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CONTINUATION OF THE NOMINATION OF
G. WILLIAM MILLER
HEARINGS
BEFORE
THE
COMMITTEE ON
BANKING, HOUSING, AND URBAN AFFAIRS
UNITED STATES SENATE
NINETY-FIFTH CONGRESS
SECOND SESSION
ON
THE NOMINATION OF
G. WILLIAM MILLER TO BE CHAIRMAN OF THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM
FEBRUARY 27 and 28, 1978
Printed for the use of the
Committee on Banking, Housing, and Urban Affairs
U.S. G O V E R N M E N T P R I N T I N G
25-067
W A S H I N G T O N : 1978
OFFICE
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
W I L L I A M PROXMIRE, Wisconsin,
JOHN SPARKMAN, Alabama
HARRISON A. WILLIAMS, JR., New Jersey
THOMAS J. McINTYRE, New Hampshire
ALAN CRANSTON, California
A D L A I E. STEVENSON, Illinois
R O B E R T MORGAN, North Carolina
DONALD W. RIEGLE, JR., Michigan
P A U L S. SARBANES, Maryland
Chairman
E D W A R D W. BROOKE, Massachusetts
JOHN TOWER, Texas
J A K E GARN, Utah
H. JOHN HEINZ III, Pennsylvania
R I C H A R D G. LUGAR, Indiana
HARRISON SCHMITT, New Mexico
KENNETH A . MCLEAN, Staff
Director
JEREMIAH S. BUCKLEY, Minority Staff Director
BRUCE F. FREED, Professional Staff Member
CHARLES' L . MARINACCIO, Special
Counsel
JOHN T. COLLINS, Special Counsel to the Minority
DAVID P. DOHERTY, Associate Director, Division of
Enforcement, Securities and Exchange Commission
(II)
C O N T E N T S
L I S T OF
WITNESSES
MONDAY, FEBRUARY 27
Page-
Opening statement of Senator Proxmire
Opening statement of Senator Brooke
Opening statement of Senator Schmitt
Opening statement of Senator Riegle
C. Robert Bell, Wichita, Kans
Edwin J. Ducayet, board of directors, Textron
Dwayne Jose, vice president for commercial marketing, Bell Helicopter
AFTERNOON
1
3:
4
26'
6
14
15
SESSION
James F. Atkins, president and chief executive officer, Bell HelicopterTextron, accompanied by George Galerstein, chief legal counsel
Thomas Soutter, vice president and general counsel, Textron
74
111
TUESDAY, FEBRUARY 28
Statement of Senator Sparkman
Statement of Senator Brooke
Statement of Senator Schmitt
J. H. (Bud) Orpen, Bell Helieopter-Textron International marketing
manager until November 1969
G. William Miller, chairman of the board, Textron.:
146
147
153
139
156
APPENDIX
Chronology of G. William Miller confirmation
ADDITIONAL STATEMENTS AND D A T A
SUPPLIED FOR THE
219
RECORD
Statement on Miller confirmation by Senator Harrison Schmitt
THIRD SUBMISSION OF DOCUMENTS FROM T E X T R O N — F E B R U A R Y
137
21,
1978
Letter to Mr. Charles Marrinaccio, special counsel, Senate Banking,
Housing, and Urban Affairs Committee, from Thomas Soutter, vice
president and general counsel, Textron
FOURTH SUBMISSION OF DOCUMENTS FROM T E X T R O N — M A R C H
2,
1978
Letter to Senators Proxmire and Brooke from Thomas D. Soutter, vice
president and general counsel, Textron
Documents submitted by Arthur Young & Co. in response to February 25,
1978 subpoena
Additional affidavits
Additional documents
(in)
221
229
387
587
681
CONTINUATION OF THE NOMINATION OF
G. WILLIAM MILLER 1
MONDAY, FEBRUARY 27, 1978
U.S.
SENATE,
C O M M I T T E E ON B A N K I N G , H O U S I N G , A N D U R B A N A F F A I R S ,
Washington, D.C.
The committee met at 9:05 a.m., in room 5302, Dirksen Senate
Office Bldg., Senator William Proxmire, chairman of the committee,
presiding.
Present: Senators Proxmire, Sparkman, Stevenson, Morgan,.
Riegle, Sarbanes, Brooke, Garn, Heinz and Schmitt.
OPENING STATEMENT OF CHAIRMAN PROXMIRE
The C H A I R M A N . The committee will come to order.
Before I call the panel that we have to start off the hearings this
morning I would like to make an initial statement.
There has been some talk that the committee, in pursuing the
investigation of the Miller nomination, may be taking a position
that is damaging to the public interest in several ways.
The suggestions are:
First: The committee is establishing standards that are too high.
That is, if every nominee can be expected to have a company with
which he has been associated investigated from stem to stern in
connection with a payment made by subordinates and over which
the nominee had no specific responsibility and disclaims knowledge,
where do you draw the line?
Second: The committee is becoming mean spirited and petty in
giving such time and attention to a relatively minor issue that occurred years ago and only remotely—if at all—affects Mr. Miller.
Third: The charge is that the committee is generally conducting
the nominating process in a way which will discourage able and
competent people who could serve Government with distinction from
being willing to do so, because—however strong and clean their
record may be—the errors of those associated with them—or the
alleged errors of those associated with them will be visited upon
them, their associates and friends.
Fourth: It's charged that the committee is delaying the nomination unduly. Hearings were held the week the Senate returned to
! F o r further information on the Nomination of G. William Miller, see earlier
hearing: dated January 24, 1978. Also see committee print published bv this committee
and titled "Staff Investigation Relating to the Nomination of G. William Miller,"
Parts 1, 2, and 3 ; datod February 27, 1978.
(1)
2
Washington. But the investigation since then has consumed more
than a month. Meanwhile, the Federal Reserve Board which plays
such a central role in the Nation's economic policy is waiting uncertainly and the incumbent chairman of the board, Dr. Burns, is
so concerned that he has been reported to have called some committee members to urge a prompt decision by the committee.
Here is my response : The committee in my view has had no real
choice except to proceed as it has. Consider the facts. The chairman
of this committee was informed that, in paying about $3 million
to its agent in Iran, Air Taxi, in connection with a sale of $500
million in helicopters to Iran, Bell Textron had paid a large part
of that sum to the head of the Iranian Air Force, General Khatami,
who was a part owner of Air Taxi. And that such a payment constituted a bribe.
The nominee, Mr. Miller, in appearing before this committee, admitted the nearly $3 million payment, admitted that he had a full
knowledge of the payment, but declared that he did not know and
would be surprised if General Khatami had been in fact the owner
of Air Taxi.
At the initiative of Senator Heinz and the approval of this
Senator as chairman, the committee decided to direct our committee
staff to investigate this payment. That decision was vital. If anyone
has said the committee should not have investigated this payment
under these circumstances, I have yet to hear it. So the decision to
investigate was unchallenged. And there was ample opportunity for
such a challenge. Several days after the staff investigation was ordered, the committee with a quorum present voted without objection
to issue subpenas to secure records to support the investigation.
The staff conducted an investigation interrogating a number of
corporate officers of Bell Helicopter and two outside witnesses. They
assembled a number of pertinent documents. They secured affidavits
from interested parties. Under the circumstances, they worked hard
and fast.
The results of that investigation have now been made available
to the members of the committee for more than a week and to the
press for several days. The investigation has received intense scrutiny. But I have yet to hear the first charge that the staff indicated
any bias, any discourtesy, or even any lack of straight, professional
conduct. The record of the investigation is an open book. No one—
no member of this committee, no other member of the press—-no one
has cited a single question, assertion or action by the investigating
staff that was unfair.
Now, are our standards too high? Should we demand that the next
Chairman of the Federal Reserve Board come before this committee
and subject himself to a challenge to his competence, his integrity,
his performance in the principal job he has held during his working
life? Of course we should. And the nominee should be able to meet
the highest, toughest tests. What if he cannot meet these standards?
Thpu we should, and can, get someone who will meet these tests.
If nervous nellies and weak sisters are frightened away by this
kind of thorough investigation, so be it; the Government is better
3
off without them. This country has literally hundreds of men and
women qualified for this great and powerful position and willing
and anxious to get the job. The committee cannot avoid a strong
investigation or tough and challenging questions for fear they may
offend a nominee and frighten good people away from Government
service.
Finally, the committee has not and is not going to delay this hearing 1 day, 1 hour or 1 minute longer than necessary. Like any careful
investigation of this magnitude, it takes time. We are not yet
through. I think we should take just as much time, interrogate as
many witnesses and run down as many leads as the situation requires.
Unfortunately, we cannot have all the facts before we will have
to make a decision. We will not have the benefit of the Securities and
Exchange Commission investigation completed and available, for
instance. We may not be able to secure the kind of detailed information we would like from Europe and Iran in time to make a more
thoroughly informed decision.
But if we have to meet early in the morning and late at night and
on next Saturday and Sunday, we will do so. We owe the Senate,
and Mr. Miller, as prompt, as thorough, as rigorous and as fair a
record and report as we can make and I think the committee is well
on its way to doing that.
Senator B R O O K E . Mr. Chairman, if I may
The C H A I R M A N . Senator Brooke.
OPENING STATEMENT OP SENATOR BROOKE
Senator B R O O K E [continuing]. Just for a moment, and I think
Senator Schmitt also wishes to make a very brief statement.
First: The purpose of these hearings as I understand it is to assist
the committee in determining whether G. William Miller is fit to
serve as a member and chairman of the Federal Reserve Board; second, since the question of the propriety of the $2.9 million payment
was raised in the committee's hearing on January 24th, the committee staff, as you have said, Mr. Chairman, has conducted an
investigation into the matter and has recently reported to the committee on its inquiry; third, there are questions which have been
raised as a result of the investigation regarding, among other things,
the credibility of witnesses who have appeared before the committee
staff and those who have been deposed by the committee; and four,
it is now appropriate in my opinion for the committee to explore
some of the issues that were raised by the staff's investigative report
and to put them to rest here.
Now as you have said, Mr. Chairman, some have charged that
Mr. Miller is being unfairly judged in 1978 on the basis of postWatergate morality because the Bell Helicopter contract with Iran
was signed in June 1973 and Air Taxi was hired in 1968.
Now I would like to point out that the committee is not only
examining what G. William Miller knew in 1968 or in 1973, but
what Mr. Miller knew in 1975 when Thomas Soutter, who is Textron's general counsel, conducted an internal investigation of the
4
payment. That's one reason why, Mr. Chairman, I so much stress
the necessity for having Mr. Soutter, the general counsel, appear
before us.
And moreover, in 1975, many large companies were participating
in the Securities and Exchange Commission's voluntary disclosure
program regarding foreign payments and yet Textron Co. did not,
and, of course, this raises the question of what Mr. Miller did in
1975 to determine the circumstances surrounding and the propriety
of the payment.
Now those are just some of the issues, Mr. Chairman, that come
to light. I don't know what the witnesses will testify to this morning, but I think it is important that we receive their testimony.
Senator Schmitt, Senator Lugar and other Senators have consistently asked that this committee frame the issues that are before
us, and I think it's important that we do so, and I believe the following are still the basic issues:
No. 1, the fitness, the qualification for G. William Miller to serve;
and No. 2, his knowledge of certain of the facts regarding the $2.9
million payment, that is, what if any participation he had in it; how
much he knew about the ownership of Air Taxi; and what he should
have known, if he did not know about such matters, in the course
of his administration of Textron and particularly during the period
when he acted as the group vice president with direct administrative
responsibility for Bell Helicopter.
So I hope that the testimony we will receive today, and again when
Mr. Miller is given an opportunity to appear before us, will resolve
these matters and we will be able to vote on whether Mr. Miller
should be confirmed or not.
The C H A I R M A N . I understand Senator Morgan has no opening
statement.
Senator M O R G A N . N O .
OPENING STATEMENT OF SENATOR SCHMITT
The C H A I R M A N . Senator Schmitt.
Senator S C H M I T T . Mr. Chairman, just fairly briefly, I want to
associate myself with Senator Brooks' comments and also with the
question that has been raised as to what degree does the committee
or any committee have to pursue that issue. I must admit that when
we started this, I was uncertain as to whether or not we were moving
into an area that was beyond the necessity of the confirmation hearings for Mr. Miller. I think that in retrospect we have done, up until
now, the appropriate thing.
My principal questions about Mr. Miller have been on his monetary
philosophy and in the degree of independence that he may have
from the White House. We also must be very careful that once a
question of integrity is raised that we move to the point where that
issue is full resolved either in favor of the nominee or not in favor
of the nominee.
I have wondered myself since we had the staff report of whether
or not Mr. Miller should have exercised greater responsibility in the
5
investigation that he undertook of the $2.95 million payment by
Bell Helicopter to Air Taxi. I think that's the purpose of today's
hearings and questions we will ask Mr. Miller tomorrow, to determine just to what degree should he have pursued that more than he
did. Was it based on knowledge or was it based on a judgment as
a manager of a large corporation that that was beyond his need to
pursue ?
As a member of the Commerce Committee we get nominations
before us on a sort of steady stream, much more so than we get here
in the Banking Committee, and I have tried and I believe other
colleagues are trying to establish a new level of investigation, a new
level of perusal of various nominees' qualifications—not only the
background, experience and philosophy of the nominees, but also
their knowledge of the job that they have to undertake so they can
get off running quickly. We also are looking very carefully into the
basic underlying integrity of each individual and whether or not
after their nomination and confirmation they might at some time
embarrass the U.S. Government. Embarrassment of the U.S. Government is something that we have to minimize in this day and age
more so than an other age I think that we have ever had before us.
I hope that that's the spirit in which we are entering this hearing—
not a spirit of trying to find somebody we can hang, like Mr. Miller,
because I tend to believe that we will not do so, but in a spirit that
shows we are trying to restore the confidence in the U.S. Government, in the Congress, that unfortunately has been eroded over the
past few years. Thank you.
The C H A I R M A N . Thank you very much, Senator Schmitt.
Senator Garn.
, Senator G A R N . N O .
The C H A I R M A N . N O W I ask the first panel to come forward. That's
Mr. Robert Bell, attorney for Bell Helicopter's agent in Iran; Mr.
Edwin J. Ducayet, board of directors of Textron and former president and former chairman of Bell Helicopter; and Mr. Dwayne
Jose, vice president for commercial marketing of Bell Helicopter.
Be seated, gentlemen.
We have three distinguished witnesses and we have two microphones so I will ask you to share the microphones among you.
First, I'd like you three gentlemen to rise and raise your right
hands. Do you swear the testimony you are about to give will be the
truth, the whole truth and nothing but the truth, so help you God?
M r . BELL. I
M r , JOSE. I
do.
do.
M r . DUCAYET. I
do.
The C H A I R M A N . Thank you, gentlemen. Be seated.
Now all three of you gentlemen have been questioned previously
bv the staff within the last few weeks. I'm going to ask each of you
if vou have a statement that you would like to make at this time
before the committee begins questioning you and following up on
the interrogation which was made available to all members of the
committee.
Mr. Bell, go right ahead, sir.
6
STATEMENT OP C. ROBERT BELL, ESQ., WICHITA, KANS.
Mr. BELL. Thank you, Senator.
My name is C. Robert Bell. I'm an attorney from Wichita, Kans.
In 1966 at about late August I was approached by a client of my
law firm at that time, named William French, and he told me that
he had been the Bell Helicopter and the Cessna dealer in Iran for
a number of years and he lived there with his family and he had
been having problems. He had been approached by a representative
of General Khatami who was the owner of Air Taxi and Heli-Taxi,
two Iranian corporations which supposedly had a complete monopoly on the sales and operations of aircraft in Iran and around which
he had been attempting to operate, and had been requested to give
the General a substantial portion of the proceeds of his Cessna and
Bell Helicopter interests.
After consultation with representatives in the American embassy
he advised the messenger, General Rafaat, that he was unwilling to
do this. General Rafaat told him if he didn't do it he would run
him out of the country. Mr. French subsequently went out of the
country on business and upon his return was denied reentry to Iran.
This was in the spring of 1966.
Thereafter, for a considerable period of time, our embassy personnel were unable to find out any statement of reason as to why
he was not permitted to reenter the country. Approximately in July
of 1966 he was informed that the Iranian officials had accused him
of making illegal flights in his Cessna 180 aircraft, something which
we later were able to conclusively show was not true in fact.
At that point he was advised by embassy personnel to retain counsel and he came to see me. He had consulted me previously because
he was a Cessna dealer and when he needed counsel he happened
to have been in Wichita for a Cessna dealers' meeting.
After he told me this story, I said:
Well, Mr. French. I'm not exposed to matters of this kind very often and
what you tell me sounds like something out of an Arabian nights and dreams.
I don't believe it.
Well, I'll pay you per diem if you will go to Washington with me while we
talk to the State Department and they will confirm it.
So I went to Washington with him.
We arrived in early September, I think the 8th or 9th, and we
went to the State Department and we talked to the gentleman in
charge of the Iran desk. His name was Elliott. His assistant, Mr.
Mulligan, was also present as was a lady lawyer for the State
Department whose name I don't recall. Mr. French was present.
I told Mr. Elliott this story and asked if he would confirm or
deny each portion of it. I told him I recognized some parts of it
might involve national security and if he would just tell me we'd
proceed. I went through the story without interruption in more
detail than I have just related to you and at the conclusion of it
Mr. Elliott said:
I have just returned from a tour of duty in the U.S. Embassy in Tehran,
and I know of my own knowledge that everything you said is exactly correct.
7
At that point, I said:
Well, I didn't want to have my client standing trial for some kind of
charges in Iran.
And he thought that was good advice—Mr. Elliott did. I asked
what he would recommend and he stated that he would recommend
that since the causes of the trouble seemed to have been Mr. French's
intransigence in failing to adapt to the local mores and customs
in the country where he was trying to do business, and since it
appeared that I was more acquainted with negotiations and matters
of that sort that it would be beneficial for me to go negotiate on
Mr. French's behalf with General Khatami.
I told him I would be glad to do so if they could assure me that
it wouldn't be held against me just because my client was charged
with what they regard as criminal activity and that if I were
delayed in leaving Iran for even 10 minutes they would send a
whole battalion of Marines after me. He said they would contact
the embassy in Iran and let me know. In the meantime, I was to
return home and I did. Mr. French went to Beirut where he was
staying temporarily.
I received a telephone call from Mr. Mulligan on September 22
telling me that the question of my visit had been discussed with
General Khatami and that he was willing to see me and he suggested that I discuss these matters with a Dr. Safavi who was, I
was told, a vice president of the High Council of Civil Aviation of
Iran and who was an attorney for that High Council.
There was a subsequent phone conversation with Mr. Mulligan on
the 28th of September telling me that they had contacted Dr. Safavi
and he was willing to see me when I arrived. I then started for
Iran. I stopped in Beirut on the way and conferred again with my
client.
Upon arrival in Iran I first contacted Mr. Robert Harland of
the U.S. Embassy and told him this entire story. He indicated that
he was fairly new on the job in Iran and had no personal knowledge
of it, but that he was familiar by way of hearsay with all of the
things I told him. I then talked to Mr. Thatcher and Mr. Ferguson
of our embassy. They informed me that there might be some possibility for me to negotiate a way for Mr. French's business to continue in Iran and if that were successful and continued for an
appropriate period of time perhaps eventually I would be able to
arrange for Mr. French's personal return.
They indicated that General Khatami was not an unreasonable
man, although he was very put out with Mr. French for the things
Mr. French had been saying in communications to our President,
Secretary of State and various Members of Congress.
The embassy arranged an appointment for me with Dr. Safavi
and at that meeting Dr. Safavi confirmed that he was speaking on
behalf of General Khatami and other members of the High Council
of Civil Aviation. He started to tell me what a bad man my client
was and I told him I wasn't there to discuss that although I was
interested in whether or not these charges were against my client
8
personally or against his companies. Dr. Safavi assured me they
were against my client personally. I said:
In that event, Dr. Safavi, we are both men of affairs and we are able to
recognize that there must be some way in which thsee companies can arrange to operate in Iran.
Dr. Safavi said there was and he would be very happy to accommodate us by forming a Persian corporation in which he would
be the holder of 51 percent of the shares as the nominee for General
Khatami and other members of the High Council of Civil Aviation.
Our companies would hold the other 49 percent. I told him I would
have to confer with my client who was in Beirut and at that time
there were no good phone connections between Iran and Beirut so
I went on the airplane back to Beirut and conferred with my client
and told him what was involved—the formation of a company in
"which he was to pay all of the expenses of formation, including the
-deposit of the initial capital which Dr. Safavi suggested would be
i million riels, which at that time was a little over $13,000. Mr.
"French decided that was probably the only alternative open to him
3,nd authorized me to go back and authorize the formation of the
corporation. So I returned to Tehran.
Prior to talking to Dr. Safavi again, I had the embassy arrange
an appointment for me with General Khatami. I went to see him
in his office. I told him that at his request I had seen Dr. Safavi
and I told him that Dr. Safavi had suggested the formation of a
Persian corporation in which Dr. Safavi was to be the nominee
liolder of 51 percent of the shares for certain members of the High
'Council of Civil Aviation, and before agreeing to this I wanted to
know was Dr. Safavi speaking for him. General Khatami said he
was.
I then asked General Khatami if it would be possible to arrange
for my client personally to return to the country—not that he
wanted to live there any more, but his wife and two little daughters
were still there and he wanted to be able to assist them in moving
out to Beirut and he also wanted, in the event his business proved
operative, to be able to come back on occasions for maybe a maximum of a week or so at a time to oversee business and technical
matters. General Khatami replied that there was no way that could
happen. He said that Mr. French had said too many bad things
about him and the Shah in his communications to various U.S.
officials and that he would never be allowed to set foot in Iran
again. That was about the end of the interview. I thanked the
General and left.
I then went back to Dr. Safavi, authorizing him to form the
corporation, returned to Beirut and reported this to Mr. French,
where we worked on preparing the necessary powers of attorney
that were required by Dr. Safavi and sending him the initial deposit of funds for the formation of the corporation.
I then returned to the United States and attempted to make a
report to the companies that Mr. French represented. My first
contact was at Cessna, Mr. Jack Zook there was out of the country
for an extended period of time so I then contacted the people at
"Bell Helicopter.
9
On November 2, 1966 I went to Fort Worth and I conferred with
Mr. James Feliton and Mr. Jose and I told them basically this story,
starting at the very beginning as to the origin of Mr. French's
problems and what we thought we could accomplish in arranging
for the company to continue in business in Iran.
Mr. Feliton, I believe, suggested that I should attempt to obtain
a letter from Dr. Safavi setting forth the formation of this corporation and assuring us that it had General Khatami's blessings or
at least did not have his disfavor, and to make the letter as strong
as possible. He also requested that I inform Mr. French that it was
Bell's desire that the company operate through the use of Iraniani
nationals to the greatest extent possible and he stated that that
was their overall policy.
When I completed telling Mr. Jose and Mr. Feliton this story,
Mr. Jose asked if I would mind repeating it to the president of the
company and I said I would not. I was thereupon taken to the
office of Mr. Ducayet and introduced to Mr. Ducayet, and told him
this entire story.
Senator B R O O K E . The same day ?
Mr. B E L L . The same day. He had very little to say while I told
him all of this.
The C H A I R M A N . The gentlemen on your left are the people you
are referring to, so let me ask you if you recognize these gentlemen ?
Mr. B E L L . Yes. Mr. Ducayet is on the end and Mr. Jose is next
to me. Mr. Ducayet has changed less over the years than Mr. Jose*
At the conclusion of my informing Mr. Ducayet of all of these
facts, he said something to the effect of "Thank you very much for
telling us this interesting story and we'll be in touch." That was
the conclusion of
The C H A I R M A N . Who told you that?
Mr. B E L L . Mr. Ducayet.
The C H A I R M A N . "We'll be in touch?"
Mr. B E L L . "We'll be in touch." I gathered it was a formality—
euphemism.
Senator B R O O K E . I S that how you pronounce "Ducayet?"
Mr. D U C A Y E T . It's Ducayet.
Mr. B E L L . I apologize. I never have been quite sure how to handle
Mr. Ducayet's last name. In fact, in my original notes, I only referred to him as the president.
The C H A I R M A N . You're right at the crux of what is very important here. That is, what was told to the Bell executives about the
ownership of Air Taxi by General Khatami and about this subsequent relationship that General Khatami would have with STP ?
the new corporation you were setting up. So precisely, what did
you tell Mr. Ducayet, who I understand was the top executive at
that time of Bell Helicopter and reported directly to Mr. Miller?
Mr. B E L L . Well, I had no knowledge of who he reported to.
The C H A I R M A N . Of course not, but I want you to tell us what yon
told Mr. Ducayet as precisely as you can.
Mr. B E L L . I told him as nearly as I can recall that Mr. French's
troubles in Iran had commenced because General Khatami who was
the Shah's brother-in-law—he was married to Princess Fatima, the
10
Shah's younger sister—was the commanding general of the Imperial Air Force, the chairman of the Board of Civil Aviation, and
the owner of Air Taxi and Heli-Taxi and, in fact, he controlled
everything that moved in the air in Iran except the birds—or
attempted to, and he had taken objection to Mr. French's attempts
to sell and operate aircraft and helicopters in Iran without his
express permission and that he had demanded Mr. French give him
a part of the proceeds of his company and when Mr. French had
refused he had arranged to have him run out of the country and
that was how we arrived at the state of affairs when I had to go
to Iran.
The C H A I R M A N . Y O U specifically recall telling Mr. Ducavet that
General Khatami was the owner of Air Taxi? Is that the way
you put it ?
M r . BELL. I
do.
Senator B R O O K E . Did you give him the breakdown at that time
of 51 percent or any percentage?
The C H A I R M A N . Or that there were other owners?
Mr. B E L L . N O , I did not give him any breakdown at that time. I
had been informed, but it was strictly hearsay from my client to
me and had been obtained by his Iranian partner prior to his departure from Iran.
Senator B R O O K E . But you said he was the owner ?
Mr. B E L L . I said he was the owner. By that, I meant that he had
an equity ownership as nearly as we could tell and that he controlled the company effectively and that was the information we
had been given. That was the information which was confirmed to
me by various representatives in the State Department and in the
TLS. Embassy in Iran, as well as various other individuals in Iran.
The average man on the street that I ran into seemed to have some
knowledge of it. Now when I say "average man on the street,"
I've got to admit I don't speak Persian and I didn't talk to too
average a person, I suppose, but I mean members of the business
community in Iran.
Senator S C H M I T T . Mr. Chairman, may I ask one question?
The C H A I R M A N . Certainly.
Senator S C H M I T T . D O you have any specific information, Mr. Bell,
on whether General Khatami was receiving financial benefit from
this company or was he just controlling it?
Mr. B E L L . I was told that he was receiving financial benefit. I
was told that he had to have the money for his personal use so
that he could use it in other ways that he saw fit that would be
appropriate to enhance the use of aviation in Iran. He never did
separate his personal interest from those of a more public nature.
Senator S C H M I T T . But do you have any hard evidence that he
was receiving financial benefit other than this hearsay ?
Mr. B E L L . Any hard evidence to me—the answer is no. Everything
I was told was in the general nature of recitation by other parties
which in a court of law, of course, would be hearsay.
Senator S C H M I T T . But you had the strong impression he was an
owner and did transmit that information to the officials you mentioned?
11
Mr. B E L L . That's right.
Senator S C H M I T T . Thank you, Mr. Chairman.
The C H A I R M A N . Are you finished with your presentation, sir?
Mr. B E L L . Well, I think up to that point that's what you need.
The C H A I R M A N . Fine. Now, Mr. Ducayet, do you have any statement you would like to make, sir, for the record?
Mr. D U C A Y E T . I ' m sorry. I don't think I can add anything.
Senator BROOKE. Mr. Chairman, if I may, I know you want to
get all three statements in, but there are some matters we want to
take up now with Mr. Bell.
The C H A I R M A N . Well, if I could, what I would like to do—and
of course this is entirely up to the committee to follow any procedure they wish, but I think it might be orderly if we could do this
—if we could have Mr. Ducayet and Mr. Jose state whatever they
wish and then have the committee question in turn because I think
it's so very important that we have an opportunity to have Mr.
Ducayet comment on what Mr. Bell has told us and also have Mr.
Jose comment on this. We want to get the interplay.
Senator BROOKE. I would normally agree with that procedure,
Mr. Chairman, but I'm not quite convinced that we have all of the
information from Mr. Bell to which you want responses from Mr.
Ducayet or from Mr. Jose. So if I could, I just have a couple
questions that might clarify it.
The C H A I R M A N . Yes. I have some questions too I'd like to followup on.
Senator BROOKE. Did you have any question in your mind about
the propriety of what your client was doing in dealing with Iranian
officials at all? Did you question that yourself?
Mr. B E L L . N O , Senator, I didn't.
Senator BROOKE. Did you think that it was right to advise your
client to enter into contractual arrangements with Iranian officials,
because as you said General Khatami was the chief of staff of the
Iranian Air Force and was chairman of the Civil Aviation Board ?
Mr. B E L L . Well, Senator, what I thought was that we had been
advised by members of the State Department that Iran was run by
the royal family pretty much like a closely held family corporation
and it was necessary to deal with them in that fashion if one were
to do business in Iran.
Senator BROOKE. I understand that, but did you see anything
wrong in what you were doing; what you were advising your client ?
Do you think you were advising your client to do something that
was legally right and morally right?
Mr. B E L L . Yes, I did. They had different mores and cultural
standards in Iran. I was informed that, for example, they did not
even pay minor clerks any salary because they were expected to
make their living off of "bashees" as it was termed, and I was told
that that was an accepted cultural value in Iran.
Senator BROOKE. S O while in Rome, do as the Romans do ? Is
that it?
Mr. B E L L . Yes. That's exactly what I was told by Mr. Elliott,
in effect.
12
Senator B R O O K E . One further question then before we get to Mr.
Ducayet. Did you have a conversation with Mr. Ducayet or did .you
merely conduct this in a narrative form and then Mr. Ducayet said,
"Thank you," and that terminated the meeting?
Mr. B E L L . I think it would be fair to say it was more of a narrative on my part and his acknowledgement at the conclusion of it.
Senator B R O O K E . Did he ask you any questions?
Mr. B E L L . Not that I can recall.
Senator B R O O K E . S O you merely told him what you told us and
there was nothing further so far as Mr. Ducayet's participation in
that meeting ?
Mr. B E L L . No. I think I told him in somewhat greater detail than
I have told you, but that's essentially correct.
Senator B R O O K E . N O W the chairman asked you to give us the
details that you told him. Is there something you told him that you
have not told us?
Mr. B E L L . Quite a few things. I was trying to condense it. He
asked me as to a particular point. The overall of what I told him
is fairly well contained in my letter to Jack Zook of November 28,
1966 which I wrote because I had been unable to see Mr. Zook.
Now he was with Cessna Aircraft, but I was being very careful to
convey all the same information to both Bell and Cessna so there
would be no hiatus in the knowledge of either one of them.
Senator B R O O K E . Well, I don't want you to go into anything
that
Mr. B E L L . What I've got is a multi-page letter covering many
subjects and that's the kind of detail I used.
Senator B R O O K E . In keeping with the chairman's procedure, I
just want to be sure that you have said everything to which Mr.
Ducayet could respond relative to the meeting you had with him
when you gave him this narrative. Have you given us all of that?
Mr. B E L L . Not quite. With respect, Senator, I must point out that
the request that was made of me first was to tell you in detail
what I said about General Khatami's ownership of Air Taxi. I
have related that in as much detail as I think I can. There were
other subjects relating to this whole proposition that were covered
in considerable detail that I have not told you and they were covered, though, in my letter to Zook of November 28.
