Mr. HANSEN. Yes, sir. Mr. HARKINS. It is true, is it not, that in those instances where a carrier has submitted more than one report for any particular year, there are substantial differences in the reports that it has submitted? Mr. HANSEN. In some instances. I can't say that that is always true. Mr. KILGORE. Usually they are made to show corrections in computations and things like that. Mr. HANSEN. There are some that show changes and corrections in computations. Mr. HARKINS. Service Pipe Line Co., for example, has submitted 3 reports for each of the calendar years 1942 through 1948; is that not true? Mr. KILGORE. Yes, sir. Mr. HANSEN. Yes; that is correct. Mr. HARKINS. Further, Service Pipe Line Co. has submitted 4 separate reports for the calendar year 1949; isn't that true? Mr. KARSTED. That is correct. Mr. HARKINS. For the years 1950, 1951, and 1952, Service Pipe Line Co. submitted 2 reports to the Attorney General; is that not true? Mr. KARSTED. That's right. Mr. HANSEN. That's correct. Mr. HARKINS. For the year 1942 on April 9, 1943, Service Pipe Line Co. reported to the Attorney General that the valuation used as an earnings basis amounted to $63,392,994; is that true? Mr. HANSEN. I can't give that from memory. If you are reading from the report, I assume that is correct. If you want me to check I'd be glad to do so. Mr. HARKINS. Check it with the document you have supplied to us. Mr. HANSEN. The answer is "Yes." Mr. HARKINS. However, on March 8, 1951, Service Pipe Line submitted a report to the Attorney General for the year 1942 that stated that the valuation used as a basis for the 7 percent amounted to $74,386,432; did it not? Mr. HANSEN. That's correct. Mr. HARKINS. My question is this: What was the appropriate valuation for Service Pipe Line to use as a basis for dividends in 1942? Mr. HANSEN. I'd have to compute it. I certainly could not tell you now what the correct amount is. Mr. HARKINS. Is either of these figures that have been submitted by Service Pipe Line valuation to be used as a basis for dividends in 1942 a correct statement? Mr. HANSEN. There would have to be an audit made before I could say whether it was or not. I don't know of my own knowledge whether it is correct or it is incorrect. Mr. HARKINS. Has there been an audit made of this matter? Mr. HANSEN. The FBI has made several checks for various years. I cannot give you the exact years that they are covered. If you are interested in knowing the exact years, I could find out what we know about that. Mr. HARKINS. Do you know, do any of you gentlemen know, whether the valuation used as a basis for dividends in the report submitted on April 9, 1943, or the valuation used as a basis for dividends in the report that was submitted on March 8, 1951, with respect to the year 1942, do you know which of those figures is the correct one, or is either of them correct? Mr. HANSEN. I can't answer that without a study of it. Mr. HARKINS. According to the original 1942 report, $364,530 was subject to the provisions of paragraph 3 (c) of the complaint; is that not true, 3 (c) of the complaint? Mr. HANSEN. What was that amount again? Mr. HARKINS. Of the judgment. I will repeat my question. According to the original 1942 report, that was submitted on April 9, 1943, $364,530 was subject to the provisions of paragraph 3 (c) of the judgment. Mr. HANSEN. That's correct. Mr. HARKINS. However, in the second amended report filed in 1951, the amount subject to the provisions of paragraph 3 (c) was reported to be $1,134,000; is that not true? Mr. HANSEN. That's correct. Mr. HARKINS. My question is this: What was the amount of money in 1942 that Service Pipeline earned and withheld pursuant to the provisions of paragraph 3 (c) of the judgment? Mr. HANSEN. I can't answer that without checking it carefully. Mr. HARKINS. Mr. Reporter, will you repeat the question? Mr. KILGORE. According to which report, sir? Mr. HARKINS. We want to know what are the facts as of 1942? Mr. HARKINS. Do you know whether either of those figures is accurate? Mr. KILGORE. That would depend upon an audit being made, sir. Mr. HARKINS. Has an audit been made of Service Pipe Line report for 1942 ? Mr. KILGORE. I have no personal knowledge of that until I check. Mr. HARKINS. Will you supplement the record with respect to that? Mr. KILGORE. You appreciate these are reports that Service has filed and I have no personal knowledge as to what specific years or what specific companies the FBI audited. Mr. HARKINS. Do