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_ Charges of gross misuse of funds \of the Ontario Hydro Commission |\ were :murled across the Legislative 'Ohumber yesterday by Attorney--Gen-- cral Arthur W. Roebuck when he re-- 'mmed his searching address into the affairs of Hydro. The Attorney--General said that Commission funds, to the extent of $500, were used to finance a radio | address dolivered on June 16 last by ' James Simpson on the subject: "A \ Challenge to the Enemies of Hydro." Scores Municipal Under-- writers in Hydro Report Roebuck Raps T. J. Hannigan And Simpson B ILLS ARE LISTED T. J. Hannigan, Guelph, was named by the Attorney--General as Secretary of the OMEA., the Hydro--Electric Railway Association and director of the Municipal Underwriters, Limited. Hannigan and his two associations, Mr. Roebuck claimed, received the sum of $40,290 out of Hydro funds from 1917 to 1923, and of this sum HMHannigan had received $18,416 as "salary." Regarding Northern Ontario, the Attorney--General said that he would not deal with the story of the Abitibi development, and "the financial op-- eration of its promotors." He would content himself with a presentation of its financial position. * He explained that the set--up of the Northern Ontario properties was totally different from that of all the other systems under the Commission's management. In the other systems,| the plants were vested in the Hydro-l Electric Power Commission and oper-- | ated at cost for the purpose of sup-- plying electrical energy to direct cus-- tomers and to municipal systems. However, in Northern Ontario the | properties were owned and operated by the Government, which was re-- sponsible for its possible losses. The district included an area of 330,000 square miles, with a popula-- tion of 210,000 people. The area was divided into six districts for distribu-- tion purposes, with nine generating stations with a capacity of 136,300 horsepower. Only 500 horsepower was purchased. The revenue last year was $1,238.-- 311. The five properties other than the Abitibi, included in the Northern Ontario System, showed a revenue. as Oct. 31, 1934, of $675,761.69, and a a total expense of $534,055.55; and a profit of $120,806.14. This, he felt, was a very creditable showing. Municipal Underwriters, to 1923, the placing of the insurance of the Commission was handled by Mr. Littlejohn, an officer of the Commission. On legal advice, on Feb. 12, 1923, there was incorporated a company known as the Municipal Underwriters, Limited, with an au-- thorized capital of $40,000. s "The necessity for a company," said Mr. Roebuck, "arose out of a pro-- vision in the Criminal Code making it lllegal for an insurance company or its agent to rebate any part of an insurance premium to the assured 'as an inducement to insure. Whether such a device successfully evades the intention of the law need not be dis-- cussed, but at any rate the very pur-- pose of the arrangement was to retain the money as Hydro funds for the purposes of the Hydro Act. It was Hydro money. then recalled how, prior "Mr. I. B. Lucas made a report to the Commission dated April 30, 1923, in which he said: ""The Municipal Underwriters to hold the net profits derived by the business obtained by it from the Hydro in trust, to dispose of the sam« in any way that it could be lawfully disposed of, and while under the law it cannot be pald over to the Hydro Commission it could be used directly for the bensfit of the municipalities which the Commission represent.' "'The said company will stand seized and possessed of the net profits from any business obtained by it from the Commission in trust for the Com-- mission, and will dispose of such prot-- its in such lawful manner as the Com-- mission may direct.' Charges HMegality. "There is in the files of the Com-- mission a draft agreement between Municipal Underwriters, Limited and the HMydro--Electric Power Commission, one clause of which reads as follows: "On Sept. 12, 1923, the Commis-- sion retained Mr. I. B. Lucas as Solicitor in charge of the Legal De-- partment at a salary of $750 per month and placed the insurance busi-- ness under the Legal Department. &uch was the set--up, That it was illegal is quite clear, for it violated in spirit the provision against rebat-- ing, and to the letter of the provision against one company agents. The legal position was protested by the Superintendent of Insurance to the Attorney--General, and Mr. Price di-- rected the license to issue. "At no time was the paid--up capi-- tal of this company more than $90 in all, yet between the years 1923 and 1934 it received from the Hydro the sum of $1,347,459.78, out of which it rw®tained as commission, rebate, or whatever it was, the sum of $151,-- 781.54. "On Sept. 11, 1923, Mr. Gaby ap-- proved of an account of T. J. Hanni-- gan for certain unitemized expendi-- ' tures said to have been incurred in lp:'esenung by--laws" in the munici-- palities of Grantham, Louth, Thorold, \ Fonthill, Hamilton, Burlington, St. Catharines, Grimsby, West Flamboro, Nelson and Clinton. "Political Manipulator. "Hannigan was the political manip-- u'lator of those in charge of Commis-- sion affairs, as is indicated by his letter to Mr. Gaby, dated Feb. 14, 1924, in the first paragraph of which he says: 2 "What is interesting now is what was done with the money, as an in-- teresting side--light on the general morality of the people with whom we have to deal--the type of thinking going on, and as a prelude to more pertinent matters. e k "How were the monics amsjuiseua; They were paid out at first on the recommendation of the Commission Itself, but later on the suggestion of Mr. I. B. Lucas, KC., and of Mr. Gaby the Chief Engineer. 