Senator B R O O K E . Does it pertain to General Khatami's ownership
or any of the matters that we are here concerned with?
Mr. B E L L . Most of this did not pertain to General Khatami's
ownership. That was a relatively minor side point at that time in
my view, and I think in the view of those that I spoke to
Senator B R O O K E . More technical matters, in other words?
Mr. B E L L . More background as to how we got to where we were.
The C H A I R M A N . Well, I would like to follow up on this. We'd
like to have an orderly procedure here. It's a little difficult if we
don't follow the usual procedure because we are accustomed to that.
I think Senator Brooke has brought out some very valuable information at the same time, and I think other Senators would too if
each Senator has his turn in questioning the witnesses, if that's
acceptable.
13
Senator Brooke is right. He suggests that we ask the witnesses
to give all the information they can so that if one wishes to rebut
the other they will have all the information before them.
Senator S P A R K M A N . Mr. Chairman, I have to handle this bill on
the floor at 9:45 and I promised them I would be there. I left my
proxy with Senator Morgan.
The C H A I R M A N . N O W I'd like to ask Mr. Ducayet and Mr. Jose
to make whatever statement they wish. I think, Mr. Ducayet, you
had said that you had no statement to make at this time?
Mr. D U C A Y E T . N O . I have nothing to add to what's already been
told.
The C H A I R M A N . Mr. Jose, would you like to make a statement at
this time?
Mr. JOSE. I have no opening statement.
The C H A I R M A N . All right. I'm going to ask the clerk to run the
time on us so we do this in order.
Mr. Bell, I'm going to ask you a question or two relating to your
background because, of course, we have to judge credibility here.
There may be a difference of opinion—I'm sure there will be before
we are through. What is your educational background?
Mr. B E L L . I went to the public schools in Kansas, graduated from
high school in Hutchinson in 1948, obtained an AB Degree from
Princeton University in 1952, and a law degree from Harvard in
1955.
The C H A I R M A N . What's your professional background ?
Mr. B E L L . Well, I spent 3 years in active duty in the Navy and
then after having been admitted to the Massachusetts bar returned
to my home State and was admitted to that bar and worked for
the Garvey family enterprises for approximately 2 years and then
went into general practice with the firm of Morris, Lang, Evans,
and Brick. I practiced with them as a partner until 1974 when I
associated myself with Sidney Brick and the firm of Brick and
Bell.
The C H A I R M A N . N O W we are informed that after 1 9 6 5 there's no
public record of General Khatami's ownership interest in Air Taxi
—after 1965. Your conversation with Mr. Ducayet alleging General
Khatami's ownership interest in Air Taxi was in 1966.
How did you know in 1966 that General Khatami had retained
an interest in Air Taxi ? As I understand it, the Shah had indicated
that he didn't want his officials to have this kind of conflict of
interest and there was some kind of a change. How did you know
there was still an ownership interest at this time of General Khatami ?
Mr. B E L L . Because I was told by a great number of people.
The C H A I R M A N . Y O U say a great number of people. Who, specifically ?
Mr. B E L L . Mr. Elliott at the Iran desk in the State Department;
Mr. Ferguson at the American Embassy in Tehran; Mr. Thatcher
at the American Embassy in Tehran; Dr. Safavi, whom I was told
to contact and whom General Khatami said would speak for him
said the same thing. I was also told this by various individuals in
25-067—78
2
14
Iran—an individual who was an Englishmen I believe who worked
for an English steel company. I think his last name was one of
those hyphenated ones—Douglas-Bates or something like that.
The CHAIRMAN. I have a letter from Mr. Elliott dated February
21 written to the staff director of this Committee—Mr. Mulligan—
I beg your pardon—Mr. Mulligan, who as I take it was one of the
people—you said Mr. Mulligan, Mr. Elliott and a lady lawyer
Mr. BELL. Mr. Mulligan stated he was Mr. Elliott's assistant.
The CHAIRMAN. Mr. Mulligan was asked which company did you
know or hear that General Khatami had an ownership interest in,
STP or Air Taxi; when did you learn of General Khatami's interest and who did you learn it from. Answer:
To the best of my knowledge, it was alleged but not established that General Khatami had a direct or indirect ownership in Air Taxi. I believe this
information first came to my attention in 1966 in connection with efforts
with the American Embassy in Tehran and the Department of State in
Washington to assist an American businessman by the name of French who
was a resident in Iran and had a business operating in Iran.
It appears from this response that Mr. Mulligan indicated that
he heard this allegation and he heard it in connection with your
representation.
Mr. BELL. I agree it does appear that way.
The CHAIRMAN. But you said not Mulligan, but Elliott, was the
person who told you this?
Mr. BELL. That's correct, Senator.
The CHAIRMAN. NOW, of course, what we want to do here is to
get right to the heart of your testimony as it relates to what is
before this committee, the confirmation of William Miller's nomination as head of the Federal Reserve Board.
In the first place, you told us you had no contact whatsoever—
no communication with Mr. Miller. Is that correct?
Mr. BELL. That's correct.
The CHAIRMAN. YOU have never met him? You never wrote him?
You have no indication whatsoever that Mr. Miller directly knew
about this directly from you or indirectly?
Mr. BELL. That's correct.
The CHAIRMAN. All right. Now you told us that you did inform
Mr. Ducayet and Mr. Jose of this.
Mr. Ducayet, do you recall whether or not—and I stress whether
or not—Mr. Bell told you of General Khatami's ownership interest
in Air Taxi?
Mr. DUCAYET. Senator, I have no recollection of ever having had
a meeting or any recollection of what I might have been told in a
meeting if I can't even remember having a meeting. You're asking
me to remember something that happened some 10 or 12 years ago.
I was busy operating a big company. There were many, many people
who came in and out of my office in the course of the normal day
or week or month. I just have no recollection.
The CHAIRMAN. Y O U don't deny that such a meeting took place,
but you don't recall that it did take place; is that correct?
Mr. DUCAYET. That's correct.
15
The C H A I R M A N . In looking at Mr. Bell and realizing that in all
of our cases we change in the course of 10 or 12 years, do you recall
him now?
Mr. D U C A Y E T . N O , I don't.
The C H A I R M A N . Mr. Bell very graciously said that you hadn't
changed very much.
Mr. D U C A Y E T . I guess I haven't.
The C H A I R M A N . Maybe Mr. Bell has.
Mr. Jose, do you recall this visit by Mr. Bell to Fort Worth and
do you recall what Mr. Bell told you about the ownership by General Khatami of Air Taxi?
Mr. JOSE. Senator, I commented to the staff on that when I was
here several weeks ago. I do recall that a meeting took place. I did
not recall who arranged the meeting. Subsequently, reading some of
the minutes of the staff investigation, it was arranged by Mr.
Feliton who was our area manager at that time. Also, I testified
to the staff that I didn't recall the date or the detail of the meeting,
but that I had a recollection that a meeting had taken place. At
that time I had never been to Iran and I did not know the names
that Mr. Bell was talking about, so much of what he may have said
at that time I don't have specific recall, but I do recall that such
a meeting took place.
The C H A I R M A N . D O you recall Mr. Bell alleging that General
Khatami had an ownership interest in Air Taxi?
Mr. JOSE. I don't specifically recall. There were the names of,
again, six or seven people that I had no knowledge of and did not
know by name
The C H A I R M A N . I missed that. You said there was a list
Mr. JOSE. There were six or seven names in Mr. Bell's presentation. I didn't—I had difficulty association function and name at the
time because I had not been involved with our efforts in Iran to
any extent.
The C H A I R M A N . The reason I ' m asking that question is because
what you testified before the staff, you indicated that on three occasions you were told that General Khatami had an interest in Air
Taxi. What were those three occasions?
Mr. JOSE. Well, I ' m just trying to lay the background first.
The C H A I R M A N . All right.
Mr. JOSE. General Khatami's name did come up on that occasion.
The C H A I R M A N . On this occasion when Mr. Bell was there you
now recall?
M r . JOSE.
Yes.
The C H A I R M A N . All right. What were the other two occasions ?
Mr. JOSE. The other two occasions were once when Mr. French
was in Paris during the Paris Air Show in 1967, and the third
occasion that I heard General Khatami's name in connection with
relationships with Helicopter Consultants was in a letter that Mr.
Bell sent me in July of 1967.
The C H A I R M A N . What were the circumstances here? Why were
vou told that General Khatami had an interest in Air Taxi by
French at the Air Show ?
16
Mr. JOSE. Well, it started earlier than that. We had had Mr.
French as a dealer since 1964 and he had been representing us for
some time. We knew that in the middle of 1966 he was not to be
allowed back in the country and we had had questions about retaining Mr. French, so when Mr. Bell came in I assumed that whatever
story they were beginning to tell us had to do with Mr. French's
desire to retain Bell representation in Iran and so at that time Mr.
Bell began talking about the influential contacts that Mr. French
would be able to bring to our company. At that time Mr. Khatami's
name was brought up—General Khatami's name was brought up.
The C H A I R M A N . N O W what did you do with this information?
After all, you had responsibility here. To whom would you report
this information?
Mr. JOSE. Well, my first effort would be to discuss it with the
international marketing manager, Mr. Orpen, who had responsibility
The C H A I R M A N . He was your subordinate, right?
Mr. JOSE. He was my subordinate. He was not in the city at that
time.
The C H A I R M A N . But how about your superiors in the corporation? Wouldn't you have had an obligation here to report that and
discuss that kind of intelligence with Mr. Atkins or Mr. Ducayet?
Mr. JOSE. Well, sir, I wanted to check—the story was so unusual
that I wanted to get some sort of additional background on it
before I began to bring it to other people's attention.
The C H A I R M A N . Well, didn't you testify before when you were
questioned that this information was so unusual that you in the
normal course of events would have passed this on to Mr. Atkins ?
Mr. JOSE. A S I recall, Senator, there was some question about
whether I did. The question was
The C H A I R M A N . I didn't say you did, because you can't recall as
I understand whether you did or not.
Mr. JOSE. I do not recall discussing it.
The C H A I R M A N . I understand, but my question is in the ordinary
course of events, given your relationship with Mr. Atkins as your
superior, wouldn't you have felt it incumbent to pass this kind of
information on to Mr. Atkins?
Mr. JOSE. Well
The C H A I R M A N . After all, the ownership—you said yes?
M r . JOSE. N O .
The C H A I R M A N . I thought you nodded.
Senator S C H M I T T . Mr. Chairman, I think he's trying to answer.
Mr. JOSE. We have had several movements up here. I have been
distracted, Senator.
The C H A I R M A N . Yes. Go ahead.
Mr. JOSE. Yes, I would feel that in the normal course of events
that we would have had a chance to discuss it but I don't recall
that we ever did—things that were unusual like this, because it was
unusual.
The C H A I R M A N . Unfortunately, my time is up. I will be back.
Senator Brooke.
17
Senator BROOKE. Mr. Bell, were you compensated by French for
your efforts on his behalf during 1966 and 1968?
Mr. B E L L . Yes, I was, Senator.
Senator BROOKE. D O you have any outstanding bills owed by Mr.
French to you?
M r . BELL. NO.
Senator BROOKE. N O W
how long did this meeting take with Mr.
Ducayet and Mr. Jose? How long were you in Mr. Ducayet's office?
Mr. B E L L . I would estimate something in the vicinity of 3 0 or 4 5
minutes ?
Senator BROOKE. Could you describe that office? Do you remember its furniture arrangements or anything?
Mr. B E L L . I don't have a detailed recollection of it. I do recall
we were seated in kind of an informal arrangement, perhaps a
couch and chairs. Mr. Ducayet was not behind a desk at any rate.
Senator BROOKE. And you went from Mr. Jose's office to Mr.
Ducayet's office ?
Mr. B E L L . That's correct.
Senator BROOKE. Just the two of you ?
Mr. B E L L . My recollection is just the two of us.
Senator BROOKE. Was there anybody else in the room besides you
and Jose and Ducayet?
Mr. B E L L . Not to my recollection.
Senator BROOKE. Did you suggest a meeting between yourself
and Mr. Ducayet?
M r . BELL. I d i d n o t .
Senator BROOKE. Who made the suggestion?
Mr. B E L L . Mr. Jose suggested that.
Senator BROOKE. Did he tell you why he
wanted to have you
meet with Mr. Ducayet ?
Mr. B E L L . I think he said something to the effect that: "This is
a very unusual story; would you mind repeating it to our president?"—and he got on the intercom and spoke to someone and we
then went to the other building where Mr. Ducayet's office was.
Senator BROOKE. And there's no doubt in your mind that the
man who sits to your left, to the extreme end of that table, is the
man with whom you met on that date; is that correct?
Mr. B E L L . That's correct.
Senator BROOKE. And you met with him for 30 to 45 minutes ?
Mr. B E L L . That's correct.
Senator BROOKE. N O W did you talk for 30 or 45 minutes or did
Mr. Jose enter into the conversation?
Mr. B E L L . Principally I talked for 30 to 45 minutes.
Senator BROOKE. Were any questions propounded to you by either
of the two gentlemen ?
Mr. B E L L . Not that I can recall.
Senator BROOKE. At the conclusion of that meeting what, if anything, was said by Mr. Ducayet or Mr. Jose?
Mr. B E L L . Mr. Ducayet said something like: "Thank you very
much for telling us this interesting story. We'll be in touch."
Senator BROOKE. What was his reaction? Did he express any
shock at this story? Did he say anything about whether it was
18
contrary to Bell Helicopter policy to be involved in an arrangement whereby Government officials would receive direct or indirect
monetary benefits?
Mr. B E L L . N O , he didn't say that. In fact, the thing that stands
out in my memory about his reaction was that there was no reaction
of any kind. He really was very unresponsive.
Senator B R O O K E . N O W , Mr. Jose, do you remember the meeting?
Mr. JOSE. With Mr. Bell in my office?
Senator B R O O K E . Yes.
M r . JOSE. Y e s , I
do.
Senator B R O O K E . D O you remember making a call to any office
asking to meet with Mr. Ducayet subsequent to that meeting?
Mr. J O S E . Senator, that was 12 years ago. I don't recall the
specifics.
Senator B R O O K E . Come, Mr. Jose. This is not a matter that happens every day; is it? This was of considerable import to your
company.
Mr. JOSE. I don't recall, Senator, the call. It could have happened.
Senator B R O O K E . At any rate, if there was a call or was not a
call, do you recall going from your office with Mr. Bell whom you
do remember; do you not ?
Mr. JOSE. I think he's changed more than I have, Senator.
Mr. B E L L . Senator, I think that's a fair comment.
Senator B R O O K E . Aside from the cosmetics of it, I just want to
get to the question—you do remember him, do you not? You remember him even whether he's changed?
Mr. JOSE. I remember meeting with Mr. French's lawyer.
Senator B R O O K E . Y O U remember that Mr. French's lawyer to be
Mr. Bell; don't you?
Mr. JOSE. I believe so, yes.
Senator B R O O K E . N O W you met with him in your office; did you
not?
M r . JOSE. Y e s , s i r .
Senator B R O O K E . After you left your office, did you leave your
office with Mr. Bell and go to Mr. Ducayet's office ?
Mr. JOSE. Senator, I don't recall.
Senator B R O O K E . Y O U do not recall. Would you say that you
didn't?
Mr. J O S E . I'll not say I didn't.
Senator B R O O K E . D O you remember at any time being in the
meeting between Mr. Ducayet and Mr. Bell ?
Mr. JOSE. I do not, Senator.
Senator B R O O K E . You don't recall that at all?
M r . JOSE. N O .
Senator B R O O K E . Did you tell Mr. Ducayet of your conversation
with Mr. Bell?
Mr. JOSE. I could have, but I do not recall.
Senator B R O O K E . Y O U have a great loss of memory between yon
and Mr. Ducayet in those 12 years or so. You don't remember that
at all?
19
Mr. J O S E . I remember meeting with Mr. Bell and I remember
portions of what he has said in his opening remarks.
Senator B R O O K E . That refreshes your recollection; does it not ?
M r . JOSE. Y e s , s i r .
Senator B R O O K E . Y O U knew of General Khatami's ownership of
Air Taxi; did you not ?
Mr. JOSE. I did not know that General Khatami was involved
with Air Taxi.
Senator B R O O K E . At any time you did not know that? You knew
it when Mr. Bell talked with you; didn't you?
Mr. J O S E . Well, I heard what he said, but I did not know it.
Senator B R O O K E . Did you believe him ?
Mr. JOSE. I found it somewhat of a fairy tale.
Senator B R O O K E . A what ?
Mr. JOSE. A fairy tale.
Senator B R O O K E . A fairy tale. Did you have any reason to disbelieve him ?
Mr. JOSE. Well, just that in 7 or 8 years of international marketing I had not seen such an arrangement anywhere and I have dealt
in a number of countries.
Senator B R O O K E . Y O U continued to do business with Mr. French
for a year after that meeting; did you not?
Mr. JOSE. We gave a temporary extension and I had asked our
people to make arrangements to change our dealership in Iran.
Senator B R O O K E . Well, of course, knowledge or having heard, let
me say, of this ownership of General Khatami's in Air Taxi, what
did you do, if anything, to ascertain whether Mr. Bell was telling
you the truth or not?
Mr. JOSE. Well, first of all, we made the decision that we were
going to change our representation.
Senator B R O O K E . That was a year later.
Mr. JOSE. N O , sir. We made that decision very shortly after Mr,
Bell was in my office.
Senator B R O O K E . Did Mr. Bell's statement to you have anything
at all to do with your decision to make a change?
Mr. JOSE. Yes, it had to do with it.
Senator B R O O K E . All right, What did it have to do with it? Why
did you make a change based upon what Mr. Bell stated ?
Mr. JOSE. Well, it had to do with the fact that Mr. French, being
an expatriate American, was not allowed in the country which was
a significant thing to me. I failed to see how any kind of arrangement, whether legal or illegal—and I certainly wasn't interested in
an illegal one—but in any event, a man could not represent us in
Iran who was not allowed in the country.
Senator B R O O K E . That was one reason. Were there any other
reasons ?
Mr. JOSE. Well, the other reason would be that I was somewhat
dismayed that any agent which we had previously selected would
send an attorney to me with the proposition like Mr. Bell was outlining because he—they collectively obviously misread the kind of
20
a company that we were and, secondly, that, you know, in any
event, we weren't interested.
Senator B R O O K E . Any other reasons? Were you not concerned at
all about the fact that you would be dealing with a company owned
by the chief of the air force of the Iranian Government?
Mr. JOSE. Well, I thought I implied that, Senator, when I said
when such a proposition was brought to me.
Senator B R O O K E . Well, if that's the reason, then, Mr. Jose, you
did believe what Mr. Bell told you; is that not true? That was one
of your reasons for making the change. You obviously believed
what Mr. Bell was telling you about this, as you call it, fantasy
arrangement.
Mr. JOSE. Well, I don't think it's obvious that I believed that,
Senator. I believe that the method of operation that they proposed,
regardless of who the principals were and whether there was a
behind-the-scene arrangement or not, not necessarily that it involved
General Khatami or whoever, would not be acceptable to us.
Senator B R O O K E . I S this the sort of thing that you would take up
with the president of the company, Mr. Ducayet? I mean, here Mr.
Bell comes representing Mr. French, your agent in Iran, and he
gives you this outline of the arrangement that they were having
which included doing business with a concern that was owned by
General Khatami, who's the chief of the Iranian air force. Was this
not something of such significance that you would take it up with
Mr. Ducayet, the president?
Mr. JOSE. Generally speaking, yes.
Senator B R O O K E . Did you in fact do so, Mr. Jose?
Mr. JOSE. I don't recall that we discussed it.
Senator B R O O K E . Would it be unusual for you not to have taken
it up with Mr. Ducayet?
Mr. JOSE. Well, I was allowed quite a bit of latitude in the selection of dealers.
Senator B R O O K E . I know, but you also were a good administrator.
You know what administration entails. If a matter of this significance
Mr. JOSE. N O , sir. I was a creative salesman. I was not an administrator.
Senator B R O O K E . Even worse if you were a salesman, even worse
you would want to take it up with the administrator, would you
not, as a good salesman?
Mr. JOSE. I do not recall taking it up with Mr. Ducayet.
Senator B R O O K E . Mr. Ducayet, if you didn't remember talking
with Mr. Bell, do you remember at any time talking with Mr. Jose
about this matter?
Mr. D U C A Y E T . N O , I do not, Senator.
Senator B R O O K E . Well, you were a topflight administrator. You
were not a salesman. You were an administrator; were you not?
Mr. D U C A Y E T . I guess I was supposed to be.
Senator B R O O K E . Well, you would not call it proper administration, would you, to not be informed of a matter of this magnitude?
Would vou not expect Mr. Jose to have reported this to you, if he
in fact knew about it?
21
Mr. D U C A Y E T . I guess if the marketing department had information of this nature, that I would have expected the marketing department to go do something about it and find a solution to their
problems. They had a representative that couldn't even get into the
country and to me that was enough to do anything. You should get
to it and find out.
Second, we were dealing in many, many countries at that time.
You wonder why things may not have been brought to my attention.
They were supposed to be running the marketing department. They
should have been able to get good and adequate representatives and
if they had a bad one I would have expected them to go do something about it, not come back to me first.
Senator B R O O K E . D O you have a diary of your meetings?
Mr. D U C A Y E T . N O , I do not, Senator. I do not keep one. I did not.
Senator B R O O K E . Y O U never kept diaries of persons with whom
you met?
Mr.
DUCAYET.
Senator
NO.
BROOKE.
Did your secretary keep a diary ?
M r . DUCAYET.
NO.
M r . DUCAYET.
Yes.
Mr.
DUCAYET.
NO.
Mr.
DUCAYET.
NO.
Senator B R O O K E . H O W did you know your agenda for the day?
Mr. D U C A Y E T . Well, she kept it for the day.
Senator B R O O K E . Are those diaries available?
Mr. D U C A Y E T . NO. They were never kept except a list of who was
waiting to see me or some such thing.
Senator B R O O K E . Didn't you have appointments every day ?
Senator B R O O K E . Didn't you have an appointment list? You knew
at 10 a.m. you were going to meet with Mr. Jose and 10:30 you were
going to meet with somebody else. You had that sort of business
diary; did you not ?
Mr. D U C A Y E T . Yes, but it was only kept on a daily basis.
Senator B R O O K E . And they were destroyed thereafter?
Mr. D U C A Y E T . She'd destroy it and start a new one.
Senator B R O O K E . S O you would keep no record of whom you met ?
Senator B R O O K E . I S that good office procedure?
Mr. D U C A Y E T . A S you look at it now, I guess it could be classed as
not good procedure.
Senator B R O O K E . My time is up, Mr. Chairman.
The C H A I R M A N . Senator Stevenson.
Senator S T E V E N S O N . I pass for now, Mr. Chairman.
The C H A I R M A N . Senator Heinz.
Senator H E I N Z . Yes. I'm very interested, Mr. Ducayet, that you
have no records of any meeting you ever held?
Mr. D U C A Y E T . NO. Well, I may have kept records of meetings if
this had been of sufficient importance to me to write a memo to
myself afterwards or a memo to the file or to have answered something that was asked me. There are records of that nature.
Senator H E I N Z . But no record on a regular basis?
Senator H E I N Z . Why did your secretary destroy every day the
records of who you met with?
22
Mr. D U C A Y E T . There was no particular reason to keep it.
Senator H E I N Z . Did she do so upon instructions from you or did
.you just let her do her own thing?
Mr. D U C A Y E T . I just let her do her own thing. I saw no particular
reason to keep track of it.
Senator H E I N Z . D O you have the same secretary today as you did
then?
Mr. D U C A Y E T . NO, sir. I have been retired for 5 years.
Senator H E I N Z . Did you have the same secretary in 1 9 6 6 who you
had when you retired 5 years ago?
Mr. D U C A Y E T . I changed at some point. I can't say exactly when.
I don't know.
Senator H E I N Z . Think about it.
Mr. D U C A Y E T . I can't remember really.
Senator H E I N Z . When do you think you changed secretaries ?
Mr. D U C A Y E T . I really have no idea. It could well have been
around that time.
Senator H E I N Z . What time? 1 9 6 6 ?
Mr. D U C A Y E T . 1966, or 1967, or 1968, somewhere in there.
Senator H E I N Z . Mr. Ducayet, you said that you expected your
marketing department, in running into a problem, to just go do
something about it and not to come back to you; is that right?
M r . DUCAYET.
Yes.
Senator H E I N Z . I S the sale of helicopters to Iran something that
you were involved in?
Mr. D U C A Y E T . Not in detail as such.
Senator H E I N Z . But you were involved in it; weren't you? You
knew what was going on, on a week-to-week basis; didn't you?
Mr. D U C A Y E T . Yes. As the head of the company, I obviously received some kind of reports from time to time as to progress being
made there or any of the other countries.
Senator H E I N Z . Isn't it true you monitored the progress quite
closely ?
Mr. D U C A Y E T . NO, I would not say that.
Senator H E I N Z . Yet you were aware of it on a week-to-week basis ?
Mr. D U C A Y E T . I was aware of it on a basis.
Senator H E I N Z . Mr. Ducayet, did you have an explicit policy that
you and your division understood and followed with respect to not
dealing with high officials in any way, bringing them into a business deal? Was there a policy against that?
Mr. D U C A Y E T . Senator, the question of having a Government official involved in our dealerships never came up in those days certainly.
Senator H E I N Z . It never came up? You accepted it as common
practice ?
Mr. D U C A Y E T . NO, sir. It never came up and, therefore, we never
established any written policy or any states policy as such.
Senator H E I N Z . Well, how could you say to us just a moment ago
that you just expected your marketing department to handle it without such a policy? You were unaware at the time that Government
officials involved themselves in transactions like that? Do you expect us to believe that that didn't ever cross your mind ?
23
M r . DUCAYET.
NO.
Senator H E I N Z . That Government officials didn't involve themselves ?
Mr. D U C A Y E T . We would never have tolerated having a Government official involved in our dealership.
Senator H E I N Z . Why didn't you have a policy against it?
Mr. D U C A Y E T . Because the question never really came up.
Senator H E I N Z . Were you involved in the decision to change
agents in Iran?
Mr. D U C A Y E T . Not directly; no.
Senator H E I N Z . What do you mean "not directly?"
Mr. D U C A Y E T . Well, the chain of command, so to speak, came up
through Mr. Jose, then to Mr. Atkins and then to me.
Senator H E I N Z . Y O U did not approve the change of agents in Iran ?
That was done without your knowledge or consent?
Mr. D U C A Y E T . I believe it was done without my knowledge or
^consent. I don't remember.
Senator H E I N Z . I S that proper operating procedure at Textron?
Mr. D U C A Y E T . I believe it's perfectly proper.
Senator H E I N Z . S O you changed agents and you say to this committee under oath that it was done without your knowledge or consent?
Mr. D U C A Y E T . I believe so.
Senator H E I N Z . Y O U believe so? Do you want to be sure?
Mr. D U C A Y E T . I have no recollection of having been involved in
the change of agents.
Senator H E I N Z . N O W that's different from what you just said. You
said it was done without your knowledge or consent. That's an
affirmative statement. That's different from saying: "I don't recall;
I don't remember; I can't seem to recollect." Now which are you
saying ?
Mr. D U C A Y E T . I'm saying that I did not know anything about it.
I do not remember anything about it and that it is perfectly logical
that Mr. Atkins could have approved or Mr. Jose could have approved a change of agency without needing my concurrence.
Senator H E I N Z . Why do you suppose Mr. Jose brought Mr. Bell
to your office?
Mr. D U C A Y E T . Well, it's a little strange. It's hard for me to speculate what went on 10 or 12 years ago as to why he was
Senator H E I N Z . Well, if it happened today would you think that
Mr. Jose was acting responsibly and properly or would you think
he would be wasting your time if suddenly today were 1966 ?
Mr. D U C A Y E T . NO, I wouldn't say he was wasting my time if he
came in and I probably—I'm not at all surprised that Mr. Bell's
statement that I merely said: "Thank you for telling me this story."
I think this is normally what I would have done. I would have
expected to talk it over with our own people afterwards or expect
them to go do whatever they needed to do about it.
Senator H E I N Z . People came to you as a matter of course and told
you things and you just listened?
Mr. D U C A Y E T . Many times.
24
Senator H E I N Z . Didn't make any notes ever ? You're not a notetaker?
Mr. D U C A Y E T . NO, not necessarily.
Senator H E I N Z . Not necessarily?
Mr. D U C A Y E T . I usually don't.
Senator H E I N Z . You usually don't. You listen. If you had such a
meeting with Mr. Bell and Mr. Jose today, what would you do as a
result of such a meeting? Let's suppose this description just took
place. What would you do about it?
Mr. D U C A Y E T . I would probably have said just what I did to Mr.
Bell, to complete the discussion with Mr. Bell or recitation by Mr.
Bell, as he said. I would have expected to talk with the marketing
people afterwards or to talk to Mr. Atkins or to talk to Mr. Jose,
whoever was in charge of doing something about it.
Senator H E I N Z . Y O U wouldn't have felt compelled as a result of
having sat in on a—I'm not saying the meeting did take place
Mr. D U C A Y E T . Eight.
Senator H E I N Z . But let's assume that today that happened. You
would just listen and do nothing about it? You wouldn't talk to
Mr. Jose? You wouldn't talk to anybody else?
Mr. D U C A Y E T . Yes. I would expect Mr. Jose or somebody to come
back and talk to me about it.
Senator H E I N Z . Mr. Jose, did you go back and talk to Mr. Ducayet
about the meeting you had with him and Mr. Bell.
Mr. JOSE. Well, I have already stated, Senator, I don't recall meeting with Mr. Ducayet about it.
Senator H E I N Z . Did you talk with him on the phone ? You don't
recall? You simply don't remember.
Mr. JOSE. I don't recall.
Senator H E I N Z . Did you follow up on this meeting in any way?
Mr. JOSE. I made up in my own mind, as I have already stated,
Senator, that we were going to make a change.
Senator H E I N Z . Yes.
Mr. JOSE. And it was within my province to do so. Our established procedures at the time were that the regional managers who
reported to Mr. Orpen who reported to me on the international side
would screen dealers. Mr. Orpen would make recommendations, review them with me, and we could make that change. Now this policy
was being committed to writing in the later part of 1967. It got
published in 1968 but that was a codification of the way that we had
been operating. We were not asked to review dealership appointments with the president or with the vice president. Our international business at that time was very, very small and was not a very
significant part of our business.
Senator H E I N Z . Well, you indicated a moment ago that you basicallv believed what Mr. Bell told you about General Khatami's involvement in this agency. Is that right?
Mr. JOSE. I beg your pardon, sir. I didn't mean to.
Senator H E I N Z . Y O U indicated a moment ago in response to questioning by Senator Brooke that you basically believed what Mr. Bell
was saying to you about General Khatami's involvement in this deal.
Isn't that right?
25
Mr. JOSE. I ' d like the record checked on that because I didn't mean
to if I did.
Senator H E I N Z . Let me refresh your memory again if I may. What
you told Senator Brooke was that you were dismayed that Mr.
French had sent Mr. Bell, a lawyer, to represent him, and making
you this proposition—and you indicated to Senator Brooke that the
reason you were dismayed at the proposition was that it involved
somebody who was an official in Government, a high Iranian official.
M r . JOSE. Y e s .
Senator H E I N Z .
