management salaries was yesterday rejected by the board hearing the hotel talks.

The Essential Industries Disputes Settlement Board's ruling came after BIU president Mr. Ottiwell Simmons said he was suspicious of the Hotel Employers of Bermuda's claim that the Island's major hotels lost more than $17 million last year.

The HEB has presented a summary financial statement showing major hotels' net profits dived from $13 million in 1980 to a $17.5 million loss in 1991.

Stressing that the hotels' financial position can only improve by raising revenue and reducing costs, the HEB has proposed a complete wage and benefit freeze for workers from February 24, 1992 to 1993.

And three percent wage increases were proposed for the next two years.

The union has put forward percentage wage increases of seven, six, and seven for 1991, 1992, and 1993.

Mr. Simmons yesterday questioned the accuracy of the hoteliers' dismal report which was prepared in three months and of which only 60 percent was audited.

And he asked how much of the hotels' $47-million payroll cost in 1991 was due to management salaries.

Mr. Simmons argued that while it could be determined how much of that amount went to workers, the union had no idea what portion is paid out to management or employees not covered by the collective bargaining agreement.

He also noted that when the union tried to obtain this information, HEB executive vice president Mr. John Harvey told the union such information was not compiled by the HEB's accountant firm, Cooper and Lines, "nor has it ever been sought''.

Drilling Cooper and Lines chief accountant Mr. David Lines in yesterday's hearing at Cathedral Hall, Mr. Simmons asked: "Can you say that the wages and overtime which are paid to the unionised employees, who fall within the collective bargaining agreement, is the cause of hotels losing $17 million in 1991?'' Mr. Lines said he could not because he is not privy to that information.

But he stressed that the summary financial report "demonstrated adequately'' the positions of the hotels.

Noting that HEB president Mr. Dennis Tucker testified that hoteliers could not afford to increase wages, Mr. Simmons told board chairman Prof. Ronald Haughton: "It is going to be the duty of your panel to adjudicate on the basis of these two groups (HEB and BIU) and determine by evidence whether the hotels can afford an increase to its workers without going out of business.

"If you're going to make that judgment, you're going to have solid ground to arrive at your position.

"You have here one figure that refers to two separate interest groups.

Management who are paid salaries and the workers who earn wages.

"So it does become crucial to your position to have salaries, wages and overtime categorised.'' Mr. Simmons also pointed out that it was the board's duty under the 1991 Labour Relations Amendment Act to require the information from the HEB.

But HEB lawyer Mr. Stephen Shawe said collecting such information at this point would just be "an enormous burden'' and "another expensive exercise that will do nothing for the board''.

"We're not attaching blame to the union members,'' Mr. Shawe said. "We're not punishing people. What we're trying to do is avoid repetition of losses.

That can only be done if revenue increases and costs decrease or remain stable.'' The board ruled that it would not request the information on salaries, but will consider each party's arguments as evidence.

The hearing resumes this morning with Mr. Simmons continuing his cross examination of Mr. Lines on the hotels' financial report.