you know, Judge Hansen, in subsequent years how much money did Service Pipe Line pay to its shipper-owner on the basis of the earnings that were withheld in 1942? Mr. HANSEN. I can't answer that without checking carefully on it. Mr. HARKINS. Has there been an audit made of that? Mr. HANSEN. I can't answer that. It is long before my time and I don't know whether there was. Mr. HARKINS. Would you supplement our record after you have had an occasion to study the records of the Department of Justice in this regard? Mr. HANSEN. I will check our records. Mr. HARKINS. What justification is there for Service Pipe Line amending its 1942 report in 1951? Mr. HANSEN. That is calling for an opinion. I don't know the facts. I assume they adjusted it because an error was found to be present or somebody called their attention to it, or the Bergson letter or some other information; I don't know. Mr. HARKINS. Mr. Kilgore, what would your answer be to the question of what justification is there for Service Pipe Line amending its 1942 report in 1951? Mr. KILGORE. I don't know what they considered to be their justifications, sir. I would only have to guess at what it might be. Mr. HARKINS. Would there be any justification for accepting in 1951 a correction of the 1942 report, other than to correct an arithmetical mistake? Mr. HANSEN. Isn't that the matter that is probably going to be determined by the court? Mr. HARKINS. What case would that be? Mr. HANSEN. I don't know what you have in mind here. You asked for the justification of it. Have they properly computed it? That is one of the issues. The CHAIRMAN. There is no case involving this matter. Mr. HANSEN. It is certainly under investigation, and ultimately this issue is going to have to be determined by the court. The CHAIRMAN. Next question? Mr. HARKINS. When does the report filed with the Attorney General pursuant to this decree become final? Mr. KILGORE. That has never been determined by any court, sir. Mr. HARKINS. Has it ever been submitted? Mr. Kilgore, will you state an answer to the question. Mr. HANSEN. By whom? Mr. HARKINS. The question that is involved is, when the report filed with the Attorney General pursuant to this decree became final, has that ever been submitted to a court for determination? Mr. HANSEN. By whom? Mr. HARKINS. By the Department of Justice? Mr. HANSEN. I can't answer anybody whether it has ever been up. I would want to make a thorough search of it, but our present information is that it is an undetermined issue, and it probably will be an issue that will be in one of the cases which either is filed or will be filed. The CHAIRMAN. That is the issue will be whether or not the report filed with the Attorney General shall be deemed final? Mr. HANSEN. That's correct. The CHAIRMAN. Which report and which particular year? There are so many reports that have been filed. Mr. HANSEN. The issue of the statute of limitations, I assume, will be one in some of our cases. Mr. HARKINS. Why are not the reports submitted by the companies pursuant to this decree final when they are filed by April 15 of the year succeeding the calendar year? Mr. HANSEN. What do you mean by the term "final"? You mean not subject to any attack for inaccuracies? Mr. HARKINS. Not subject to drastic changes. Mr. HANSEN. Pardon? You mean after a certain period they are not subject to attack even though they are obviously in error? Mr. HARKINS. There may be some error in figuring, but on principal, the standard that was used, why isn't that final? Mr. HANSEN. I would like to know what is meant by the term "final"? Mr. HARKINS. According to provisions of paragraph VIII of the judgment, each company is required to submit annually a report by April 15 of the year succeeding the calendar year of which the report is subject. Now, my question is, Why are the reports that are filed at that time not final reports except for the adjustment of minor arithmetical errors? Mr. HANSEN. If you want to speculate, I could assume that there might be fraud in there without any evidence of it. I don't know what might develop. The CHAIRMAN. All things being equal, why wouldn't they be deemed final? Mr. HANSEN. Nothing is deemed final unless there is some statute of limitations, some agreement as to when it is final, or some adjudication of it. The CHAIRMAN. But the court says they are to be filed as of a certain date. When they are filed, why aren't they deemed final, unless there are some arithmetical changes necessary? Mr. HANSEN. Do