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Mr. OPPE. I should say that was poor memory and perhaps a joking reference to it, because at that time he never questioned where Mr. Sieling got the $2.

Senator MUNDT. You mean it was a joke around the office as to how he could get stock for $2.

Mr. OPPE. Yes; in my capacity with Sieling & Jarvis and in their association with United Tankers, I always dealt with the Chinese, and never with Mr. Sieling, and I never met Mr. Lenfest, and I would say, any time there was anything to be done in Washington, which had been my former association, when they wanted me to take up some matter, it was the Chinese I dealt with.

Senator MUNDT. In other words, as far as your experience was concerned, the Chinese were the controlling operators, and they were the people running the corporation?

Mr. OPPE. Exactly.

Senator MUNDT. You have that both from the standpoint of being at the Government side when they were contacting you, and from your experience, your previous experience, with Sieling & Jarvis, where, when the $2 share of stock came up, he laughed about it, because it was generally conceded it was a dummy corporation?

Mr. OPPE. That is right. And with this background memory of the situation, and it always having been acknowledged that it was a dummy organization, I kept in contact with Mr. Jarvis through the years since I have left there whenever anything came up relating to them as for instance on the matters of foreign crews on board or trading with Communist China. I always contacted him to see what they were doing. Because I, personally, was very antagonistic toward the situation. I thought it was to the discredit of the American merchant marine, to say the least, that Chinese as well as others were getting into American shipping, as they have done. And when I had the opportunity with ECA, I would object to these things. That is how I first objected to the situation of the Kettleman Hills and the Saint Christopher, when they started to have their second or third movements to China.

I spoke to Mr. Jarvis, he passed it on to Mr. Wasson, and he asked if he could come to Washington and see me. I said I would be delighted. We met.

Senator MUNDT. Did he come to see you in his capacity as secretary and treasurer of the Chinese Foundation operating the fund, or as lawyer for United Tanker?

Mr. OPPE. I should say he never stated officially or specifically what his capacity was, but I took it that he represented United Tankers when he came to see me.

Senator MUNDT. And the Chinese group controlling it?

Mr. OPPE. Yes. He wanted to dissuade me from the action I thought was in order, and that was to deny those vessels and their sister ships from trading for ECA henceforth, and that they were certainly beyond the pale now.

He stated that he wanted to explain to me why they did these things. And, as I recall the conversation, in substance he just explained that since the State Department had offered no objection, he couddn't see policywise where I could object. Legally, or technically, I probably

couldn't object; and that it was good musiness; United Tankers had been losing money, and here was an opportunity to make some.

Senator MUNDT. The State Department had told him it was all right to do this?

Mr. OPPE. Not all right. They had offered no objection. And, as a result of this, since he wasn't able to convince me, he arranged to see Colonel Syran. I arranged for him to see the colonel. And thereafter, he spoke to Mr. Wasson, as I see, again, from my diary. He wanted to pursue it further with the colonel, and I said I was leaving ECA at that time and he would have to henceforth take the matter up with the colonel.

He said what should he do, and I said, "I suggest that you give him a complete explanation of this China International Foundation," which had just been mentioned at that time.

And, as I recall the conversation, I believe I might have suggested to him that it might be well if Mr. Morris would come down and explain that to Colonel Syran.

Senator NIXON. Did I understand you to say Mr. Wasson indicated they wanted to continue this business in May?

Mr. OPPE. Not to continue it. He wanted to justify the action they had taken so that we wouldn't henceforth deny them the opportunity to engage in ECA business.

I also took that opportunity to point out to Mr. Wasson that I thought it highly objectionable that he operate these ships with foreign crews. It was very dangerous, I thought, what they were doing. Because they seemed to have done it on a systematized schedule. It was done deliberately, rather than through the course of events; they deliberately planned to get the Americans off the ships and put foreign crews aboard, because it would amount to a tremendous savings in operations.

Mr. FLANAGAN. In other words, they were willing to operate these ships with foreign crews to save money, or to make money.

Mr. OPPE. That was my personal view as to why they did it.

Senator MUNDT. You mean they paid these foreign crews what, in substance, would be sweatshop wages as compared to what they would have to pay American union crew men?