And that that dismayed you. Therefore, it is a
fairly logical conclusion, as was pointed out by Senator Brooke,
that you, therefore, basically believed what he was telling you. Isn't
that right? There's nothing to be ashamed of in the proposition if
you don't believe it. If you don't believe that a high Iranian official,
General Khatami is involved, then it's not illegal, immoral, or fattening. But you indicated that you did believe that there was some
high Iranian official, General Khatami, involved here and that offended you, you said. Now which is it?
Mr. JOSE. I did not mean to imply that. I said the thing that
offended me was that we would get some sort of a proposition and
I thought I also said
Senator H E I N Z . Excuse me for interrupting, but in business you
get propositions all the time. Let's stop kidding ourselves. Either
this was an offensive proposition or it was just a normal proposition, and if it was offensive it was offensive for a reason.
Mr. JOSE. Yes, it was offensive.
Senator H E I N Z . What was the reason?
Mr. JOSE. The implication—and I think I stated this, Senatoris the implication that we would be interested in such a proposition
regardless of who it involved. Now I also stated that the names did
not mean that much to me.
Senator H E I N Z . Was it your impression that there were high
Iranian officials involved, though whether you recognized the name
Khatami or anybody like that ? Was it your impression that somebody with a little power in the Iranian Government might be involved in this deal?
Mr. JOSE. Well, I don't know quite how to respond to that. I did
not have the impression that—well, as I stated, I thought it was a
fairy tale.
Senator H E I N Z . Well, I ' d like you to answer my question.
Mr. JOSE. Was it my impression that someone high in the Government would be involved?
Senator H E I N Z . Somebody with some clout in the Iranian Government was involved ? Was that or was that not your impression ?
Yes or no?
Mr. JOSE. I don't think I felt—I thought it was a matter of name
dropping and I did not feel that it was really a story that would
hold water.
Senator H E I N Z . But regardless of whether you tell us you believed
it, you do recollect clearly that Mr. Bell indicated to you that some
important people were involved, irrespective of whether you believed that or no; is that the case ?
Mr. JOSE. Yes, that's true.
Senator H E I N Z . All right. My time has expired. Thank you.
The C H A I R M A N . Senator Riegle.
OPENING STATEMENT OF SENATOR RIEGLE
Senator RIEGLE. Thank you, Mr. Chairman. I was not present
when the hearing began this morning and you made your statement,,
so I would like to just briefly make a comment of my own beforeaddressing seome questions to the witnesses if I may.
First, I want to make it clear that I have the highest regard for
both the chairman of the committee as well as the professional staff
and I think they proceeded with great diligence in pursuing the
matters that are before the committee at the present time.
I myself have expressed some reservation and some concern last
week that I thought our investigation, while thorough and proper,,
was beginning to become—and the term I used at the time— was
very close to a fishing expedition, and I thought that then and I
think that now and that in no way however detracts from the facts
that others here feel differently about it and feel the fact that these
questions have to be pursued really at great length, and I have no
objection to that being done, though that doesn't mean that I hold1
the same opinion.
I think the basic issue that we are facing here and I think we can
track this particular issue for additional weeks and months probably because going back and putting the pieces together on the transaction that's a decade old is never an easy thing to do, but I think
the basic issue that's before the committee is the question of William*
Miller's integrity and whether or not he's a person that is honest
and is a person who is properly suited by background and capacity
to be Chairman of the Federal Reserve.
I have taken a close look at that issue—his personal history, pro*fessionally, and his private life, his activities at the community level!
and other things—and I find it very difficult to find even the beginning of a basis for reaching a judgment that the man would not
only be dishonest but would come before our committee and lie. And'
that really is at the heart I think of what we are endeavoring to
do here, is to try to find out if in the end Mr. Miller—I think a man
of considerable reputation—has at this point in his career been
willing to in effect come here and make false statements in behalf
of his nomination to be chairman of the Federal Reserve.
Now that's not the way today's inquiry is being postured, but
that's really the basic question—as to whether or not this man is
honest and forthright in terms of the representations that he's made
to the committee.
I'm really much less interested in the discussion among the people
here at the table, although it's interesting, than I am this basic
question of the integrity and the honesty of Mr. Miller because after
all that's presumably why we are here.
And so far, at least I have not seen nor heard a scrap of information bv anybody that suggests that Mr. Miller has not been honest
and not been forthright with this committee.
27
I might say that if I ever find that that's the case, there will be
no one on this committee that would be more vigorous in their opposition to his nomination than I would be, but failing that finding,.
I guess there comes a question in my mind as to how long one is
prepared to put forward and leave standing really a profoundly
negative presumption about somebody's character and good faith.
It seems to me that after a while it takes something quite substantial to be willing to put forward, even if it's done silently, the
presumption that a man basically is a liar and
The C H A I R M A N . Would the Senator yield?
Senator R I E G L E . I will in just a second—that he would have comehere and committed perjury and that's the way I see it. I see that
as the question—as to whether or not Mr. Miller has been truthful
to us. I happen to believe, based on my best judgment, that he was
truthful to us. Nobody can prove that beyond any question whatsoever, but in the end we will have to make our judgment, but that's
the basic judgment that I have reached, barring some clear finding
of fact that would in effect set aside an entire work career and professional career of a person who has been active in his community
and on the State and national scene for decades.
So I want to make sure that we keep what we're doing here in
some kind of perspective because in the end that's the question that
seems that we have to come to and resolve because that's really the*
issue—not whether or not, for example, these particular arrangements did or did not take place and how one reconstructs this history based on the ability of one witness at the table to reconstruct
events at that time versus another. I'm not saying they are not important and I'm not saying that I don't feel that it's necessary to
track this through and it's not being done in a proper manner, but
what I'm saying is that its final relevance in my judgment relates
to the issue that is before us, and that's the question about Mr.
Miller. It's not a question about Mr. Bell or Mr. Ducayet or Mr. Jose
or whoever, in my judgment. I think the issue is profoundly a question of Mr. Miller and, of course, I do yield to the chairman.
The C H A I R M A N . May I say to my good friend from Michigan, for
whom I have great respect and admiration, that I don't know how
in the world this can be characterized as a fishing expedition. In
the first place, there was a specific motion by Senator Heinz that we
investigate a particular act, and that's entirely what the committee
has been confined to.
Now a fishing expedition would be quite different. I call to the
attention of the Senator a letter that's been distributed to all members of the committee dated February 22 from the Securities and
Exchange Commission Chairman. He points out there are four specific areas in which they are investigating Textron and Miller, including the use of push money, salary contributions and other promotional proxies by another Textron subsidiary, including the instances of overbilling underbilling and other billing practices
employed by several divisions of Textron to accommodate their customers, including with respect to informational regarding numerous
proceedings brought by Federal and State governmental authorities regarding alleged employment discrimination on the basis of"
race, sex, age, religion, and so forth.
28
Mr. Williams says there could be other inquiries too that they are
going to engage in.
Now this committee isn't going into those things. We haven't authorized—at least not so far—we haven't decided that we are going
to investigate that at all. There's no fishing expedition here that I
can see at all.
Furthermore, there is no presumption by any Senator here—
there's certainly been no presumption by the staff—that Mr. Miller
is a liar or that we want to prove that he's a liar or anything of
kind.
The fact is that we have this information that General Khatami
owned an interest in Air Taxi. We have information that this was
known to some extent at the time and we have a duty, therefore, to
find out what all the facts are and question Mr. Miller on it. Mr.
Miller is going to have his day in court tomorrow.
Senator RIEGLE. Mr. Chairman, if I may respond—and then I'll
be happy to yield to the Senator from Massachusetts—first of all, I
think the chairman knows the great personal regard I have for him
so my comments are not to be taken in any light other than that.
I have read SEC Chairman Williams' letter and it is true that they
are undertaking certain inquiries about Textron, but they are not—
and I'm being very careful about the choice of words here—investigating Mr. Miller per se, at least insofar as I know.
The C H A I R M A N . He was the head of Textron. He was the chief
executive officer.
Senator RIEGLE. We are also talking to people here who were at
Textron who were directly involved in one form or another with
the matter we are discussing, but as far as I know there isn't any
evidence that I have seen or the committee has assembled—and if
there is I would like to hear it now—that ties Mr. Miller, not somebody else but Mr. Miller, to this activity; and I'm just saying in the
absence of a shred of fact to that effect—and when he comes and
makes assertions that he was not involved—it seems to me that our
unspoken assertion here is that we expect at some point that we may
find some link that would connect him directly to that transaction.
The C H A I R M A N . Well, there's no fishing expedition. As I say, we
have all kinds of oceans to fish in and we are not fishing in them.
Senator RIEGLE. I would agree with the chairman and my exact
quotation which was in the Wall Street Journal last week was that
I said it had come very close to the point of being a fishing expedition, and what I meant by that and I want to say it again so
nobody is confused about it—that is the issue in my judgment here—
is the integrity, the honesty, the character of Mr. Miller, and the
degree to which this inquiry or any others that we want to propound finally comes back around as a cross-check on this basic question of Mr. Miller because we are not here to confirm these men as
head of the Federal Reserve. We are here to confirm Mr. Miller.
But what I want to do—I dont' want to use all my time this way.
I don't want to not yield to the Senator from Massachusetts but if
I do yield to him I wonder if I could have unanimous consent to at
least pose a question or two to the witnesses so I don't lose all my
time.
29
The C H A I R M A N . Yes, unless there's objection, the Senator will have
an additional 3 minutes.
Senator B R O O K E . Mr. Chairman, I am really appalled at the Senator from Michigan's assessment of these hearings. I and the Senator
from New Mexico, the Senator from Indiana, the Senator from
Pennsylvania and others have done everything possible to see that
the rights of G. William Miller are protected. The chairman, of
course, has done everything possible to see that the rights of G. William Miller are protected. The Senator from Michigan has said it's
a question of integrity. There is a question of integrity. There's a
question of credibility. We have evidence from Mr. Bell that he
informed Mr. Jose and to Mr. Ducayet, who were high-ranking officials of Bell Helicopter and Textron, that General Khatami was an
owner of Air Taxi.
The question was whether Mr. Ducayet, Mr. Jose, Mr. Atkins or
any others notified Mr. Miller himself that that was the fact.
Senator R I E G L E . If the Senator would yield at that exact point, we
have put that question to Mr. Miller and in fact—:—
Senator B R O O K E . And he denied it.
Senator R I E G L E . That's exactly right and he denied it emphatically
and without any equivocation.
Senator B R O O K E . That's correct.
Senator R I E G L E . I think what we must do—there's some point at
which we have got to judge that the man is either honest and forthright and truthful in his responses or one is left having to draw or
try to construct the other inference which is the one I mentioned
before, that he was not truthful.
Senator B R O O K E . We are not trying to draw any inference at all.
We are trying to find the facts. Staff conducted what you have
already referred to as a very excellent in-depth investigation and
as a result of that investigation they have uncovered certain information which resulted in the committee voting to have these men
and others testify before the committee.
Senator R I E G L E . I understand that.
Senator B R O O K E . We are now in the process of doing our job by
asking the questions to ascertain what the facts are.
Senator R I E G L E . Let me ask the Senator from Massachusetts, there
have been numerous staff interrogatories take place with these witnesses. These are not new witnesses to the staff and you are aware
as I am of the information that's been developed to this point. Is
there a single fact—is there a single item that's been discovered that
would indicate that Mr. Miller was not truthful in his assertions to
the committee?
Senator B R O O K E . T O this point, I would answer that question in
the negative. I don't know that there's been any fact, but there's
another question involved here. We also are looking at his administrative abilities as well as his qualifications. The Senator from New
Mexico wants to look at his monetary policies. We have other things
of which
Senator R I E G L E . I agree with the Senator from New Mexico in
that respect. I think that would be a fruitful line of inquiry.
25-067—78
3
30
Senator B R O O K E . Should he have known that he had a general
counsel that conducted an investigation of this matter and made a
report? The question is whether Mr. Miller knew anything about
that report or should he have known or what Textron did. We also
know that in 1975 other major corporations in this country voluntarily complied with SEC's request to look at this whole question
of dealing with foreign governments or payoffs to foreign governments. We also know that Textron, one of the largest corporations
in this country, did not participate in that voluntary program. We
want to know why. We want to know if Mr. Miller was a part and
parcel of that.
Senator R I E G L E . I would say to the Senator from Massachusetts
I think those are fair questions to put to Mr. Miller and Mr. Miller
is our witness tomorrow so there will be that opportunity as there
was before when Mr. Miller was our witness.
Senator B R O O K E . Don't you think it's a fair question to put to
Mr. Ducayet, who was the president of Bell Helicopter and who,
according to Mr. Bell, was told that General Khatami was an owner
of Air Taxi? Mr. Bell testified that he told Mr. Jose the same thing,
and Mr. Jose admits he met with Mr. Bell. But neither Mr. Jose
nor Mr. Ducayet can recall which, according to Mr. Bell, the meeting
was attended by himself, Jose and Ducayet. On the other hand, Mr.
Jose and Mr. Ducayet have not testified that the meeting didn't
take place. That's quite different in the law and I'm sure the Senator from Michigan must understand that.
Senator R I E G L E . I think it comes back to the question that I was
trying to put forward initially and that is the real issue here, it
seems to me, is William Miller.
Senator B R O O K E . Of course.
Senator R I E G L E . And it's very easy to get so distant from the question of Mr. Miller and Mr. Miller's involvement or lack of involvement that this sort of case history that we are developing here is
a fascinating history—I'm sure a book could be written about just
this one transaction—but whether or not it has any bearing on Mr.
Miller and on whether Mr. Miller was honest in his representations
to this committee is really the central question.
Senator B R O O K E . It has every bearing. Would that Senator suggest that the only witness this committee call would be G. William
Miller? What kind of inquiry would that be?
Senator R I E G L E . I think the Senator knows all the members of the
committee, including this one, signed the subpena so we could have
the witness come in. We have been at this now for some time. We
didn't start yesterday and the fact that the witnesses are here today
does not mean that they have not been questioned before today.
Senator B R O O K E . Not by us.
Senator R I E G L E . By your staff members, presumably, who have had
the opportunity to do that. What I'm saying is that by your own
comment a minute ago as to whether or not there's been a finding
of even the most microscopic shred of evidence to indicate that Mr.
Miller was not truthful in his responses we obtained
31
Senator B R O O K E . That is not true. I think you have gone a little
too far. There is evidence that Mr. Miller could have known that
General Khatami was the owner of Air Taxi and there's evidence
that Mr. Miller should possibly have known that General Khatami
was an owner of Air Taxi.
Senator R I E G L E . Well, in terms of your first inference
Senator B R O O K E . It's not an inference. That's a statement of fact.
Senator R I E G L E . Well, perhaps you feel that it is, but I think it's
important that the statement at least now be on the table because
that becomes I think the unspoken presumption that's here in the
room with respect to Mr. Miller as a nominee—as to whether or not
he in fact did have some knowledge, that he was not truthful in his
testifying before this committee—and I think the Senator by his
comment makes it clear that there is a doubt in his own mind about
that.
Senator B R O O K E . Not only that, I presume he's innocent, that he
has told us the truth. There's a presumption, I've said it time after
time—that there's a presumption that under oath he told us the
truth. There's also a presumption that under oath Mr. Bell told us
the truth and that Mr. Jose told us the truth and Mr. Ducayet told
us the truth. But somewhere along the line obviously there is some
discrepancy between the truth that we have heard both from that
table and as a result of the investigation of our staff.
Senator H E I N Z . Mr. Chairman, if I might just interrupt to ask
the Senator
The C H A I R M A N . Senator Riegle has the floor. Will Senator Riegle
yield?
Senator R I E G L E . I will not yield my time.
Senator H E I N Z . My name was mentioned by Senator Proxmire in
connection with the investigation. I just want to point out that you
have indicated that you are satisfied that Mr. Miller, under any and
all circumstances, has told the committee the truth, and that there's
no reason, therefore, for the committee to challenge him, unless I
misunderstand you.
Senator R I E G L E . N O , I don't think that is correct and let me put
it the way I think I put it.
Senator H E I N Z . Y O U don't think Mr. Miller has told us the truth?
Senator R I E G L E . I think in light of all the investigative work that's
gone on that we have not found any information that I'm aware of
or anybody has yet presented or is offering to present now in response to the invitation to present it to show that Mr. Miller's
responses to this committee—and they were very pointed questions—
were not truthful.
Senator H E I N Z . Let me just ask you this one question then. From
what you have heard this morning, have you noticed any discrepancy
in the testimony of the three witnesses we have had?
Senator R I E G L E . It would be hard to say there's not some discrepancy in the testimony of the witnesses who are here today, but
that to me is a profoundly different question than the question that
I think we really ought to be homing in on. That's the question of
32
whether or not Mr. Miller is worthy and suitable as a Chairman of
the Federal Reserve Board. That's the issue.
Senator H E I N Z . It seems to me, if one has noticed a discrepancy
in the testimony today, that no one can characterize what the committee is doing as a fishing expedition.
Senator RIEGLE. Don't characterize it that way.
Senator H E I N Z . I didn't say you did. If we don't notice any discrepancy in what the witnesses have told us, then presumably our
time is better spent elsewhere.
Senator R I E G L E . I think the central question is the relevance of
this to Mr. Miller. I would hope you would agree with that point.
I mean, if in effect this discussion doesn't have some direct relevance to Mr. Miller and the truthfulness of his responses to the
committee, then I would argue that this——
Senator H E I N Z . We each have to make up our mind as to how
relevant this is.
The C H A I R M A N . Gentlemen, we have engaged now for about 15
minutes in a very interesting colloquy but I think we should try to
reserve that for after we have heard the witnesses and we decide
what we are going to do about Mr. Miller's nomination.
Senator R I E G L E . I can be very brief. There are two questions that
I'd like to pose to the Textron people here, the people who were
with Textron.
Do either one of you, as nearly as you can remember, ever recall
getting any indication from Mr. Miller either at the time when he
was chief operating officer of the company or when he would be at
a lower level than that—any indication from him as to his feelings
about bribes or push money or any of these kinds of sort of underthe-table arrangements with people in foreign countries? Did he
ever express himself in writing or verbally to either one of you that
would give you some clear sense for how he felt about that kind of
activity and what his predisposition toward it would be ?
Mr. D U C A Y E T . I ' M sure that Mr. Miller at various times and at
many times probably has made it quite clear that he will not
tolerate and Textron will not tolerate any under-the-table dealings,
any shady dealings, any coverup work. We were expected to be the
high quality company that they procured. We had good policies at
the time.
Senator R I E G L E . Let me just stop you there. I don't think it's
enough that you say that you think he said that. In other words, do
you know for a fact he said that? Can you recall either a combination of times and ways that he would have said that or is this now
a presumption on your part?
Mr. D U C A Y E T . No, I cannot recall specifically when it was said,
but I'm quite sure that at more than one time Mr. Miller has made
it quite clear that the policies of Textron would not tolerate such
actions.
Senator R I E G L E . Well, do you think to the extent that you got that
tone from him—did you think you got the tone when he was saying
it one way that he was sort of winking at the same time to let you
know that, well, that was sort of the spoken code that, you know,
33
over and beyond that, if it took a little bit of sort of wheeling and
dealing to get a contract that was OK ?
Mr. D U C A Y E T . N O . That is exactly the reverse of that.
Senator R I E G L E . What was his reputation within the company?
Was it as a hardnosed, straight-line sort of straight-arrow type, or
was it that he was a flexible sort of a guy where just about anything
that had to go would go?
Mr. D U C A Y E T . N O . Mr. Miller was straight-nosed, if you want to
call it that. He would never tolerate deviations or any dealings that
were other than the policy of the company.
Senator R I E G L E . D O you know of any situations where he personally or through his involvement turned down a sales opportunity
someplace where there was some kind of an under-handed component to it? Do you know of any?
Mr. D U C A Y E T . I know of no such question ever having been brought
to him or his having turned it down.
Senator R I E G L E . Mr. Jose, do you have anything to add to either
of those two questions ?
Mr. JOSE. Senator, I didn't deal directly with Mr. Miller so I
wouldn't have been in a position to hear it, but from knowing Mr.
Ducayet and Mr. Atkins, there was no question in my mind about
the way that we were expected to conduct ourselves and the kind
of business arrangements that our company would retain.
Senator R I E G L E . What was Mr. Miller's reputation within the company from your vantage point ?
Mr. JOSE. Mr. Miller was not the sort of man who would wink and
say something.
Senator R I E G L E . In other words, his reputation was one of being
direct and to the point ?
Mr. JOSE. Direct and to the point and no funny business.
Senator R I E G L E . I certainly have taken enough time now and I
look forward to another chance later.
The C H A I R M A N . Senator Schmitt.
Senator S C H M I T T . Thank you, Mr. Chairman.
Memory is always a problem, particularly memory of events 12
years ago. Good management procedures are also a problem, but
very often can solve the problems of bad memory and certainly
prevent the kind of difficulty we seem to be running into today.
Now my impression, gentlemen, from what I have heard today
is that Bell, at least at the level that you were dealing, not only had
bad memories but bad management procedures, and I would be
curious for other reasons to know why. But I think the essential
elements here are whether or not Textron and Mr. Miller in particular, representing higher management, knew of these difficulties.
I don't think we have even come close to determining that.
If the bad management procedures and the bad memory were
not an advertent protecting method, should Mr. Miller have known
what was happening within the Bell division ? Mr. Ducayet, do you
think there was any way that Mr. Miller could have known that
these discussions relative to Bell's agent in Iran were taking place
within your division?
34
Mr. D U C A Y E T . I S the Senator assuming that there was such a meeting and I was informed of this matter? I very much doubt that I
would have told Mr. Miller what was an operating problem within
a division and we did not try to take operating problems to Mr.
Miller.
Senator S C H M I T T . Well, now later, gentlemen, we will get into
whether or not Mr. Miller pursued with appropriate vigor his own
investigation of Air Taxi once it became an agent and once he heard
of the sale, and the general counsel will be before us later this morning to discuss that.
Now most of the discussion—correct me if I'm wrong, Mr. Bell—
the discussion you had, in fact all of it, with Mr. Jose and Mr.
Ducayet, had to do not with Air Taxi, but with International Helicopter Consultants, Mr. French's company?
Mr. B E L L . That's basically correct. The Air Taxi matter was only
background. It really had to do with how International Helicopter
Consultants proposed to attempt to operate through a Persian corporation formed by General Khatami's lawyer.
Senator S C H M I T T . But Air Taxi existed as a company within Iran
at this time—correct—and at one time
Mr. B E L L . That's correct.
Senator S C H M I T T . It had been the agent for Bell Helicopter in
Iran?
Mr. B E L L . I'm told that it had been.
Senator S C H M I T T . And that was terminated I believe in 1964, and
I believe we have yet to find out a reason for that termination, which
is still of some interest, maybe just idle interest, but interest to this
Senator. OK.
Now the decision to drop International Helicopter Consultants
was made in late 1967. That's correct, is it not, Mr. Jose?
Mr. JOSE. The decision was made early in 1967. The action didn't
take place until
Senator S C H M I T T . The action took place in 1967, for reasons that
you gave earlier?
Mr. JOSE. That is right.
Senator S C H M I T T . Y O U began, then, an effort to find a new sales
agent, and Air Taxi was hired as Bell's agent in 1969; is that correct?
Mr. JOSE. 1 9 6 8 , Senator.
Senator S C H M I T T . 1 9 6 8 . Now was there any feeling on your part,
Mr. Jose, that you recall, that Air Taxi might have somehow gotten
involved in this proposal, as you referred to it, that you had previously rejected, that was brought to you by Mr. French's attorney?
Mr. JOSE. Yes, it was a question that I asked to be investigated,
because T certainly—I would like to give a piece of background on
this, if I may.
Senator S C H M I T T . Please do.
Mr. JOSE. Iran was of strategic important to the United States,
as were a number of other countries on the periphery of Eussia, and
a number of other countries in various parts of the world.
Most of the guidance and counsel they were getting on their strucwas made. We would have to make cases to, in our case, the U.S.
35
embassies, or in the military advisory and assistance groups. Iran
was such a country. Most of the inputs which were being made to
the Government of Iran were being generated within the MAAG
headquarters, or Army MAAG. There were actually four MAAGS,
four MAAG sections in Iran.
It was our feeling at the time of this discussion, the time we are
discussing at the moment, that any sales that went to Iran and that
had to do with a military involvement, would be as a result of recommendations by the U.S. Government.
Very likely they would be made on a direct government-to-government basis, and very questionably would involve the allowance of
any commissions, because the U.S. Army's procedures involving the
inclusion of allowable costs to the contractors on sales abroad was a
very much of a question which was debated, generally after the sale
was made. We would have to make cases to, in our case, the U.S.
Army to justify that the actions of our sales people had contributed.
Now this would have been involved in numerous cases, small cases,
because we weren't involved in large cases at that time, that had to
do with foreign military sales in various countries of the world.
The ones I was particularly involved in were those in Thailand
and Australia and New Zealand and Japan, and that part of the
world, because generally speaking I was taking care of things in the
Far East, because I had begun that when I first came to Bell in
1960. Mr. Orpen didn't come in until several years later, and we
decided between us that those things I had been handling, I would
continue to handle, and he would take Europe, Africa, and the
Middle East.
But the point is there was no requirement for us to have any sort
of an influence center in order to make sales in Iran, because it was
very definitely going to be a matter that would be between the two
governments.
And our position, and as it eventually transpired in 1967, and
1968, is we very much were given a back seat by the U.S. Government Foreign Military Sales Group, at that time headed by Mr.
Cuss and Mr. Fickle [phoenetic] and Mr. Dave Olney, who were,
generally speaking, conducting all of the government-to-government
negotiations in this case with Iran.
It never came out, really, in the discussions with the staff as to
what the overall perspective was at that time.
Senator S C H M I T T . I think it is very fine that you established that,
and in order that I can pursue now, bringing Air Taxi into this
discussion, which I think the committee generally has correlated
Air Taxi with the International Helicopter Consultants discussion
that you all had with Mr. Bell.
Now Air Taxi is a new entry on the scene as of 1968, or a re-entry,
but I don't believe 1964 is significant in this case.
Now what did you do to try to determine what kind of ownership
existed for Air Taxi?
Mr. JOSE. Well, I had been aware of these discussions or these
allegations from Mr. Bell, both by—well, by his meeting and some
earlier or later discussions with Mr. French and I can't put a time
on it.
36
Senator S C H M I T T . Y O U in your own mind had correlated those
discussions with the Air Taxi question?
Mr. JOSE. First of all, I correlated the question with just the
question of representation. There was a serious question before Mr.
Bell came in, as early as March of 1966, even before Mr. French
was not allowed back in the country in May of 1966.
Now I didn't recall these dates as of the time of the discussions
with the staff, so this is some new information that I have since
gone back and researched and some of the proceedings that you have
conducted have given me information that wasn't really readily
available to me.
But we had had serious question about retaining Mr. French,
even at the time Mr. Feliton, who was regional sales manager, and
he has been referred to and has been interrogated, went in March
of 1966—that was his first visit to go to Iran. He was the new regional manager in the area. And we had briefed him that we had
serious question about the suitableness of Mr. French to handle our
Iranian business. And in his trip report he states "This being my
first trip, I did not raise with Mr. French the question that we have
about his suitability to act as our dealer."
Later, in May of 1966, we were informed, or at sometime shortly
thereafter, we were informed that Mr. French was not allowed,
there was some difficulty.
Now the details of it we didn't have until Mr. Bell came to talk
to us. And, again, the timing of this, I was not sure of it at the
time I talked before, but I have had a chance to read some of the
testimony or some of the notes, and so as far as the dates and so
on, I have no trouble with the dates
Senator S C H M I T T . What I am trying to do is establish, if the
Chairman will allow me, I have been trying to establish if there is
a link between the knowledge you had about Mr. French and about
the proposal, and Air Taxi.
Air Taxi is the issue with which Mr. Miller later was confronted.
M r . JOSE. Y e s .
Senator S C H M I T T .
There was a link? so you, in your capacity, did
look into Air Taxi and attempted to determine that there was no
problem of ownership in your mind with Air Taxi?
Mr. JOSE. Yes. that was the instructions that I gave to the people
who were sent to do it.
Now we had had our discussions with Mr. Bell in November, there
was a letter which set a temporary extension, because they were
finishing up the delivery of several small aircraft, $40,000 to $50,000,
that were going out into areas that he was concerned with, so we
had some cleanup to do.
We also wanted to proceed in a rather deliberate fashion, to make
a change. And this was going to involve an on-site investigation.
Now Iran at that time was probably No. 20 on a list of high
priority things we were doing, so we did not get to it immediately.
But there was no question in my mind about what we were going
to try to do.
We had hoped to go over there in the spring and send a team.
It actually did not get there until that fall. I did not participate in
37
that, and I don't really recall giving the briefing instructions or
even getting the debriefing. All I recall is my feelings about the
situation. We wanted to make sure, it would have been an operating
guideline all of the way from Mr. Ducayet, Mr. Atkins, just the way
we did business, that we would not entertain any kind of a dealer
arrangement that involved a conflict of interest.
So a team went there, and it consisted of Mr. Orpen, who was the
International Manager, Mr. Kling, who probably 4 or 5 months
before had been assigned that region, and Mr. Dick Pierrot. Mr.
Dick Pierrot was a consultant to us, had been since the mid-1950's.
Mr. Pierrot was a man in his 60's, he had been involved in, been an
officer in the State Department, and had been in charge of certain
embassies, as first officer, and so on, and had been involved in aircraft
sales since the 1940's, or even before, in the 1930's. So he was the
one that we generally used to check out the question.
But certainly there should have been no—I don't know whether
there was a question in their minds as to what their marching orders
were. Certainly there was no question in my mind that they were
to look for a dealer in the area, that would be able to, would be
acceptable to talk to people in the embassy.
Now we were having problems, because of the way the military
sales were being conducted at that time, with our dealers being able
to go into an embassy and talk about certain planning things.
Senator S C H M I T T . But Mr. Jose, the question is when that investigation by your team was over, there was no doubt raised in your
mind about the propriety of ownership of Air Taxi?
Mr. JOSE. There was no doubt—there was no doubt in my mind
that there was no conflict of interest.
Senator S C H M I T T . S O whatever conflict may have existed was
either shielded from the team or occurred later, or the team did not
report to you about it?
Mr. JOSE. It had to be one of those three, because in my mind, I
was satisfied.
Senator S C H M I T T . Mr. Chairman, I will come back to this. I am
sorry, but I think it is important to establish when Air Taxi entered
the picture and whether upper management had any reason in their
mind, right or wrong, to transmit this information up the line.
If we can show that they did not, then I think until we get the
question of Mr. Miller's own investigation, at least this part of it
can be put aside.
The C H A I R M A N . Senator Stevenson passed the first time. Ordinarily—do you want us to go ahead?
Senator STEVENSON. Yes.
The C H A I R M A N . I want to followup in a little different way on
the line of questioning Senator Schmitt was involved in, first with
Mr. Bell.
Mr. Bell, after you met on this crucial November 2, 1966 date,
with Bell officials, including, you said, Mr. Ducayet, Mr. Jose and
others, what was your reading of Mr. Ducayet's and Mr. Jose's reaction at that meeting?
Did they indicate any outrage or any distaste for what you had
proposed ?
38
Mr. B E L L . N O ; they did not indicate any. If they felt any, they
were very clever in concealing it.
The C H A I R M A N . Weren't you proposing in effect an arrangement
by which General Khatami, who was head of the Iranian Air Force,
would have received part of the payment?
M r . BELL. Y e s , I w a s .
The C H A I R M A N . Wouldn't
that have been a payoff to Government
officials ?
Mr. B E L L . It would have been.