5 "'When in March last year I sug-- ' gested stepping aside from the Hydro | movement you insisted that I stay, and I stayed and continued operation, did what I could during the election campaign to get rid of the Drury Government as enemies of Hydro.' i _ "Hannigan was Secretary of the Hydro--Electric Railway Association, Secretary of the Ontario Municipal Electric Association, and Director 0o' the Municipal Underwriters, Limited. "Not only had Mr. Hannigan 'done his best,' but under his guidance so, had the associations of which he was Secretary. From 1917 to 1923, he and his two associations had recaived di-- rectly out of Hydro funds by vote of the Commission the sum of $40.290.177. Of this sum Hannigan had received | $18,416.77 as 'salary," and the Hydro | Radial Association and the Ontario Municipal Association had received $18,796.50 for 'expenses' The sum of $3,077.50 were advances Of loans out of Hydro funds, $1,000 in 1917 pre-- ceding the general elsction of 1919 ' and $2,077.50 in 1922 to Hannigan personally preceding the ganeral elec-- tion of 1923 in which Mr. Hannigan 'did his best.' March monies disbursed? q the Hydro the Ontario had received The sum of t "Under these circumstances one 151 not surprised at finding on the files a letter to the Hydro--Electric Powetr | Commission of, Ontario from Mr. \Hannigan, in which concern is ex-- | pressed at the inadequacy of the sal-- | aries paid to the Commissioners and \thcir chief executives. Mr. Hannigan says: "'At the annual meeting of the Municipal Electric Association, held in Kitchener May 1 and 2, 1924, it was recommended in the report of the Executive Committee and adopt-- ed unanimously, that in view of the investment of two hundred and fifty millions of dollars in the Hydro Sys-- tem by the municipalities of Ontario that the powers--that--be should see that the members of the Hydro Com-- mission and the executive heads of the Departments are given adequate remuncration for their services.' "But $6,000 per year could ha.rdly' be considered enough for a man who had done his 'political best' and for such compliant association as he represented. It seems that the Com-- mission had dGuring the years 1917 and 1932 advanced Mr. Hannigan, out of the funds of the Commission, the sum of $3,077.50, and as an offset Mr. Hannigan presented an expense account of the Ontario Municipal Eloctric Association and the Hydro Radial Association for $6,398.65 for services rendered between 1921 and 1923. "The matter of this account was brought to the attention of Mr. Lucas by Mr. Pierdon, the accountant ef the Commission, in a memorandum dated Dec. 19, 1924, which reads as follows: s "'The question arises as to the best method of clearing off the expenses which are attached hereto. I have a very strong feeling that the Commis-- sion should not pay these by cheque and have the expenses reflected in its accounts, and therefore I would be very glad if you will consider the matter and let us take it up with Mr. Gaby without delay, so that we can take care of these expenses in some fashion and arrange for the return of the Commission's advp.noes.' & "On May 4, 1925, Mr. Pierdon made a further memorandum to the Com-- mission, in which he suggested that the account for the moneys advanced by the Commission to Mr. Hanni-- gan be liquidated by a payment of $5,077.50 to Mr. Hannigan on account of his bill of expenses incurred in work allegedly done for the Commis-- sion. Fext of Letter. "Accordingly, the Commission wrotg the Municipal Underwriters under dGate of May 6, 1925, authorizing the payment of $3,077.50 to Mr. Hanni-- gan. "Mr. Hannigan responded by writ-- ing his cheque to the Commission for the same amount, thus conveniently removing from the books a trouble-- socme charge of mbneys advanced to a private individual for purposes far separated from the cbjects for which the Commission had been incorpo-- rated financial requirements, the Commis-- sion or its members proceeded to dis-- pose of the balance of the funds. Two thousand -- five hundred dollars is awarded in the minutes of the Com-- mission of March 31, 1926, to the Beck Memorial Endowment. On Dec. 14, 1926, A. H. Selby, Acting Secretary of the Municipal Underwriters Lim-- ited, wrote to the Commission that the Ontario Municipal --Association had requested a grant of $2,500 to mset obligations the 'd@etails of which the writer has no knowledge,' and the grant was made. On Dec. 3, 1930, the Ontario Municipal Electric Associa-- tion asked and received a further $1,000. _ e & o Eo PWP y o L "'Having satisfied Mr. Hannigan's 1 14000 0o Ni scvactnatine