charter, amendments thereto, and the by-laws of the corporation are hereto attached as exhibit G. The two aforesaid corporations, one foreign and one citizen, made separate written applications simultaneously to the Maritime Commission for the purchase in cash of war-built tankers. Upon being advised by the Commission that all available tankers had been sold or allocated for sale but that if additional vessels became available full consideration would be given to the application of United, United sought to obtain tankers from other corporations which had been successful in obtaining allocation thereof from the Maritime Commission. The Tanker Meacham had been allocated to American Overseas Tanker Corporation, a citizen corporation, which thereupon caused the incorporation of National Tanker Corporation in Delaware with substantially the same officers, directors and stockholders. National then agreed to bareboat charter the Meacham to United for ten years and its stockholders gave United an irrevocable option to purchase all of the stock of National. Copies of the agreements between United and National and United and National's stockholders, each dated January 24, 1948, are hereto attached as Exhibits H and I. Such agreements would not have been made, however, if there had been any opposition thereto on the part of the Maritime Commission, and as appears from the terms of said agreement the same had been discussed with three members of the Maritime Commission who advised that there were no objections to the carrying out of such arrangement. Before the transaction was consummated the said parties took the further precaution of obtaining a written opinion from the assistant general counsel of the Maritime Commission upon the qualifications of United as a citizen under the Shipping Act of 1916; a copy of his opinion, dated February 3, 1948, is hereto attached as Exhibit J. As the arrangement with United above referred to contemplated time-chartering the tanker MEACHAM to China Trading and sub-chartering by China Trading to Chinese Petroleum in order to carry out the objective of transporting oil from the Persian Gulf to China, United filed an application with the Maritime Commission for approval of such chartering and subchartering, filing with its application copies of the three proposed charters. On April 28, 1948 Maritime Commission entered an order of approval, copy of which is hereto attached as Exhibit K. Such charters were later extended with the express approval of the Commission. With and upon the disclosures and assurances, the tanker MEACHAM was purchased from the Maritime Commission, duly registered and hence proceeded in the approved service. In the sale transaction the balance of the purchase price was advanced by Chemical Bank & Trust Company, a citizen corporation, secured by a first preferred ship mortgage on the vessel. The stock option was ultimately exercised, National thus becoming a wholly-owned subsidiary of United. Twenty-fourth: On June 4, 1948 China Trading having offered to endow the same, The China International Foundation, Inc. was incorporated, as hereinbefore set forth. All of the class A and class B stock (being all of the voting stock) of United was thereupon transferred to the Foundation, and United issued a new class of redeemable non-voting preferred stock to China Trading in cancellation of existing indebtedness. On October 17, 1949 the Foundation organized and became the owner of all the stock of Meacham Corporation, whose president, directors and stockholders were and are citizens. Its purchase of the tanker MEACHAM was accomplished without the investment of new capital, foreign or otherwise, as hereinbefore set forth. The said corporation was created in good faith without intent of violating any law and in the belief that its acquisition and operation of the vessel, which was then in foreign waters and remained so until November 1, 1951, were in all respects proper and lawful. Twenty-fifth: At no time has Meacham Corporation or its predecessor in title been owned, operated or controlled by Chinese or any other foreign interests. The only rights accorded the admittedly foreign corporations were those of creditors or minority stockholders; the only consideration shown such corporations or obligations issued to them were such as are common practice in the ordinary course of business and would have been given to any other minority stockholder or creditor in like position. The operation of the vessel since its purchase from the Maritime Commission has at all times been under the management of Sieling & Jarvis Corporation, a citizen corporation which has been approved by the Maritime Commission for the operation of United States flag tankers; and the 95335-52- -46 vessel has at all times been operated lawfully and consistently with the interests of the United States. Twenty-sixth: While any transfer of any interest in the tanker MEACHAM to a person not a citizen is denied, if there has been a violation of law it is limited to forfeiture of the