The C H A I R M A N . Didn't you continue to correspond with Bell Helicopter for another year on that STP arrangement?
Mr. B E L L . Yes, I did. In fact, just a couple of minutes ago was
the very first time I was aware that it was all a futile act, and the
decision had already been taken long prior.
I was under the impression it was a decision being held in abeyance during that time, during which time Mr. French and I, on his
behalf, continued to expend sums of money, time and effort to try
and further their interests in the country, and to continue to establish his own operating position.
The C H A I R M A N . And no Bell Helicopter official ever told you that
he would have nothing to do with STP ?
Mr. B E L L . They certainly didn't. As a matter of fact, Mr. Feliton
was quite concerned in being certain that General Khatami approved
of it.
The C H A I R M A N . Furthermore, you testified that no one at Bell
indicated to you it was contrary to Bell's policy to do business with
Government officials? In fact, you testified they indicated the opposite, and I quote: "They were concerned to be certain they were
going to be doing business with General Khatami." Is that correct?
Mr. B E L L . That is correct.
The C H A I R M A N . That is your testimony.
Now, Mr. Jose, since Mr. Bell proposed at his meeting with you,
and I quote your earlier testimony, a scheme that involved, and
those were your words, payoffs to officials within the Government,
why didn't you reject that proposal immediately upon hearing it?
Why didn't you just say this is outrageous, we don't do that, that
is not the way we do business?
Why wasn't that your reaction?
Mr. JOSE. Well, it was my reaction, but I didn't communicate it
to him.
The C H A I R M A N . Why didn't you? wouldn't that have been the
natural thing to do?
Mr. JOSE. I was hearing some allegations that we needed to check
out.
The C H A I R M A N . That you needed to check?
Mr. JOSE. We needed to check, yes.
The C H A I R M A N . What does that mean?
Mr. JOSE. We needed to check to see, you know, background, the
substance. What he was talking about were things that made no
sense to me. I didn't know any, as I stated, I didn't know the people,
39
I didn't know what the dickens he was talking about. It was very
confusing to me.
The CHAIRMAN. Well, it would seem to me that under these circumstances it was clear that General Khatami was a man of influence in Iran, I think throughout the testimony here there is an
indication there is some difference of opinion as to how much influence he had, but there is indication that he could have been very
helpful in the sale by Bell to Iran.
So why wouldn't it be logical for you to consider that, except that,
you say, it was a clear policy on the part of the company not to make
any payments, and you were outraged and it was preposterous and
you have testified this morning that you were opposed to it because
you just don't do that kind of business?
Mr. JOSE. That is correct.
The CHAIRMAN. Why didn't you say so ?
[No response.]
Now on January 14, 1967, two months after this meeting, Mr.
French, who employed Mr. Bell, wrote to James Feliton, the Bell
Helicopter Export Area Manager, and a copy went to you. And he
said
Mr. JOSE. The date again, Senator?
The CHAIRMAN. January 1 4 , 1 9 6 7 . He said:
John Bolton just left Beirut last night after coming in to tell me we have
finally gotten the new company completed and registered, and with the new
set-up, it should open many doors. The fact that we have General Khatami
as partner silently, along with Dr. Safavi, the head of the legal department
of civil aviation, and others, we own 49 percent of the new company and
51 percent Iranian.
Then, instead of cutting him off, after that letter, you wrote to
him on 30 January 1967, or your Export Area Manager wrote to
him, and the last paragraph says:
W e hope your new association will permit you to resume residence and
business in Tehran, and want you to keep us advised.
How do you explain that?
Mr. JOSE. Well, isn't there another letter, too, Senator, from Mr.
Orpen to them, granting only a temporary extension, and also stating that we were not interested in their proposal on STP?
There were three letters that went about that time, Senator.
The CHAIRMAN. I think there was a letter indicating that there
was some concern, but nevertheless you had this letter and this letter
is an expression by an official of Bell Helicopter indicating an interest and certainly not indicating it was against your policy ?
Mr. J O S E . L I the case of the Feliton letter, he had already been
notified of his termination and he was in his last month.
The CHAIRMAN. Mr. Jose, what I can't understand is why, with
all of this voluminous documentation we have, and we do have a
great number of documents, as you know, why isn't there any letter,
any note, any document at all in the material provided by Textron
to the committee that indicates that Bell Helicopter would not have
anything to do with the STP arrangement?
40
Mr. JOSE. Generally speaking, Mr. Orpen's office and mine were
right next door, and we didn't need to.
The CHAIRMAN. That temporary letter you referred to, of 1 7 January from Mr. Orpen, the one that you brought up, it says:
It is our feeling that the arrangements for handling sales through Persian
Co., STP, are not satisfactory to Bell as long as Bill French is unable to
personally followthrough with Iranian contacts. However, a temporary authorization is herewith given for continuing Bell's business in Iran, as you
have outlined in your letter of 5 January 1967, until such time as we have
had an opportunity to personally assess the situation by a visit to Iran.
M r . JOSE. W e d i d
The CHAIRMAN. In other words, you weren't complaining about
Khatami, you were complaining about the fact that Mr. French was
out of the country and couldn't be there. I understand. That is
sensible. But you have not got any documentation at all, none, to
establish any policy on the part of Textron-Bell against making
foreign payments. I don't see a document, I don't see any indication
of that at all.
Mr. JOSE. We didn't feel we had to document that.
The CHAIRMAN. And there is evidence that you were interested in
the STP arrangement, you continued to inquire about it. I mean
by you, the company officials did.
Mr. JOSE. Well, I told the staff, and it is in my testimony, that I
thought that the phraseology that Mr. Orpen used was not very clear,
because it was really two thoughts.
The CHAIRMAN. Let me ask you this: You took a long time, it
was more than a year after that, that you finally dropped Mr.
French as your agent in Iran. It was in December 1967. And yet
you continued with him in Kuwait for another year.
If it was your policy not to do business with an agent who engaged
in a situation where there were foreign pay-offs, why did you continue to do business for 2 years with Mr. French?
Mr. JOSE. Well, I am not sure that that was ever consummated,
for him to be in Kuwait. Because early in 1969 some of our people
met with him, met with Mr. French in Beirut, and said that he had
no operating authority anywhere.
The CHAIRMAN. On 1 1 December, 1 9 6 7 , in a letter to Mr. French,
from Mr. Orpen, Mr. Orpen says:
This letter will outline generally the findings of Dick Pierrot, George Kliug
and myself on a recent trip to Iran during the week of 20 December, 1967.
He says later on in the letter:
Our recent visit to Tehran and discussions with Dr. Safavi, John Bolton,
Lt. General Khatami, and Major General Jablonsky, produced no indication
that your position has improved, either through intervention of the U.S.
Government, or other efforts of our own organization.
In other words, you still were concerned about Mr. French not
being there. You weren't concerned with Mr. Khatami, in fact, you
talked to General Khatami about it; you weren't concerned about
any pay-off there with respect to the General. Isn't that right?
Mr. JOSE. Well, Senator, we didn't believe the allegation at the
time and I still don't.
41
The CHAIRMAN. Your Export Manager said this, Mr. Orpen, in a
telephone conversation with the staff: Mr. Orpen, in a telephone
conversation with the staff, who left Bell Helicopter in 1969, said
in a telephone interview with the committee staff he had heard from
Mr. French earlier in 1967 that General Khatami had an ownership
interest in Air Taxi. He also said he knew before his trip to Iran
there was an ownership interest in Air Taxi going up to the Shah's
family. I describing what Bell wanted in a new Iranian representative, Mr. Orpen said:
We looked for someone who had dealings with the royal family, looking
for potential contacts, since the sale of our helicopters are highly dependent
on high level contacts.
He said that shortly after they returned, Air Taxi was hired by
Bell as its agent. When asked about General Khatami's role, Mr,
Orpen said:
Khatami would be important to sales of helicopters to the Army, because
he had a finger in all aviation except for the navy. We got that story from
General Toufanian.
So, I get the picture the reason Bell hired Air Taxi is because they
had General Khatami, and you had a report from Mr. Orpen, your
sales person, who would know that that was the case.
Mr. JOSE. This was a telephone call to Mr. Orpen from the Staff ?
These are not direct quotations, they are paraphrasing?
The CHAIRMAN. They are direct quotations, yes, sir. Now let me
ask you this—my time is up. I beg your pardon.
Senator SCHMITT. Excuse me, Mr. Chairman. Direct quotations of
what?
The CHAIRMAN. A direct quotation of Mr. Orpen, who was interviewed 2 days ago by Mr. Freed of our staff.
Senator SCHMITT. But not direct quotations of the phone conversations? It is direct from his testimony, is that right?
The CHAIRMAN. Well, they are Mr. Orpen's recollection.
Senator SCHMITT. Thank you.
Senator RIEGLE. Mr. Chairman, if you are not finished with that
line of questioning
The CHAIRMAN. Senator Brooke has the floor next in order now.
My time is up.
Senator RIEGLE. I was just going to suggest if you were about to
complete that line of questioning, that you ought to do so and maybe
others would wait. I Imow I would.
The CHAIRMAN. N O , I think it is best to keep a discipline on time,
we are over-running a little bit. In fairness to the Senators, I would
prefer to do that. Senator Brooke.
Senator BROOKE. Mr. Ducayet, when did you first hear the name
of General Khatami?
Mr. DUCAYET. General Khatami? I cannot remember exactly when
I first heard it. I would be very surprised if I hadn't heard it sometime during the last 5 or last 4 or 5 years I was there. General
Khatami was the chief of the air force. As such, he was a person
who could potentially be a customer, because he might be buying
42
helicopters. We obviously were trying to sell to the air force, the
Army or anyone. Although the Army was the best potential customer.
Senator B R O O K E . Y O U are still a member of the board of directors;
are you not?
Mr. D U C A Y E T . I am now, yes. I was not then.
Senator B R O O K E . Y O U mean the last 5 years you were there as
president; is that correct?
Mr. D U C A Y E T . Yes. I am sorry.
Senator B R O O K E . When you first heard of General Khatami, you
heard of him just as the chief of the air force, is that correct?
Mr. D U C A Y E T . That is all that I remember.
Senator B R O O K E . When did you first hear that General Khatami
was an owner of Air Taxi?
Mr. D U C A Y E T . I had never heard that in those days. If I heard it,
it was sometime since the last 2 or 3 weeks.
Senator B R O O K E . I beg your pardon?
Mr. D U C A Y E T . If I heard it, it was sometime in the very recent
time.
Senator B R O O K E . Y O U said if you heard it. Don't you know whether
you heard it?
Mr. D U C A Y E T . Yes; recently, when all of the investigations have
been going on.
Senator B R O O K E . Only since Mr. Miller has been the nominee for
the Federal Reserve?
M r . DUCAYET.
Yes.
Senator B R O O K E . That is the first time you heard of General
Khatami's position as the owner of Air Taxi? Is that correct?
Mr. D U C A Y E T . That is correct.
Senator B R O O K E . Did Air Taxi ever come before the board of directors as a subject of discussion?
Mr. D U C A Y E T . As a question of discussion, I would say no.
Senator B R O O K E . Did you ever hear of Air Taxi at any board
meeting of the board of directors at Textron ?
Mr. D U C A Y E T . I believe the question was brought up, yes.
Senator B R O O K E . It was brought up. When was it brought up, and
in what context?
Mr. D U C A Y E T . I believe it was brought up in the context of a
settlement that needed to be made with an agent in the country.
Senator B R O O K E . When was that brought up ?
Mr. D U C A Y E T . I can't tell you exactly. I know it was brought up
in 1975, maybe.
Senator B R O O K E . In 1 9 7 5 ?
Mr. D U C A Y E T . Maybe.
Senator B R O O K E . Was G. William Miller president of the board
of directors meeting at that time?
Mr. D U C A Y E T . I would believe so, yes. Sir, may I add something?
I was not a director for a period of time in 1973. So there is a
period of time in which I do not know whether any question was
brought up.
Senator B R O O K E . T O the best of your recollection, it was brought
up for the first time in 1975?
43
Mr. D U C A Y E T . That is correct.
Senator B R O O K E . At that meeting, G. William Miller was president, was he not?
M r . DUCAYET.
Yes.
Senator B R O O K E . At that time was he not only the president of
Textron, but also the group vice president of Aerospace?
Mr. D U C A Y E T . I believe there was a group vice president other
than that.
Senator B R O O K E . Had he previously been a group vice president
of Aerospace?
Mr. D U C A Y E T . He was for a period.
Senator B R O O K E . D O you know how long and when ?
Mr. D U C A Y E T . Oh; about the last 4 or 5 years I was there.
Senator B R O O K E . That would be what years?
Mr. D U C A Y E T . That would be 1 9 6 7 or 1 9 6 8 , to the end of 1972.
Senator B R O O K E . N O W Mr. Atkins was the executive vice president,
was he not?
Mr. D U C A Y E T . Correct, sir.
Senator B R O O K E . And in turn, Mr. Atkins reported to you?
M r . DUCAYET. Y e s ,
sir.
Senator B R O O K E . As the president?
Mr. D U C A Y E T . Correct.
Senator B R O O K E . And in turn you reported to G. William Miller
as the group vice president ?
Mr. D U C A Y E T . That is correct.
And also the president of Textron. That is the chain of command,
is that right?
Mr. D U C A Y E T . That is correct, at that time.
Senator B R O O K E . Did Mr. Atkins at any time discuss Air Taxi
with you while you were president of the company?
Mr. D U C A Y E T . Not to my knowledge, I don't remember any such—
well, I am sorry. I will change that. He must have discussed it with
me, because during the last year that I was there, they were modifying the Air Taxi agreement.
Senator B R O O K E . That would have been what year?
Mr. D U C A Y E T . S O I must have known about it.
Senator B R O O K E . What year was that?
Mr.
DUCAYET.
1972.
Senator B R O O K E . Did you at any time know who the owners of
Air Taxi were?
M r . DUCAYET.
NO.
Senator B R O O K E . Mr. Atkins never told you that?
Mr. D U C A Y E T . Not specifically, I don't think.
Senator B R O O K E . Did you know who your agent was in Iran?
Mr. D U C A Y E T . At that time, Air Taxi, yes.
Senator B R O O K E . Did you know when Mr. French was your agent
in Iran?
Mr. D U C A Y E T . I was not aware—I was aware that at sometime
we had an agent in Iran who was not allowed into the country. I
could not have told you the name of the man, nor could I have told
you the name of his company.
44
Senator B R O O K E . Was it of concern to you that you had an agent
who was not allowed into the country, the country with which you
wanted to do substantial business?
M r . DUCAYET.
Senator
Yes.
BROOKE.
M r . DUCAYET.
Did you make this fact known to Mr. Miller.
NO.
Senator B R O O K E . Why?
Mr. D U C A Y E T . Not in the normal course of doing business, we
would not have taken such matters to Mr. Miller.
Senator B R O O K E . What did you do, if anything, personally to
replace Mr. French as your agent?
Mr. D U C A Y E T . I don't think I did anything. I probably, if I did
anything, I merely referred it to the marketing department, or to
Mr. Atkins, maybe.
Senator B R O O K E , S O at no time while you were president did you
ever receive any information from Mr. Atkins or anyone else to the
effect that General Khatami was an owner of Air Taxi?
Mr. D U C A Y E T . That is correct, sir.
Senator B R O O K E . Y O U say it is correct, or that you have no recollection of it ?
Mr. D U C A Y E T . N O ; I would say that it is correct, because I did
not know it. I believe if it had been true, somebody would have
told me.
Senator B R O O K E . Well, you have heard Mr. Bell testify here today
that he told you ?
Mr. D U C A Y E T . Well, then I have no recollection.
Senator S C H M I T T . Would the Senator yield?
Senator B R O O K E . Yes.
Senator S C H M I T T . Was that a question of whether Air Taxi was
owned bv Khatami, or whether the STP proposal would have included Khatami?
Senator B R O O K E . Did you know that ?
Senator S C H M I T T . I don't think Air Taxi was discussed in the interchange between Mr. Bell and Mr. Ducayet.
Senator B R O O K E . Did you know of STP?
Mr. D U C A Y E T . I had no idea.
Senator B R O O K E . Y O U didn't know General Khatami was in any
way involved?
M r . DUCAYET. NO.
Senator B R O O K E . And you don't recall any statement from Mr.
Bell to that effect at all?
Mr. D U C A Y E T . I don't recall any of it at all.
Senator B R O O K E . Y O U stated it was a policy of Mr. Miller to have
no shadowy deals whatsoever, I think he said he was a straightnosed man. I have never heard that before, "a straight-nosed man."
Mr. D U C A Y E T . Right.
Senator B R O O K E . Were there any written communications or any
directives or any office memoranda to the effect that Bell Helicopter
or Textron would not do business with any agent whereby foreign
officials would be receiving a pay-off?
Mr. D U C A Y E T . In those days, I know of no such written instructions.
45
Senator B R O O K E . But you said that that was the policy of the
company. Is that correct?
M r . DUCAYET.
Yes.
M r . DUCAYET.
NO.
Senator B R O O K E . Why didn't Textron, like some other major corporations in the country, cooperate with the SEC in their voluntary
disclosure program? Was that ever discussed by the board of directors ?
Mr. D U C A Y E T . Oh, yes; it was brought up.
Senator B R O O K E . Why was it rejected?
Mr. D U C A Y E T . Because Textron did not consider that it had done
anything wrong.
Senator B R O O K E . I don't believe that that was the criteria for participation in the voluntary disclosure program, namely, that a company had done anything wrong or was in violation of the law. It
was a voluntary disclosure to ascertain whether companies were
involved in such practices.
Do you recall the discussion in the board of directors at all ?
Senator B R O O K E . Was Mr. Miller present at the time that this
discussion took place?
Mr. D U C A Y E T . I would have assumed that he was. He was in all
of the board meetings.
Senator B R O O K E . D O you recall whether Mr. Miller took any position as to whether there should be participation by Textron in the
SEC voluntary disclosure program?
Mr. D U C A Y E T . The subject was discussed, yes.
Senator B R O O K E . Did he take a position?
Mr. D U C A Y E T . Yes; he took a position.
Senator B R O O K E . What was his position?
Mr. D U C A Y E T . His position was that we did not need to cooperate
with the SEC.
Senator B R O O K E . Did he state why he thought that your position
was not to participate with the SEC ?
Mr. D U C A Y E T . Maybe I am using the wrong words, but to us, we
had made no payments to anyone that were illegal or immoral, or
unethical, there was no reason for us to make any disclosure, as I
remember it.
Senator B R O O K E . A S a matter of fact, in 1 9 7 5 , when you had this
discussion, had you not made payments to foreign officials, which
in hindsight are certainly very questionable, is that not true ?
Mr. D U C A Y E T . Y O U are talking about Air Taxi?
Senator B R O O K E . If in fact General Khatami, as it appears now,
and this hasn't been refuted, was an owner of Air Taxi and he did
receive money as a result of Bell's contract with Air Taxi, does it
not appear, looking back in retrospect, that you were in error ?
Mr. D U C A Y E T . NO. We had no knowledge that Air Taxi had a
part, that General Khatami had a part of Air Taxi.
Senator B R O O K E . Y O U still don't have that knowledge ?
Mr. D U C A Y E T . We didn't at that time, sir.
Senator B R O O K E . But you do now, do you not ?
Mr. D U C A Y E T . N O ; I haven't had it proved to me.
25-067—78
4
46
Senator B R O O K E . Have you looked at the Defense Department or
CIA records, any of those records at all?
Mr. D U C A Y E T . I haven't, personally.
Senator B R O O K E . The State Department, I beg your pardon.
Mr. D U C A Y E T . N O ; I haven't looked at them personally.
Senator B R O O K E . D O you accept now that General Khatami was
actually the owners of Air Taxi?
Mr. D U C A Y E T . I am not sure.
Senator B R O O K E . Y O U still don't accept it?
Mr. D U C A Y E T . I am not a lawyer, I am not investigating the statements of this Nation.
Senator B R O O K E . Y O U don't have to be a lawyer to understand who
is or who is not an owner of a given concern, do you?
I am trying to ascertain what you understand now about what
happened in 1975, when Mr. Miller stated to Textron's Board of
Directors that Textron should not participate in the SEC voluntary
disclosure program, and gave as his reasons, as you have stated, that
Textron had done nothing wrong; nothing illegal, nothing which
would embarrass the corporation. So I am asking you now, looking
back to Bell Helicopter's agreement with Air Taxi and Textron's
view of that agreement, do you understand that Textron actually
had engaged in an agreement in which a foreign government official had received a payment?
Mr. D U C A Y E T . In 1 9 7 5 , when we are talking about, we had a record
of ownership or a statement of ownership of Air Taxi. This does
not include General Khatami. And it still doesn't, and therefore I
still am not convinced that he owns it, or had any part of it.
Senator B R O O K E . My time is up again, Mr. Chairman. I would like
to just hold that, and I intend to come back to that later on.
Thank you.
The C H A I R M A N . Senator Stevenson.
Senator S T E V E N S O N . Mr. Chairman, my staff has prepared a sheaf
of questions for these witnesses and those to follow, which I don't
intend to ask. All of the questioning in this hearing has so far
brought out nothing that has not been brought out in earlier hearings, or by the questions of the staff in the course of its investigation, That is unless something has escaped my attention.
And I suspect that my questions wouldn't bring out anything new
either. The question which must be answered, as Senator Riegle
indicated, is the question about the ability and the integrity of Mr.
Miller.
So, I have one question. Mr. Bell, do you have any evidence, hearsay or otherwise, that would raise in the mind of a reasonable man
any doubt about the integrity or the ability of Mr. Miller?
Mr. B E L L . Senator, I don't have anything which would go beyond
my own feelings as a citizen in the matter, which would involve
indirect inferences, which it is this committee's duty to draw from
anything that has been said.
Senator S T E V E N S O N . I asked for evidence, including hearsay. It
doesn't have to be admissible in court. This is not a court.
Is there any evidence, beyond the fragments of circumstances that
have come out so far, that would raise that question in the mind of
47
a reasonable man, in your opinion, as an attorney, and as a party
to these facts.
Mr. B E L L . Well, Senator, first, I demur at being a party, because
I am not properly. I am a voluntary witness before the committee.
Second, as to evidence of hearsay nature or whatever, I had no
contact whatsoever with Mr. Miller, nor did anybody else tell me
that they did.
I have stated that it is my opinion that the fact of General
Khatami's silent ownership and control of Air Taxi throughout all
of the period of time we are talking about, as far as I know, even
up until the time of his death, was so widely known that anybody
who wanted to know it could and would know it.
Senator S C H M I T T . Would the Senator yield? Except you did not
pass that information on to the Bell officials?
Mr. B E L L . Y O U are incorrect, Senator. I think you misunderstood
my testimony. I did pass it on to them.
Senator S C H M I T T . In the discussion you referred to ?
Mr. B E L L . In the discussion of November 2. I subsequently passed
it on in a great many other documents. I might say, Senator, that
isn't the question
Senator S C H M I T T . Air Taxi we are talking about, the ownership
of Air Taxi.
Mr. B E L L . Yes; we are talking about that. I am saying that is
covered in a great many of these documents. Since the question of
my credibility vis a vis the other witnesses today has obviously
arisen, and quite properly so, it is a posture I am not too accustomed to, either, as an attorney, I am used to being considered an
officer of the court, and my statements are considered to be under
oath, whether I have taken the oath or not.
I have always dealt in that fashion. These records you have before you were produced from my own closed files, file 5870, and you
can tell from the dogeared condition how much use it had through
the years.
These are not things I thought up later. These are things that
happened then and are documented as of that time. This is no fairy
tale.
Senator STEVENSON. Mr. Chairman, I have not yielded yet, but I
would be happy to in a minute.
Am I to infer from that answer, Mr. Bell, that you are accusing
Mr. Miller of not wanting to know? Or of not knowing because he
did not want to know?
Mr. B E L L . Senator, I am saying that he apparently did not want
to know, and I do not mean to attach any invidious intent to that.
I don't know how you would run a company the size of Textron,
and I don't know whether a person in his posture could or should
have known within the ordinary way you would run a company
like that.
Senator STEVENSON. That is the next question. It goes beyond your
competence as an attorney, perhaps. Perhaps it is a question that is
more properly addressed to persons with experience in business management. But the question is should he, in the office which he occu-
48
pied at Textron, and as a reasonable, prudent, effective, diligent
businessman, have known, have taken whatever steps were necessary
in the course of business, with reasonable prudence, that would have
established procedures that would have produced this knowledge?
To put it differently, has he been derelict, in your opinions, as a
businessman, for not wanting to know ?
Mr. B E L L . Senator, I was only a businessman in a very small way.
And I would say never at the levels that he has been. I have no
knowledge of those. I was impressed just to have met the president
of Bell Helicopter.
Senator S T E V E N S O N . Well, Mr. Chairman, there is no evidence
still, and no opinion as of now.
I am not disinterested in your answers, gentlemen, to that question for obvious reasons, but will ask you too, do you have any evidence, hearsay or otherwise, that would cast any doubt about the
integrity or the ability of Mr. Miller, evidence in this matter or
any other matter in the mind of a reasonable man ?
Mr. JOSE. I have no doubt, I have no evidence.
Mr. D U C A Y E T . I have no evidence whatsoever, sir. I have had Mr.
Miller as a chairman of the board of Textron, which I have been
on for some 4 or 5 years now. Prior to that, I had dealings with
him as my boss, substantially, directly or indirectly, almost directly.
I have found him to be a highly—I would never have any question
about what is going on.
Senator S T E V E N S O N . Mr. Chairman, the evidence we do have indicates that Mr. Miller is a man of an uncommonly high level of integrity and ability. And so far there is no evidence, in my judgment,
to rebut the overwhelming evidence in support of his nomination.
But I am afraid that what has happened, not here, but in our
Government, is something in the political process, which originates
in Watergate, in the Bert Lance affair, and originates in other
recent unhappy political experiences, that requires a nominee to
prove his innocence, and that I fear is not possible. It certainly has
never been a part of our system under commonly accepted notions
of Anglo-Saxon justice. And it probably won't be required of nominees in the future, except for those who are high achievers, those
who have made some waves, or left some enemies in their trail. The
others won't find themselves in such a predicament as this. The
thing I fear is the need to prove the impossible. It may not even
be possible in the case of the mediocrities, or for Mr. Miller, if he
spent his life in a monastery, to prove his innocence.
That, Mr. Chairman, is what we are about. I am not suggesting
that this is a fishing expedition. I am not suggesting that the committee is not doing anything it doesn't have to do. But I am suggesting that, soon, this process which requires the impossible should
be cut short, it should be stopped, and we are getting very close to
that point.
Thank you.
The C H A I R M A N . Senator Heinz.
Senator H E I N Z . Thank you, Mr. Chairman. Mr. Jose, when Mr.
Bell came to you with the story that you described, you, in effect,
felt he was proposing something that was unethical, is that correct?
49
M r . JOSE. Y e s ,
sir.
Senator H E I N Z . Why didn't you either terminate the conversation
right then and there and reject his proposal, or, alternatively, why
didn't you go to your superior, Mr. Atkins ? Why did you go instead
to a very high member of management, Mr. Ducayet?
Mr. J O S E . A S I stated, Senator, it was within my province to deal
with the matter.
Senator H E I N Z . I am sorry, I don't understand.
Mr. J O S E . I say it was within my province to deal with the matter. I had a problem, I wasn't sure, but I might have been wickered.
There was an automatic renewal provision in our sales agreements
in that year that said if we didn't give notice of termination 60
days prior, that it automatically renewed. Mr. Bell didn't call us
until that point had passed. So I was dealing with a situation
where Mr. French and Mr. Bell, knowingly or not knowingly, had
automatically renewed their contract.
Senator H E I N Z . With you?
Mr. J O S E . With us.
Senator H E I N Z . H O W is that relevant here?
Mr. J O S E . That put me into the position that the only way of terminating them was for cause. And that would be very difficult. I
already had revealed to me that by the nature of the things that
had gone on, that this could become a very contentious matter.
Senator H E I N Z . Why would you not have gone to
Mr. J O S E . S O why should I state categorically at that moment
"You and I are going to have to fight about it."
Senator H E I N Z . Why did you go to Mr. Ducayet though, rather
than to Mr. Atkins, who was your supervisor, as we understand it?
Mr. J O S E . A S I stated, Senator, I don't recall that I did, I don't
deny we talked about it. But I don't recall the details.
Senator H E I N Z . Well, if you were trying to establish a cause, you
felt you needed I suppose some support for doing that. Without trying to settle whether or not you did go to Mr. Ducayet or Mr.
Atkins, why wouldn't you have gone to your superior rather than
to your superior's superior? Let's assume for the moment you actuarially did see Mr. Ducayet.
Mr. J O S E . I have a great deal of trouble with these suppositions,
Senator.
Senator H E I N Z . S O do I .
Mr. J O S E . Your question was why did I go, why would I have
gone to Mr. Ducayet?
Senator H E I N Z . Yes. Let's try to deal with a hypothetical case.
If you wanted some management support, you thought your agent
ought to be terminated for cause, and you wanted to establish the
cause, would you normally have gone to Mr. Atkins or would you
not go to Mr. Atkins, but go up a level to Mr. Ducayet—just in
abstract, not dealing with Mr. Bell or Mr. French or International
Helicopter Consultants. In the abstract, how would you normally
go about that?
Mr. J O S E . I had very little experience with terminating dealers.
I wanted to talk to the people to find out what they knew of the
circumstances surrounding it. I don't think it has come out in this
50
testimony today, that Mr. Orpen and I were on very heavy travel
schedules the late part of 1966 and 1967. It is in the other testimony.
It was very difficult sometimes for us to get together and try to
discuss plans of action.
In the first half of 1967, there seems to have been some questions
as to why we didn't deal forthwith with this. I made three extended
trips of anywhere from 3 to 5 weeks. In the month of January,
which Senator Proxmire asked me about, there was a series of 3
letters written, and I had a sales meeting with 30 to 40 people the
week before. The week of the letter I was at a helicopter convention
on the West Coast. The week after that I was getting an annual
physical. And I really was not there when much of this correspondence took place.
Senator H E I N Z . I want to compliment you, though, on your excellent recollection as to what was happening.
Mr. JOSE. A S of a week ago Thursday, I tried to go back and put
myself into position—and I happen to have access to the travel
vouchers—about where I was.
Senator H E I N Z . Mr. Chairman, I have a few minutes left. I would
be happy to yield it to Senator Brooke. I have completed my line
of questioning, if Senator Brooke would like the remainder of my
time.
Senator B R O O K E . Yes, I would. Thank you very kindly.
Mr. Ducayet, there was an article that appeared in the Wall
Street Journal by Jerry Landauer which stated that auditors for
Textron, Inc. discovered that at least four divisions of the company
paid kick-backs to foreign customers, generally through secret Swiss
bank accounts, which could involve millions of dollars. Are you
familiar with that article ?
Mr. D U C A Y E T . I have read the article, I believe.
Senator B R O O K E . Y O U have been an officer of Bell Helicopter and
still are a member of the board of directors of Textron?
Mr.
DUCAYET. Y e s ,
sir.
Senator B R O O K E . D O you have any familiarity at all with kickbacks through four divisions of your company to foreign customers ?
Mr. D U C A Y E T . I know of no kickbacks as such. I am not too familiar with those four items that have come up. I am not sure that
I have the story on them. They have come up very recently, as I
understand it.
Senator B R O O K E . Has the Board met on this, to look into this?
Mr. D U C A Y E T . I think it came up since there has been a board
meeting. I believe it came up after we had the board meeting.
