1. American Overseas Tanker Corp. application filed with United States Maritime Commission for purchase of 20 T-2 tankers, August 27, 1947- 2. Amendment No. 1 to American Overseas Tanker Corp. ap- plication, September 17, 1947___ 3. Contract of sale entered into by American Overseas Tanker Corp. and the Maritime Commission for five T-2 tankers, 4. Amendment No. 4 to American Overseas Tanker Corp. ap- 5. Charter agreement entered into by American Overseas Tanker Corp. and Greenwich Marine Corp., October 21, 6. Bareboat charter entered into the Greenwich Marine Corp. and Panama Transport Co., October 21, 1947. 7. Loan agreement between American Overseas Tanker Corp. and Metropolitan Life Insurance Co., December 30, 1947. 8. Letters from George Trypanis, David R. Dorn, and Mrs. Mary Dracopoulos to the Compania Internacional de Vapores, Panama, August 15, 1950- 9. List of stockholders in American Overseas Tanker Corp. and Greenwich Marine Corp. as of date of transfer, June 10. Minutes of meeting of United States Maritime Commission, 11. Statement from Office of the Secretary of State of Delaware 13. Telegram from United Tanker Corp. to United States Maritime Commission and reply, February 2, 1948, and February 3, 1948, respectively. 14. Contract of sale between American Overseas Tanker Corp. and United States Maritime Commission, December 31, 15. Letter from George H. Helmbold, Chief, Bureau of Oper- ations, United States Maritime Commission, to National Tanker Corp., January 31, 1948. 16. Letter from Joseph E. Casey, president, National Tanker Corp., to George H. Helmbold, United States Maritime 17. List of stockholders of National Tanker Corp., January 26, May be found in the files of the subcommittee. IV 21. Contract of sale between United States Maritime Commis- sion and American Overseas Tanker Corp., December 31, 1947. 1949___ 28. Agreement between American Overseas Tanker Corp. and United Tanker Corp., January 19, 1948___ 29. Agreement between United Tanker Corp. and Mrs. Olga 30. Agreement between China Trading & Industrial Develop- ment Corp. and the Wonok Corp., February 18, 1948.--. 32. Cablegram from Sieling & Jarvis to Masters, December 18, 35. Letter from Secretary of Defense Louis Johnson to Maj. Gen. Philip B. Fleming, Chairman Maritime Commission, 36. Letter from Senator Richard M. Nixon to Admiral E. L. 37. Statement of legal fees billed by Lovejoy, Morris, Wasson 39. Application for remission or mitigation of forfeitures or 1949. 405 716 41. Memorandum from Director, Transportation Division, 42. Memorandum from Arthur G. Syran, ECA, May 3, 1950- 44. Letter from Secretary of Defense Louis Johnson to Secretary of State Dean G. Acheson, January 17, 1950_-- 45. Letter from Secretary of Defense Louis Johnson to Secretary of State Dean G. Acheson, April 24, 1950----- 46. Letter from James E. Webb, Undersecretary of State to Maj 47. Letter from Maj. Gen. Philip B. Fleming, Chairman, United 48. Letter from Secretary of Defense George C. Marshall to 51. Press release from the Chinese Embassy, Washington, D. C., April 13, 1951.. 50. Statement from Cadwalader, Wickersham & Taft, New York, February 7, 1951-- 52. Letter from Senator Karl E. Mundt to Secretary of Navy 55. Photostatic copy of entry from office diary of Admiral W. 57. Report from Paul A. Walker, Chairman, Federal Com- SUPPLEMENTAL DATA 1. Charts mentioned by William A. Leece throughout his testimony.. SALE OF GOVERNMENT-OWNED SURPLUS TANKER VESSELS MONDAY, FEBRUARY 18, 1952 UNITED STATES SENATE, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS OF THE COMMITTEE ON EXPENDITURES Washington, D. C. The subcommittee met, pursuant to Senate Resolution No. 251, Eighty-second Congress, second session, agreed to January 24, 1952, in room 357 of the Senate Office Building, Senator Clyde R. Hoey (chairman of the subcommittee), presiding. Present: Senators Hoey, McClellan, Underwood, Mundt, and Nixon. Also present: Francis D. Flanagan, chief counsel; William A. Leece, assistant counsel, and Ruth Young, chief clerk. Senator HOEY. The committee will please come to order. I will ask that if the photographers have not taken all the pictures they wish to, they take them now, so that we may proceed with expedition. We will follow the usual practice of not taking pictures during the time the witnesses testify. Whatever pictures are to be made will be made before the witness begins to testify. I wish to make a brief opening statement. Last year the Subcommittee on RFC of the Senate