INTERLOCKS BETWEEN MEMBERS OF BOARD OF DIRECTORS
AND OFFICERS OF BOSTON EDISON COMPANY (INCLUDING
FINANCIAL INSTI-
AFFILIATES) AND OTHER UTILITIES

TUTIONS

INSURANCE COMPANIES AND LAW FIRMS

Bank

NAME

FULL NAMES AND PRINCIPAL POSITIONS OF DIRECTORS,
TRUSTEES, AND OFFICERS REFERRED TO IN EXHIBIT

(JNK-2)

PAGES 1-7

PRINCIPAL POSITIONS

Ahern, John I.

Allen, Donald G.

Anderson, O. Kelley
Avila, Charles F.
Bell, W. Douglas
Bennett, George F.
Bergstrom, Oliver T.
Bilodeau, Thomas H.
Bourgeois, Homer W.
Burr, Francis H.
Cabot, Paul C.
Carter, James R.
Clarke, T. Dexter

Cochrane, F. Douglas
Coolidge, Charles A.
Coughlin, Richard J.
Daley, Leo F.
Damon, Roger C.
Dean, John Ladd

Driver, Jr., William R.
Dumaine, Frederic C.
Dunn, Richard B.
Elliott, Byron K.

Farwell, Frank L.
Fitzgerald, R. Leigh
Fletcher, Paris
Foley, Henry E.
Freeman, R. H.

Galligan, Thomas J.
Getman, Burrill M.
Goldston, Eli

Guild, Henry R.

Hanify, Edward B.

Healey, Joseph P.

Johnson, Burdette A.

Vice-President, (NEES)

Chairman, (Real Estate Investment Trust)
Director, (Boston Edison Company)

President, (State Mutual Life Assn. Co. of Am.)
President, (State Street Investment Corp.)

Director, (Massachusetts Electric Co.)

Partner, (Rich, May & Bilodeau, Attys, Boston)
President, (Union National Bank of Lowell)
Partner, (Ropes & Gray, Attys, Boston)
Chairman, (State Street Investment Corp.)
Chairman, (Nashua Corp.)

President & Director (Narragansett Elec. Co)
Partner, (Ropes & Gray, Attys, Boston)
Partner, (Ropes & Gray, Attys, Boston)
Director, (Stores & Service, Boston Edison)
Sr. Vice-President, (Harris, Uphan, & Co.)
Chairman, (1st National Boston Corp.)
Partner, (Hahn, Loeser, Freedheim, Dean &
Wellman, Attys, Cleveland, Ohio)
Partner, (Brown Brothers, Harriman & Co.)
President, (Amoskeag Co.)

Vice-President, Secretary, Gen. Counsel (NEES)
Chairman, (John Hancock Mutual Life Insurance)
President, (Liberty Mutual Insurance Co)
Vice-President of Finance & Director, (NEES)
Partner, (Fletcher, & Whipple, Attys, Worcester
Partner, (Foley, Hoag & Eliot, Attys, Boston)
President & Director, (Eastern Associated Coa?
Corp.)

President & Director, (Boston Edison Company!
Chairman, (Gorham/Textron, Inc.)

President (Eastern Gas & Fuel Associates)
Member (Herrick, Smith, Donald, Farley &

Ketchum, Attys, Boston)

Partner, (Ropes & Gray, Attys, Boston)
President, (Middlesex Bank)

Financial Vice-President, (New England Gas, &
Electric Association Service Corporation!
Director
/Mamercongoth "'ontic Co.

Mr. HARRINGTON. Through direct, secondary, and tertiary interlocks, New England Electric is connected with 31 other utility companies, and 37 banks, insurance companies, and law firms. Boston Edison is connected with 23 utilities, financial institutions, insurance companies, and law firms.

Do these intricate interlocks have any adverse impact on the public? Professor Kuhlman testified that they do. He stated upon being questioned:

Question. Can interlocking directors lead to something less than arm's length bargaining?

Answer. Yes. It is certainly possible that a person serving as a director of two companies transacting business with one another will have information with respect to both firms that he should not have if bargaining is to take place in a proper environment. The same situation might prevail if two business associates served on the boards of companies transacting business with one another. Thus, two officers in a bank might have knowledge regarding a transaction between two companies of which they are directors which, if shared, would impair the bargaining process.

Question. Can you give an example of an interlocking director and a conflict of interest?

Answer. Yes. If officers or directors of a bank are also directors of a utility comany, for example, they may have access to information which might provide them with a strong incentive to change the portfolios in the bank's trust accounts.

Question. Are you citing these as dangers of interlocking directors?

Answer. Yes. I'm not saying they will happen. I am saying that interlocking directorates may create a conflict of interest. They may create instances in which one party has an unwarranted access to information. These dangers are in addition to the increased concentration of control. And certainly it was these dangers that led Congress to restrict interlocking directorates.

An examination of the business practices of New England Electric and Boston Edison reveal that transactions are taking place between utilities and the banks they are interlocked with. New England Power, a NEES subsidiary, has two bank loans outstanding in 1973-$17.7 million from the First National Bank of Boston and $2.5 million from the Worcester County National Bank. Both of these banks have representatives on NEES' Board of Directors.

Five of the 10 banks represented on Boston Edison's board loaned the company $40 million last year; $27 million of this total was lent by the First National Bank of Boston.

The Chairman of the First National Bank of Boston, Richard Hill, himself admitted that bank utility interlocks create a potential conflict of interest, but maintained that the conflicts do not materialize because of the high level of integrity of the men involved. In an interview with David Rosen, of United Press International on August. 7, 1974, Hill defended interlocking directorates as necessary because of the limited number of people in New England with financial abilities adequate to represent stockholders' interests.

Having examined the two statutes, and having examined the situation as it actually exists, the question naturally arises: How can the two be reconciled? On July 3, 1974 I wrote Chairman John Nassikas of the FPC and the SEC to discover the answer.

According to the answer I received from FPC Chairman John Nassikas, which I submit for the record,' the FPC has interpreted the interlock provision, which originally was contained in title II of the Public Utility Act of 1935, to mean that only directors of banks, trust

1 Letter to Chairman Nassikas and response may be found on p. 155.