Mr. DUDLEY. No, I have never met her. Mr. DUDLEY. I have never met Mr. Morris. Senator NIXON. Do you recall what the extent of your conversations were with Mr. Wasson on the situation? Mr. DUDLEY. It is kind of dim. I remember talking some thing about national tankers. Senator NIXON. Who handles those negotiations primarily? Mr. DUDLEY. I think they are handled by Mr. Casey. I had so little to do with the transaction that I really couldn't tell you who was the primary force there. Senator NIXON. Did Mr. Rosenbaum have anything to do with those transactions? Mr. DUDLEY. Not that I know of, no. Senator NIXON. That was primarily a deal between Casey and Wasson? Mr. DUDLEY. As far as I knew, we had virtually nothing to do with the transaction other than forming the corporation, which is a thing we did through the Corporation Trust Company. Senator NIXON. The total, incidentally, in stock and fees was $267,200. Senator HOEY. Thank you, Mr. Dudley. I believe we will not be able to proceed with the investigation further this afternoon. It is nearly adjournment time now. The committee will recess until 11 o'clock in the morning. (Whereupon, at 4:22 p. m., Tuesday, March 4, 1952, the hearing was recessed to reconvene at 11 a. m., Wednesday, March 5, 1952.) SALE OF GOVERNMENT-OWNED SURPLUS TANKER VESSELS WEDNESDAY, MARCH 5, 1952 UNITED STATES SENATE, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS OF THE Washington, D. C., The subcommittee met at 11 a. m., pursuant to Senate Resolution No. 251, Eighty-second Congress, second session, agreed to January 24, 1952, in room 357 of the Senate Qffice Building, Senator Clyde R. Hoey (chairman of the subcommittee) presiding. Present: Senator Clyde R. Hoey, Democrat, North Carolina; Senator John L. McClellan, Democrat, Arkansas; Senator Hubert H. Humphrey, Democrat, Minnesota; Senator Joseph R. McCarthy, Republican, Wisconsin; Senator Karl E. Mundt, Republican, South Dakota; Senator Richard M. Nixon, Republican, California. Also present: Francis D. Flanagan, chief counsel; Howell J. Hatcher, chief assistant counsel; Jerome S. Adlerman, assistant counsel; William A. Leece, assistant counsel; Louis Sornson, accountant; Ruth Young, chief clerk. Senator HOEY. The hearing will please come to order. Mrs. Olga Konow will please come to the stand. Mrs. Konow, will you please stand up and hold up your right hand? Do you solemnly testify that the evidence which you give in this case shall be the truth, the whole truth, and nothing but the truth, so help you God? Mrs. KoNow. I do. Senator HOEY. Have a seat. Will you please give your name, address, and occupation to the reporter? TESTIMONY OF OLGA KONOW, PRESIDENT, AMERICAN VIKING I am also having lately a nickname. I am called "Oil Boat Olga.” Senator HOEY. Will you give your name and address also? Mr. KELLY. I am Roy B. Kelly, attorney, Transportation Building, Washington, D. C. Sonator HOEY. Mr. Flanagan, you may proceed with the examination of Mrs. Konow. Mr. FLANAGAN. Mrs. Konow, by way of background in connection with the questioning we will do of you, I want to state for the record here that our testimony to date indicates that in January of 1948, you acted as a broker between the United Tanker group and the Casey group in the purchase of three tanker ships which eventually were turned over to the United group; and our questioning will, for the most part, have to do with your activities as a broker in connection with that specific transaction. Now, could you tell the committee who first contacted you in the United Tanker group for the purpose of having you attempt to get them ships? Mrs. KoNow. You mean to say who very first contacted me? Or you want to know how did I become a broker for United Tanker in this very deal? Mr. FLANAGAN. Yes. Mrs. KoNow. I was very fortunate, because in the tanker business it is usually good to have the buyer. Tankers you always have. So the United Tanker people gave me the privilege to act for them as a broker, either for chartering or for purchasing vessels. Mr. FLANAGAN. Which representative of the United Tanker group contacted you and asked you to be their broker in seeking charters or ships? Mrs. KoNow. It was never actually an individual, because this United group is usually three or four gentlemen who are getting together, and then they ask you to either go and look for shipsHow would I explain that? Would you want to know one specific person? Mr. FLANAGAN. Yes; or the three or four persons. Mrs. KONOW. Well, most of them was Mr. Wei, who I had most close contact with Mr. FLANAGAN. That is Chung-ching Wei? Mrs. KoNow. C. C. Wei. Mr. FLANAGAN. W-e-i, I think he spells it. Mrs. KoNow. Yes, W-e-i. Mr. FLANAGAN. Did Mr. Wasson contact you at that time? Mrs. KONOW. Mr. Wasson was always with our group together, like Mr. Lenfest or Mr. Sieling or Mr. Wei, but most of my dealings were specifically with Mr. Wei. Mr. FLANAGAN. Now, at the time that Mr. Wei first contacted you with regard to getting tankers for them, did he indicate what commission or what brokerage fee you might get if you were successful in obtaining tankers? Mrs. KoNow. It is not actually the buyer of the vessel who indicates the commission. It is actually the broker, who is very hopeful to get 5 percent on a brokerage, on a ship. Mr. FLANAGAN. Did you indicate to Mr. Wei or to others in the group that you would want 5 percent of the purchase price? Mrs. KoNow. Yes; I imagine I have said so. Mr. FLANAGAN. Now, how did you