Committee on Banking and Currency received testimony that a group headed by Joseph E. Casey had acquired eight tanker vessels from the Maritime Commission. After the RFC Subcommittee had taken some testimony in connection with these tanker transactions, it decided that further investigation in this case was beyond the scope of its jurisdiction. For that reason Senator Fulbright, the chairman of the RFC Subcommittee, referred this case for further investigation to this subcommittee. At about this same time last year the Senate Committee on Interstate and Foreign Commerce was also making preliminary inquiries in the case and the chairman of that committee also made available to us the results of his inquiry. The investigation by our staff indicates that the group headed by Mr. Casey purchased and chartered eight vessels through the American Overseas Tanker Corp. and its several affiliates and subsidiaries. The purchase of five of these tankers from the Government was financed through a loan of $9,705,000 by the Metropolitan Life Insurance Co. Thereafter these five vessels were operated under a charter agreement with the Panama Transport Co., a Panamanian subsidiary of the Standard Oil Co. of New Jersey. The other three 1 tankers which were purchased from the Government by a subsidiary of the American Overseas Tanker Corp. were chartered to the United Tanker Corp., an affiliate of the China International Foundation, Inc. Thereafter the Casey group disposed of all its stock interest in American Overseas Tanker Corp. and affiliated corporations. These stock holdings were sold to two main groups, namely, the United Tanker Corp. in which Chinese nationals had a considerable financial interest, and the Delaware Tanker Corp. which was financed by a Greek national. The stockholders in the Casey group realized $3,250,000 in the sale of their stock interests, which had been acquired on an initial investment of $101,000. The staff of this subcommittee has been and will continue to make further inquiries into the sale of Government-owned tankers to various corporations. However, this phase of our hearings will be confined to the purchase and resale of the eight tankers which were originally acquired by the Casey group. The main objectives of our investigation at this time are as follows: 1. To determine whether the original purchase of these eight tankers from the Government and the subsequent transfer of the vessels to various other corporations, as well as the use of the ships, was done in a manner consistent with the broad objectives of the Merchant Ships Sales Act of 1946 and in accordance with applicable merchant marine laws and regulations. 2. To determine whether Federal taxes were avoided by the various individuals and corporations who made substantial financial gains from the chartering of these vessels or from the sale and transfer of the stock in the corporations involved in this case. 3. To inquire into the legal, brokerage, and other fees which were paid in connection with various transactions in this case. The subcommittee staff, together with representatives of the Maritime Administration and the General Accounting Office, have developed considerable information concerning the transactions involved. Because of the involved and intricate nature of the facts in this case, it will be necessary for the subcommittee to develop a considerable amount of detail in these hearings. If this is not done, the legal and tax problems involved cannot be adequately considered nor will it be possible to make a fair and complete presentation of the case. The subcommittee has not sought to prejudge this case, nor render a final judgment until it has made a thorough exploration of all pertinent facts. The first witness to appear here today is Vice Adm. Edward L. Cochrane, Maritime Administrator, United States Department of Commerce. It is believed that Admiral Cochrane's testimony will serve to outline the policy of the Merchant Ships Sales Act, as well as the operating procedures of the Maritime Commission in their administration of the act. Other witnesses whose testimony may be necessary to determine or to amplify the facts in this case will be called upon to testify as the inquiry progresses. I will ask Admiral Cochrane if he will stand, please. Will you hold up your right hand? Do you solemnly swear that the evidence you give in this hearing shall be the truth, the whole truth, and nothing but the truth, so help you God? Admiral COCHRANE. I do. |