an isolated case of two Directors getting together, I assume over cocktails or drinks in the room below; is that correct? Mr. THIBEAU. The reason for having this kind of an informal meeting was one solution, if you will, to the contentiousness that existed among Board members. The idea of having an opportunity for Board members to get together informally, to discuss matters that they were concerned with, seemed to me, and to the Chairman, to be a good one. That was the genesis of this meeting. If you are asking for the context of this conversation, I agree with Mr. Schroeder's characterization that the state of Board relations at the time were contentious. Senator COHEN. I think hypercontentious was the word used at the last hearing. Mr. THIBEAU. Hypercontentious. Senator LEVIN. Contentious now. Senator COHEN. Mr. Thibeau, thank you again for coming forward and testifying. Mr. THIBEAU. Thank you, Senator. [Mr. Thibeau's prepared statement follows:] PREPARED STATEMENT OF DON THIBEAU, EXECUTIVE ASSISTANT TO THE CHAIRMAN, U.S. SYNTHETIC FUELS CORPORATION Mr. Chairman, Members of the Subcommittee: Thank you for the opportunity to testify before this Subcommittee. The following responds to your letter of July 20, 1983: (1) As Executive Assistant to the Chairman and Board of Directors, I am responsible for two elements of the Corporation's work—(i) liason with the Executive Branch of the United States Government and (ii) liason with the Directors of the U.S. Synthetic Fuels Corporation (SFC) on behalf of the Chairman of the Board-and other duties as assigned by the Chairman. (2) The adequacy of internal and external communications has been the subject of continuing discussion and concern within the Corporation and among its key constituences. That there are problems is evident by the fact that members of the Board as well as other interested parties have offered suggestions and solutions to various "communications" concerns. My assessment is that attempts to impose SFC "communications" have met with limited success because they have focused on the mechanics of transmitting information. I firmly believe that the referred to "communications" problems of the Corporation are metaphor for a lack of clear consensus and goal-oriented collegiality among members of the SFC Board. (3) That there are problems, be they of perception and/or of substance, is evident by the public record of the SFC Board meetings. My role as staff ‘facilitator' of Board-level communication, without 'line' responsibility, necessarily makes my involvement with managerial and administrative practices one step removed. I therefore can add little to the comments of the Corporation's Directors on these matters. I will be pleased to provide detailed responses to any questions posed by the Subcommittee. Thank you Mr. Chairman. Senator COHEN. Our final witnesses this morning are four directors of the Synthetic Fuels Corporation: Mr. Monks, Mr. Carter, Mr. Masson, Mr. Wilkins. I appreciate you coming before the committee. Please come forward and raise your right hand. [Witnesses sworn.] TESTIMONY OF JOHN B. CARTER, JR., MILTON M. MASSON, JR., ROBERT A. G. MONKS, AND C. HOWARD WILKINS, JR., MEMBERS, BOARD OF DIRECTORS, SYNTHETIC FUELS CORPORATION Senator COHEN. I guess we might begin. Mr. Wilkins, when were you nominated to the Board of Directors. 24-125 0-83-9 Mr. WILKINS. Roughly a year ago, October. Mr. WILKINS. How long is my term? Seven years. Am I the oldest? Five years? Five years. Senator COHEN. Mr. Masson? Mr. MASSON. August of 1982. Senator COHEN. You were appointed; your term runs until when? Mr. MASSON. August of 1983. Senator COHEN. Mr. Carter. Mr. CARTER. August of 1982, Senator, for 2 years. Mr. MONKS. September of 1981, till September of 1984. Senator COHEN. Perhaps we could begin, gentlemen. Most of you were not here during the course of the hearings on Wednesday. Have any of you had a chance to review the transcript of the proceedings? Mr. CARTER. Yes. Mr. WILKINS. Yes. Mr. MASSON. Yes; very, very briefly. Senator COHEN. Mr. Monks? Mr. MONKS. Yes. Senator COHEN. What we are trying to do is review the nature of the operation of the Synthetic Fuels Corporation. During the course of the last hearing, we attempted to explore the background, the genesis of the Corporation, the sense of urgency that the Congress felt for the need to produce synthetic fuels, the sense of mission the Corporation would have, and place that congressional mandate within the context of the Board's operation, its efficiency, its responsibilities. We did not explore the nature of the Board's function, which I hope to do this morning, a question about who is in charge of what, who is responsible for what, and perhaps what legislative changes are necessary or thought to