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I said that the only person who was at all concerned about throwing in that conspiracy is the Antitrust people because they want to make sure that they do not run into a situation if they charge conspiracy to monopolize through rebating that somehow or other.
Mr. Kyros. Do you have a drafting of the language that would satisfy the Antitrust people, too, on the conspiracy question?
Mr. TAYLOR. In the language we did not throw in the thing about conspiracy, but we can try again. This is really an antitrust problem, frankly. As far as I am concerned, you could just throw in the language of any conspiracy to violate those provisions. I do not think there is any great problem with that. Let me try that and when we write to you with those statistics on the rebating, perhaps we can let you know on that.
The CHAIRMAN. Provide some specifics.
Mr. TAYLOR. Provide some amnesty thing that uses the conspiracy language, too, and I will check it out with Mr. Flexner.
The CHAIRMAN. Let us have some specific language in this area, please.
Mr. Kyros. Finally, Mr. Taylor, just one point. That is, again there has been discussions about obtaining the documents from foreign carriers irrespective of the September 27 note. It allegedly facilitated discussions with foreign carriers, foreign nations, concerning these documents. At the same time we have received a document from the Council of European and Japanese Shipowners in which they indicate the various foreign governments are highly concerned and that it is not their intention to provide the documentation.
So, what I am asking is that if you consider the trade offs on immunity back and forth, I am just wondering whether it doesn't really serve us a great function by possibly being an inducement for people come forward. I do not know whether it is worth the efforts.
Do you think it is worth the effort ?
Mr. TAYLOR. You mean use the immunity so far as it affects foreign carriers, if they will agree?
Mr. KYROS. And domestic. You have to use it across the board. In the narrow context that we have talked about immunity to see if they could come forward with the documents and sign settlements up with the Federal Maritime Commission.
Mr. TAYLOR. I understand the Federal Maritime Commission thought it was doing pretty well in getting settlements until this bill came along
I can sympathize with the point of view articulated by the chairman of Delta and I guess Mr. Amos, too. Both had rather strong views on the basis that they do not rebate, never have, never would, and that they know other carriers that do not and they do not see why those that did should get an amnesty. I can understand that as a bystander to this thing because, as I say, the Criminal Division does not really have that much to do with maritime policy. We have very few provisions that are now criminal under the Shipping Act and those we do we got a few dollars in fines. That is all.
Maybe it is an inducement, but the people who would know better would be the people who are dealing with that industry.
Mr. Kyros. We also know that sitting here today there has not ben one of the foreign-flag carriers brought to justice in regard to a rebating under these alleged violations and malpractice we are talking about here in this investigation. One of the 17 has not been brought before us and in all likelihood will not unless collateral evidence obtained from consignes or consignors elsewhere will prove the case, which might be very difficult.
I am just wondering why you might not want this string added to the bow of the Federal Maritime Commission.
No further questions, Mr. Chairman.
I understand there are some 10 elements of a criminal conspiracy, such as knowledge, intent, overt action, so forth and so on.
Would it be correct to say that because of these 10 elements, if you apply them to the classic rebating situation in the ocean trades, that there probably would not be a criminal conspiracy?
What I am saying is if you examine the statutes. I am addressing this to the Justice Department. If you apply the elements, the statutory elements, I think there are about 10 of them, for a criminal conspiracy, really in the classic rebating ocean carrier case you really would not have a criminal conspiracy.
Mr. TAYLOR. I would hesitate to say that because if, as I understand it, certain carriers at least engaged in a pattern of rebating deliberately and concealing it over a period of time and did it in conjunction with certain favored shippers, then it would seem to me there is enough there in general without having the facts of a specific situation before me to at least think that there is an excellent chance of making out a conspiracy to violate the rebating provisions. As I say, if a carrier is doing it repeatedly to the extent of rebates in a neighborhood of $19 million or $20 million and repeatedly with certain shippers, I would be surprise if you could not develop a fact situation showing that that carrier and those shippers conspired together to violate the rebating procedures.
Mr. Corrado. That is probably correct, but when you look at it you have the chief executive officer of the carrier, you have his agents, vice presidents, agents, in Hong Kong or Taiwan or wherever. You have the shippers and various shippers and then when you try to put all the 10 elements together you start fooling with knowledge and intent and all that kind of thinking.
I just wonder as to ultimately being successful in getting a criminal conspiracy charge.
But, I agree that in a situation as you postulate of $20 million there onght to be a set pattern where these factors would fall into place. One would think so anyway,
Mr. TAYLOR. If you had a grand jury that got into it where you could bring some of these people before the grand jury, some instances, immunize individuals to tell what they knew, I do not think you would have to be the world's greatest prosecutor with a diligent grand jury and a little time to make out a conspiracy.
Mr. CORRADO. Just one other quick question I would like to address to the Justice Department because I addressed this to the witness from FMC last time.
If we retain the provision in this bill closing the ports to those who are cooperating, would it be your opinion that this would invite a veto?
Mr. LEDEBUR. In our statement before the subcommittee on the 14th we deferred to State on that question. I have no opinion on it.
Mr. CORRADO. Thank you.
The CHAIRMAN. Would the Department of Justice have an opinion should we pass the bill? Would they then have an opinion?
Mr. LEDEBUR. I really can't answer. We would certainly be asked for our views. But, I really have no basis for formulating a guess as to what that view might be at that time, if it happens.
The CHAIRMAX. At this time you defer to the Department of State?
Mr. LEDEBUR. We have.
Mr. CORRADO. But, I assume you would look with disfavor on that provision, the Justice Department, never mind the veto.
Mr. LEDEBUR. I personally am bothered by it. I have heard at least two witneses today describe that provision as operative only against foreign operators. Nothing in the statute suggests that. The words of the statute, of the bill, would apply equally to American.