Senator B R O O K E . Have you had any discussions with Mr. Miller
relative to this?
Mr. D U C A Y E T . No, I haven't.
Senator B R O O K E . Would you be surprised if this happened to be
a fact?
Mr. D U C A Y E T . I would be surprised, yes.
Senator B R O O K E . N O W you are in the business of selling helicopters? That was your business?
M r . DUCAYET.
Yes.
51
Senator BROOKE. Obviously you wanted to get a foreign market
as well as a domestic market, is that not true ?
Mr. D U C A Y E T . That is correct.
Senator BROOKE. And when you are doing business in foreign
countries, you sometimes find you have to do business in a manner
in which they want you to do business, is that correct ?
Mr. D U C A Y E T . Possibly, but not if it is illegal, or improper, I
would say.
Senator BROOKE. Have you always done everything possible to
see that you did not conduct illegal business in foreign countries as
well as here?
Mr. D U C A Y E T . I believe we have, yes, sir.
Senator BROOKE. And that you say was a policy of your company ?
M r . DUCAYET. Y e s .
Senator BROOKE. What did you do to insure that you did not do
business illegally in foreign countries?
Mr. D U C A Y E T . We did not have, to my knowledge, a written policy
in Bell of what was or wasn't proper. We have always told our
people that they are to deal above-board, they are to be open, they
are not to do improper things, they are not to do illegal things.
Senator BROOKE. But that is sort of a general statement of "do
good." I am talking about what sort of oversight, what sort of
monitoring did the company have to assure—it is a big company,
and you were letting contracts in these foreign countries—yourselves that you weren't in violation of your own policies ?
Mr. D U C A Y E T . I know of no specific monitoring service, to use
those words, that would say yes or no, you have done this properly
or improperly or something. We were trying to expand the foreign
business. Foreign agents, foreign sales representatives were difficult
to find. We usually tried to get someone who was a fixed wing
operator, or fixed wing representative, because the helicopter business in a lot of our foreign countries was pretty slim in those days,
and it was difficult to get an agent to take you on when there wasn't
much sales potential.
Senator BROOKE. Senator Heinz' time is up, so I will wait.
The C H A I R M A N . Senator Riegle.
Senator RIEGLE. Senator Sarbanes has not had an opportunity yet,
so I yield to him.
The C H A I R M A N . Senator Sarbanes.
Senator SARBANES. Thank you, Mr. Chairman. Mr. Bell, I am not
quite clear how you came to represent Mr. French, located as you
were in Wichita.
Mr. B E L L . Well, it is a rather long story, and I didn't go into it
at the beginning to try to save the Senators' time.
But I represented a company which delivered aircraft called Aircraft Ferry Co., its name was Flow Air, and its principal was a
man named Floyd Atchinson. He had delivered the demonstrator
aircraft, the Cessna, which Mr. French bought in the early days of
his Cessna dealership, and while there, he suggested to Mr. French
that he should have a corporation in order to carry on business. Mr.
French was relatively unschooled, and said all right, how do I get
52
one. Mr. Atchinson suggested next time he was in Wichita, Kans.,
for a Cessna dealers meeting, that he go and see his lawyers. Mr.
French did that. This was sometime prior to 1966, approximately
1960, as best I can tell from the file.
Mr. French came in and asked us to form a company for him,
which we did. That was Aviation Development Consultants, which
held the Cessna dealership.
A while later he asked us to form another company, which was
International Helicopter Consultants, and it held the Bell Helicopter franchise commencing in 1964.
Senator SARBANES. Well, I wasn't in the room earlier, but I gather
in response to some questioning from Senator Stevenson, you indicated you have no direct evidence of Mr. Miller's knowledge of this
matter. Is that correct?
Mr. BELL. That is exactly correct.
Senator SARBANES. Did you say that apparently he did not want
to know?
Mr. BELL. I think under some prodding from the Senator as to
any kind of evidence or inference therefrom which I might have,
including hearsay, I responded that the knowledge of General
Khatami's ownership and control of Air Taxi was so widespread
throughout this entire period of time that anybody who didn't know
about it, just didn't know because they didn't want to. And there
was no invidious inference intended in that.
Senator S A R B A N E S . N O W when you went down to the State Department with French to talk with Elliott and Mulligan, apparently—
I am now reading from the transcript of your interview with the
staff investigators:
I then inquired what Mr. Elliott would recommend we do under the circumstances. Mr. Elliott said since it appeared that a large part of this
problem originated because of Mr. French's attitude, his refusal to accommodate himself, as most businessmen must, to the varying mores and customs
of the country in which he was operating, and since it appeared that I, as
an attorney, had a more progmatic view of the world, perhaps it would be
advisable for me to go to Iran and negotiate on Mr. French's behalf with
General Khatami.
Is that an accurate statement of what he told you ?
Mr. BELL. Yes, Senator.
Senator SARBANES. On the basis of that suggestion of Elliott's, I
take it that you had a more pragmatic view of the world, to arrange
in the intervening period to go to Iran, is that correct? In other
words, to meet with Dr. Safavi?
Mr. BELL. The State Department actually made the arrangements
for me, Senator.
Senator SARBANES. The State Department made the arrangements
for you for that meeting?
M r . BELL. Y e s .
Senator S A R B A N E S . N O W when you met with Mr. Safavi, I take it
there were two questions. One was that you did not want to get into
the charges against French, of having committed illegal acts, is
that correct? I take it that was his plane going in and out without
permission, things of that sort.
53
Mr. BELL. He commenced a discussion along those lines, and I
wasn't prepared to go into that at that time, because I have never
been given access to the evidence. I later was, and found it was not
supportive of their charges in any way.
Senator SARBANES. But in fact you say here that:
I then told Dr. Safavi that since both he and I were attorneys, practical
men of affairs, I thought it was up to us to arrive at some method by which
Mr. French's company could continue to do business in Iran.
Then you all proceeded to discuss the arrangements connected
with doing that. Is that correct?
Mr. BELL. That is correct.
Senator SARBANES. NOW is it correct that in the course of that
conversation, at some point Safavi said that—I guess it is. I have
the answer here.
At any rate, he also said since I was an attorney and was instrumental in this business, coming to him, he would split his formation
fee 50-50 with me. I didn't demur to that because later on I told
Mr. French that since he had already retained me, he would obtain
Safavi's services for half price.
So, Safavi, in that meeting in effect indicated that he involved
you in the formation fee, and you didn't say anything in response
to that, I take it?
Mr. BELL. That is correct.
Senator SARBANES. NOW was all of this related in a conversation
that you had—I gather there is a divergence of recollection here
with respect to a meeting with Ducayet, in Fort Worth?
Mr. BELL. Well, after hearing what was said today, I would say
more properly a failure of recollection in some quarters.
Senator SARBANES. I didn't mean to suggest it was in all quarters.
I take it there is some failure or difference in recollection in this
matter ?
Mr. BELL. I didn't understand the gentleman's testimony to
amount to that.
Senator SARBANES. In this meeting that you testified to, was all
of this recounted ?
Mr. BELL. Well, I don't think we discussed the division of Dr.
Safavi's legal fee with me. But the rest of it was. And as I have
said in the deposition you have in front of you, I told them everything that was in my subsequent letter to Mr. Zook of Cessna, which
is an exhibit to that deposition also.
Senator SARBANES. NOW your recollection of that meeting is that
you in effect made a full statement and at the end of it, you got
up and left, and the people said "Thank you, that is interesting, nice
to have seen you"?
Mr. BELL. I don't recall them saying it was nice to have seen me.
Senator SARBANES. "Nice to have met you"?
Mr. BELL. That is possible.
Senator SARBANES. Well, I am quoting your own recollection of
that meeting you have given the staff investigators.
Mr. Bell, well, I said that was possible. They said something to
that effect.
54
Senator S A R B A N E S . "Thank you very much for telling me this very
interesting story, it was nice to have met you, we will be in touch
with you."
That is to your recollection the extent of Ducayet's comments in
the course of this exposition on your part in the meeting?
Mr. B E L L . That is correct.
Senator S A R B A N E S . I have no further questions at this point, Mr.
Chairman.
The C H A I R M A N . Senator Lugar.
Senator L U G A R . I have no questions.
The C H A I R M A N . Senator Schmitt.
Senator S C H M I T T . Mr. Chairman, I have gone on record as concurring with Senator Stevenson's summary remarks at the end of
his time, that we are getting ourselves deeper and deeper into having to prove innocence, which is probably an impossibility in most
instances.
He and I, of course, work closely together on the Senate Ethics
Committee, and I would say that 99 percent of our effort is to prove
innocence, and apparently that is the game in town right now, so
to some degree this questioning has to proceed on that basis.
I am a little bit confused, Mr. Bell, and I apologize if I gave any
indication that I doubted your remarks from what you previously
said, doubted the truthfullness of your remarks.
However, I am still a little bit confused about the information
you passed on to Mr. Jose and Mr. Ducayet at your meeting. Did
you mention Air Taxi at that meeting?
M r . BELL. I
Senator
did.
SCHMITT. Y O U
M r . BELL.
Yes.
did?
Senator S C H M I T T . And you mentioned it in the context of your
impression that General Khatami had an interest in that?
Mr. B E L L . I didn't state it in that way. I mentioned it in the context of background as to what caused Mr. French's problem to originate. I said, probably, something to the effect that, as you know,
General Khatami controls Air Taxi and Heli-Taxi and through
them, attempts to control all aviation in the country. And he has
his ownership interest in that way, and he will not permit anyone
to operate who doesn't give him an ownership interest. And he has
approached Mr. French through an errand general, General Raffaat,
for such an interest. When he refused to give it to him, he was run
out of the country.
Senator S C H M I T T . Mr. Chairman, I think there may have been
some confusion on my part, maybe on several member's part earlier,
in whether Air Taxi was mentioned. I hope that clears the record.
Now, Mr. Jose and Mr. Ducayet, I guess in that order: In summary, you did not at any time, according to your recollections, have
occasion to pass that particular information about Air Taxi up the
line so that in your feeling it would have come to the attention of
Mr. Miller? Is that correct?
Mr. JOSE. I never did.
Senator S C H M I T T . Y O U certainly did not, as you said earlier, because that was not your reporting sequence, Mr. Ducayet? You had
no occasion to do so?
55
Mr. D U C A Y E T . I had no occasion to do it, no, sir.
Senator S C H M I T T . Mr. Chairman, I have no further questions. I
think we ought to get on to look at the next piece of this puzzle,
which is to see what happened when Mr. Miller then on his own
volition asked his general counsel to look into the question of the
$2.9 million payment to Air Taxi to see if there was any question
about that payment, that they should have raised, and then whether
or not the report he got back from the general counsel should have
raised any doubts in his mind.
I think we have hit basically a doorway we can't get through
here in part because of the kind of records and recollections that
Bell Helicopter officials had at that time.
Senator B R O O K E . Would the Senator yield?
Senator S C H M I T T . I would be happy to yield.
Senator B R O O K E . I personally think that Mr. Bell has done an
excellent job and has been a forthright witness, buttressed by the
documentation which he had in his office. I think that what the witness has testified to has not at any time been rebutted. Bell testified
that he met with Mr. Jose, he gave him this information about General Khatami's interest, and Mr. Jose does not deny this at all, in
fact he admits this and has said he thought it was a fantasy story.
Mr. Bell further testified that he or Mr. Jose then made a phone
call and they subsequently went to meet with Mr. Ducayet.
Now, again, that has not been rebutted. Mr. Ducayet didn't say
that Mr. Bell and Mr. Jose did not meet with him. He said that he
did not recall whether they met with him or not.
So without any rebuttal to what Mr. Bell says, the record shows
Mr. Bell's testimony stands as it is, that there was a meeting between Mr. Bell, Mr. Jose and Mr. Ducayet.
Now the question is if Mr. Bell told Mr. Ducayet the same story
he related to Mr. Jose, and there is no reason to believe that he
didn't, because that hasn't been rebutted, why did Mr. Ducayet not
take some action on it himself, why did he not pass this on to
Mr. Miller, or did he in fact pass it on to Mr. Miller?
Now Mr. Ducayet has said that it is the policy of this company
not to deal with agents that were paying kickbacks to foreign country officials. He said that there was no written policy, but that was
a general understanding, and it was Mr. Miller's position not to
engage in improper activities. But Mr. Ducayet does not recall ever
talking with Mr. Miller about this at all.
Now the question I would like to put to you, Mr. Ducayet, if in
fact Mr. Bell did tell you about General Khatami, as he has testified, to which there has been no rebuttal, did you not consider it
to be an unusual circumstance?
Mr. D U C A Y E T . I would consider it to be an unusual circumstance.
Senator B R O O K E . If it were an unusual circumstance, would you
have passed that unusual circumstance on to Mr. Miller, your "superior? Or would you consider it of so little magniture not to compel you to pass it on?
Mr. D U C A Y E T . I did not, I would not have considered it of a magnitude to pass on to Mr. Miller, or something that should be passed
on to him.
56
Senator BROOKE. Y O U would not have?
Mr. DUCAYET. I would not have. I would have considered it an
operating problem, with Bell Helicopter, that Bell Helicopter had
to do something about it, and then should cleanup their own house
and take care of such a situation.
Senator BROOKE. Would you then have given such direction to
Bell Helicopter to do that?
Mr. DUCAYET. I would be very surprised if I hadn't given it to
somebody. But I have no real recollection of the meeting, and therefore I can't remember what I did.
The CHAIRMAN. Would you yield at that point, because I think
the previous testimony may be a little unclear on this.
You were asked about this when you were interviewed by the
staff at Fort Worth. And the question was:
If you were ever advised by a subordinate at Bell Helicopter about any
serious breach of corporate policy concerning foreign sales, would you report
that to Mr. Miller?
Answer:
I think if it was a serious breach, I would have reported it, yes.
How do you reconcile your response now to Senator Brooke with
that you gave in Fort Worth?
Mr. DUCAYET. I haven't considered this situation as a breach of
anything. I would have considered that we were in a poor position,
we had a representative who couldn't get into the country. We had
done very little business in the country. The sales representative had
been relatively unsatisfactory from our standpoint. And that I
would expect the Sales Department to go do something about it.
I would have considered that the question of his inability to get
into Iran was enough reason to eliminate him, let alone whether he
brought up anything else or not.
The CHAIRMAN. But you wouldn't have considered the ownership
by General Khatami of Air Taxi to be sufficiently significant, unusual,
to call to his attention ?
Mr. DUCAYET. Air Taxi was not our agent.
The CHAIRMAN. Then you picked them up again in 1968.
M r . DUCAYET. Y e s .
Senator SCHMITT. Mr.
Chairman, I think before my time is gone,
I would just say that unless one or more people have perjured
themselves, we have to assume at this point that Mr. Miller did not
receive notification of this kind of a problem with Air Taxi from
these people that are here at the table today, or as near as I can
tell, from anybody with whom the staff has talked, or we have
knowledge of at this time.
That doesn't mean that he shouldn't have known. The question is
did he know. And should he have had previously established management procedures by which that would happen as a matter of
course.
Again, those are details, important details, that are going to be
difficult to establish by this committee.
The CHAIRMAN. A S the Senator indicated, we have yet to develop
the information we should develop with Attorney Soutter, counsel
for Bell Helicopter.
57
Senator S C H M I T T . N O question, but I consider that a separate
window into Mr. Miller's understanding of this problem. The window we have seen right now is foggy and unclear and it appears as
if it was not open to Mr. Miller. And therefore his statements on
the record from his hearing stand unchallenged by this group of
witnesses. I think we have to accept that.
The C H A I R M A N . The question of whether or not there is a challenge is a matter of judgment.
Senator S C H M I T T . Unless these gentlemen have perjured themselves, we have to assume truth was there. If we want to get into
an investigation of the question of these gentlemen's testimony, that
is something else. But as far as they have testified, Mr. Miller did
not receive that information from them.
The C H A I R M A N . The difficulty here is we have the clear unquestioned assertion by Mr. Bell, in which he has given us documents,
there is no document that refutes what Mr. Bell has said, and Mr.
Ducayet denies he recalls this, and therefore his recollection as to
whether he told Mr. Miller, it seems to me, is also modified by the
fact that he doesn't remember hearing this information.
Senator S C H M I T T . Well, I am not going to try to justify ^ the
recordkeeping procedures of Bell Helicopter. I have been a little
discouraged by the testimony we have heard. But we do have his
testimony that even though there is no written documentation, his
testimony is that he did not tell Mr. Miller. Now we can launch into
a major investigation to find out if that is a true statement. But I
think we have to assume it is a true statement.
The C H A I R M A N . Mr. Ducayet, do you flatly deny you told Mr.
Miller, or was it that you can't recall?
Mr. D U C A Y E T . N O ; I would deny I ever told Mr. Miller anything
about a problem we might have with an agent in Iran at that time.
The C H A I R M A N . Y O U flatly deny you told him about the ownership of Air Taxi, flatly deny you ever told Mr. Miller that you had
heard General Khatami may have owned Air Taxi? You flatly
deny it?
Mr. D U C A Y E T . I would have to deny that, yes.
Senator B R O O K E . Your memory is very, how shall I say it, you
remember some things so positively, yet you don't remember other
things at all. You don't remember seeing this man in your office in
a 45-minute meeting, and hearing about this whole problem, and
yet you remember specifically that you didn't tell Mr. Miller anything at all about this transaction. Your memory comes and goes.
Mr. D U C A Y E T . Mr. Brooke, I remember the kinds of things that
I would take up with Mr. Miller. I never tried to take up with him
any problems we might have had with the establishment of or termination or reestablishment of a dealer. We had dealers in 50 countries. We had good one and bad ones, and poor ones. We had hard
times finding them sometimes. But these, to me, were operating
problems that I would not necessarily have taken up with Mr. Miller.
Thnt is whv I would not have.
Senator B R O O K E . It was not the kind of thing you would take up
with Mr. Miller, is that what you are saying?
58
Mr. D U C A Y E T . Yes, they are just not the kind of things I would
tell Mr. Miller.
Senator B R O O K E . But you would have told them to cease and
desist, not to enter into such an agreement?
Mr. D U C A Y E T . I am surprised if I didn't tell them.
Senator B R O O K E . But at any rate, they did not cease and desist?
Mr. D U C A Y E T . They did take action, they were busy, they were
trying to do the best they could, I would say, at trying to get the
situation taken care of.
As Mr. Jose said, it took time, it wasn't done instantly. We didn't
want to, I am sure we didn't want to get into trouble with Mr.
French's company. So you don't just go terminate people for nothing right away.
Senator S C H M I T T . Mr. Chairman, my time is up. If I could ask
one more question, though.
The C H A I R M A N . Certainly.
Senator S C H M I T T . Mr. Ducayet, at the time under discussion, just
prior to the rehiring of Air Taxi as Bells' representative in Iran,
were there any pending major sales that you could foresee in Iran
for Bell products?
Mr. D U C A Y E T . Not—I don't believe we had any open sales or any
open program with them at that time. I think we were trying hard.
Senator S C H M I T T . N O W you were thinking at that time of finding
a representative that could assist in opening up a major market in
Iran?
Mr. D U C A Y E T . I think we were trying to establish a good representative in Iran for us. You have to remember that Auguste, our
licensee, also could sell in Iran and he had been selling, I am not
sure exactly that is the time, but it was his territory, too. And he
could well sell in there and I believe had sold and had been successful in selling.
Senator S C H M I T T . But at the time there was nothing in the financial activities relative to sales to Iran that would have prompted
you to think that this issue of Air Taxi was big enough to take up
to a higher level. Is that what you are saying?
Mr. D U C A Y E T . N O , I am saying that—I am not sure I am saying
what you are saying. The question of ownership of Air Taxi or of
our agent was the type of thing that I would not have taken up to
Mr. Miller. To me it was an operating problem, that should be
solved by us in the division.
Senator B R O O K E . Would the Senator yield at that point?
Senator S C H M I T T . Thank you. I have nothing further.
Senator B R O O K E . There is another final point there, Mr. Ducayet.
It is not just a question of who the agent was, or the ownership.
If in fact you had this information, you had a serious breach of
Textron policy. Do you understand what I am saying? That would
be much more than just who the agent was, or whether French was
a good or bad agent. The question here involves were you then dealing with an agent that was partially owned by or was paying kickbacks to a foreign government official.
That would be a serious breach of your own policy, as you have so
testified.
59
Now would you take that matter up with Mr. Miller?
Mr. DUCAYET. I would still say that—may I ask, are you talking
about Mr. French's company ? Because they were our agents.
Senator BROOKE. I am talking about the information that Mr. Bell
has testified that he gave you, that is what I am talking about. I
am presuming, because it hasn't been rebutted, that Mr. Bell's information was given to you. Now I am saying the proposal Mr. Bell
was talking about would have been a breach of Textron policy.
Would you not have then taken that up with Mr. Miller?
Mr. DUCAYET. I would probably not not have. I still say that I
would have considered it an operating problem, and we should clean
the place up and do something about it ourselves.
And I believe that we did, because we turned around and removed
the agent.
Senator BROOKE. I am not talking about Mr. Miller as the president of Textron. I am talking about Mr. Miller acting as the group
vice president of Aerospace.
What did you take up ? What sort of matter would you take up
with your group vice president, if you wouldn't take that matter
up with him?
Mr. DUCAYET. We would take up matters of how sales were going,
how marketing was doing, how our military programs were going.
Remember, 95 or more percent of our business right then was military, U.S. military business. We were in the throes of trying to get
from 60 ships to 160 ships a month for the U.S. Army to ship to
Vietnam. And we had plenty of problems other than this little
piece of business over here that was International Marketing, of
which one little piece was Iran. We were doing very little business
in Iran.
Senator BROOKE. When you were deposed, you were asked the
following question:
If you were ever advised by subordinates at Bell Helicopter about any
serious breach of corporate policy concerning foreign sales, would you report
that to Mr. Miller?
Answer: I think if it was a serious breach, I would have reported it, yes.
Mr. DUCAYET. Yes, that is correct.
Senator BROOKE. NOW again I ask you: The information given
to you by Mr. Bell, together with Mr. Jose, you would not have
considered that a serious breach?
Mr. DUCAYET. I would not have. If there were an agent in that
country that we have done hardly any business in, they had other
problems, if that wasn't the only problem, they had other problems
that made them an unsatisfactory agent, I would still say we should
clean up our own house and we did not try to take problems like
that to Mr. Miller.
Senator BROOKE. Then what did you mean when you testified if
it was a serious breach, you would take it up with Mr. Miller? What
would be a serious breach?
Mr. DUCAYET. I think a serious breach would be if we hypothetically had some, let's us say an agent, sales representative, and found
that he was paying people off.
60
Senator B R O O K E . Well, that is exactly what Mr. Bell said, wasn't
it? Mr. Bell said that General Khatami was holding them up, had
a gun at their head, practically, and was saying to them "all right,
you are going to give us this percentage of the business, if you are
going to do business in Iran."
Now what more would you want?
Mr. D U C A Y E T . What we did was change agents.
Senator B R O O K E . Y O U changed agents ?
Mr. D U C A Y E T . I would think that was plenty of action taken.
Senator B R O O K E . Why did you change agents?
Mr. D U C A Y E T . T O me, if you asked me why we changed, it was
adequate that he couldn't get in the country. We didn't have to have
any other reason.
Senator B R O O K E . Y O U didn't change agents on the basis that General Khatami was involved?
Mr. D U C A Y E T . We might have. I don't know. I don't know the
circumstances of why we changed, really.
Senator B R O O K E . What did you hire after this agent?
Mr. D U C A Y E T . A S I understand it,, we hired Air Taxi.
Senator B R O O K E . And Air Taxi was owned by General Khatami?
Mr. D U C A Y E T . Not to our knowledge.
Senator B R O O K E . Then you didn't believe what was told you?
Mr. D U C A Y E T . That is right. I don't think we believed it.
Senator B R O O K E . Did you do anything to find out whether it was
true or not?
Mr. D U C A Y E T . At some time we had a Dun & Bradstreet on them.
Senator B R O O K E . Did you go to any Federal agencies or departments to find out?
Mr. D U C A Y E T . Any pardon?
Senator B R O O K E . Did you ascertain anything from these agencies?
Our staff did.
Mr. D U C A Y E T . From who?
Senator B R O O K E . From agencies, the Defense Department?
Mr. D U C A Y E T . N O , not to my knowledge. I am sure the Army,
the MA AG office, must have known that Air Taxi was our agent.
The C H A I R M A N . Did you check your own files? Your own files
disclose that.
Mr. D U C A Y E T . I haven't checked my files, no. I have no files.
The C H A I R M A N . Well, we have been imposing. Senator Schmitt's
time has expired. Senator Riegle.
Senator R I E G L E . Thank you, Mr. Chairman. I don't think I will
use the whole 10 minutes.
But I do understand, then, Mr. Ducayet, that at some point you
checked with Dun & Bradstreet, which presumably takes a tough
look at who owns companies and so forth, to try and find out who
in fact owned this company, and Khatami and company had apparently been skillful enough in hiding this thing that they hid it from
Dun & Bradstreet. Is that correct ?
Mr. D U C A Y E T . It doesn't show in Dun & Bradstreet.
Senator E I E G L E . S O when you did ask, to get a cross-check from
what you thought to be an independent outside financial source,
61
despite the fact that it now appears today and that that was the
case, they were not aware of it at that time, and therefore they did
not make you aware of it?
_
Mr. Bell, let me ask you this? How much did Mr. French make
for the time that he represented Bell Helicopter in Iran?
Mr. B E L L . I have no direct knowledge of the total figure. But I
have been told by Mr. French that that amounted to a few thousand
dollars.
Senator R I E G L E . There was an article in the paper the other D A Y
that put the estimate at about $35,000. Would that be, do you think
that would be close to right, or would you have no way of knowing?
Mr. B E L L . It sounds approximately right. Mr. French had that
dealership for four years, he sold three small helicopters, what they
call G-5s, and two of them he bought himself.
Senator R I E G L E . How did you bill Mr. French for your services ?
Mr. B E L L . I billed him on a per diem basis, plus expenses.
Senator R I E G L E . What would you have been paid by Mr. French?
Mr. B E L L . I don't recall the totals, but I imagine it amounted to
a couple of thousand or $3,000 a year.
My per diem was fairly low in those days.
Senator R I E G L E . D O you think Mr. French was short changed in
this whole transaction?
Mr. B E L L . I certainly do.
Senator R I E G L E . If he had not been short changed, he might have
made a lot of money, I take it, then, on this?
Mr. B E L L . Well, it is difficult to speculate on what might have been.
Senator R I E G L E . Well, short change means he didn't get as much
as he might have gotten.
Mr. B E L L . I agree.
Senator R I E G L E . That is what is meant by the statement,
Mr. B E L L . Yes, I agree.
Senator R I E G L E . If things had really panned out for Mr. French,
I assume you probably would have made more money yourself on
this arrangement, would you not?
Mr. B E L L . I don't know, because when things are going well for
Mr. French, he doesn't hire me. It is only when he has troubles.
Senator R I E G L E . S O you don't know whether you might have gotten more per diem days or whether you might have gotten more
compensation if things had panned out in Iran, rather than sort of
going the other way ?
Mr. B E L L . It is difficult to say. It would have depended upon how
many problems they had.
Senator R I E G L E . I assume that is why you were interested in this
particular client. Was there a longstanding friendship here or was
this a dollars and cents proposition?
Mr. B E L L . N O , it was my duty as an attorney.
Senator R I E G L E . But the point is why did you have Mr, French
as a client?
Mr. B E L L . I had him because he hired me.
Senator R I E G L E . S O , in other words, your interest in Mr. French
was as a client? There was no longstanding friendship, it was not
something you were doing out of the goodness of your heart?
25-067—78
5
62
Mr. BEJLL. N6, riot to the extent it was possible to be paid for. We'
became friends throughout the long course of this.
Senator EIEGLE. But he was a paying customer for you?
M r . BELL. H e W a s a n d
is.
Senator JJTEGLE. 'What I am wondering is this : let's say the SEC
investigation now were to turn up later the fact that this payment,
that was made to Air Taxi, that some part of it was not as it should
have been, and some part of that might actually be due to Mr.
French.
Wouldn't he stand to gain under those circumstances?
Mr. B E L L . Yes, under your hypothesis, he would.
Senator RIEGLE. Do you see any chance of that happening?
Mr. B E L L . I doubt it on that basis. I think there might be some
basis which we are in the process of examining, which we are really
riot prepared to discuss in public, because we don't want to engage
in saber rattling. But there may be some basis for some kind of
action by , Mr. French against Bell Helicopter. '
Senator RIEGLE. Well, I think that is a very important factor. So
what you have just said to the committee is that you, on behalf of
Mr. Bell, are apparently contemplating some kind of legal action
Against Bell yourself,: right today?
Mr. B E L L . Yes, we are considering it.
Senator RIEGLE. Have you advised the committee of that ?
iMr. B E L L ; I Chave. It is in my deposition.
Senator RIEGLE. Well, frankly, that concerns me a little bit, be-'
cause that obviously puts, I think, you in an awkward position as a
^itne^SijiTJiat c&bega't- .mean you are still not an officer of the court
as a lawyer. But I think it obviously puts you in an awkward spot1
when you really have sort of two interests going here. One- is to
testify to .the committee in behalf -of its inquiry along the lines of
this subject matter, but the second is that you are apparently engaged now at the' same time in ' a private legal matter with Mr.
French to see if you can't recoup monies from this?
Mr. B E L L . N O , Senator, the position is not awkward at all. First,
I am not yet engaged5 in any action, we ate'considering the possibility of one.
- 'Furthermore, Ihe effectiveness of that action will be enhanced to
the degree that* the officials of Bell Helicopter Come forward with'
lots of evidence to support the truth of what Mr. Miller has told'
the committee about the way they treat their agents when they
terminate them;
Senator RIEGLE. Are you under retainer by Mr. French now ?
M r . BELL. I a m n o t .
Senator RIEGLE; Has
he paid you any money at all in the last"
two or three years in terms of the possible pursuit of a suit: of some
kind to recoup some money you may feel is owed him?
Mr. B E L L . He has, but not relating to this company.
Senator RIEGLE. S O you do have an active business relationship*
with him?
M r . BELL. I
do.
63
Senator RIEGLE. Have you discussed with him the terms arid con-'
ditions under which you might proceed with an action against Texn
tron in this matter?
M r . BELL. N o t y e t .
Senator RIEGLE. But I take it you plan to
M r . BELL. I d o .
Senator RIEGLE. Mr. Chairman, I think that
do so?
is an important factor,
and I would say to the Senator from Massachusetts, I think that is'
an important factor.
Senator BROOKE. X think it is preposterous. I think it is absolutely
preposterous. I' have never heard anything so preposterous since
I have been practicing law. I think it is absolutely preposterous.
Why don't you ask Mr. Jose and Mr. Ducayet, who have an interest
in Textron?
Senator RIEGLE. A S long as we are on my time, let me ask the
Senator from Massachusetts what is preposterous about it? The
thing that concerns me is that—this is not to impute Mr. Bell's
testimony any more than it is to impute somebody else's ability to
recall or not recall certain facts at some time in the past.
But it is significant to me that there is a financial stake involved
here. And it is a large one. And Mr. French apparently feels, as is
related in fact by Mr. Bell here, here is an article just the Other
day in the Washington Star, in which Mr. Bell is quoted as sa}dng—
this is a quote in the middle of a paragraph, and I should probably
read" the whole paragraph:
They—meaning apparently Mr. French and Mr. Bell—are clearly bitter
about what they term inadequate compensation of French. Bell said" I would
like to see Textron demonstrate with documentation that the $2.9"million
payments was well-earned and well-deserved. Such a demonstration, lie said,
might give him grounds to sue for additional payments for French.
