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The Board of Directors of Colonial on June 15, 1951, established an Executive Committee in accordance with the terms of the proposal. This committee, selected by the Board of Directors of Colonial, is composed of one director, the controller and the Secretary of the company. Its duties and functions include the employment and discharge of personnel, the review of the roster of personnel and determination of need for services and reasonableness of compensation, close supervision and check on receipts, disbursements, and use of company funds, and the keeping of books, records and accounts in proper manner and in accordance with Board requirements. In addition to such existing requirements, the committee is to comply with all requests of the Civil Aeronautics Board with respect to accounting, auditing, record keeping and reporting.

The investigation was instituted by the Board on April 13, 1951, to determine if certain alleged practices and conduct of Colonial and Janas constituted violations of the Civil Aeronautics Act, the Board's Economic Regulations and the Board's Uniform System of Accounts for Air Carriers. The practices and conduct referred to were set forth in a bill of particulars served with the order. In substance, it was alleged that Colonial and Janas:

1. May have furnished and permitted unauthorized free and reduced rate transportation through various devices. Such devices included the charging of the cost of free tickets to expense accounts of certain officers, particularly Hudson, which were thereafter "washed out" upon unsupported expense vouchers, and the distributions of free tickets through advertising and public relations agencies, the cost of which was charged to and paid by Colonial upon unsupported vouchers submitted by such agencies.

2.May have failed and neglected to keep Colonial's accounts and records in conformity with the Board's Uniform System of Accounts for Air Carriers, and may have falsified records and reports. Many of the violations in this category allegedly resulted from the diversion of company funds to the personal benefit and enrichment of the President, although such transactions were reported and recorded in Colonial's records as legitimate company expenditures. Such personal transactions were said to include (a) foreign exchange transactions for personal benefit of Janas, (b) the payment of excessive amounts, upon unsupported of false statements to certain persons and firms, which were wholly or partly "kicked back" to Janas and Hudson, (c) use of company funds for payments of personal and unofficial expenses and (d) excessive and improper expense accounts charged to the company on unsupported statements.