Lucrative Maze

Lucrative Maze A Senate committee last week turned its attention to a question involving eight war-surplus tankers with fancy names, e.g., Oywhee, Antelope Hill, and even fancier postwar histories. How did a group of highly placed Washington promoters manage to buy the ships for a mere $101,000 investment and then unload them with a $3,250,000 profit? To find out, the committee had to wade through a maze of interlocking corporations.

Corporation No. 1 was formed in 1947 by Joseph E. Casey, 52, onetime Democratic Congressman from Massachusetts.

It floated a $9,700,000 loan from the Metropolitan Life Insurance Co. and bought five tankers from the Government at half their original cost. Meantime, Casey organized Corporation No. 2 in Panama to charter the ships from No. 1, No. 2 chartered them, in turn, at a fat profit, to a Panamanian subsidiary of the Standard Oil Co. (New Jersey), which paid off the loan to Metropolitan in four years.

In 1948, Casey set up Corporations No. 3, 4 and 5 and bought three more tankers. These he chartered to Corporation No. 6, which was financed largely by Chinese Nationalist interests; the ships were used to haul oil to China from the Persian Gulf. By 1950, the Casey group had sold all eight tankers to Chinese and Greek interests. The promoters thereupon split up the profits and went out of business.

Besides Casey, the profit-takers included the late ex-Secretary of State, Edward R. Stettinius Jr.; Admiral William ("Bull") Halsey, the Pacific War hero; Julius Holmes, now minister of the U.S. Embassy in London; the University of Chicago, and a half-dozen of Casey's relatives. Casey said the venture was free enterprise, pure & simple. He added: "If I had known the Korean war was going to happen, I could have held on to the tankers and they would be worth $16 million now."

But the committee wanted to know a lot more. Had the complex deals violated federal tax laws? Or the ban against sale of surplus ships to foreigners? On the latter points, the Justice Department has begun a study of its own.

The inquiry might lead to another embarrassment for President Truman. Newbold Morris, the New Yorker Truman appointed to clean up Washington corruption, is a member of the law firm that arranged most of Casey's deals and collected fees totaling more than $100,000.

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