amount of such interest. Twenty-seventh: The purchase from the Maritime Commission and subsequent arrangements pertaining to and operations of the tanker MEACHAM would not have been made or done if there had been any legal question or objection raised by the Commission. A forfeiture of the vessel at this time would accordingly work a failure of consideration for the purchase and entitle Meacham Corpora tion to a set-off in the amount of the purchase price together with damages for breach of warranty of title. WHEREFORE claimant-respondent prays that the libel herein be dismissed. BAIRD, WHITE & LANNING, Proctors for Meacham Corporation. STATE OF VIRGINIA, Corporation of the City of Norfolk, to wit: Edward R. Baird being duly sworn, says: I am a member of the firm of Baird, White & Lanning, proctors for claimantrespondent herein. The foregoing answer is true to my own knowledge, except as to the matters therein stated to be alleged on information and belief, and as to those matters I believe it to be true. The sources of my information and the grounds for my belief as to the matters not within my own knowledge are statements made by and information received from representatives and employees of claimant-respondent. The reason this verification is not made by the claimant-respondent is that it is a corporation, and none of its officers is within this District. (Signed) EpWARD R. BAIRD. Subscribed and sworn to before me this 23rd day of November 1951. My commission expires 2–14–55. (Signed) HILDA B. WARD, Notary Public. EXHIBIT No. 40 SIELING & JARVIS CORPORATION, 74 Trinity Place, New York 6, New York, August 18, 1949. DEPARTMENT OF STATE, Shipping Department, (Attn: Mr. Falk.) GENTLEMEN: On or about June 15, 1949, our Mr. David B. Jarvis had a telephone conversation with Mr. Falk in which we were assured that there would be no objection to our chartering a U. S. flag tanker to load a cargo of petroleum products in Constanza for discharge in North China, under charter to U. S. S. R. U. S. Maritime Commission, Bureau of Law, are questioning the authority of Mr. Falk to give us such assurance, also our sagacity in not obtaining the assur ance in writing. We contend that, as a shipping firm, we could not be expected to consult with any department other than the Shipping Department. Mr. Jarvis sought to discuss the matter with Mr. Sangstad or Mr. John Mann, but was referred to Mr. Falk. So far as requesting written assurance is concerned, our telephone conversa tion made it obvious that there was no real reason for obtaining the assurance, and it did not enter our mind to ask for anything in writing. Furthermore, our relations with personnel in the State Department have always given us confidence that any verbal assurance was as good as a written one. Since obtaining the above assurance, we have made other charters with various bureaus of U. S. S. R. and, naturally, will continue to do business with them until, as intelligent citizens of the United States of America, we are on notice that to do so will harm our nation in any way, or, until we are notified by you or other competent authority to desist. We are from time to time being questioned by other government bureaus, as well as Naval Intelligence, in regard to the vessels involved in this trade. We are, of course, making available all information in our possession. The first of these vessels, the "KETTLEMAN HILLS," is due to arrive at Dalny on August 21 to discharge her cargo of gasoline. We are presently in constant communication with the vessel by radio and will be until the vessel arrives in port when, as usual, the ship's station will be shut down. Very truly yours, EXHIBIT NO. 41 SIELING & JARVIS CORP., By DAVID B. JARVIS. OFFICE MEMORANDUM-UNITED STATES GOVERNMENT To: Mr. Ty Wood, Assistant Administrator for Operations. Date: 29 July 1949 Reference your memorandum of the 25th on the above subject. When we first learned that U. S. vessels had been chartered to Chinese Communists some weeks ago, we contacted the State Department and other Government Agencies to determine what arresting action was possible. Several people in State Department have been advised of the situation and Mr. Jesse Saugstad told us that in a Far East Conference which took place in the State Department the other day, he would bring up the question in an endeavor to formulate a definite policy on the subject and would advise us im mediately he was in position to do so. Inasmuch as the U. S. Maritime Commission is believed to hold mortgages on these vessels (those sold under the U. S. flag) we contacted the Commission, gave them the information, for which they were most grateful, and told us they would take the matter under advisement and let us know what could be done from their angle. As soon as we are able to correlate these activities, I will let you know what can be done. /s/ ARTHUR G. SYRAN. EXHIBIT NO. 42 OFFICE MEMORANDUM-UNITED STATES GOVERNMENT To: Memorandum for the Record. Date: May 3, 1950 Subject: United Tankers-Trading Between Romania and Chinese Communist Ports. For some time we have had the unusual experience of paying freights on a U. S.