Widespread mismanagement and "complete ineptness" by officials of Consolidated Rail Corp. is resulting in millions of dollars being wasted, two employes of the railroad and a union official charged yesterday.
The allegations, made at a hearing of a subcommittee of the Joint Economic Committee, were denied by a Conrail official.
Transportation Worker's Union vice president Albert Terriego said Conrail "management is literally driving the company deeper into a hole by the squandering and misuse of funds." He gave several examples of the alleged mismanagement, including charges that Contail is spending $180 million a year for outside wrecking contractors when Conrail employes could do the same work for considerably less.
He also said that, in one case, a contractor paid for Hawaii vacations for Conrail executives, and in general, contractors routinely inflate bills to the railroad for work that frequently has not even been completed.
Contail, which was created by Congress in 1976 to merge six bankrupt Northeast railroads, is being aided by more than $2 billion in federal grants or loans but has remained steeped in financial problems.
"We know we have problems," Conrail Vice President for Government Affairs John Sweeney told the hearings. But he defended the use of outside contractors. He also claimed that wrecking contractors only cost the railroad $8.3 million last year, considerably less than Terrieog claims was spent.
According to Sen. George McGovern (D-S.D.) who chaired the hearings, the U.S. Railway Association estimated the cost of the outside wrecking contractors was actually $21.8 million.
McGovern said that because of the conflicting testimony on the extent of mismanagement and possible corruption, he had "no recourse but to turn this conflict over to the Justice Department, the Interstate Commerce Commission and the United States Railway Association."
The employes who testified are from the Ft. Wayne Ind., division of Conrail.