be made to improve the efficiency. But we explored the question of the commitment of this Corporation to the congressional mandate. Frankly it was not this committee, or subcommittee, looking at that commitment, but going back from the very inception of the commitment to the appointment of the Chairman and the President and you as members of the Board of Directors, as to whether there was, in fact, a commitment to carry out that congressional mandate. It was questioned by a number of business leaders, industry leaders in the press, the Wall Street Journal, New York Times, various subcommittees. The Appropriations Committee, I think, issued a fairly strong statement concerning the efficiencies in the operation of the Corporation. We heard testimony from Mr. Coughlan on how he was required to make an analysis of the nature of the problems of the Corporation. I would like to do, gentlemen, if I could-I know you all have limited amount of time that you can be here this morning-but I might start and just say, perhaps you can give the committee some description of the evolution of the nature of the problems. Mr. Wilkins, it was suggested during the course of Wednesday's hearing that perhaps there is one member, mainly, Mr. Monks, who has been sort of a thorn in everybody's side, that the other members weren't as concerned or as contentious as Mr. Monks about the nature of the operations. Your name has surfaced on several occasions during the course of the hearing on Wednesday and here today as being someone who was concerned about what was taking place. So I guess my question is, what has been your experience in the operation of the Corporation? What are your general criticisms or recommendations? Why don't we begin there. When did you become concerned about what was taking place? Let's put it that way. Mr. WILKINS. Oh, about a month after I joined up. Mr. WILKINS. Mr. Monks, simply, is taller than and speaks louder than anyone else on the Board, which does not mean that he is a single Director with a single motive or a single concern. He simply has roped off by choice from one end of the spectrum. I don't think there's any question about the commitment of anybody on the Board. It is sincere and complete and has been since day one, including the inside Directors. Our concerns began when there seemed to be a gulf between the inside versus the outside people, and having sat on a number of boards, being, at least feeling responsible, for the formulation of policy, as the statute requires, although the statute is a bit confusing in some areas, it's pretty specific in most areas. We felt, perhaps, that the directors should be more involved in the evolution of, and formulation of many of these management policies. What concerned us the most was that there seemed to be no policy. It was not a matter of disagreeing with the policy so much as an attempt being made to formulate a plan as in a strategic plan, or a game plan, in general. So over a period of time, one grants-with some patience, because it is a new Corporation, with an entirely unknown and unprecedented mandate, in nearly physically impossible things to carry out-one must grant considerable patience to the inside management to work out many of these heretofore not-put-together types of procedures and plans. So after a number of months, we began to become very impatient, and that's when I think some of our differences of opinion became more pronounced. Senator COHEN. Did it become more pronounced about September of 1982; do you recall? Mr. WILKINS. Well, I recall a Board meeting at that time thatlet's see; September, October; yes, about that time, I would say. That's when we became very concerned about the quality of communication; not the quantity. Directors are mostly concerned about specific dilemmas or a specific threshold, specific crossroad type of decisions coming up, as well as the ongoing functioning and the direction of the Corporation, sorting through stacks and stacks of material. That's when the communication-I guess it was about November, actually, when we actually required, as a group, that a communication plan be developed and delivered and discussed. Senator COHEN. What was the response to that request? Mr. WILKINS. The response was the Coughlan work. Senator COHEN. So, in other words, you, and other members of the Board, had expressed a desire to have some sort of plan about having better "communications" among the Board members so that you could in our good conscience carry out your responsibilities as a member of the Board of Directors. Mr. WILKINS. Not only that, Senator, but there seemed at that time to be an unawareness of the state of communications that existed between the Corporation and its constituency. Both externally, in the way of