-flag tanker for the carriage of ECA as well as non-ECA cargoes in the Persian Gulf continental trade and then finding out that on another leg of a voyage the same vessel would take a cargo from Romania to a Communist-controlled port in China. The movement would be by a charter to the Communist Government agency known as the Soviet-Romanian Transport Company. The transaction appears on its face to be entirely legal and well within the rights of the particular American-flag tanker company. There are however a few mystifying facts that strain coincidence. There is good reason to believe that United Tanker Corporation is directly or indirectly controlled by a Chinese group sympathetic with Soviet motives. It did not seem just to us that we should be paying an American-flag tanker dollars for the carriage of ECA cargoes while at the same time the same vessel or a sister vessel would be trading for the distinct advantage of Communist China. There did not seem to be very much that we could do except to encourage the participating countries who might be using tankers of the United Tanker Corporation to prefer tankers belonging to either other American concerns or tankers belonging to other ERP nations. Another strange situation developed in that the vessels by reason of their being in a cross trade usually employ only one American on the crew. He is generally the master, the remainder of the crew is entirely foreign. Although strictly speaking this is not a very drastic violation of any rule established by the United States Coast Guard Bureau of Marine Inspection and Navigation, but it is subject to a fine when, as, and if the vessels return to a United States port. Our feelings in connection with the utilization of these tankers came to our attention and it appears it also came to the attention of the United Tankers Corporation which sent a Mr. Wasson of the law firm of Lovejoy, Morris and Wasson of 52 Wall Street, New York, to interview Mr. Oppe in order to get into the good graces of ECA. After many conversations between Mr. Wasson and Mr. Oppe I saw Mr. Wasson here on Tuesday, May 2, shortly before noon at which the entire subject was discussed at considerable length. I advised Mr. Wasson that we were not telling him what to do or how to do it. He was at liberty as the owner of an American flag tanker to go where he pleased, as he pleased, when he pleased, and that we were offering no restrictions nor issuing any directions. His primary purpose was to ascertain from us specific instructions as to what we would want him to do. This we declined to do. The only comment that we made was that as individual citizens we thought that his trading with Communist Russia did not entitle him and his company to the same type of cooperation that we were giving to other American and other ERP nation flag tankers. Our only limitation was our feeling that they were not entitled to "cooperation." It has been the feeling of this division for some time that the proper agencies to supervise this problem was: (1) the State Department which has the responsi bility in overseeing the activities of American flag vessels trading in areas which are subject to policy directives of that department. And (2) the United States Coast Guard by its Bureau of Marine Inspection and Navigation was directly concerned because of a technical violation regarding the crewing of the vessel. A third agency perhaps not too directly concerned but indirectly concerned was the United States Maritime Commission. We had wondered for a considerable period as to why any one or the other of the three above-mentioned agencies did not take aggressive steps to rectify an apparent aid to Communist China. It seemed to us a shame that we should be fighting a cold war on one front and at that same time supporting an American line who was in fact aiding another arm of the same philosophy. I understand that Mr. Falk of the State Department phoned Mr. Oppe today, Wednesday, May 3, and discussed the problem in greater detail. For further reference of the subject see memorandum classified directed to me and signed by Mr. Oppe apropos of his conversations of May 3 with both Mr. Falk and Mr. Saugstad. EXHIBIT NO. 43 OFFICE MEMORANDUM-UNITED STATES GOVERNMENT To: Mr. Harry J. Miller. Date: July 13, 1950. For some months we have had many conferences regarding the tanker Kettleman Hills. That vessel was owned by United Tanker Corporation which was in turn owned by an organization known as the China International Foundation, Inc. We had very meager information regarding the membership of the Board of Directors of the China International Foundation, and there was some doubt in our minds as to the citizenship of the individuals back of the United Tanker Corporation. Our curiosity was further aroused when we found that the Kettleman Hills became active in lifting cargoes of oil from Constantsa, Romania, to a Chinese Communist port in China. We had We had