happen to first get in contact with the Casey group? Mrs. KONOW. Well, you know, everybody knew the Casey group. In old times we used to call them the Stettinius group. And in New York, we knew that they were getting in difficulties financing their latest vessels. Because the first five ones, they were successful in financing. And then I went to Mr. Casey's office, and I proposed Mr. Casey $450,000 for the three vessels which were as an overprice for his three vessels. Mr. FLANAGAN. In other words, at your first meeting with Casey, you indicated to him that you would give him an overprice of $150,000 a vessel for making them available to your group? Mrs. KoNow. That is about what it was. Mr. FLANAGAN. And at that first meeting, what did Casey tell you? Mrs. KoNow. In all sincerity, Mr. Casey, I don't believe was taking me too seriously. First of all, there are no women in this shipping business, and I believe he was so used to seeing so many brokers, and when I left him I left him: "Would you call me tomorrow if you are interested?" and he did call me next day in New York. Mr. FLANAGAN. I think we can fix the dates of these transactions by a business diary which you made available to us. Mrs. KoNow. Well, if you would be kind enough to return it to me, I would be not so much in difficulties to explaining things. I just almost could read it. Mr. FLANAGAN. We have excerpts here from the diary. I think the first entry is on January 15, Mrs. Know. Mrs. KoNow. January 15. Mr. FLANAGAN. Do you have that entry of the 15th? Mrs. KoNow. Yes, I do. Mr. FLANAGAN. That is January 15, 1948. You stated in your own handwriting in the book there: Left Joe Casey, negotiations three T-2 tankers, American Marine for United Tanker, offer firm, $450 and if interested call me Friday-next day. Mrs. KONOW. That is correct. Mr. FLANAGAN. When you say "offer firm," what do you mean by that? Mrs. KONOW. Well. I will be very sincere with you. Now I know a little more about what "offer firm" means, but at that time I really didn't know much about what an offer firm meant. I hoped that I will induce him to accept $450,000, and by the time I returned to New York the ships will be sold, and that will be all. Mr. FLANAGAN. By that did you mean that you had made a firm offer of $450,000 over price? Or he made an offer? Mrs. KONOW. No; he is not taken my visit very seriously, I must admit. And then, after I left, I did say, "Call me Friday, next day." Mr. FLANAGAN. Now, at this point: How long had you been in the ship brokerage business? This was in '46. How did you first get into it? Mrs. KoNow. In all sincerity, this was my first ship brokerage experience. Mr. FLANAGAN. How long had you been in the shipping business? Mrs. KoNow. I have been in the shipping business since several years, but actively since '47. 95335-52-19 Mr. FLANAGAN. And this transaction with the Casey group was the first time that you ever acted as a ships' broker? Mrs. KoNow. Yes. Mr. FLANAGAN. I notice in your diary the next entry is on Friday, January 16, 1948, and it says: Mr. Casey telephoned from Washington. Will lunch 12:30 Monday Whitehall Club. Very interested in my offer. Mrs. KoNow. Well; that is correct. Mr. FLANAGAN. In substance, what did he say about your offer at that time? Mrs. KoNow. I don't recall the telephone conversation. That is probably why I have this notebook. But after, probably, I left, I must have sat a bit and figured out that I have something to offer for him. And then he called me, as you see, at 5: 10 p. m., and he was interested in my offer. That is correct. But I can't recall the telephone conversation between 1948 and up to date. But it said he was interested in my offer. Mr. FLANAGAN. I notice that your next entry is the following day, Saturday, January 17, in which you state: Visit from Mr. Wei, Mr. Du, Mr. Chen, first meeting Dr. Chen. Conferencefull authority to offer $450-$500 for the three tankers to Mr. Casey on Monday meeting. Commission of total $100,000 on each ship secured by this gentleman. Does that mean that on Saturday morning you met with these Chinese representatives of the China Trading and they gave you full authority to offer between $450,000 and half a million overprice? Senator MCCARTHY. What do you mean by "overprice" Mrs. KoNow. Overprice means that for the vessel they had an overprice. Senator MCCARTHY. I still do not know what you mean by "overprice." Mr. FLANAGAN. I think we can explain that, Senator. The point is, is it not, that at this point in the negotiations the Casey group had only allocations for three vessels? They didn't have the vessels? Isn't that true? Mrs. KoNow. Mr. Flanagan, if you have vessels, whether they are allocated or how it is, it is your vessel. Senator MCCARTHY. May I interrupt? What do you understand by "overprice"? Mr. FLANAGAN. "Overprice" means that the United group would pay for the vessels the full price, whatever the statutory price is, and give them a bonus of $450,000 for making the vessels available. Senator MCCARTHY. I understand. Mr. FLANAGAN. In other words, that would be the profit for the Casey group. Senator MCCARTHY. And do I understand that you are inquiring as to whether or not the overprice was agreed upon while they were dealing with the Maritime Commission? Mr. FLANAGAN. Yes; while ships were still allocated only. They hadn't been assigned to the Casey group. Senator MCCARTHY. So that the profit would be determined before they made the original contract? |