Mr. OPPE. That is correct. They would engage Chinese, Italians, Germans, who would work for the very lowest possible wages, undoubtedly, and would save them hundreds of thousands of dollars a year in operating expenses.

Senator MUNDT. I think that is an important point. Because American operating unions have been complaining very bitterly against that chiseling, in using foreign crew men, because it puts our men out of work and puts them in competition with what is actually a sweatshop level.

Mr. OPPE. There again, feeling something might be done, I contacted the Coast Guard, and they said unfortunately the regulations were such that only a token fine would eventually be levied against the vessel when she returned to the United States.

I think the Meacham and the Saint Christopher have now come back, and the Coast Guard hasn't even levied the token fine. Senator NIXON. Let me ask Mr. Oppe this question.

Did I understand you to say that when you were with Sieling & Jarvis you considered the United Tanker Corp. a phony front for the Chinese operation, in effect?

Mr. OPPE. I did.

Senator NIXON. Was that the general opinion in the office there at Sieling & Jarvis? Did you all deal with the Chinese, in other words? Mr. OPPE. Yes.

Senator NIXON. Throughout?

Mr. OPPE. The Chinese came into the office quite frequently.
Senator NIXON. They made the policy, then?

Mr. OPPE. They were the ones who said what would be done.
Mr. FLANAGAN. What Chinese? Do you recall?

Mr. OPPE. Well, these names are a little confusing at times. The principal gentleman I spoke with was Mr. Darfoon Du, and I believe there was a Mr. Chen.

Mr. FLANAGAN. How about Mr. Wei?

Mr. OPPE. I never met Mr. Wei.

Mr. FLANAGAN. Mr. Chen and Mr. Du were the people you dealt with?

Mr. OPPE. Yes.

Senator NIXON. And, for example, there has been quite a bit of conversation about the three Americans who, at least for purposes of the record, controlled the voting stock of United, after making an investment of $6.

Mr. OPPE. No; I never spoke with anyone of the three regarding any actions that United Tanker was taking.

Senator NIXON. Mr. Sieling, who was one of those three Americans, just considered his stockholding in United a joke; is that not right? Mr. OPPE. He originally considered it a joke, and I think later he considered it a good piece of business.

Senator NIXON. But he never considered that he controlled the policy of the corporation, did he?

Mr. OPPE. I wouldn't know how he thought about it, but he gave me the impression-and that was the general impression, I think, that was held in the office-that it was what you would call a subterfuge.

Senator NIXON. A subterfuge. In other words, Mr. Sieling and the other officers of the corporation, the American officers and majority stockholders, were just a front for the Chinese operation?

Mr. OPPE. Yes; that seemed quite obvious from the start, when the question first came up, that since the Chinese couldn't get tankers from the Maritime Commission as applicants for vessels to go under the Chinese flag or as applicants to get them any other way, setting up a corporation that would acquire other ships was a good way to circumvent the circumstances and get hold of the ships.

Senator NIXON. That was the conversation around the office, what you have just stated?

Mr. OPPE. That is correct.

Senator NIXON. Mr. Sieling participating, as I understand, in that opinion.

Senator MUNDT. Mr. Chairman, I would like to say that as one member of this committee, it is really wholesome and refreshing to have two witnesses from the Government who come up and speak here without any hedge words definitely stating that they did what they

could to protect the security interests of this country, to stop United Tanker from trading with the enemy.

I want to congratulate them for taking a step which certainly was wise in the course of history. It certainty was in complete conformity with what Secretary of Defense Louis Johnson was trying to do by his letter to the United Tanker Corp. and his letter to General Fleming. It seems to me that they did about everything they could. I am speaking now about Mr. Oppe and Mr. Syran. And the fact that they did interject themselves to try to stop a very vicious practice, a practice described by the Secretary of Defense as detrimental to our security interests, I think is highly commendable.

In my opinion, those people who for bloody profits were engaging in Red-market traffic were rendering a much greater disservice to this country than those who engage in a black-market traffic at home in times of emergency.

I want to congratulate you on the good job you have done.

Senator HOEY. I want to thank Colonel Syran and Mr. Oppe. I think we certainly all approve of the fine record they have made in that respect.