I: assume you said that to the reporters ?
Mr. BELL. That is exactly correct, Senator.
Senator RIEGLE. All I am saying, Senator Brooke, is -when one—
we are trying to reconstruct what happened and we are trying to
work from peoples' memories and peoples' notes and so forth. But
what is interesting to me is the fact that Mr. French today, and'
because Mr. Bell thinks it is very likely that he may come to represent Mr. French in an action on'this matter in the near future, that
they both have a financial stake in the outcome of this investigation
by the SEC and*by inference, I think the investigation that we are
doing here.
Now that may or may not influence his testimony, and it may or
may not cast a shadow over it in your mind or in mine. But I think
it is important that that fact, which he has related be put on
record, so it can be considered in the pattern of everything else we,
are looking at.
The CIIAIRMAX. Let Mr. Bell respond.
Mr. BELL. If I may, I think the Senator has arrived at one conclusion which is not justified. I can't represent Mr. French in any
ensuing action. And I have no possibility of that, because I will be
64
a material witness, and as you probably know, the rules of evidence
preclude my representing him under those circumstances.
Senator RIEGLE. But you have a very strong feeling in this?
Mr. B E L L . Well, I have always had a substantial dedication to the
truth.
Senator RIEGLE. I don't know that I am challenging that question.
I think the fact that the reporter here, and this in his term, he uses
the word "bitter", but I would say from the tone of your own statement, it sounds like you sort of have some hard feelings over this.
Is that a fair description of your feeling about it ?
Mr. B E L L . I would suggest that the fair description is that Mr.
French is somewhat bitter about all of the treatment not just from
Bell Helicopter, but from General Khatami, and various other
sources, that he got. I don't think it is fair to say that I am bitter
or have hard feelings.
I represent my clients when and where I can, and I can fairly
describe the facts, I think. The facts are that Mr. French was unhappy at his treatment. He was not sufficiently unhappy, however,
at the time, under what he thought the conditions were, when they
terminated him, but that he would not continue as their representative in another country.
Senator RIEGLE. You say you have had a long continuing relationship with Mr. French, you are involved in other matters with him,
and it has evolved from a client relationship to a friendship, and
if the SEC were to later find that money was due him and had gone
to others, it is possible that he might come out of this with a large
sum of money, might he not?
Mr. B E L L . I think you misunderstand the thrust of the potential
action. It has nothing to do with the SEC and money which went
to others which might have gone to him.
It has to do with whether or not at the termination of his dealership, Bell Helicopter dealt with him fairly and honestly in telling
him no commissions would under any circumstances be due or payable for sales he felt were about to come to fruition and which did,
subsequently, through an Augusta operation. We were told these
-would be government-to-government, and under no circumstances
would commissions be paid.
Mr. Miller, in his testimony, said that was not Bell's policy of
dealing with its dealers.
Senator RIEGLE. Just to conclude, and my time has expired, one
way that boils down in my mind is the fact that your friend and
client in this matter and in other matters in the past, and even in
the present time, is in a position here where he may very well recoup
some large sums of money, based on bringing an action about the
way he was terminated at that particular time. If this hearing serves
no other purpose, it may well serve a good purpose for Mr. French,
because it gets out into the open the various things that you are
interested in ascertaining, and that you have been digging to find
out and so forth, and now this work has been done and it is all there.
All I am saving is this person who you acknowledge you are very
close to, not just as a client, but as a friend, I think now has a
65
potential financial stake in how this thing is reconstructed in terms
of going back in time. Now I hope that that will not end up having
any bearing whatsoever on Mr. Miller's qualifications to serve as
chairman of the Federal Reserve, because I think it is quite extraneous to that, although I think from the standpoint of Mr.
French, and because of your involvement and your interest in Mr.
French, it may be terribly relevant to that line of inquiry that you
are actively pursuing, you acknowledge you are actively pursuing.
I think it is important that everybody here understands that,
because it seems to be one more part of the large and complicated
puzzle.
The C H A I R M A N . I think the colloquy we have just heard is very
helpful, I am grateful to Senator Riegle, because it makes clear that
now all of the witnesses who appear before this committee, including
Mr. Bell, have a vested interest in making Mr. Miller's testimony
ring true.
Obviously all of the other witnesses are Bell-Textron people who
have known Mr. Miller for a long time, have been working with
him, his colleagues have interests of course in their corporation.
Now Mr. Bell has indicated that his interests will be served if
Mr. Miller's testimony on the termination payment to Air Taxi is
found to be the truth.
So we have nothing but witnesses favorable to the nominee.
Senator R I E G L E . Should we vote then?
Senator BROOKE. I don't mean to consider Mr. Bell's testimony to
be unfavorable to the nominee.
The C H A I R M A N . That is right, that is what I said.
Senator BROOKE. I don't think he has attempted to be unfavorable,
he has only given us the facts as he knows them, and the documentation. That is a question for us to evaluate.
I would like to say to the Senator from Michigan I have not made
a decision as to how I will vote on the qualifications of Mr. Miller.
I don't know. I think we have to wait until after all of the hearings
have been concluded before any of us should make a decision as to
the confirmation of Mr. Miller.
But we are not trying a case on the agreement between Textron
or Bell and French or anybody else. We are trying to find the
qualifications of Mr. Miller. And the questions that have been asked
today go to the credibility of Mr. Miller and to his administrative
abilities as well.
Those are the two questions we have been asking, one, to find out
whether Mr. Miller actually knew about it, and what he did if he
did know about it, and, second, should he have known about it, and
what kind of an organization was he running.
I mean, I would be interested in knowing what kind of organization Textron is. He is the president of Textron. If Textron made
a practice of dealing with agents that were getting kickbacks, I
would be concerned about that. I think the Senator from Michigan
would be concerned about that. I think every question that we have
asked up until recently has been built right on target, and I think
has been a proper question.
66
I am hot interested in whether Mr. Bell will take a ease later
against Textron. That is not our concern here at all. Unless you can
prove that his reason for testifying before us this morning is somewhat other than what it appears on the record to be, which I think
would be a fair area of inquiry. There is no testimony to that. Everything you have asked him is m the record, when he was deposed he
told us about that, we knew about it. If we read the record, it is
there. I think he has been as honest as he can possibly be.
I think it is unfortunate if we want to cast aspersions at his integrity, or what he was getting as a fee. I know if he only got $2,000
or $3,000 a year as a fee, he was grossly underpaid in my opinion.
The CHAIRMAN. I just have a few more questions. I hope then we
can wind up and move on to Mr. Atkins, who is the next witness.
I would like to confine these questions to Mr. Jose and Mr.
Ducayet.
Mr. JOSE. Could we take 5 minutes before we go on, Senator? It
has been Sy2 hours here. Could we excuse ourselves?
The CHAIRMAN. Would you like to step out for 5 minutes ?
Mr. JOSE. Yes; 5 minutes, if I may.
The CHAIRMAN. All right, I understand.
[Short recess.]
The CHAIRMAN. NOW, Mr. Jose, I would like to get answers to
two questions.
The first question relates to the decision, after all of this information was discussed and disclosed, the decision made by Bell Helicopter to decide on Air Taxi as its replacement for Mr. French.
Did you tell Mr, Orpen, who I understand you sent to Tehran
to investigate this situation, whether or not to hire Air Taxi? Did
you tell Mr. Orpen, who was Bell Helicopter's sales manager, about
General Khatami's ownership of Air Taxi, especially about the time
of Mr. Orpen's trip to Iran in November 1967 ?
Mr. JOSE. Mr. Orpen would have had a copy of Mr. Bell's July 7
letter which outlined the allegations.
The CHAIRMAN. What was that again, sir?
Mr. JOSE. I said Mr. Orpen would have had a copy of Mr. Bell's
July 7 letter which outlined the allegations.
The CHAIRMAN. NOW by letter of February 1 6 , 1 9 7 8 , the State
Department, in response to the staff request for information, said
that General Mohammed Khatami was chairman of Air Taxi between
1957 and 1965, according to oral statements at the American ernbassv by the Registration Office, Ministry of Justice of Iran.
Then we have a whole series of affidavits from U.S. military and
embassy officials, which I will place in the record, indicating the
knowledge,of Jvhatami's ownership in Air Taxi, that it was common
knowledge, "widely knoWn.
Let me just read one of them:
The commercial attache, Mr. Westly, heard that General Khatami had a
financial interest in Air Taxi soon after arriving in Tehran in 1974, from an
Iranian commercial assistant. The attache stated that General Khatami's
connection with Air Taxi was not common knowledge but appeared to be
taken as an accepted fact by those in the aerospace business, especially those
interested in doing business with Air Taxi.
m
[Reprints of the affidavits referred to may be found, beginning
at page 173, in part 3 of committee print titled "Staff Investigation
of G. William Miller."]
The C H A I R M A N . N O W you say that Mr. Orpen had the information
that Mr. Bell had given you.
Mr. JOSE. Yes; he would have been copied on the letter.
The C H A I R M A N . With that in mind, what investigation, did you or
Mr. Orpen make as to whether or not there was a conflict of interest ?
I understand then having had that information, he decided Bell
Helicopter would retain Air Taxi?
Mr. JOSE. Yes. He went with Mr. Kling and Mr., Perriott.
The C H A I R M A N . He must have known this would be a payoff to a
foreign official, because obviously General Khatami was a foreign
official, owner of Air Taxi, which meant that that agent would of
course be paid in due course by Bell Helicopter and there would be
a payoff, isn't that right?
Mr. JOSE. If it were true, yes.
The C H A I R M A N . Well, if it were true. You have, no documents at
all to indicate it was not true, none in your files we have been able
to get. Would it not seem logical then for Mr. Orpen to make an
effort to determine in Tehran whether or not this was true?
If so, what did he do ?
Mr. JOSE. Well, Mr. Pierrot would have been the one to do most
of it, because Mr. Pierrot for about, at that time over 10 years, had
done much of our investigation work on backgrounds of people and
general reputations.
, The C H A I R M A N . At any rate, when Mr. Orpen returned to Fort
Worth, and I presume recommended Air Taxi——
M r . JOSE. H e
did.
The C H A I R M A N . What did you do to check out whether or not there
was in fact a conflict of interest, in view of the information you had
from Mr. Bell?
Mr. JOSE. I talked to Mr. Pierrot, And he told me there was no
conflict of interest.
The C H A I R M A N . Did you check up on what that meant? Did you
ask him what he meant ? Did you call his attention to theMr. JOSE. Certainly. I don't recall that he got a copy of Mr. Bell's
letter, but he would have been aware that we were discussing this
allegation, and I would have made it very clear with Pierrot by
phone to Washington that we were not to deal with anyone where
there would be a conflict of interest, and he was to check it out.
The C H A I R M A N . Pierrot is now dead, as I understand it?
M r . JOSE, Y e s , s i r .
The C H A I R M A N . And I
understand that Mr, French has deposed
that he talked to Mr. Pierrot, and Mr. Pierrot knew that General
Khatami had an interest in Air Taxi. Had an ownership interest
in it,
M r . JOSE. A S o f
The C H A I R M A N .
1962, n o t
1967.
That's right, but knowing that he had that ownership in 1962, didn't it seem logical under all of the circumstances
that you should determine whether or not he had that ownership as
of that date?
68
Mr. JOSE. We checked if he was still involved and we were told
he was not.
The C H A I R M A N . In 1962, who was your agent in Iran?
Mr. JOSE. I N 1962 it was Air Taxi.
The C H A I R M A N . And at that time you just told me that General
Khatami had an interest in Air Taxi.
Mr. JOSE. It was a matter of record at that time. I have since
determined—I had never looked into it when he had been appointed
in 1959. I didn't come until mid-year 1960 and I didn't go back and
check the records.
The C H A I R M A N . But you were burned by then, weren't you, you
were burned in the sense that you did retain Air Taxi at a time when
General Khatami was an owner of Air Taxi?
Mr. JOSE. I am not sure that at the time I was
The C H A I R M A N . In 1962, you just told me.
Mr. JOSE. Yes. Senator, you were talking about a conversation between Mr. Bell and Mr. Pierrot. And you were asking whether Mr.
Pierrot would have known about it. I said he would have, because
in looking at the testimony, it is true, if it is true what French said,
he would have discussed it with Pierrot at that time, so Pierrot
would have known about it.
The C H A I R M A N . That is right. So Bell Helicopter officials knew,
and knew as of 1962 that Khatami had an ownership in Air Taxi.
Now you didn't know in 1962, but you found that out later?
Mr. JOSE. Yes. I am talking about looking back.
The C H A I R M A N . Another question is if you found that out later,
why didn't you take precautions to determine if you were going to
hire Air Taxi again, that you wouldn't be hiring an agent that was
owned by a foreign official, if that is against your policy ?
Mr. JOSE. Senator, I thought I said we had asked Mr. Pierrot to
make sure there was no conflict of interest.
The C H A I R M A N . What did you do specifically to determine whether
or not there was a conflict of interest ? What did Mr. Pierrot do ?
Mr. JOSE. I don't know what he did. He just came back and reported there was no conflict.
The C H A I R M A N . S O you just accepted his word, that is all?
Mr. JOSE. Yes. I had been accepting his word for several years.
The C H A I R M A N . Mr. Ducayet, would you consider that to be good
management, would that be satisfactory, that all you have to have
is him tell you there is no conflict of interest under all of these circumstances, and you accept it?
Mr. D U C A Y E T . In those times, knowing Mr. Pierrot, I would have
accepted it.
The C H A I R M A N . Let me move on quickly to something else. In
1975, as I understand it, Mr. Bell asked the counsel for Bell-Textron,
Mr. Soutter, to make an investigation of the payment of $2.95
million by Bell Helicopter to Air Taxi. Is that correct?
Mr. JOSE. Are you asking me, sir?
The C H A I R M A N . Yes, Mr. Jose.
Mr. JOSE. I was not involved in the Iran question from 1969 on.
The C H A I R M A N . Y O U didn't know about that inquiry ? Mr. Ducayet,
did you know about that?
69
Mr. DUCAYET. I wasn't working for Bell at the time. I had been
retired then.
The CHAIRMAN. If you had—and I think it is rather unusual you
don't know about that investigation. It seems to me that raises some
questions about the investigation, how deep it was, how thorough
it was.
If you had been asked at that time about your knowledge of the
ownership of Air Taxi, how would you have answered?
Mr. JOSE. If I had been asked what question about the ownership?
Mr. DUCAYET. He is asking me.
Mr. JOSE. Excuse me. I am sorry.
Mr. DUCAYET. Y O U are asking me, aren't you?
The CHAIRMAN. I want Mr. Jose to answer it.
Mr. JOSE. Would you repeat the question?
The CHAIRMN. If you had been asked by Mr. Soutter, who was
sent down to Fort Worth to investigate the $2.95 million payment,
if you had been asked at that time about who owned Air Taxi who
received that payment, what would you have said, in 1975 ?
Mr. JOSE. I would have had to go back and look it up on some
sort of record. But if you would rephrase the question and say if
I had been asked whether I was aware, or whether I believed that
General Khatami was involved in the ownership of Air Taxi, I
would have said no.
The CHAIRMAN. Would you have told them on three occasions you
had been informed that General Khatami was an owner of Air Taxi?
Mr. JOSE. I would have had no feeling, no question in my mind
about saying there had been some question, we had looked into it
and satisfied ourselves.
The CHAIRMAN. YOU would have told him on three occasions you
received the information, but you would have said
Mr. JOSE. In 1975, Senator, I don't know whether I would have
remembered I heard it on three occasions or not.
The CHAIRMAN. Y O U would have looked at the record and the
record would show that. You have told us that having looked at the
record, you deposed to that. Is that correct?
Mr. JOSE. If I had had the same records available to me.
The
CHAIRMAN.
Question: If they had asked you if any one of those individuals had asked
you whether or not you had any knowledge of the ownership of Air Taxi by
any government official in Iran, including military officials, would you have
brought to their attention that on two, possibly three occasions, the allegation had been made to you that General Khatami had an ownership interest
in Air Taxi, if you had been asked?
Answer: I would have seen no reason not to answer that.
Mr. JOSE. Have I not answered it now generally the same way?
The CHAIRMAN. Not quite. That is the same you would give now.
OK.
Mr. Ducayet, I want to get your relationship with Mr. Miller.
Mr. JOSE. Excuse me, Senator?
The CHAIRMAN. Yes, Mr. Jose.
Mr. JOSE. There was a part in that that in several paragraphs
previously I had been asked if I believed it and I would have said
70
that' I did not find it to be so. I have been quoted liberally in the
press since,, and we are in the hot lights of publicity here, I was
quoted in the press out of context to what I told the committee. I
would like for the record to set that straight, because I had said I
did not believe it, and I would have told the people that.
The C H A I R M A N . You have made it very clear now. You had heard
it two or three times, you did not believe it, but you had heard it
two or three times. Is that correct?
M r JOSE.
Yes.
The C H A I R M A N . All right. Mr. Ducayet, you were directly responsible to Mr. Miller, is that right?
Mr. D U C A Y E T . During what period?
The C H A I R M A N . During the period when you were president of
Bell Helicopter, and then I think for a short time you were chairman of Bell Helicopter ?
Mr. D U C A Y E T . Yes; during those last 4 or 5 years.
The C H A I R M A N . H O W frequently were you in contact with Mr.
Miller?
Mr. D U C A Y E T . I was asked the question, I gave it on deposition. I
believe I said about once a week, probably. But it depended on what
was going on and how much was going on.
The C H A I R M A N . What types of matters did you discuss with Mr.
Miller when you talked to him?
Mr. D U C A Y E T . We would discuss anything that might be a prob^
lern to the division, or something that I felt we needed his concurrence in. We might need to expand, we might have good business, I
would be sure to bring him up to date on how we were doing in
various sales programs, probably. Many military programs were
going on, U.S. military.
The C H A I R M A N . Since your appearance before the committee staff,
have you had time to refresh your memory about the meeting Mr.
Bell said he had with you and Mr. Jose on November 2, 1966?
M r . DUCAYET. NO,
sir.
The C H A I R M A N . Y O U have not?
Mr. D U C A Y E T . I have not.
The C H A I R M A N . Senator Brooke.
Senator B R O O K E . H O W frequently does the board of directors of
Textron meet, Mr. Ducayet ?
Mr. D U C A Y E T . Every other month, usually every other month.
Senator B R O O K E . Are minutes kept of the board of directors
meetings ?
M r . DUCAYET. O h , yes,
sir.
Senator B R O O K E . Would the corporation have the minutes of the
board meeting when this whole question of Air Taxi was discussed ?
Mr. D U C A Y E T . There would be minutes of the meeting. I am not
sure that they will show that that was discussed as such. The way
any question might have come up, it might have come up in a report
by someone on the operations or things that were going on and not
necessarily be recorded in detail in the minutes of the meeting.
Senator B R O O K E . But a matter of this importance, would it not
bp included in the minutes? That is the purpose of the minutes, is
it not, to record what happens at the meeting?
71
Mr. D U C A Y E T . What is it you are specifically asking about the
payment ?
Senator B R O O K E . I am not asking about a transcript, I am asking
about the minutes of the meeting that would record that this matter
was discussed, and what the position of the president of the corporation was.
Mr. D U C A Y E T . It might show it. I am not sure that it does.
Senator B R O O K E . Were the minutes of your meetings supplied?
Mr. D U C A Y E T . I don't know.
Senator B R O O K E . Mr. Chairman, I would like to have those records
subpenaed, if we may.
T h e CHAIRMAN.
Yes.
Senator B R O O K E . The corporate minutes. What date would you say>
rather than having them bring all of the minutes of the corporation,
what date would you say this matter was discussed by the board of
directors?
Mr. D U C A Y E T . I T is hard for me to say when it might have come
up. I am afraid I have no recollection of how to remember when it
came up, really.
Senator B R O O K E . Did you take a position yourself
The C H A I R M A N . Would the Senator yield? Did the Senator suggest the committee subpena these minutes?
Senator B R O O K E . Yes.
The C H A I R M A N . The staff tells me they have done that.
Senator B R O O K E . We have not received them, they say.
Mr. D U C A Y E T . Pardon?
Senator B R O O K E . I understand that the records I have asked the
chairman to subpena have already been subpenaed, but we have not
as yet received those records.
I would like to see the minutes of the board of directors to ascertain the nature of that discussion.
The C H A I R M A N . A S I say, we will renew our request and press it;
Senator B R O O K E . Yes.
Now you referred earlier to the fact that you got a Dun & Bradstreet. I have a copy of that Dun & Bradstreet dated October 4,
1970. Actually we have evidence that General Khatami's participation as the owner of Air Taxi terminated in 1965, as I recall it.
And that there was some evidence that he was a silent partner after
that. So this Dun & Bradstreet does not go back far enough to
ascertain whether General Khatami was in fact an owner of Air
Taxi.
Mr. D U C A Y E T . I understand what you are saying. But if what you
are saying, sir, is saying that Khatami had no interest unless it
were a silent interest after 1965, I believe it was 1968 that we re^
newed the agreement with them, and therefore it is not surprising
we wouldn't have found any ownership.
Senator B R O O K E . It would not have shown on the Dun & Bradstreet, because at that time he was not a visible owner of Air Taxi.
Now Mr. Jose, you referred to the fact that Mr. Feliton went to
Iran in the spring of 1966 to review, among other things, the suitab^itv of Mr. French as Bell Helicopter's agent.
You also mentioned a trip report from Feliton. Is that correct?
72
Mr. JOSE. I believe I did. I am going from memory now.
Senator B R O O K E . Y O U did testify to that.
Mr. J O S E . I testified that way. Yes.
Senator B R O O K E . Have you supplied the committee with a copy
of that trip report?
Mr. JOSE. I don't know, sir. I haven't been involved in the documents, the question of what files have been submitted. We can check
that for you.
Senator B R O O K E . If you have such, would you supply it to the
committee ?
Mr.
JOSE.
Yes.
Senator B R O O K E . Y O U further testified or rather, you did testify
before the committee staff that you sent three Bell employees, Pierrot,
Kling, and Orpen to Iran in November 1967 to hire a new sales
representative and specifically to determine whether General Khatami had an interest in Air Taxi.
Now who were the prospective agents that you had in mind before
the Bell officials went to Iran in November 1967?
Mr. JOSE. I didn't have a list. What I stated was our position at
the time was as of mid-year that year we were aware of an interest
within the MA AG and within the Iranian government of a small
buy of transport type aircraft, on the order of, initially it was 17,
then it was 24, and ultimately it became 36. But it was a small buy.
And we felt we should have someone that could look after our
interests.
I had never been to the country, I didn't have a list. We had
changed our regional manager assignments in that area twice within
the last year. So we had lost considerable time and continuity. So
we went out to reestablish the continuity, and to try to determine
who could represent us there.
Senator B R O O K E . What were your instructions to your people regarding the procedures they should follow in checking out the reputation and ownership of Air Taxi, the type of report that Pierrot,
Kline: or Orpen should make about Khatami's alleged interest in
Air Taxi?
Mr. JOSE. The only experienced international representative we
had on the tour was Mr. Pierrot. So it would have been an instruction to him. And Mr. Pierrot at that time was teaching us about
the international business.
So beyond saying " I want to make sure that there is no conflict,"
I would leave it up to his best judgment.
Now at that time we were beginning to work up procedures that
were guidelines about checking with the embassy, checking the trade
accounts or banking connections. But they were general in nature.
The procedure that we were developing, but did not write until the
following year, was one that we generally had been using with our
people.
Senator B R O O K E . Did they indicate to you how they reached their
conclusion that he had no involvement with Air Taxi ?
Mr. JOSE. I don't recall. I am sure they did at some time. The
words that I would have been looking for would have been that there
73
would be no conflict of interest or there would be no evidence of any
high military official being involved in it.
Senator B R O O K E . Without the documentation, how would you have
ever made a judgment that the General did not have an interest in
Air Taxi?
Mr. J O S E . I would have asked Mr. Pierrot what he had found out>
who he had talked to.
Senator B R O O K E . Had you at any time heard rumors that General
Khatami was an owner?
Mr. J O S E . I had been told three times, sir.
Senator B R O O K E . S O you were trying to ascertain whether he was
still an owner, is that correct?
M r . JOSE. Y e s ,
sir.
Senator B R O O K E . D O you know whether your three people actually
met with General Khatami while they were in Iran to ascertain from
him firsthand whether he was still an owner in Air Taxi ?
Mr. J O S E . I believe there was a meeting with General Khatami^
but I don't recall the details of it. I recall there was no indication*
Senator B R O O K E , S O even though you knew that General Khatami
was an owner of Air Taxi at some time, you thought that interest
had been terminated, is that correct?
Mr. J O S E . The Shah had come out with some rules that said they,
that there would not be a conflict of interest on procurements. And
1 assumed, since it was a very tightly controlled society, that people
would take that seriously.
Senator B R O O K E . S O you felt the General had complied with the
Shah's rules, and therefore he was no longer an owner of Air Taxi*
Is that correct?
Mr. J O S E . That is correct.
Senator B R O O K E . And you felt you were dealing with these principals and there was no undisclosed principal?
Mr. J O S E . That is what I felt, sir, or we would not have appointed
them.
Senator B R O O K E . My time is up, Mr. Chairman.
The C H A I R M A N . Senator Riegle?
Senator R I E G L E . N O questions at this point, Mr. Chairman.
The C H A I R M A N . Any further questions?
Senator B R O O K E . N O .
The C H A I R M A N . Gentlemen, I want to thank you very much. This
has not been easy for any of you. I think you have been most responsive and helpful and I want to commend you for your appear*
ance under very difficult circumstances.
In view of the hour, it is 1 o'clock, and the fact that we have two
additional witnesses, the committee will take a recess until 2 o'clock.
[Thereupon, at 1 p.m. the hearing was recessed, to reconvene at
2 p.m. the same day.]
AFTERNOON SESSION
The C H A I R M A N . The committee will come to order.
This afternoon our leadoff witness is Mr. James Atkins. Mr.
Atkins, We are happy to have you; and I understand, sir, you are
the president and chief executive officer of Bell Helicopter. Is that
correct, sir?
Mr. A T K I N S . That is correct.
The C H A I R M A N . Do you have any kind of a statement you would
like to make?
Mr. A T K I N S . Yes; I would like to make a statement. If I may, I
would like to have Mr. Galerstein sit with me.
The C H A I R M A N . Before you do—it was my fault; I neglected to
explain to you—would you rise and raise your right hand?
Do you swear the testimony you are about to give will be the
whole truth, and nothing but the truth, so help you God?
M r . ATKINS. I
do.
The C H A I R M A N . And I apologize for interrupting you.
Yon go ahead, in your own way.
STATEMENT OF MR. JAMES F. ATKINS, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, BELL HELICOPTER-TEXTRON; ACCOMPANIED BY GEORGE GALERSTEIN, CHIEF LEGAL COUNSEL, BELL
HELICOPTER-TEXTRON
Mr. A T K I N S . Mr. Chairman, first off, I have made a career out of
working for Bell Co. I started with them back in 1941. And other
than spending 4 years in the Air Force in World War I I I have
stayed with the Bell Co. for the last 35 years.
And in that time, I have attempted to build a company based
upon integrity and credibility. And from a personal standpoint, I
think you could check with my customers and my employees, and
you would find that I have a pretty good reputation for that.
Now, these investigations and the publicity that has resulted from
these investigations have been very trying on me, and on my family.
And of course they are of great concern to me because of their
reflection on Mr. Miller.
So, I am going to try to, first off, set the whole scene and give you
a picture of how I see the situation.
Now, this morning Mr. Ducayet and Mr. Jose had problems in
remembering back 12 years; and I would like to show you the extent
of this overseas business at that time. It may give you a better picture
of why they didn't remember certain things.
Now from our financial history for the years 1964 through 1967,
Bell did $1,142,000,000 in business—total business. And during that
(74)
75
same time frame, the international business was $68 million, or
about 6 percent of our total over that 4-year period. Iran and all of
Asia was a very small part of this 6 percent.
For those 4 years, we had sold a total of 15 transporters in Asia—
not just in Iran, but in Asia—and that will give you some idea of
why Mr. Ducayet and Mr. Jose were not overly concerned about
Iran at that time.
You might be interested in just 1 year. In the year 1967, Bell
built 1634 Hueys and 110 Cobras for the U.S. Army. So from 15
transports over a 4-year period, to 1750 transport-category aircraft
for the Army, you can see what a small part of our business that
Iran and Asia represented at that point.
Now let's talk about our organization for a bit. Mr. Ducayet became president of Bell Helicopters in 1960, and I became his executive vice president. We had 10 major functional departments that
reported to Mr. Ducayet through myself.
Mr. Ducayet and I worked as a team. We did not involve ourselves in the same situations, but those 10 functional departments—
the vice presidents of those departments—had the right to talk to
either of us about a particular problem. And normally they would
talk to the principal that was in town, or they would talk to the
principal who was closest to their particular problem. So that, again,
may show you why Mr. Jose may have talked to Mr. Ducayet about
the international consultants situation.
OK, moving from that and picking up with Air Taxi—and
remembering that they were first appointed a Bell representative in
1959, and that they were replaced iji 1964 by International Helicopter Consultants—when, 1 think Mr. French testified, I heard
some testimony that during that time frame I think he was testifying that he thought that General Khatami had some interest in
Air Taxi.
If that was so, why would they move from Air Taxi to Helicopter
Consultants, who admittedly had very little influence in the country ?
Now, it sort of says to me that Bell did not recognize that General Khatami had an interest in Air Taxi.
Now, going on from there and up through the 1968 timeframe,
I had no knowledge of the statement that Mr. Bell had made but
I certainly would have reacted that: If the Pars corporation which
they were proposing to form was going to have General Khatami
as a partner I would have certainly reacted that we wanted no part
of a relationship with Pars.
,
I also feel that the statements that were made about General
Khatami having ownership that I've read in the last 2 weeks indicates that there were "allegations"; they were not facts.
There may hav£ been facts some place, but to me, Mr. French and
Mr. Bell, from the testimony I have ready, they talked about cock-,
tail rumors, and stuff of that type.
So I think that Bell reacted pretty well in terminating International Consultants before the end of 1967; and I guess I think
that Cessna terminated International Consultants 6 months later,
and they had received the information at the s&me time as Bell
had received it.
76
Now of course we went back in 1969, or 1968, and went back to
Air Taxi. And why we did that, I'm not sure. I became interested
in the Iran program, basically in the late 1970's, early 1971. And at
that time, we received a D&B report which showed Mr. Eshoo
and Mr. Chafik as the owners—the 100 percent owners—of Air Taxi.
The D&B also said something else. First of all, it said the corporation was organized in 1958. Second, it said that they were operating on a large scale, a company of high repute and high standing in the community, considered trustworthy for engagements.
That was in the D&B report we received in October of 1970.
And to me, that was a pretty good reading on a representative in
Iran.
OK, from there let's talk about the product just a bit. Now, I
noticed in the testimony—the 600 pages of testimony I previously
gave—I brought the product into play several times, but it does
not appear in the staff's report.
And in my experience, a government procures an aircraft because of the performance, or other capabilities of the aircraft. And
when, in the 1970-71 timeframe, the Iranian government made a
decision to attempt to develop an Army aviation program, they
certainly looked to the U.S. Government and the U.S. MAAG for
advice. And certainly for their use, the Bell ships that had been
proven in Vietnam, they were the right product to buy.
Really, there was no competition. It just—the Huey transport
sold around the world 10,000 of them built. It was the right product for them to buy.
