(The list referred to was marked "Exhibit 25," and will be found in the appendix on p. 696.) Senator HOEY. Go ahead, Mr. Flanagan. Mr. FLANAGAN. Back to these commissions: My understanding is that your group paid $90,000 in commissions. Mr. GUTHRIE. That is correct, sir. Mr. FLANAGAN. And you were the purchasers? Mr. GUTHRIE. Yes, sir. Mr. FLANAGAN. Now, it is the usual practice, is it not, in the purchase of ships, or stock, such as this was, that the seller pays the commission? Mr. GUTHRIE. Yes, sir. Mr. FLANAGAN. Why did you people agree to pay the commission, when you were the purchasers? Mr. GUTHRIE. Because of the fact that in the course of negotiations we were holding out for a price of two million-eight, and the seller finally says, "Well, I will take your price at two million-eight if you will pay the commissions." We determined that the commissions were going to be $90,000. So we had to pay $2,890,000. That was the price it was going to cost us. We were willing to pay the $2,890,000, so we closed the deal. Mr. FLANAGAN. And as the testimony previously shows, and as we will just recite for the record here, $40,000 of that $90,000 went to Vining and Holmstead in New York? Mr. GUTHRIE. Yes, sir, 20 each. Mr. FLANAGAN. And $50,000 went to Rosenbaum and Newmark in Washington? Mr. GUTHRIE. Yes, sir; one check to the two of them. Mr. FLANAGAN. And of that $50,000, Rosenbaum got $27,000 and Casey got $9,000. Mr. GUTHRIE. I heard that testimony here. Mr. FLANAGAN. Now, did Rosenbaum ever advise you that he had any relationship with Casey in this deal other than being a broker? Mr. GUTHRIE. No, sir. Mr. FLANAGAN. Did you ever hear of a case where the seller got back part of the commission that was paid him? Did you ever hear of such a case? Mr. GUTHRIE. Where the seller got back part of the commission? Mr. FLANAGAN. That is what happened here. Casey was one of the sellers, and he got $9,000 in the commission. Mr. GUTHRIE. I don't believe so, sir. Mr. FLANAGAN. In your discussions with Mr. Rosenbaum or Mr. Casey or anybody in these transactions, were you ever advised that there was any relationship between Casey and Rosenbaum other than a broker-client or attorney-client relationship? Mr. GUTHRIE. I knew one other thing. I was told that Mr. Dudley in Mr. Rosenbaum's office was a brotherin-law of Mr. Casey. Mr. FLANAGAN. But you knew of no other business relationship! Mr. GUTHRIE. No, I knew of nothing. I never had met or even heard of Mr. Rosenbaum until this matter came up. Mr. FLANAGAN. There was just one other thing that I have here. Your group has controlled AOTC since the middle of 1950; is that right? Mr. GUTHRIE. Delaware Tanker has owned the stock of AOTC since July of 1950. Mr. FLANAGAN. Has AOTC, to your knowledge, paid any United States corporate taxes since your group has taken it over? Mr. GUTHRIE. I don't believe So, sir. Mr. FLANAGAN. Has Delaware Tanker paid any United States corporate taxes? Mr. GUTHRIE. I don't believe so, sir. Mr. FLANAGAN. Has Greenwich Marine operated at a profit? Mr. FLANAGAN. And it pays no United States taxes, because it is Panamanian. Mr. GUTHRIE. That is correct. Mr. FLANAGAN. What use is now being made of the five ships that were purchased from AOTC? Mr. GUTHRIE. These five ships are now chartered to Anglo-Saxon, a subsidiary of Shell. Mr. FLANAGAN. In other words, you ended the charter agreements with Standard of New Jersey? Mr. GUTHRIE. Yes, with Panama Transport, and following that they have been continuously since chartered by a subsidiary of Shell Petroleum. Mr. FLANAGAN. Where are they carrying oil? Mr. GUTHRIE. Principally, I believe, between the Persian Gulf and the United Kingdom. Mr. FLANAGAN. Have any of these five ships since your group took over ever carried oil to or from any iron curtain country? Mr. GUTHRIE. No, sir. Mr. FLANAGAN. I have no further questions. Senator HOEY. Any further questions? Senator NIXON. Could I ask one question? Your answer to the last question was "No, sir." Have they had the opportunity to carry oil to or from an iron curtain country? Was such business made available to you? Mr. GUTHRIE. Really, I don't know whether that is available. Senator NIXON. Let me ask you this. You