Mr. SYRAN. Thank you, sir.

Mr. OPPE. Thank you.

Senator HOEY. Mr. Harold C. Lenfest.

Mr. Lenfest, will you hold up your right hand?

Do you solemnly swear that the testimony you give in this hearing shall be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. LENFEST. I do.

Senator HOEY. Mr. Lenfest, will you please give your name and address to the reporter?

TESTIMONY OF HAROLD C. LENFEST, NEW YORK, N. Y., PRESIDENT,
UNITED TANKER CORP.

Mr. LENFEST. H. C. Lenfest, 67 Broad Street, New York.
Senator HOEY. State your business.

Mr. LENFEST. I am president of the United Tankers and subsidiary companies, excepting the American Viking, of which I am chairman. Senator HOEY. Mr. Flanagan, you may proceed with the examination.

Mr. FLANAGAN. Mr. Lenfest, can you tell us approximately when you became president of United Tanker Corp.?

Mr. LENFEST. When it was started, about the 10th of December 1947. Mr. FLANAGAN. And at that time, I recollect from the record that you gave $2 for 10 shares of class B stock?

Mr. LENFEST. I think it was 20; no; 10 shares; that is right.

Mr. FLANAGAN. At whose suggestion did you buy into United Tanker?

Mr. LENFEST. Mr. Wasson's.

Mr. FLANAGAN. Did he indicate to you at that time what your duties as president of that corporation would be?

Mr. LENFEST. Normal responsibilities and duties of a president. There was no definition. It was just understood they were the normal duties.

Mr. FLANAGAN. Did he ever indicate to you that the Chinese interests which owned part of that stock would have any part of the control of the corporation?

Mr. LENFEST. No, sir.

Mr. FLANAGAN. He always indicated to you that you would have the full powers in control which any president of a corporation would have?

Mr. LENFEST. Yes, sir.

Mr. FLANAGAN. Did you always exercise that type of control?
Mr. LENFEST. To the best of my ability.

Mr. FLANAGAN. Was it your experience that the Chinese interests at any time did exercise any substantial amount of control over that corporation?

Mr. LENFEST. They never exercised any control.

Mr. FLANAGAN. Did they make suggestions as to how the corporation should be operated?

Mr. LENFEST. As employees, yes. Except at first; Wei was the secretary and treasurer; of course, he had the responsibilities and authorities of those positions.

Mr. FLANAGAN. As a matter of fact, he held on to the purse strings; didn't he?

Mr. LENFEST. Yes; well, he didn't control them, because I had to sign every check, or if I were away, Mr. Tode or Mr. Sieling. All three directors had one signature; no check could go out without the signature of one of the directors.

Mr. FLANAGAN. And Wei always had to countersign, did he not? Mr. LENFEST. Yes; he did, at first, when the thing was just starting. Mr. FLANAGAN. When did you finally dispose of your stock in United Tanker Corp.?

Mr. LENFEST. About the middle of 1948.

Mr. FLANAGAN. And how much were you paid for that stock, for which you paid $2?

Mr. LENFEST. $10,000.

Mr. FLANAGAN. Who paid you $10,000 for that stock?

Mr. LENFEST. The check was made out by China Trading, but it was thoroughly understood that it was to be donated to the foundation. Mr. FLANAGAN. Do you know why you made such a substantial profit on that stock?

Mr. LENFEST. Well, the stock-you remember, when we paid $2 for the stock, we had nothing, except the $2,000 that the China Trading had put up, which had gone into the corporation. But as time went on and we acquired interests and ships, that stock was worth considerably more money. I think $10,000 was a fair price.

Mr. FLANAGAN. As a matter of fact, the stock jumped from 20 cents a share to $1,000 a share; did it not?

Mr. LENFEST. Yes.

Mr. FLANAGAN. Did the profits of the corporation, in your opinion, warrant the stock jumping so much in price?

Mr. LENFEST. Well, at that time, we had gotten some substantial charters from Chinese Petroleum through the CTIDC.

Senator MUNDT. What was that last?

Mr. LENFEST. China Trading and Industrial Development corporation.

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