industry, and, as you might say, internally to the close neighborhood of the District of Columbia, as we are accountable to a number of groups. Senator COHEN. So you joined with those requesting Mr. Coughlan or someone to conduct a survey, interview, whatever, to recommend a game plan so as to facilitate and carry out the mission of the Corporation, essentially. Mr. WILKINS. Yes, sir. Senator COHEN. You were interviewed by Mr. Coughlan. Mr. WILKINS. Yes, sir. Senator COHEN. You saw the report which he filed with the Chairman which I assume was distributed to the Board of Directors. Mr. WILKINS. Yes, sir. Senator COHEN. Would you generally agree that he characterized the nature of the complaints, observations, criticisms, recommendations, in this report to the Board, to the management. Mr. WILKINS. Yes, sir; those were accurate. Senator COHEN. Did you anticipate that there would be some action taken on the so-called comments of the Board at one of your meetings? Mr. WILKINS. Yes, sir. Senator COHEN. Was there any action taken? Mr. WILKINS. None. Senator COHEN. Was that a continuing source of frustration to you? Mr. WILKINS. That is correct, Senator. Senator COHEN. Now, following the meeting, I guess it would have been in Tulsa, in January of 1983-was that Tulsa or Houston? Mr. WILKINS. Houston. Senator COHEN. At that meeting, the Coughlan report was not discussed as I understand it. Mr. WILKINS. Not to my knowledge. Senator COHEN. You said the fact that it wasn't discussed was a source of frustration to you and some other members of the Board of Directors. Mr. WILKINS. That's my understanding. Senator COHEN. Following that period of time, your next meeting was where: New York? Mr. WILKINS. Right; February. Did we have a meeting in February? Mr. MONKS. Washington. Telephone; telephone meeting. Senator COHEN. You don't recall that. Mr. WILKINS. No, sir; I don't remember the one after that. Was it in Washington, in February? Mr. CARTER. Washington. Senator COHEN. Now, at our hearing on Wednesday, I discussed with Chairman Noble a letter which had been given to him during a meeting of two Directors in May of this year, a letter which had your initials at the bottom, as well as those initials of Mr. Carter and those of Mr. Monks. Were you present at that meeting in which that letter was delivered to Mr. Noble? Mr. WILKINS. Yes, sir. Senator COHEN. Did that letter contain your specific recommendation as to the course of action you felt the Chairman should take with respect to the items contained therein. Mr. WILKINS. It did. Senator COHEN. Did you have a chance to discuss the contents of that letter with Mr. Carter before it was handed to Mr. Noble? Mr. WILKINS. Yes. Senator COHEN. Did Mr. Carter agree with the contents of that letter? Mr. WILKINS. It was my understanding that he did. Senator COHEN. And did you convey that understanding to Mr. Monks? Mr. WILKINS. I believe I did. Senator COHEN. So that when you and Mr. Monks went to Mr. Noble, that document, in fact, represented what you felt had to be done in order to satisfy your own concerns? Mr. WILKINS. Yes, sir. Senator COHEN. Do you recall the contents of that letter essentially, Mr. Wilkins? Let me backtrack. Why did you feel it necessary to go see Mr. Noble? Mr. WILKINS. Well, we were meeting anyway in Tulsa for a briefing on a number of subjects. I believe this was prior to the Board meeting, 2 weeks prior to the Tulsa Board meeting, and it had been about a month and a half, I think, since the New York Board meeting, and I was concerned that a number of questions simply were not being confronted. Senator COHEN. Were you concerned about the meetings between Mr. Masson and Mr. Schroeder? Mr. WILKINS. Among other things, yes. Again, mostly from the standpoint of just simply confronting it. Getting it on or getting it off. The business of the Corporation is such that these things just can't hang around, you know, on the table somewhere. You just can't inventory these items. So it was an attempt at least, on the part of three of us, to urge the Chairman to move ahead or take some action or Senator COHEN. Well, let me just review the nature of that action. On the one hand, you requested an investigation of the meeting that occurred between Mr. Masson and Mr. Schroeder; and, No. 2, to make suitable arrangements for termination of the services of the incumbent President of the Synthetic Fuels Corporation before the May 26 Board meeting. That was a very specific recommendation. Mr. WILKINS. That was very specific, Senator. Senator COHEN. Three, to appoint a committee consisting of yourself and Mr. Bowden to bring up to the Board for prompt consideration and approval at a scheduled meeting in June of 1983 a new organizational plan for the Synthetic Fuels Corporation. |