you mean by that the Government then would be estopped to take any proceeding immediately after they had filed a report? The CHAIRMAN. No; not at all, but here you have this company filing several reports for each year. Mr. HANSEN. That's right. The CHAIRMAN. Which is the right one? Mr. HANSEN. I don't know. The CHAIRMAN. There must be a time when there must be some finality attached to it, and we are trying to discover that. We are trying to get your help on it. Mr. HANSEN. I can't give you any help on it. It is a similar question to a man filing 3 or 4 income-tax returns and ultimately there is litigation on it, which one of the income returns are final. I don't know that any of them are unless the statute has run against them. Mr. HARKINS. Mr. Kilgore Mr. KILGORE. Would you pardon me just 1 second, sir? Mr. HARKINS. All right. Mr. HANSEN. Maybe I misunderstood your question. Do you mean by final, the last one to be filed? The CHAIRMAN. Judge, look at this situation. Here you have a report submitted in 1943, putting a valuation used as basis for dividends over 63 million, and in 1951 they use a figure over 74 million. Mr. HANSEN. Is that as of 1943? The CHAIRMAN. Wait a minute, for 1942 when they file it in 1951– in 1951 they file a report for 1942, and the figures are given over 74 million. In 1943 when they filed for 1942 they give the figure over 63 million. That is a dreadful and a very substantial discrepancy. What is the reason for this, if you know? Mr. HANSEN. We are investigating it. I don't know. I can't answer as to the reason for it. The CHAIRMAN. That is an answer, you don't know. Mr. HANSEN. That is not a complete answer to it because I don't want the committee to think that we are overlooking the discrepancies. We aren't. The CHAIRMAN. The answer must stand unless you want to amplify it. You don't know. It is a very strange thing though. You have this big discrepancy for this same year filed in two different periods. Mr. HARKINS. Mr. Kilgore, do you have any comments on this problem? Mr. KILGORE. I could only pose a question as to whether or not the judgment permits a defendant in 1950 to file an amended report from the year 1942 when the defendant knows that the ICC has used certain period prices which ICC says is proper to use for their purposes. The Department did reject certain amended reports on the ground that they should not use certain period prices for the years 1942-49, through 1949. The CHAIRMAN. It is rather clear, isn't it, that 7 percent of $74,386,432 is far greater than 7 percent of $63,392,994. As a matter of fact, 7 percent of the figure over $74 million is $5,200,000, whereas 7 percent of over $63 million is only $4,437,580 at 7 percent of evaluation. In other words, these figures were increased so as to increase in turn the amount of profit and the amount that would be put into the pockets of the shipper-owner. Mr. HANSEN. On the same document, however, you will note in 1950 they returned a sum less than the amount they returned in 1943 to wit, $63,144,133 instead of $63,392,994. The CHAIRMAN. That's right. The second one gave a less amount. Mr. HANSEN. That's correct. The CHAIRMAN. But the third one gave them far greater. Mr. HANSEN. That's correct. The CHAIRMAN. In other words, you have got three figures there. Mr. HANSEN. That's right. All I'm asking is that the record be clear. The CHAIRMAN. I don't know which is the correct one. Mr. HANSEN. I don't either until we have checked it. Mr. HARKINS. Has the Department of Justice ever advised any of the defendants in this case that defendants would not be permitted to change their reports once they had been filed, other than for correction of minor arithmetical mistakes? Mr. HANSEN. I don't know. I have no knowledge of it. Mr. HARKINS. Mr. Kilgore, do you know the answer to that question? Mr. KARSTED. The answer is "No." Mr. HARKINS. The answer is "No." Is this not a problem, Judge Hansen, that should be submitted to the court for determination? Mr. HANSEN. Which problem? Mr. HARKINS. The problem of whether a defendant subject to this decree can in 1951 make a report for the calendar year 1942 other than to correct minor arithmetical mistakes? Mr. HANSEN. I would certainly give it consideration. The CHAIRMAN. Thank you, very much. I think that is a very wise course to pursue, Judge. Mr. KILGORE. I would like to have the record show that no recommendation has been made to Judge Hansen for him to act upon, one way or the other, on that. |