Now I imagine that U.S. MAAG would have recommended the
Bell product, but even then the Iranians were concerned about the
performance of the Huey machines that they had previously bought
from Aguste. And we went into a product evolution program to
build a super-Huey, and a super-gunship, which was more—which
would have greater performance in their hot and high temperatures.
In my opinion, the product was 85 percent of the reason why
Bell won the program. And I think that has been overlooked in the
staff report, and I think it is something that the committee ought
to give consideration to.
Now when we offered to improve the product, the Iranian government did not say: OK, we will buy your performance, and we
will buy your aircraft because you say it has certain performance.
But, rather, they said to us: Bring two prototypes to Iran and
perform our mission in six or eight hot and high places.
And we spent the better part of a month, with a team of about
50 people, touring Iran and showing our performance in these hot
and high places.
That demonstration, which finally ended up being given to
about BOO of the Iranian military at a site outside of Tehran, was
the main reason that His Majesty finally decided on this program.
Now, what about the role of General Khatami?
Well, there have been allegations made that the General owned—
had an ownership interest in Air Taxi. The committee report
savs that there were reports available from the CIA and DOD
intelligence agencies.
77
Well, certainly these reports were not available to Bell; and
certainly I personally was visiting the MAAG offices, and the
embassy offices during the completion of that sale in late 1972, and
no one in the U.S. Government made any statement to me that
indicated that General Khatami had an interest in Air Taxi. And
they fully understood, as did the Iranian government, that Air
Taxi was the Bell agent.
Now, I personally met General Khatami one time. That was in
his office. I think it was on the 1971 trip in October. I spent about
a half hour with the General. I explained to him the performance
qualities of our product, and we had a very formal half-hour
meeting.
And that is the only time that I had the privilege of meeting
with the General.
The C H A I R M A N . That was General Jablonsky?
Mr. A T K I N S . General Khatami.
And of course I felt, from my contacts in Iran, that the source
of the procurement would be the military-industrial organization,
and General Toufanian from that organization would take the
recommendation to His Majesty for final approval.
I considered the MIO to be the pivotal point in the selection
process—not General Khatami. I understood that General Khat^
ami was a very well recognized aviator, and I'm certain that his
opinion may have been valuable to His Majesty in making a final
decision, but in my mind, General Toufanian led the way. He
formulated the program; he made the recommendations.
And when His Majesty finally called us to his office to tell us
that he had selected our program, it was General Toufanian that
was in the office and not General Khatami.
So in my opinion, General Toufanian and His Majesty made the.
selections on our program.
Now as a result of all this, we had a dealer, or a representative—Air Taxi—and they had a legal contract with us. And we needed
to find a way to compensate Air Taxi fairly, and at the same time
we needed to find a way to terminate our agreement as far as
future military business was concerned.
And as a result of that, we went through two or three amendments to our agreement and finally arrived at the settlement of
$2.9 million.
I personally was involved in the final negotiation of it. I can
say, very truthfully, that if we had not paid the $2,950,000 we would
have had a lawsuit. I felt that it was a very fair and reasonable
compensation, when you recognized that it was only six-tenths of 1
percent of the sales value of the first contract. And since that time,
we probably have received another $1.5 billion in contracts.
So, I thought we conducted ourselves well. The day, or shortly
after we negotiated this agreement with Air Taxi, we submitted the
final amendment to the Air Taxi agreement to the U.S. Army
contracting officer. And he had been advised early in the negotia^
tion period that we had an agreement with Air Taxi. He had been
provided amendments one and two, and now here was the final
amendment.
25-067—78
6
78
And of course in the final transaction, the $2,950,000 was paid by
Bell out of its profits, and no part of it was charged to the U.S.
Government, or to the Iranian government, in any way.
So, Mr. Chairman, I think we conducted ourselves in a very
honorable way; and it is something that has hurt us quite a bit,
to see the allegations that are made about "bribes," and all of the
rest.
And certainly when you think about Mr. Miller and the outstanding person he is, and how he has the highest standards in the
world, you recognize that if Mr. Miller cannot be confirmed for
this job, no U.S. citizen can be confirmed.
So with that, sir, that concludes my statement.
The C H A I R M A N . Well, thank you, Mr. Atkins, for a very, very
impressive statement. We very much appreciate it.
I would like to ask you some questions about your relationship
as supervisor of Bell Helicopters, or as chief executive officer of
Bell Helicopters with Mr. Miller who, as I understand it, was not
only the head of the corporation but he was the head of this particular group—the Aerospace group—and he had, therefore, a
peculiar and special responsibility.
M r . ATKINS. Y e s ,
sir.
The C H A I R M A N . Y O U testified earlier that Mr. Miller supervised
Bell Helicopters until 1974. Is that right?
How frequently were you in contact with him during that period ?
Mr. A T K I N S . Well, I testified incorrectly before. I said " I thought"
1974. It was actually November of 1972. I went back and checked
my testimony.
So he was our chief officer until November of 1972, and then at
that point Mr. Ames took over as group officer of the Aerospace
group.
The C H A I R M A N . And what matters did you discuss with Mr.
Miller during that period ?
Mr. A T K I N S . Well for example, I was discussing with Mr. Miller
and Mr. Ducayet—often the three of us were discussing the Iranian
program that we were trying to build.
We discussed the fact that we had a representative in Iran. I
personally considered that I heeded a way to terminate that agreement, at some point.
We discussed the negotiation that we were going through to
arrive at that termination.
That is about the extent of our discussion.
The C H A I R M A N . Well, let me see if I can get a little bit before the
termination matter came up.
Referring to the period between 1968 and 1972 inclusive, what
did you tell Mr. Miller about the sale of the 489 helicopters as the
sale of the 489 helicopters came closer to fruition in 1972 and 1973?
Mr. A T K I N S . Well I think that I made two basic trips to Iran——
.The C H A I R M A N . Let me just refine that a little bit, so you'll know
what I'm trying to get at.
Did you discuss with Mr. Miller the Bell Helicopter sales strategy,
in fact? That is, Bell Helicopter's agent in Iran—-his role, the
79
importance of General Khatami to the sales, and any commissions
that Bell would have to pay in connection with these helicopter
sales ?
Mr. A T K I N S . Well, Mr. Miller was very familiar with the fact
that Bell had a worldwide representative organization—some 40
representatives around the world. He was well familiar with the
fact that we had a standard agreement that each representative
signed. He was aware of the fact that these standard agreements,
when they reached a certain point, the payments to be made to the
representative would be a negotiated settlement.
The C H A I R M A N . That was for over five helicopters?
Mr. A T K I N S . That's correct, sir.
And first of all, when we started this program we were looking
at 30 armed helicopters. And the program grew, from the period
of 1971 to 1972, and throughout that period we weren't quite sure
how large the program was. We, at one point, thought it was 30;
we then upped our estimates to 100; and then, I think in August
or so, I was thinking 300; and then it turned out to be 500.
So the commission that would be payable would of course depend
on the size of the program. And as we went through the negotiations to attempt to fix this commission with the representative, we
kept Mr. Miller advised of what we were doing.
The C H A I R M A N . What questions did Mr. Miller ask of you about
the pending helicopter deal ?
Did he ask about the representation you had with Air Taxi, at
any time?
Did he ask anything about the ownership ?
Mr. A T K I N S . I don't believe he asked anything about the ownership. He knew that Air Taxi represented us, and other than to
inform him of the general ground rules on which we were trying
to negotiate, I think that is about the extent of the information
I gave him.
The C H A I R M A N . N O W , with respect to your own information
about the knowledge of the ownership of Air Taxi, you say until
a few weeks ago you were not aware of General Khatami's ownership?
Except by the cocktail party rumors or things of that nature?
Mr. A T K I N S . NO, sir, I did not hear those cocktail party rumors.
I was unaware of the International Helicopter Consultants correspondents. I had a D&B report that told me who the owners of Air
Taxi were.
When we came to making the settlement with Air Taxi, we asked
for a resolution from their board of directors authorizing Mr. Zanganeh to make the settlement. He gave us that resolution, and as a
gratuity, he threw in the fact that the three owners—Chafik, Eshoo,
and Zanganeh—they signed as owners of 100 percent of the shares.
So that was in 1973. So that is about my extent of knowledge of
General Khatami's ownership, and I don't really know what the
committee has and whether they have allegations or whether they
have proof that General Khatami had ownership.
The C H A I R M A N . Y O U said you talked with General Jablonsky;
is that correct?
80
Mr. A T K I N S . N O ; I said General Khatami. But I may have talked—
I may have talked with General Jablonsky maybe once in my
life, and that was before he went to Iran.
The C H A I R M A N . General Jablonsky was our Army representative
in Iran.
Mr. A T K I N S . Yes; but before he left, went to the country, I think
I talked to him. I think that was the only time I talked to him.
The C H A I R M A N . General Jablonsky has been deposed, and we have
an affidavit here that he knew of the ownership by Khatami of
Air Taxi. He said he first heard in 1966. But he said, " I believe
this information was common knowledge in our military circle of
friends at that time." That is his testimony.
Now, you say you understood that Mr. Zanganeh was one of the
three owners, but you did not know Mr. Khatami was.
Mr. A T K I N S . That's correct.
The C H A I R M A N . N O W , what about Mr. Zanganeh. Wasn't he on a
High Council of Aviation in Iran? Isn't that the Iran equivalent
of the CAB or the FAA?
Mr. A T K I N S . I have no knowledge of that, sir, that he was.
The C H A I R M A N . At any rate, Air Taxi was probably owned by
Mr. Zanganeh; you are aware of that.
M r . ATKINS. Yes,
sir.
The C H A I R M A N . D O you think you had any kind of an obligation
to inquire about the identification of Mr. Zanganeh with the Iranian government, or did anyone who worked for you do so?
Mr. A T K I N S . Well, let me say that the Iranian government understood that Air Taxi was our representative. The U.S. Government
understood that Air Taxi was our representative. Both understood
that.
The C H A I R M A N . Yes; but I'm asking about Mr. Zanganeh inasmuch as Mr. Zanganeh was an official of sorts. He was on the high
command of the aviation council, which, as I say, is an official government body in Iran.
Mr. A T K I N S . Was that during the period that he owned Air Taxi,
or was that some other period?
The C H A I R M A N . Well, my information must have been during
an earlier period.
But, at any rate, he did have some kind of a connection of that
sort.
Now, Mr. Atkins, I would like to ask you about your authority
to negotiate a $2.9 million settlement with Air Taxi, and also the
earlier agreements—the earlier amendments, I should say.
You said that you had a situation where you had a fixed commission up to five helicopters. After that point, there was negotiation.
Mr. A T K I N S . Bight.
The C H A I R M A N . Was your authority to negotiate a $ 2 . 9 million
settlement with Air Taxi ?
What authority or instruction did you receive from Mr. Miller
or from Textron's board of directors in negotiation of payment
to Air Taxi?
Mr. A T K I N S . Well, the authority to negotiate that $ 2 . 9 million
was within my charter.
81
When you're playing around with $5- or $6- or $700 million
worth of business, $3 million is not very large.
So it was within my charter to negotiate for $3 million.
The C H A I R M A N . Except it could be very large when you were
down to the point where you recognized that you had to take it
out of your own profits. It was not something that could be added
onto the cost.
Mr. A T K I N S . That's correct.
And I did consult with Mr. Miller. I told him a general area
where we would negotiate, and I made him understand that we
would be paying this out of our profits.
Mr. C H A I R M A N . Was this matter presented to the Textron board
of directors?
Mr. A T K I N S . Sir, I don't know.
The C H A I R M A N . What authority did Mr. Sylvester and Mr. Rudning have to amendments 1 and 2 of Air Taxi and initially expose
Bell Helicopter to a $10 million commission?
What did you tell them ?
Mr. A T K I N S . Well, Mr. Rudning had been manager
The C H A I R M A N . I'm very sorry. I'm going to have to interrupt
because that's the last five minutes of roll call, and I have to run.
Senator Brooke went over early and should be back in about two
or three minutes. So if you will just wait, we will resume the questioning right away.
TBrief recess.]
Senator B R O O K E [presiding.] The meeting will come to order.
Mr. Atkins, you testified that you had a meeting with General
Khatami; is that correct ?
Mr. A T K I N S . I had one meeting with him.
Senator B R O O K E . And when was that meeting held ?
Mr. A T K I N S . I believe that was in October of '71.
Senator B R O O K E . Now who arranged that meeting?
Did you ask for the meeting or did General Khatami ask for
the meeting ?
Mr. A T K I N S . I asked for the meeting. And Mr. Zanganeh, the
manager of Air Taxi, arranged the meeting.
Senator B R O O K E . Where was the meeting held?
Mr. A T K I N S . In General Khatami's office.
Senator B R O O K E . Why did you ask for a meeting with General
Khatami?
Mr. A T K I N S . Well because we were coming in the country—we
had not been established in the country. I recognized that the army
had a limited capability as far as aircraft programs were concerned. And I considered that, with a good part of our marketing
policy, to advise General Khatami of the particular characteristics
of our products.
Senator B R O O K E . N O W you did not know General Khatami at all,
did you?
M r . ATKINS. N o ,
Senator
sir.
BROOKE. Y O U
M r . ATKINS. Y e s ,
sir.
only knew him by reputation ?
Senator B R O O K E . And you thought it was best to advise him of the
product that you were trying to sell ?
82
Mr. A T K I N S . That's correct, Senator.
Senator B R O O K E . Did you feel that he had some influence in orders
for your helicopters?
Mr. A T K I N S . Well, I fully recognized that he was highly respcted by the U.S. MAAG. I fully recognized that he was considered to be an aviation expert. And I felt that in some way he
might have an imput to His Majesty before the final decision was
made.
Senator B R O O K E . Who told you of his influence with the Shah?
Mr. A T K I N S . I don't think I remember. But being a four-star
general of the air force in Iran is a pretty high-level position.
Senator B R O O K E . Yes but this was an army purchase, was it not?
M r . ATKINS. Yes,
sir.
M r . ATKINS. Y e s ,
sir.
Senator B R O O K E . At any rate, you found out from some source or
sources that General Khatami had influence with the Shah and that
he was a man well versed in the type of equipment you were trying to sell to the Iranian government.
Mr. A T K I N S . Well, I would not consider him a helicopter expert
or anything of that type, but I felt that in a marketing program,
you contact all the possible tentacles that lead to a final decision,,
and I thought he was one of those people.
Senator B R O O K E . Did you see anyone else other than General
Khatami ?
Mr. A T K I N S . Yes, I'm sure I did. Basically—not in the air force.
Basically, I think, I ,saw General Khosrodad; I saw General Kliosrodad who was going to lead the new army aviation program. I
saw General Toufanian. And, of course, I saw Mr. Dehesh. At that
point, the decision makers in that country were very limited, so
there were probably four or five principal people.
Senator B R O O K E . At that time had you heard any rumors that
General Khatami was an owner of Air Taxi or had ever been an
owner of Air Taxi ?
Mr. A T K I N S . I hadn't.
Senator B R O O K E . N O W you said you had a conversation which
lasted about 30 minutes?
Senator B R O O K E . What was that conversation with General Khatami about, and who was present at the time?
Mr. A T K I N S . I believe Mr. Zanganeh was there, and I believe Mr.
Sylvester was with me.
And Ave were describing to the General the characteristics of the
products, improved aircraft, that we were going to offer to their
country.
There were Bell Hueys in Iran. We had been watching the performance of those aircraft, and we saw that they were having
trouble because of the high mountain conditions of Iran.
Senator B R O O K E . Did you discuss anything other than the technical matters dealing with the aircraft?
Mr. A T K I N S . Not to the best of my memory, sir.
Senator B R O O K E . N O W , Mr. Zanganeh at your request set up the
meeting with General Khatami?
Mr. A T K I N S . That's correct.
83
Senator B R O O K E . Did lie tell you anything about any relationship
that he had with General Khatami?
Mr. A T K I N S . Well he told us that he had several air programs
that he was involved in. He operated Aero Commanders for the
Iranian Air Force.
Other than that no.
Senator B R O O K E . Did Mr. Zanganeh tell you that General Khatami had any prior relationship with Air Taxi?
M r . ATKINS. NO sir, h e d i d
not.
Senator B R O O K E . Did you discuss with Mr. Zanganeh the ownership of Air Taxi ?
Mr. A T K I N S . Yes. At one time during the 1972 trip I had a discussion with Mr. Zanganeh about that issue and he confirmed the
ownership as shown on these documents that we have.
Senator B R O O K E . Did you raise the question or did he volunteer it?
Mr. A T K I N S . I raised the question.
Senator B R O O K E . Why did you raise the question?
Mr. A T K I N S . Because I was interested in knowing. I recognized
that I had a contract to settle and I wanted to make sure that I
had the same owners as I knew were the owners.
Senator B R O O K E . Did you ask him about any previous ownership
of Air Taxi?
Mr. A T K I N S . I can't remember doing that sir.
Senator B R O O K E . Were you concerned about it?
M r . ATKINS. N o
sir.
Senator B R O O K E . Did you look into the ownership of Air Taxi
while you were in Iran on that trip ?
Mr. A T K I N S . N O sir. I think we were relying pretty heavily on
the D&B report that we had dated 1970.
Senator B R O O K E . And you thought you were dealing with the
principals as were contained in that report?
Mr. A T K I N S . Yes sir. And as far as I know—I still don't know
that they are not the principals.
Senator B R O O K E . But you do know that at sometime prior to
1965, General Khatami was an owner of Air Taxi; you know that
now, do you not ?
Mr. A T K I N S . NO, sir, I do not know that.
Senator B R O O K E . Y O U have not seen anything that would convince you that he was an owner at that time?
Mr. A T K I N S . The only thing I've seen is some letters from Mr.
Bell, and they were allegations. And I have no knowledge.
I have heard you folks mention the CIA report and an intelligence report, and, of course, we don't have access to such reports.
Senator B R O O K E . What about the Defense Department reports ?
Mr. A T K I N S . Well, the DOD intelligence report is the one I'm
talking about.
Senator B R O O K E . Well, couldn't you ascertain from the Defense
Department whether he was or was not?
Mr. A T K I N S . Senator Brooke, the Defense Department negotiated
a letter of offer with the Iranian Government. They knew that Air
Taxi was our representative. So, certainly, if they had any information, they would have put it on the table.
84
Senator
BROOKE.
And they never did?
M r . ATKINS. NO, sir.
Senator B R O O K E . N O W , you heard Mr. Jose testify today—were
you in the hearing room?
M r . ATKINS. Y e s ,
sir.
Senator B R O O K E . Mr. Jose testified that he did meet with Mr.
Bell and that Mr. Bell did tell him that General Khatami was an
owner of Air Taxi.
M r . ATKINS. Y e s
sir.
Senator B R O O K E . He said it was rather inconceivable—and I
don't want to paraphrase what he said—but he said it was sort of
a fantasy thing, this whole story, and that he did not, to the best
of his recollection, communicate it to Mr. Ducayet. And you were
immediately working—you were the one, as executive vice president, working with Mr. Jose, were you not?
Mr. A T K I N S . Well, in my opening statement, Senator, I talked
about our organization, and I talked about the fact that Mr. Ducayet sat as president; I sat as executive vice president. There were
10 functional departments that reported to him through me.
Now, each one of those vice presidents knew that they could go
to either of us on any particular situation. Quite often one of us
would be out of town. Quite often one of us would have a greater
degree of expertise in a subject than the other would have.
So it was not unlikely for Mr. Jose to consult directly with Mr.
Ducayet, any more than it was for the vice president of engineering
to consult directly with Mr. Ducayet.
Senator B R O O K E . S O Mr. Ducayet could have had a meeting with
Mr. Jose and Mr. Bell without first having had a meeting with you;
is that correct?
M r . ATKINS. O h , yes, sir.
Senator B R O O K E . That would have been an acceptable procedure?
Mr. A T K I N S . Yes, perfectly.
Senator B R O O K E . It would not have been considered going over
your head ?
M r . ATKINS. NO, sir.
Senator B R O O K E . It might have been you were out of town on the
date of that meeting?
Mr. A T K I N S . That could be.
Senator B R O O K E . If at any time either of them told you about
the meeting, meaning Mr. Ducayet or Mr. Jose, did you know that
thev met with Mr. Bell?
Mr. A T K I N S . Well, I know that Mr. Jose met with Mr. Bell, but
I have no knowledge of that meeting or the results of that meeting, and I first read the correspondence of the past two weeks.
Senator B R O O K E . D O you know yourself what was the purpose
of Air Taxi?
Mr. A T K I N S . Well, Air Taxi was a fixed-based operation at Mehrabad Airport. When we went there in '71 they probably had two or
three major maintenance hangars. They probably had 150 employees. They represented the companies of Avco, DeHavilland, a couple
of others—Bristow—not Bristow but a British company.
85
So they were representing four or five major aircraft companies—
Aero Commander was one of them—and at the same time they
were doing maintenance on the Aero Commanders that the Iranian
Air Force had purchased.
It was a big facility, a big operation.
Senator B R O O K E . Y O U negotiated that $ 2 . 9 5 million, did you not?
M r . ATKINS. Yes,
sir.
Senator B R O O K E . Did you think that that was excessive?
Mr. A T K I N S . N O , sir, I don't.
Senator B R O O K E . D O you think you got dollar-for-dollar value
from it?
Mr. A T K I N S . I think, sir, that a commission of six-tenths of 1
percent of a sale was very small.
Senator B R O O K E . What services, if any, did they provide, other
than a commission on the sale ?
Mr. A T K I N S . Sir, would you repeat that, please?
Senator B R O O K E . What services, if any, did Air Taxi provide
other than the sale itself?
Mr. A T K I N S . Well, they were, of course—by the time of the sale
they had represented us for some 10 years, considering the two
periods of time. They were good sales representatives. They knew
the country well. They could help us meet the right people that
we needed to meet. They could help us with the parsi language..
They could help us with logistics. They could help us with—they
participated in our demonstration at 10 bases across the country.
So they had performed considerable service.
Senator B R O O K E . $ 2 . 9 million was not for services rendered in the
earlier time period; it was only on this transaction. Isn't that
correct?
Mr. A T K I N S . It was only on this transaction, sir, but I think the
total compensation they had received before this was very minor.
Senator B R O O K E . Are you indicating that part of this compensation was for services rendered prior to the second contract you had
with them?
Mr. A T K I N S . N O . What's I'm saying is, a major program of this
type doesn't develop in three months or six months; it takes three
years, perhaps, to develop it. And so over all that period of time
they represented us, and they received no payments until such time
as we had made a sale.
Senator B R O O K E . And if you would agree that General Khatami
was the owner of Air Taxi at the beginning of the first contract,
then obviously Air Taxi received some compensation for services
during that period.
Mr. A T K I N S . I believe in the first period, 5 9 to ' 6 4 , I think I heard
that they received less than $20,000, and I did not know and still
don't know that General Khatami was a co-owner in that time
frame.
Senator B R O O K E . My time has expired.
The C H A I R M A N . Senator Riegle.
Senator R I E G L E . Thank you, Mr. Chairman.
As I understand it, the way the commission business of this sort
works, you have a contact organization in a foreign country and
86
they assist you and you try to develop this business, and it is a
long, slow process and there may be modest payments along the
way that, because they are acted in your behalf, but it isn't really
until you close a deal that a commission is really appropriate.
I mean, I've done selling • myself, and I don't ever recall ever
being paid a commission until finally there was a sale, and that
actually takes place. And I gather that is what happened in this
instance.
Mr. A T K I N S . Well, the payments they received along the way are
less than $20,000, and that was based on spare parts or something
that were to be delivered in the country.
Senator E I E G L E . Eight. But the figure of $ 2 . 9 million, which was
the major commission, six-tenths of 1 percent of the volume or the
value of the first sale, really came as a result of having finally
closed this deal, which was almost 10 years in the making and developed the relationships and so forth.
Mr. A T K I N S . That's right.
Senator E I E G L E . N O W , that seems to me to be a reasonable figure
in terms of the size of the sale.
Now, am I correct in remembering that there was also that if
you had not worked out the commission figure that was acceptable
to both sides, that you were susceptible to legal action by them
against your company for whatever figure that they might want
to press forward and the court might fine them?
Mr. A T K I N S . Yes. We felt that the sum might have been much
higher than the negotiated amount. The negotiated amount was not
only the commission on this large sale, it also had the effect of
terminating their contract. And I could see a billion dollars in
additional business down the road, and so they received no commission whatsoever on future work.
Senator E I E G L E . On following business?
Mr. A T K I N S . That's right.
Senator E I E G L E . N O W , I gather—and if the committee has anything that refutes what I'm about to say, I would appreciate it if
they would make it clear—but we don't have any information as
a committee, insofar as I know, that that percentage figure of sixtenths of 1 percent on a sale of that size is unusual, that it is
larger and, in a sense, constitutes some kind of a red-flag amount
that would be out of keeping with the scale of the transaction.
As a matter of fact, I think, given the size of the sale and how
long it took, that the ownership question aside, you made it clear
what your understanding was of the ownership situation, but the
amount, both as a dollar amount and as a percentage—and they
have to be looked at together—was not something that was out of
the ordinary, in light of the facts of this case, insofar as I am able
to iudge it.
Now, let's talk about Mr. Miller. You worked with him a long
time, and I want you to comment, if you would, about him.
First of all, what was Mr. Miller's feeling in the company about
"bribes, push money, payoffs, overly large commissions that would
get passed back under the table, and so forth? Describe for us, if
87
;you would, what his position was on these matters, and what has
he either said or put in writing as a matter of company policy?
Mr. A T K I N S . Well, first of all, Mr. Miller is a very conservative
person, and even though he is the head of a large corporation, let's
say a $2 or $3 billion corporation, he maintains a minimum office
staff; he is a no-frill man.
Senator R I E L E . That will appeal to the chairman, here.
Mr. A T K I N S . Well, that is very, very true. I think they have
something like 125 people in all of the Textron corporate offices,
which is a very limited amount.
But certainly Mr. Miller—every one of the 65,000 employees
that Textron represents feels that Mr. Miller is a man of the highest integrity who would have no part of any kind of shenanigans.
Senator R I E G L E . D O you recall any situations where business was
offered to the company where there were bribes or payoffs involved
that would have been turned down outright?
M r . ATKINS. Y e s , I
do.
Senator R I E G L E . I S it more than once?
Mr. A T K I N S . Well, there is one major one that I'm thinking of.
Senator R I E G L E . Can you describe it for us ?
Mr. A T K I N S . Without naming the country ?
Senator R I E G L E . Well, let's do it without naming the country at
the moment. I don't think that that's the important part. I think
the important part is the illustration.
Mr. A T K I N S . Well, maybe two or three years ago, we had a call
from a major country, and they wanted to buy so many aircraft.
And our salesman was in the country, and there was a matter of
whether we would agree to increase the price of the aircraft, and
I said, "No, we would not agree to increase the price the aircraft."
Senator R I E G L E . And the idea was how would this money get
funnelled back to that person.
Mr. A T K I N S . Well
Senator R I E G L E . Well, there was some arrangements, presumably?
Mr. A T K I N S . Well, those details weren't worked out.
Senator R I E G L E . But the point is you were offered the business if
you were willing to sell them at an inflated price and somehow
this third-party goods came off, the difference?
Mr. A T K I N S . That's right.
Senator R I E G L E . And what happened in that case?
Mr. A T K I N S . We did not do the business.
Senator R I E G L E . And how big was that proposed sale?
Mr. A T K I N S . That was probably about $ 1 5 or $ 2 0 million.
Senator R I E G L E . SO, you're saying yoa refused it? In other words,
•once you understood the fact that that was the condition of the
sale, you walked away from the sale?
Mr. A T K I N S . We did not have a choice. That is the way you have
to conduct vour business.
Senator R I E G L E . And are you saying there were other situations
like that, that when they came to light that the company would
follow exactly the same practice?
A T K I N S . Well, if there were, they probably did not even
reach me, because the marketing department knows that we go on
88
one basis only; we don't get into any stowed-up prices or anything
of that sort.
Senator R I E G L E . SO, coming back to Mr. Miller—and it would not
be fair to characterize him as somebody who is a corner-cutter or a
guy who is a little flexible in terms of his standards of conduct and
integrity
Mr. A T K I N S . Mr. Miller is inflexible as far as his integrity and
the way he conducts his business.
Senator R I E G L E . I think it would be important—you've seen him
for some time and you've watched him operate and so forth—I
would like you to elaborate a little bit more because I think this is
sort of what is before us, and it is awfully difficult for him to come
in and sort of say those things about himself. And someone could
argue that you are not a disinterested party, just like somebody
could argue that Mr. Bell, who was sitting here before, is not
actually a disinterested party.
But you've seen Mr. Miller close up. You are here as a sworn
witness, and I would like you to describe as best you can, something of his integrity, his personal ethics, his standards of business
conduct. I mean, what kind of a person is this? Because I'm concerned, if he's confirmed as head of the Federal Reserve, I think
that dimension of his makeup and his history and his behavior is
profoundly important, and presumably that is what this whole
inquiry is aimed at, and I would like to hear you describe it for
us as you have seen it.
Mr. A T K I N S . All right, sir.
Of course, Mr. Miller heads Textron, which has some 30 divisions,
and he has these 30 divisions in five corporate groups. He personally over the years has conducted business reviews in each of
those divisions almost every year.
He is a man that—liis integrity is unquestioned. His knowledge
of each of those 30 businesses is amazing. His knowledge of the
people in the corporation is amazing. He pushes equal opportunity
at every chance he gets.
He is clearly an outstanding American, and, as I said earlier
before you came in, Senator, that if Mr. Miller cannot be confirmed
for this job, no American can.
Senator R I E G L E . Well, let me ask you this. Can you ever recall
a time in your history in the business where you saw Mr. Miller
compromise those standards in any way at all ?
Mr. A T K I N S . NO, sir, I have never.
Senator R I E G L E . Have you ever heard anybody else say that he
had?
Mr. A T K I N S . NO, sir, I have not.
Senator R I E G L E . Have you ever, in his private life, aside from
his professional responsibilites ?
M r . ATKINS. NO, sir.
Senator R I E G L E . What would be his reputation in the community
that he has lived in?
Mr. A T K I N S . Well, he has a TrnftMiiL reputation in the community. Of course, he is deeply Involved ffi Redevelopment of Provi-
89
dence downtown center. Of course, he has served on all the good
national programs: the Alliance for Progress, and Savings Bonds,
and all of those programs.
And really, of course, he is taking a great loss to be chairman^ of
the board, and he is willing to do that because of his dedication
to the country.
Senator R I E G L E . Well, you know, when he was first here, he was
introduced—sometimes as is the practice in the Senate for the
Senators from the home state to accompany a nominee and speak
in his behalf, and sometimes it is real and sometimes it's the kind
of gracious tokenism—but the day that he was here, Senator Pell
and Senator Chafee, who represent the two parties, were here, and
I think were probably as extemporaneously lavish in their kind
comments and seemed to be genuine to me. I took both the Senaators' comments on their face, based on what I think in both cases
have been long years of history of personal knowledge, that this is
not a person who would have even the slightest blemish that anyone could identify in their history that one could use even as the
beginning point as a presumption that someone would come here
and with their whole history, their whole career, their whole professional standing, put in jeopardy by testifying falsely before
this committee.
And I frankly don't think that he did. I think that he was
truthful.
But the thing that concerns me here is that the presumption,
until we sort of resolve this matter, the issue still here is the question of Mr. Miller and the degree to which he was honest and
straight in his dealings within the company.
Now, some have raised the question of management competence.