numerous conversations regarding the organizational set-up of the China International Foundation and the fact that coincidence was being strained in that the Kettleman Hills was actually doing business with Russia. several conversations with Oppe, and with Jesse Saugstad of the State Department in our efforts to have the United Tanker Corporation desist doing business with Chinese Communists. We, of course, felt that we had no right in any way to interfere with the activities of any American corporation but we also felt that we should not be aiding such corporation with ECA dollars in placing a ship in position so that she could take a profitable cargo from Romania to China. In other words we were endeavoring to have that corporation excluded from being the recipient of ECA funds on the one hand, which funds are used in general for the stopping of the on-rush of communism in the economic field while on the other hand it was also feeding oil to Communist China and reaping the benefits from the Russians. I wrote a rather lengthy memorandum some months ago after I had a conversation in this office with Oppe and the attorney who represented the United Tanker Corporation. I ask you to be kind enough to look at that memorandum for further reference. Today Mr. Newbold Morris an attorney of New York and former Chairman of the Board of Alderman of the City of New York, came in stating that he represented the China International Foundation, Inc., and that in addition he was the Chairman of that Foundation. He certified to me that the Foundation was a charitable organization and that all of the profits of the United Tanker Corporation were dispatched to the China International Foundation which in turn used such profits for scholarships to aid Nationalist Chinese students in American universities. All of the above was in the nature of an explanation as to the historical background of the organization in order to get the United Tanker Corporation out of its current poor relationship with ECA/Transportation Division. His prime purpose was to ask for approval of the following transaction. The United Tanker Corporation, an American corporation, is not interested in this current transaction. However, the Meacham Corporation, a Delaware corporation, whose entire stock is owned by persons as indicated in the attached chart, and the profits of which corporation go to the China International Foundation, is the owner of the Tanker Meacham which it is desired to charter on a voyage basis to the Chinese Petroleum Corporation for a series of voyages from the Middle East to Formosa. I advised Mr. Morris that I could see no legal objection to the Meacham engaging in that trade so long as Formosa was under the protection of the United States as indicated by the President's recent declaration and direction that the United States Navy protect Formosa from any invasion from Communist Russia and/or China. I have tentatively approved this charter and I would like, however, you to examine the facts and ascertain if there is any other legal objection to the chartering of that vessel for that voyage. I, of course, indicated that the vessel would have to meet all other requirements as specified in ECA Regulations as to price, terms, conditions, etc. I suggest that you contact Oppe and get from him such additional supplemental information as you can secure and let me have your views at the earliest possible moment. /s/ Arthur G. Syran P. S.-For your information the pencil notations on the photostatic Corporate chart are in the handwriting of Mr. Newbold Morris who said that he is the Chairman of the Foundation. EXHIBIT NO. 44 17 JANUARY 1950. DEAR MR. SECRETARY: There is enclosed a copy of a letter which I sent to Major General Philip B. Fleming, Chairman, Maritime Commission, on 4 October relative to trading by U. S. flag tankers to and from Communist controlled ports. A copy of General Fleming's reply dated 1 November is also enclosed. The purpose of my letter to General Fleming, as you will note, was to recommend that the Maritime Commission take steps to control the chartering of U. S. flag tankers for the purpose of transporting highly strategic goods to and from Communist controlled ports. In his reply, General Fleming stated that he looked to the Department of State for guidance in these matters and thus far the Department has not indicated that trading by U. S. flag vessels to and from Communist controlled ports is contrary to the best interests of the United States. General Fleming stated also that he thought that one of the vessels, the S. S. Kettleman Hills, would probably seek other fields of employment in the near future if that had not already been done. The Kettleman Hills was at Antwerp on 15 December 1949 and from there it was to proceed to Constanzia, Rumania to pick up oil, presumably for transmittal to Communist China. It was chartered for this trip by the Soviet Export Company of Moscow, and the operating agent is Sieling and Jarvis, an American firm with headquarters in New York, New York. |