represent Mr. Niarchos, and we know of Mr. Niarchos' letter of good faith of November 13, in which he says he is willing to submit to any controls deemed necessary. In your opinion, if Mr. Niarchos had that opportunity to engage in a profitable contract carrying oil to or from iron curtain countries, would he have done so? Mr. GUTHRIE. I can tell you without any question, "no." Senator NIXON. He would not. Would you have advised him to do so? Mr. GUTHRIE. I certainly would not. I would not advise him to carry such oil, and the Greeks feel quite differently about the Communists than we do here, and much more deeply. Senator NIXON. And you would feel the same way? Mr. GUTHRIE. I certainly would, sir. Senator NIXON. Because you feel it would be against the national interest, even though you could get such business? Mr. GUTHRIE. Certainly it would be against the national interest. Senator HOEY. Thank you, Mr. Guthrie. The committee will recess until 2:30. (Whereupon, at 12.20 p. m. a recess was taken until 2:30 p. m., this same day.) AFTERNOON SESSION Senator HOEY. The committee will come to order, please. Mr. David R. Dorn will come to the stand, please. Hold up your hand, Mr. Dorn, please. Do you solemnly swear that the testimony you give in this case shall be the truth, the whole truth, and nothing but the truth, so help you God? Mr. DORN. I do. Senator HOEY. Mr. Guthrie is your attorney? Mr. DORN. That is right, sir. Senator HOEY. What is that? Mr. DORN. Yes, sir. Senator HOEY. Enter on the record that Mr. Randolph H. Guthrie is present as attorney for Mr. Dorn. Mr. Dorn, give your name and address and connection to the reporter. TESTIMONY OF DAVID RICHARD DORN, ROWAYTON, CONN., VICE PRESIDENT, NORTH AMERICAN SHIPPING & TRADING CO., AND SECRETARY AND TREASURER, AMERICAN OVERSEAS TANKER CORP., AND DELAWARE TANKER CORP.; ACCOMPANIED BY RANDOLPH H. GUTHRIE, ATTORNEY AT LAW, NEW YORK, N. Y. Mr. DORN. David Richard Dorn, 264 Rowayton Avenue, Rowayton, Conn. I am vice president of North American Shipping & Trading Co. I am secretary and treasurer of American Overseas Tanker Corp. and Delaware Tanker Corp. Senator HOEY. Mr. Flanagan, you may proceed with the examination of Mr. Dorn. Mr. FLANAGAN. Mr. Dorn, how long have you been associated with various companies in which Mr. Niarchos is interested? Mr. DORN. Since 1947. Mr. FLANAGAN. And what did you do prior to that time? Mr. DORN. I was with the Maritime Commission. Mr. FLANAGAN. When, in 1947, did you go with Mr. Niarchos or any companies in which he was interested? Mr. DORN. I was employed by North American in February, I believe, of 1947. Mr. FLANAGAN. What were your duties with the Maritime Commission? Mr. DORN. Most of the time I was in the office of Commissioners, and on the staff of Admiral Vickery. Mr. FLANAGAN. Did you at the Commission have anything to do with the sale of any surplus vessels to North American Trading Co. or any of its facilities? Mr. DORN. No, sir. I was in the Ships Sales Division at the end of my employment, but I had nothing to do with any applications of North American. Mr. FLANAGAN. Did you ever have anything to do with applications of any other company with which Mr. Niarchos was associated? Mr. DORN. No, sir. Mr. FLANAGAN. Will you explain to the committee the circumstances, the initial circumstances, under which you sought out to acquire stock interest in the Delaware Tanker Corp.? Mr. DORN. I didn't seek it out, sir. It was offered to me by Mr. Niarchos. Mr. FLANAGAN. When did Mr. Niarchos first contact you with regard to becoming a stockholder in Delaware Tanker? Mr. DORN. I don't recall exactly, sir. It was undoubtedly in June of 1950. In other words, about the time of the consummation or of the purchase agreement with Mr. Casey and Mr. Klein as agents for the stockholders of American Overseas. Mr. FLANAGAN. What did Mr. Niarchos tell you at that time with regard to his desire to have you become a stockholder in Delaware Tanker? Mr. DORN. Well, he said it was intended to have an American corporation buy the stock of Overseas and he was willing to lend to me, or to have the Compania Internacional de Vapores, which I understood him to control, lend me, the funds to