Mr. CORRADO. To everyone.
Mr. LEDEBUR. I am bothered by that, frankly, because in the Shipping Act of 1916, there is a provision, namely recourse to the American courts where you can get enforcement of administrative subpenas. But, as we know, effectively that only operates against the American carriers.
Mr. CORRADO. The problem is here I have a list of about 18 or 19 countries where rebating is legalized and there are several others where it is semilegalized and all the rest, as we all know, it is not frowned on even.
Well, given that set of circumstances and the fact that all we go through here and you even tell me just now that it is even possible that a criminal conspiracy charge will lie on this and then you are talking about imposing this on a carrier that is in competition with all these people where it is legal, absent some kind of a device like this closing of the ports, something as stringent as that, how are we ever going to solve the problem? How are we even ever going to address it?
Mr. LEDEBUR. I don't have an answer, sir. Mr. CORRADO. That is what counsel, I think, was getting at before. What we need is some kind of a blue ribbon commission or some such board or body in the administration to give us some answers on these things and some direction. But, so far, every administration witness we have talked to wants to shove the ball off to someone else.
Thank you very much.
Gentlemen, we appreciate your indulgence. Unfortunately, the committee had two bills on the floor today, both of which fortunately passed and caused an interruption in the hearings.
We appreciate your testimony. Thank you very much.
The CHAIRMAN. Our next witness is Mr. Herbert Brand, president, Transportation Institute.
STATEMENT OF HERBERT BRAND, PRESIDENT, TRANSPORTATION
Mr. Brand. Thank you, Mr. Chairman.
You have spent a long day listening to people of both Government and management and I don't know that I can add a great deal except to perhaps touch on a perspective that I have with regard to this matter. I don't know how we can talk about the whole problem of rebating without having the participation and the involvement of the rest of the world which is party to the problem in the first instance.
We are talking about two sets of moral codes, perhaps, with the people outside of the United States committed to one and we committed to another and I don't know that they are compatible. It seems to me to sit here and talk about ways and means to improve the present situation, to tighten the criminal laws and the civil laws involving rebates or affecting rebates without participation of the foreigner, absolutely will be unavailing in terms of any net result that is favorable to us. I have to look at this in the context of what this problem means to the ability of the American shipping industry to compete.
Rebating is a foreign instrument originally. It is an instrument of the foreign ship owner, openly accepted by them and their governments and I don't see how we can talk about it without having their commitments.
The counsel mentioned a while ago the subject of overtonnaging. Well, overtonnaging is not our own problem. We carry 3 percent of our oil imports. We carry 1 percent of our dry bulk cargo and five percent of our total foreign commerce and overtonnaging is not an Amerian problem. What we are talking about is the same problem that is affecting the rest of American industry at this moment: dumping of ships, like other commodities on, the American market.
If somebody decides to build six ships in Singapore and send them over into a trade with this country or to move foreign commerce of the United States or get in our crosstrades, I regard that as an overtonnaging problem for the United States but I think overtonnaging which must be addressed by the world shipping community. This overtonnaging, in effect, amounts to dumping of foreign ships into our trades.
So, I wonder how effective we can be in dealing with these issues by talking to ourselves about it.
I don't even sense the same kind of concern about the problem among the various agencies. I don't think that the Treasury Department is concerned about resolving this problem in the manner that this committee is. I don't think their attitudes stems from the same desire. Your interest in this is to improve the position of he American merchant marine, I gather. Treasury takes an entirely different point of view. I heard the Treasury representative here say that his authority on matters of merchant marine is Gerald Jantscher of Brookings Institution because of his "detached” view. This is a man who is highly controversial, to say the least, where certain aspects of his credibility about Merchant Marine matters are con
cerned. So, I have to discount a good deal of what the Treasury representative says in respect to the merchant marine. I have to view it with some concern.
I have a statement here, Mr. Chairman, which I will submit for the record. It has been supplied to the committee and I don't want to burden the committee anymore than necessary. I don't think any more studies of rebating will contribute to the resolution of the problem unless, as I say, the world shipping community has the same point of view and is committed to the same responsibilities as the Americans.
The CHAIRMAN. Mr. Brand, if we were to follow the philosophy articulated by the Treasury witness today, this problem would be solved in a couple of years. We wouldn't have to worry about rebating. We would be relying upon foreign flag shipping and they would continue the practices that presently exist in their areas of business expertise, whether they be rebating, whether they be rebater, whether they be discounts, whether they provide other services, or just what device is used. I think that would be the case.
Mr. Kyros. Thank you, Mr. Chairman.
Mr. Brand, you very gratefully sat through these hearings and listened to them and you have been involved in maritime industry for many years.
Now, you saw that one of the issues is this fragmentation of responsibility, especially on an issue like overtonnaging, how to provide the Congress or to provide the executive with the kind of framework so we can resolve the problems of overtonnaging. We don't need separate views and separate policies. We have to have one maritime policy
Do you have any views on that?
We have been vigorously advancing the idea of perhaps one oceans department, a department which would include ocean transportation, ocean exploitation and development, and all matters of a maritime nature.
What disturbs me, I might say, tangentially here is the constant reference to or the surfacing of the Department of Transportation as some kind of spokesman for the maritime ommunity or as an authority on the subject of maritime transportation I think that this is properly, as the law goes now, the province of the Department of Commerce. It seems to me that involvement of the Department of Transportation, which is concerned with domestic transportation is a further fragmentation of which you speak.
No. We think that perhaps there should be a maritime, a coordinated mechanism, which would be responsible for kind of pulling all this problem together and where we could have a single expression of views on matters of this nature affecting the Government instead of having a panel of people among whom there is not any agreement.
Mr. Kyros. Obviously, interagency coordination has not been proven very successful.
Mr. BRAND. No, sir.