUDOFF. Yes; and the action of the Board of Directors to the complaint of the GAO.

Mr. LANIGAN. Do you know whether or not Mr. Bornn acted as agent, or whether Mr. Bornn or D. O. Bornn & Sons acted as agents for the Corporation before Mr. Victor Bornn became a member of the Board?

Mr. BARTLETT. Yes, sir. Mr. Bornn was an employee of the Corporation from early 1940 or 1941, in the early 1940's anyhow, until 1947 or 1948, I think it is, at which time D. O. Bornn & Sons was appointed as agent. He was appointed a member of the Board of Directors in 1949; I believe that is the time sequence. Again I can give

you that in detail from his personnel record if you would like to have it, substantiated by exact dates, I mean. I am recalling it from

memory.

Mr. CHUDOFF. I think if you write us a letter and give us that information, that will be sufficient.

Mr. BARTLETT. The date of employment, his positions, and so forth. Mr. CHUDOFF. And when he became a member of the Board of Directors?

Mr. BARTLETT. Yes.

(The information follows:)

EXCERPT FROM MINUTES OF BOARD OF DIRECTORS MEETING HELD IN WASHINGTON, D. C., ON SEPTEMBER 13, 1955

The Chairman at this point reported, in connection with the GAO recommendation that the position of general agent at St. Thomas be abolished, that he had checked this matter with his staff and found no objection to having a Board member serve in this capacity. The Board unanimously agreed to the following motion: "That the Board approve the action of the Chairman of the Board and Board Member Canaday in ruling that Mr. Victor Bornn is eligible to serve as general agent for the Corporation at the same time he is serving as a Board member."

EXCERPT FROM AGENDA OF THE BOARD OF DIRECTORS MEETING HELD IN ST. CROIX, V. I., ON MARCH 16 AND 17, 1956

Abolishment of the general agent position in St. Thomas

The GAO recommends that the President submit the question of abolishment of the general agent in St. Thomas to the Board for reconsideration. An expression from the Board on this recommendation is requested.

EXCERPT FROM MINUTES OF BOARD OF DIRECTORS MEETING HELD IN ST. CROIX, V. I., ON MARCH 16 AND 17, 1956

The recommendation made by the GAO for the abolishment of the general agent in St. Thomas was resubmitted for consideration. The same recommendation was rejected by the Board last year. A motion was made, seconded, and unanimously passed that the position of general agent in St. Thomas should be continued, and the Board, after full consideration of the recommendation by the GAO, reaffirms the position previously taken to the effect that the appointment of a general agent in St. Thomas is within the exclusive operational policy of the Corporation and that the Board of Directors considers the same a necessary adjunct to the successful operation of the Corporation.

D. O. BORNN & SONS,

St. Thomas, V. I.

MAY 2, 1952.

GENTLEMEN: Confirming our verbal discussion with your Mr. D. Victor Bornn, effective May 1, 1952, your firm, D. O. Bornn & Sons, has been appointed agent in St. Thomas for the Virgin Islands Corporation at a monthly fee of $200. Your duties will be the same as those performed by our former agent, Mr. D. Victor Bornn.

Sincerely,

GORDON M. SKEOCH, President.

Mr. LANIGAN. Does the Virgin Islands Corporation rent any of its equipment or contract for any work for private individuals on St. Thomas?

Mr. BARTLETT. Yes, sir.

Mr. LANIGAN. Can you tell us how that operates?

Mr. BARTLETT. That is handled through Mr. Bornn.

Mr. LANIGAN. Just what do you do?

Mr. BARTLETT. Depending on the dam-construction program, we usually have available 1 or 2 bulldozers which can be used for construction work or for laying out roads, and so forth. Whenever that equipment is not being used on the dam program, Mr. Bornn has the authority to rent it to private individuals.

Mr. LANIGAN. Does he rent that on a competitive-bid basis?

Mr. BARTLETT. No; we have established rental rates for all that type of equipment.

Mr. LANIGAN. Do you find that there is a steady or substantial demand for the use of your equipment on St. Thomas?

Mr. BARTLETT. There was, but fortunately in the last year or two there has been a good deal of private operations starting, and we do not compete with private business. If we can turn the job over to a private individual, we do so.

Mr. LANIGAN. You mean if somebody comes to you to rent some equipment, you will say, "Have you tried the private people?" Mr. BARTLETT. That is correct.

Mr. LANIGAN. Then if they say they haven't, then you tell them to go to those people?

Mr. BARTLETT. That is correct.

Mr. LANIGAN. If they say they have, and all the equipment is being used, then you will rent it if you are not using it?

Mr. BARTLETT. If we are not using it.

Mr. LANIGAN. Do you have any policy statement to that effect? Mr. BARTLETT. The only statement, I think, in that connection would be just a very general statement. I don't think it covers what you are driving at in connection with the rates and so forth. But it is an understood policy among the staff.

Mr. LANIGAN. How did that policy come into being?

Mr. BARTLETT. Well, simply by the fact that we don't want to compete with private industry.

Mr. LANIGAN. Who decided that?

Mr. BARTLETT. I did; as President of the Corporation.

Mr. LANIGAN. Have you ever had any complaints while you were in the Corporation to the effect the earth-moving equipment was being used on private contracts to the detriment of the dam-building program?

Mr. BARTLETT. There has been-that statement has been made, but I don't believe it is justified.

Mr. LANIGAN. Did you make any investigation of that?

Mr. BARTLETT. Yes; I checked into it with Mr. Bornn as to what the situation was, and he explained the matter satisfactorily. Mr. LANIGAN. I see. What did he say?

Mr. BARTLETT. At that particular time the dam construction was not in a position to go ahead, and he therefore rented out the equip

ment.

Mr. LANIGAN. But the person who made the complaint thought the dam program was ready to go ahead; is that right?

Mr. BARTLETT. I presume; otherwise we would not have had the complaint.

Mr. LANIGAN. I see. Now

Mr. KNOX. Are you through with the equipment bill?
Mr. LANIGAN. Yes.

Mr. KNOX. I would like to ask Dr. Bartlett a question.

Dr. Bartlett, the revenues derived from rental of the equipment, how is that accounted for? Is it depreciation upon reserve funds for purchase of new equipment, or is it in the capital of the Vicorp?

Mr. BARTLETT. It goes to Vicorp, and takes into consideration operational costs and depreciation, which is returned to capital funds. Mr. KNOX. That is used for the normal operations of Vicorp as a whole?

Mr. BARTLETT. As a whole.

Mr. LANIGAN. Could you tell us how you have been shipping your sugar in the last 2 years; can you give us the details of the manner in which it is shipped?

Mr. BARTLETT. Yes, sir. We have shipped our sugar in the last 2 years on an LST type of vessel which comes directly up to the dock, and into which we drive our sugarcane trucks for off loading, thus eliminating the lighterage activity.

Mr. LANIGAN. I think the General Accounting Office indicated you had cut your sugar costs from the prior handling; is that correct? Mr. BARTLETT. Yes, sir. I have the figures on that if you would like to have it.

The shipping costs for the 1953 crop were $17.78. The shipping costs for the 1954 crop were $18.19. That is using the bag method of lightering it to the ship anchored in the harbor. The costs under the LST operation for 1955 were $15.43, and for 1956, $15.18. I can submit these for the record if you would like.

Mr. CHUDOFF. Let those figures appear in the record at this point without objection.