purchase the 15 shares-excuse me. I am mixed up in percentages and quantities. Mr. FLANAGAN. It is 75 shares? Mr. DORN. Seventy-five shares of the stock. And that he was doing the same thing for George Trypanis. Mr. FLANAGAN. Why did he particularly want you as a stockholder in that company? Mr. DORN. I don't look a gift horse in the mouth, sir. The opportunity was offered me and we didn't discuss it in any great detail. He made it clear that the loan would be on terms which had no strings on them so far as repayments were concerned. Subsequently, I believe in August, if I am not mistaken, a loan agreement was presented to me to formalize the arrangements, and I executed it. Mr. FLANAGAN. At the time, and we will go back now to the May period, when Mr. Niarchos contacted you Mr. DORN. Excuse me. If I say "May" here, I am speaking of about the time of the agreement between North American as agents and Messrs. Casey and Klein. Mr. FLANAGAN. Some time in the late spring or early summer of 1950. Mr. DORN. That is right. Mr. FLANAGAN. When Mr. Niarchos contacted you at that time and indicated that he wanted you to be a stockholder, did he say that he was making a gift of this stock? Mr. DORN. No, sir. Mr. FLANAGAN. You used the expression "never look a gift horse in the mouth." Mr. DORN. I was speaking about an opportunity being offered me. Mr. FLANAGAN. Why did he say he was offering this opportunity? Mr. DORN. He didn't say why. I understood why. Mr. FLANAGAN. What was your understanding as to why? Mr. DORN. Because George Trypanis and I, as officers of North American, had been very active in these negotiations through which he was acquiring Greenwich Marine Corp., a very valuable property. Mr. FLANAGAN. At that time or at any other time, did Mr. Niarchos or anyone associated with him, indicate to you that they would expect you to handle yourself as an officer of that corporation in accordance with their general directions? Mr. DORN. Never, sir. Mr. FLANAGAN. You considered yourself to be a completely free agent? Mr. DORN. I certainly did, and do. Mr. FLANAGAN. And still do? Mr. DORN. Yes, sir. Mr. FLANAGAN. What was the amount of your investment in this stock? Mr. DORN. The borrowed investment was $7,500. Mr. FLANAGAN. That was the only investment you had in the Delaware Tanker, was it not, that $7,500? Mr. DORN. That is correct, sir. Mr. FLANAGAN. It was lent to you by one of Mr. Niarchos' Panamanian corporations? Mr. DORN. Correct. Mr. FLANAGAN. And at that time, or later, in August 1950, you signed a loan agreement? Mr. DORN. That is right, sir. Mr. FLANAGAN. With the Compania Internacional de Vapores, which is in our record as exhibit 7? Mr. DORN. Right. Mr. FLANAGAN. Now, I notice under the terms of this loan that the money was to be used for acquiring 75 shares of stock and you were to use your best efforts to repay it before the expiration of 10 years, but that you would be liable for payment only to the extent that you, Mr. Dorn, should receive a net return from your investment in Delaware Tanker, is that correct? Mr. DORN. That is correct. Mr. FLANAGAN. In other words, you would not be liable to pay it back within the 10-year period or at any time, unless you could get the money some way or other out of Delaware Tanker? Mr. DORN. That is right. Mr. FLANAGAN. And there was no interest? Mr. DORN. That is correct. Mr. FLANAGAN. And in addition, you gave an irrevocable stock option? Mr. DORN. That is right. Mr. FLANAGAN. Whose idea was it to give that stock option? Mr. DORN. I presume it was Mr. Niarchos' because when the loan agreement was handed to me there it was. Mr. FLANAGAN. Hasn't Mr. Niarchos or any of his representatives previously said to you that they wanted the stock option in return for the loan of this money? Mr. DORN. No, sir. Mr. FLANAGAN. Have you ever questioned why they wanted the stock option? Mr. DORN. I called Mr. Guthrie and said, "How about this?" And he said, "It is all right, provided you understand, and I have explained to Mr. Niarchos that if and when it was ever contemplated to exercise the option, that at that time the matter should be looked into further to see whether or not there were any other corollary steps required." |