Has there been any way that Textron as a corporation has been
measured by any outside rating groups in terms of its success as a
company and the degree to which it has been well run and well
managed ? In other words, could anyone fairly make the argument
that Mr. Miller really was over his head in managing a company
of this complexity, or has the record of the company over a period
of years been quite outstanding?
Mr. A T K I N S . Well, I think, really, that Textron has been considered one of the outstanding conglomerates in the United States.
It has handled its companies in a very good manner over the years.
We showed continuing growth in the corporation.
Mr. Miller has sorted out the good companies, and they are now
the center of this total conglomerate. He has disposed of other
companies which he did not think had the same opportunities. I
would think—he is president of the National Research Council. I
would say that he is considered an outstanding businessman in the
total business community.
Senator R I E G L E . SO, it would be fair to conclude, then, that he did
not arrive there by accident, that he has a good and effective record
of managerial exercise of responsibility over a long period of years.
My time has expired, Mr. Chairman.
The C H A I R M A N . Senator Schmitt.
90
Senator S C H M I T T . Thank you, Mr. Chairman.
Of course, I'm most anxious to get to the testimony of the general
counsel to try to understand this "open .window" that I referred
to^ and possibly any knowledge that Mr. Miller may have had or
not had on this issue, and the timing of that knowledge.
Mr. Atkins, I would like to ask you, as I have other witnesses,
did you at any time talk with Mr. Miller while he was vice-president of Aerospace or president of Textron about the involvement
of Iranian officials in Air Taxi?
Mr. A T K I N S . Senator, I did not know of any involvement of
Iranian officials in Air Taxi. And I certainly did not talk to Mr.
Miller about it, because I did not have any knowledge of it.
Senator S C H M I T T . And your knowledge presumably came about
the same time as Mr. Miller's, and that is the consequence of these
hearings ?
Mr. A T K I N S . Would you repeat that, Senator ?
Senator S C H M I T T . Your knowledge o f the involvement of men
like Khatami, General Khatami, in the affairs of Air Taxi came,
as apparently did Mr. Miller's, as a consequence of the discussions
during Mr. Miller's confirmation hearings?
Mr. A T K I N S . Yes, sir, Mr. Schmitt, and the problem still remains
that we have not seen anything that says General Khatami had a
relationship with Air Taxi.
Senator S C H M I T T . Have you had access to the staff report ?
M r . ATKINS. Y e s ,
sir.
Senator S C H M I T T . And you feel that within that there is no
definitive evidence that General Khatami had a financial interest
in Air Taxi?
Mr. A T K I N S . That's right. I see allegations in there, and then
they mention CIA reports and intelligence reports, and, of course,
I don't know whether those are reports that are allegations again,
or whether they are really based upon facts. We don't have that
kind of knowledge.
Senator S C H M I T T . Mr. Atkins, can you describe very briefly your
perception of the events leading to the negotiation of amendments
1, 2, and 3 that eventually provided $2.9 million, as what your
records apparently show to be listed, maybe in shorthand, as a
commission, but has been referred to by Mr. Miller, if I remember
correctly, as termination fees or accumulation of different kinds of
fees?
Mr. A T K I N S . All right, Senator, let's go back to the fact that Air
Taxi was our representative for the years 1959 to 1964. During
that period of time, they received very minimum commissions, perhaps on spare parts or something of that type, of maybe $20,000
or $25,000.
They became our representative again in 1968
' Senator S C H M I T T . D O you, by any chance, remember why they
were terminated in 1964?
Mr. A T K I N S . NO. And I brought that up before. If we had known
that General Khatami was a member of Air Taxi at that time,
whv would we have moved over to Mr. Feliton's organization that
had no contacts in that country ?
91
The C H A I R M A N . Will the Senator yield at that point?
Senator S C H M I T T . Yes.
The C H A I R M A N . Yon mean he might move over because of the
fact that General Khatami was an official, and if you were paying;
him a commission you were paying him a bribe ?
Mr. A T K I N S . Well, if we had known that, sir—but we had; no
knowledge of that.
The C H A I R M A N . Well, that's right. But that would be the real
reason you would do it.
Mr. A T K I N S . Yes, sir. And it ought to be.
Senator S C H M I T T . I think Mr. Atkins was implying that if they
were out to pay off General Khatami, that is not the move they
would have made.
But would you continue with amendments 1, 2, and 3.
Mr. A T K I N S . Anyway, in 1968, we signed a new agreement with
Air Taxi. We went into a marketing program that started in 1970.
As we moved into the 1972 timeframe, we recognized that we were
going to make some sort of a large sale. I think I testified before
that I thought—in June of 1972, I thought the sale might be 300
ships, it could be 500 ships. So, there was a team of three of us
that were the principal people working the sale: Mr. Sylvester,
Mr. Rudning, and Atkins.
Rudning was a contract man, so, as we approached, as we moved
through 1972, I said to Mr. Rudning, "Let's negotiate an amendment to establish a percentage commission on the sale so at least
we have a feeling on the sale." And he and Mr. Sylvester negotiated that first amendment, which came up at that 2y2 percent
commission.
Well, then, in late August, early September, His Majesty made
the decision on the program. And when I met with him about thatdecision, he said to me, "This is going to be an FMS sale." I said,
"Fine."
So, we fell back and said, "Well, if this is going to be an FMS
sale, we ought to try to tighten up this commission, especially now
that His Majesty has decided on 489 aircraft."
So, at that point, Rudning and Sylvester again renegotiated that
agreement, and it went to amendment s , and we established a 1
percent commission on an FMS sale.
OK. That was late 1972.
In early 1973, the Government of Iran, in talking to us, had
become concerned about the whole commission matter and said,
"Look, we're not going to pay a large commission on this sale,
whether it is an FMS contract or direct contract."
And these discussions went on, and General Toufanian, in particular, said to me, "I'm willing to pay something that might approximate Air Taxi's costs." And so, we tried to get some records
from Air Taxi to back up what they had expended.
Now, we did not expect a basic commission on what they had
expended, but we thought the allowable commission could be based
on what they expended. So, the negotiation went on. We could not
establish what they expended. They had a big operation, and this
was a piece of it, and there was no way of breaking the costs down:
92
So, Eudning and Sylvester again were trying to negotiate amendment 3, and they were having trouble. They could not reach a
settlement, and at some point they asked me to step in, and I
stepped in, and we finally came to this $2,950,000 as settlement not
only for this particular contract but for all future business that
we might receive.
Senator S C H M I T T . N O W was there anything in the sequence of
events that might have triggered any unspoken or unwritten involvement by Mr. Miller?
Mr. A T K I N S . During the sequence of events I kept Mr. Miller
informed of the general framework of what we were doing, and
the general limits that we were trying to operate within. And
actually, I made the decision on the final payment that was made
to Air Taxi.
Senator S C H M I T T . There was nothing to trigger a more indepth
review of Air Taxi's management structure than what had already
been done?
Mr. A T K I N S . Well, the only thing that happened was, in the final
negotiations we decided that we needed a board of directors' resolution authorizing this transaction. And we requested Mr. Zanganeh to come up with a board of directors' resolution authorizing
him to make the settlement.
At that time they voluntarily, and without a request from us,
signed as the 3 100-percent shareholders of the company. And that
was the original people that had been listed in the D&B report in
1970.
So they gave us a certification, an affidavit, that they were the
100 percent owners of Air Taxi at the time of the payment.
Senator S C H M I T T . And so from your perspective, then, there was
no reason for you to have found out, much less Mr. Miller, about
the allegations, the so-called common knowledge, that General
Khatami was part of the Air Taxi structure?
Mr. A T K I N S . That's correct, sir.
Senator S C H M I T T . Can you explain why the $ 2 . 9 5 million is referred to in your records as a commission, when apparently you
and Mr. Miller and everybody felt it was more than a commission ?
Mr. A T K I N S . Well, the moneys we pay to representatives are
normally called commissions, and I assume that is why it was
referred to as such. But I assume it was a settlement for past and
future services.
Senator S C H M I T T . Well, Mr. Chairman, I again detect that, at
least insofar as the witnesses we've had today on this one window
into the issue, either have no reason to inform Mr. Miller, or for
various reasons, did not, about the possible involvement of General
Khatami or other Iranian officials in Air Taxi. So, again, I think
we need to move on and examine the other window that we still
have opened.
And I think I would also like to add, even though the red light
is on, that once again I personally, at any rate—and I don't think
the committee is trying to investigate Bell or Textron; we're trying
to understand the suitability of Mr. Miller to be chairman of the
Federal Reserve Board.
93
The CHAIRMAN. Well, of course I agree with that. And I think
the Senator from New Mexico deserves a lot of credit for keeping—
hammering away at that. And, he should, because I think there is a
tendency to get too far afield.
But nevertheless, I think you understand, Mr. Atkins, that we
have to get into this because—we have to understand thoroughly,
it seems to me, this $2.9 million payment. We have to understand
the relationship to Air Taxi; the knowledge of Air Taxi; in order
to also understand that the chief executive officer of Bell, Textron,
the man who is responsible for the aerospace division, knew, or
should have known, in general, to judge his conduct.
Now let me ask you this You said that you testified just now that
you and Mr. Sylvester and Mr. Rudning worked as a team to make
this sale?
M r . ATKINS. Y e s , sir.
The CHAIRMAN. NOW
a document recently supplied—and I stress
recently ; it was only a day or 2 ago—by Textron indicates that
General Khatami was one of four people in Iran who had influence
over the sales of helicopters to the government.
Do you agree with that conclusion? That was a memo by a
Textron officer relative to a conversation with Mr. Sylvester. That
was Mr. Sylvester's conclusion as reported by a Textron official.
Mr. A T K I N S . I agree that General Khatami was a very influential
man in the country, and a very good aviation expert; yes.
The CHAIRMAN. Why wasn't that document supplied to the committee prior to Mr. Sylvester testifying under oath? Incidentally,
that document completely contradicts Mr. Sylvester's testimony.
Mr. A T K I N S . I have not seen the document. Is that a Bell document, sir?
The CHAIRMAN. It is a Textron document, I understand, supplied by Textron Interoffice Correspondence, dated April 30th, 1975:
Dobson-Burkdall notes, submitted by BJS, reporting a conversation
they had with Mr. Sylvester, who was your official at Bell.
Mr. A T K I N S . Yes; but I don't know what the document says. I
have not seen it, sir.
The CHAIRMAN. Well, we will give a copy of the document to
you, and I will read it.
Developments in Iran, Frank Sylvester, vice-president of International
Marketing, for Bell Helicopters is extremely knowledgeable. Sylvester advises that there are only four or five people in all of Iran who are influential
in getting defense contracts. Mahavi is ATI agent in Iran; very influential
with Khatami, who is married to the Shah's sister.
And then on the next page:
Zanganeh is arranging—
It's hard to read this because it is in handwriting and not
printed—
Is managing director of Air Taxi, Bell's agent in Iran. And is the man
that Sylvester suggests using as a contact in order to get Khatami's ear and
try to turn him around on buying ATI.
Senator RIEGIJE. Mr. Chairman, could I just inquire—I heard you
read that, and I've looked at that before.
What is the inference that you're drawing from that document?
94
The C H A I R M A N . Well, I'm asking how influential General Khatami really was, in their judgment, in view of the fact that this
was a conversation with Mr. Sylvester. He was an official of Bell
Helicopter. This is Mr. Sylvester that is being quoted. And how
close Zanganeh was to Khatami.
My questions were: One, do you agree with Mr. Sylvester's concerning General Khatami's role in Iran? And you say you did,
actually.
Mr. A T K I N S . Well, the systems they're talking about are for the
air force, so I'm sure General Khatami would have the final say on
whether that equipment was procured for the air force or not.
I really had not seen this document, but I think Mr. Sylvester
is expressing an opinion that the place to go to sell this program
would be to the top of the air force.
The C H A I R M A N . And also through Mr. Zanganeh?
Let me proceed to something else, and I may come back to that.
This was foreign military sales; is that correct?
Mr. A T K I N S . The 4 8 9 ships?
T h e CHAIRMAN. Y e s , sir.
M r . ATKINS. Y e s ,
sir.
The C H A I R M A N . Applicable regulations provide for a possible
dealer commission be allowed as a cost to be included in the contract price; is that correct ?
Mr. A T K I N S . That's correct.
The C H A I R M A N . In Iran, must also be approved by the Iranian
government, as I understand it.
Mr. A T K I N S . Not at that time.
The C H A I R M A N . N O W , was the $ 2 . 9 million payment to Air Taxi
as a cost in this contract ?
Mr. A T K I N S . There was not $1 of that cost that was charged to
that contract.
The C H A I R M A N . That's right, so you could not put it through the
contract; you had to take it out of your own profits?
Mr. A T K I N S . That's correct, sir.
The C H A I R M A N . N O W , as I understand it, at this point the Army
knocked down to $1,000 their judgment as to what the commission
should be; $1,000 per helicopter, per ship; $489,000. Now you're
shaking your head. Why ?
Mr. A T K I N S . Because, sir, that $1,000 was my $1,000. I caused
that to be put in at $1,000. I testified to that, I think, to the staff.
The C H A I R M A N . What did you claim originally in the first contract?
Mr. A T K I N S . I think there were several proposals before we got
to a final one.
The C H A I R M A N . The first one.
Mr. A T K I N S . I think it might have been 1 percent; I~don't remember exactly.
The C H A I R M A N . What would that be in dollar terms?
Mr. A T K I N S . It would probably be $ 4 . 5 million.
The C H A I R M A N . N O W were there negotiations between Bell and
the Army about that $4 million figure ?
ATR A T K I N S . I don't know whether there were or not sir. Mr.
Eudning was handling that. But I think that we had submitted a
95
proposal. We put that commission in there because that was covered by amendment 2.
At the same time we told the Army that we were negotiating
amendment 3. And so, at the same time, General Toufanian had
come back and said he wanted to recognize only reasonable cost.
And as a result of that, the $1,000 a ship was the figure that I put
in, and then wrote—Toufanian came through with a message to
DOD saying he would not pay any amounts on FMS contracts.
DOD talked to me about it, and I withdrew the $1,000 per ship.
The C H A I R M A N . S O do I understand you right? Are you saying
the $489,000 is a reasonable amount?
Mr. A T K I N S . That is just a judgment figure that I used for something that might be cost.
Now, people have different figures. I think Rudning feels the
figure was $1 million or $1.2 million, or something like that. But
it is just a figure that I put in of what might be their cost.
The C H A I R M A N . Was it the Army's judgment that this would be
reasonable ?
Mr. A T K I N S . I don't think the Army made a judgment sir.
The C H A I R M A N . Well, the $ 2 . 9 million then was paid outside of
the applicable regulations on FMS contracts; is that right?
Mr. A T K I N S . Yes; it was a payment by Bell to its representative
out of its profits.
The C H A I R M A N . N O W why did you pay an amount that was in
excess of a reasonable amount?
- - M R . A T K I N S . Well, in any kind of a commission sale, the cost of
obtaining the sale has nothing to do w7ith the compensation that is
paid to the representative.
The C H A I R M A N . Well, you started off, Mr. Atkins, by telling us
that 85 percent of the sales made by Bell officials
Mr. A T K I N S . By Bell products.
The C H A I R M A N . The other 1 5 percent was what?
Mr. A T K I N S . Well, the sale was—to me, that was a big sales
program. And it takes that to win any program. But if you have a
winning product, your sales possibilities are certainly heightened
by that winning product.
The C H A I R M A N . I understand. You did say that 8 5 percent would
be because of product. Who did the selling?
Mr. A T K I N S . I would say that the selling started out to be done
by Air Taxi. I would say that in 1970, late 1971, early 1972, we
took over the sales program. They were supporting us, and we were
leading the sales program.
The C H A I R M A N . N O W the contract that you had, signed by Mr.
Zanganeh, says in part:
The representative shall not be entitled to receive any termination payment
or compensation of any nature because of termination of the agreement
M r . ATKINS. Y e s , sir.
The C H A I R M A N . And yet you paid $ 2 . 9 million.
Mr. A T K I N S . That was not for termination of the agreement.
That was for services performed in a big contract that was in the
process of being signed.
The C H A I R M A N . And what were those services?
96
Mr. A T K I N S . The services? I went through those before. Basically,
they represented us in the early days of the program. They introduced us to the right people. They helped us with the Farsi language ; they helped us with the culture of the country; they helped
us with our logistics problems in doing the demonstration. They
were of considerable service to us.
The C H A I R M A N . But all those services you just told us were
worth, in your judgment, about $489,000 in costs?
Mr. A T K I N S . I am saying that is what they might have expended.
That is purely a guess on my part.
The C H A I R M A N . S O what you told us—you told us earlier, at
least at one point, that you felt that if you went to court, you
might have been obligated to pay more than that.
M r . ATKINS. O h , yes, sir.
The C H A I R M A N . Y O U went to court on a $28 million sale, however, not long before that, and were able to settle for $90,000. Is
that correct?
Mr. A T K I N S . That, sir, was a different situation. First of all,
that is Turkey you are talking about, and it was a giveaway program by the United States government, and the dealer, under the
terms of our agreement, was not entitled to any commission. And
we had to, because it was a giveaway program. And we had to—
we were being sued in New York courts on that termination, and
finally our lawyer settled for $90,000.
The C H A I R M A N . Think of the very powerful position you would
be in court on this one, because the Shah had indicated he did not
want any commissions to be paid.
Toufanian indicated he did not want payments—commissions tQ
be paid.
Mr. A T K I N S . They didn't want commissions to be charged to their
contracts. There is a difference.
The C H A I R M A N . But if they sued, wouldn't they have to show
their costs?
Mr. A T K I N S . Well, sir
The C H A I R M A N . And you contend they would get a settlement
of six times their costs?
Mr. A T K I N S . Take a real estate situation. You buy a $50,000
house, and an agent maybe earns 6 percent. The next house sells
for $500,000. And he probably still gets 6 percent. Right?
The C H A I R M A N . Well, Mr. Atkins, if you want to stop and talk
about the real estate business, of course, that is something else.
Mr. A T K I N S . Well, let's talk about aircraft commissions, then.
Each Cessna and Piper pay 25 percent on aircraft.
The C H A I R M A N . Yes; I've read that in the testimony, and I
understand that well. But you testified to us, that in the first 5
helicopters, you sold 5 helicopters—5 percent, 10 percent; it might
be perfectly reasonable. But when you sell 489 helicopters, when
you sell them under the circumstances, that it seems to me that that
is a very happy commission indeed, particularly when, as you
point out, the costs are probably less than half a million dollars.
97
Mr. A T K I N S . Well, sir, on a normal sale of those 5 helicopters,
the representative would receive probably 6 percent. Now, here he
receives six-tenths of 1 percent.
Senator R I E G L E . Would the Chairman yield at that point?
The C H A I R M A N . My time is up. Would Senator Schmitt permit
me to yield time without taking it out of his time?
Senator S C H M I T T . I'm very generous.
Senator R I E G L E . I thank the Senator. He normally is very generous.
On this letter or memo from Sylvester that you were trying to
read from earlier—and I agree that it is hard to read from—but I
noticed here on one of the points it says, "Sylvester advises that
agent's commission typically runs 5 dash to 7y2 percent of the
contract price."
I assume that sort of fits the range of what you say is the standard sort of 6-percent figure. Now, I can understand, it is not hard
for me to understand, wThen you are using your own money to pay
the commission, that you would have liked to pay the smallest
possible commission that you can get away with. And I'm not surprised that you went in with a very lean, sort of tight-fisted sort of
suggestion of $1,000 a helicopter.
But it's also not surprising to me that in terms of the length of
time that it involved here; in terms of the buildup and the development of this sales environment; and finally, cashing in on
this big order, and negotiating a commission, which is in a sense
to relieve you of the obligation of the court suit, when you might in
fact end up paying more, when you come away paying six-tenths
of 1 percent; I don't think that is an excessive amount in light of
these facts.
It is a matter of judgment. But it just seems to me that if it
were a figure of $20 million or $40 million or something that clearly
stuck out like a sore thumb, I think that would be one thing that,
on the face of it, would make it fishy.
But it seems to me that the amount here is within the bounds of
reason, in terms of the case-facts that we have in front of us.
Now, that is just my own judgment, and I thank the Senator for
yielding.
Mr. A T K I N S . Y O U know, Senator, if you have read the various
stories that have appeared in the press over the last 2 or 3 years
about commissions and the amounts that have been paid, this commission would be much, much lower than anyone of those you've
seen in the press.
The C H A I R M A N . Senator Schmitt.
Senator S C H M I T T . Mr. Atkins, did you ever have an opinion expr^sed bv Mr. Miller about this figure of $2.95 million?
Mr. M I N S . Yes. We talked about it considerably. In fact, as
wre went through amendments 1, 2, and 3, we talked about it. I pretty
much set myself a target somewhere in the $3 million area, and he
recognized I was aiming in that area.
98
The representative, on the other hand, I think was looking for
something like $5 million. And we settled at this $2.95 million,
after a very, very hard negotiation.
Senator S C H M I T T . And the representative might have expected
even more than $5 million, might they, based on previous amendments, such as the 2.5 percent ?
Mr. A T K I N S . In addition to that, Senator, since that time we've
received at least an additional $1 billion in business that brought
the commission down two-tenths of 1 percent.
Senator S C H M I T T . Why do you think Air Taxi agreed to $2.95
million?
Mr. A T K I N S . I think they agreed to it because they understood
we were going to pay it out of our profit. I think that is the main
reason. And, of course, we are pretty good negotiators, and we
were concerned about the fact that we were paying it out of our
own pocket. And I think they took that into consideration in making their decision.
Senator S C H M I T T . What do you think, if they had wanted to
insist on the 2.5 percent, what would have been your comeback
position ?
Mr. A T K I N S . I think if they were going to insist on the 2.5 percent we might as well have taken them to court.
Senator S C H M I T T . And what would have been the basis for your
argument? What would you have done in court?
Mr. A T K I N S . Well, by the time we got to this, we were down to
1 percent, because amendment 2 was 1 percent, and between the 1
percent and the $2.95 million, there must have been a way to
compromise that, probably.
Senator S C H M I T T . D O you think you could have won that case in
court ?
Mr. A T K I N S . I don't know, sir, I really don't.
Senator S C H M I T T . Wouldn't it have been tough to get out of
that amendment, No. 2 ?
Mr. A T K I N S . It would be, and especially when 1 percent is not a
very large commission. If you will check on any of the big aviation programs, you'll find that they have ranged anywheres from
eS to 7y? to 10 percent. So it was a pretty negligible commission,
considering the size of the sale.
Senator S C H M I T T . Mr. Atkins, were you aware of Mr. Miller's
request for the general counsel—and I apologize, every time I
start to use your name, sir—I'm not sure, but were you aware of
the request for another look at that $2.95 million payment, to see
if there might not have been some problem with the ownership of
Air Taxi?
Mr. A T K I N S . Well, I don't believe the thought was, there was
anything wrong with the ownership of Air Taxi. I believe that
Touch Ground was about to do a registration statement, or something of that type, and Mr. Soutter considered the fact that he
should have some kind of review of the Iranian commission. And
he came down to the plant with Mr. Ames, and he conducted his
review, and in the course of that, I talked with him, and several
of the people involved in the sale talked with him.
99
Senator S C H M I T T . And at that time, because you had no knowledge, and the people with whom you talked had no knowledge of
this alleged association, by General Khatami with Air Taxi, that
was never brought up as a subject; is that correct?
Mr. A T K I N S . That is correct. To the best of my knowledge, it
was not brought up.
Now, I was not with him all the time he was in Fort Worth. But
as far as I know, it was not brought up.
Senator S C H M I T T . And in your dealings in Iran—and you've been
over there how many times ?
Mr. A T K I N S . Twenty-five; twice by the time we made the first
sale but I've been there 25 times since.
Senator S C H M I T T . And prior to that discussion on the relook at
the 2.95, you have been there many times?
M r . ATKINS. O h , yes, sir.
Senator S C H M I T T . And you've never heard any of these things
that the staff has come up with that tend to indicate, at any rate,
that Khatami's association with Air Taxi was common knowledge?
Mr. A T K I N S . That's right. And I looked through some of those
names that I heard. Most of them I don't know.
Senator S C H M I T T . Some of them imply ownership; some of them
just imply association or control or something like that.
Mr. A T K I N S . They sounded like rumors that were going around
in the community.
Senator S C H M I T T . But would it be your impression that a man
of Khatami's position in the Iranian government even without a
financial interest, might exercise some influence over Air Taxi?
Mr. A T K I N S . I would not think so. At one point way back he,
of course, was also in charge of civilian air matters. But I guess
for most of the years I've been going over there, he's only held the
one job of commanding general of the Air Force.
Senator S C H M I T T . Mr. Chairman, I have no further questions. I
would yield to my colleague from Massachusetts, if he wishes.
Senator B R O O K E . Just one or two questions.
So far Mr. Atkins, all we have is a statement by Mr. Bell that
he told Mr. Jose, and that they subsequently went to Mr. Ducayet.
M r . ATKINS. Y e s , sir.
Senator B R O O K E . And Mr. Ducayet does not recall that, and now
you say that you had no knowledge of that.
Mr. A T K I N S . That's correct.
Senator B R O O K E . And Mr. Miller at no time discussed Air Taxi or
General Khatami's ownership of it with you.
M r . ATKINS. NO, sir.
Senator B R O O K E . T O your knowledge, no one—you never discussed it with anyone in your organization; is that correct?
Mr. A T K I N S . Did Mr. Miller discuss it with anyone in the organization ?
Senator B R O O K E . That's correct.
Mr. A T K I N S . T O my knowledge, that's correct.
Senator B R O O K E . T O the best of your recollection Mr. Miller
had no knowledge that General Khatami was the owner of Air
Taxi.
100
Mr. A T K I N S . That's correct, sir,
Senator B R O O K E . And when you were in Iran and met with
General Khatami nothing at all was discussed about the ownership
of Air Taxi?
Mr. A T K I N S . That's correct, sir.
Senator B R O O K E . And all you've ever heard, to your knowledge,
are rumors, as you have so classified them?
Mr. A T K I N S . Well, I've never heard any of those rumors directly. I've read some of them in some of these reports, but I've
never heard them directly.
Senator B R O O K E . Prior to reading them in these reports, with
Mr. Miller being nominated for the Federal Reserve, did you hear
any rumors to that effect?
M r . ATKINS. NO, sir.
Senator B R O O K E . Did you ever have any conversations with Mr.
Ducayet relative to the ownership of Air Taxi?
Mr. A T K I N S . NO, sir. Well, Mr. Ducayet was with us through the
year 1972, and basically I was handling the running program,
and I kept him updated on the program as it progressed, and he
recognized what we were doing on amendments 1 and 2 and so forth.
Senator B R O O K E . Why did your general counsel conduct an investigation ?
Mr. A T K I N S . I believe because he was going into a registration
statement.
Senator B R O O K E . There is no direction of any official of Textron
or Bell Helicopter to your knowledge?
Mr. A T K I N S . Sir, you will have to ask Mr. Soutter about that.
Senator B R O O K E , it certainly was not at your direction.
Mr. A T K I N S . That is correct.
Senator B R O O K E . Did you receive any report from Mr. Soutter?
M r . ATKINS. NO, sir, I d i d
not.
Senator B R O O K E . Did you ever see a report from Mr. Soutter?
Mr. A T K I N S . I have recently.
Senator B R O O K E . Prior to the nomination?
Mr. A T K I N S . NO, sir, I never saw the report prior to the nomination.
Senator B R O O K E . D O you have any knowledge as to why Textron
did not cooperate with the SEC in the voluntary disclosure?
Mr. A T K I N S . I think, sir, the main reason that we did not volunteer was that we all thought we have a marketing organization
around the world; we have 40 of these representatives; and we think
we have made payments only properly, and as far as we know none
of this money has been used for unlawful purposes. So, therefore,
there did not appear to be any reason to report it.
Senator B R O O K E . There was nothing questionable?
Mr. A T K I N S . That's right, sir.
Senator B R O O K E . And therefore, you felt that since there was
nothing ouestionable, there was no necessity for you to cooperate
the SEC in voluntary disclosure?
Mr. A T K T N S . That's right, sir.
Senator B R O O K E . D O you remember William French?
101
Mr. A T K I N S . I've never met Mr. French.
Senator B R O O K E . D O you know that he did represent Bell Helicopter in Iran during the 1960's ?
Mr. A T K I N S . I did not know it until this investigation had
started. In fact, I was not questioned about it at Fort Worth, and
later, when I heard about International Consultants, I did not
even know that Mr. French would be the man. So, I have no knowledge of Mr. French.
Senator B R O O K E . Y O U did not know that Mr. Bell represented
Mr. French until this investigation? And you're.talking about the
committee's investigation?
Mr. A T K I N S . Correct.
Senator B R O O K E . D O you know anything about authorizing travel
bv Bell officials to Iran in 1967 to investigate the alleged ownership
of General Khatami's interest in Air Taxi ?
M r . ATKINS. I n
1970?
Senator B R O O K E . 1 9 6 7 .
Mr. A T K I N S . I probably knew that a team had gone out to Iran.
I can't say that I knew that they were investigating General Khatami.
Senator B R O O K E . Did you know the purpose for this trip to Iran?
Mr. A T K I N S . Yes; I would say that they were looking at the
representative situation and attempting to decide what to do.
Senator B R O O K E . Well we have evidence that they went to Iran
for the purpose of investigating the alleged ownership of General
Khatami in Air Taxi.
Mr. A T K I N S . Yes, sir, that is what Mr. Jose said.
Senator B R O O K E . Well, if you knew that, isn't that contradictory
to what you just said, that you never heard of any ownership of
General Khatami until the committee investigation into it?
Mr. A T K I N S . NO, sir, I don't think that was disclosed to me that
they were going out there to investigate that General Khatami was
a part-owner of Air Taxi.
Senator B R O O K E . Y O U just suggested that to the committee just a
minute ago. You just said that you did know. I'm not quite clear.
I'm not trying to confuse you; I just want to get the facts.
Mr. A T K I N S . Well, I did not recognize that that question was
up in the air.
Senator B R O O K E . Well, what did you think they went for?
Mr. A T K I N S . Well, they were going out to look at a new representative. I think I probably had heard that Mr. French was persona non grata and that seemed to be a perfectly reasonable thing
to do. But I don't think they ever came to me and said, "We are
looking at General Khatami and his connection with Air Taxi."
Senator B R O O K E . Did you know that General Khatami was the
subject of their inquiry ?
Mr. A T K I N S . I would say, Senator Brooke, that in 1967 I did not
even recognize that General Khatami was chief of the Iranian Air
Force.
Senator B R O O K E . Well, that might be true, but that is not really
responsive to my question, whether he was or whether he was not.
102
The question I asked is whether you knew that the team went there
to investigate the alleged ownership of Air Taxi by General Khatami?
Mr. A T K I N S . NO, sir, I did not know that.
Senator B R O O K E . D O you recall the reason why Mr. French's
agency agreement was terminated by Bell Helicopter?
Mr. A T K I N S . Actually, as I say, I think I knew that we had an
agent that was persona non grata in Iran, and I think that is about
what I knew about it, and I would expect that if that were the
situation that he would be terminated.
But, again, Senator, the big thing here is that so small amount
of our business was Iran or Asian that the management of the
company did not put a lot of emphasis on that business at that
timeframe.
I testified before I think we sold 15 transports in all of Asia in
4 years. So, that was not a burning fire with us. We were fighting
the battle of trying to get 2,000 ships for the U.S. Army, and I was
in the middle of the production operations, and I really was not
worried about some representative in Iran at that point.
Senator S C H M I T T . If the Senator would yield—they were also
trying to get NASA to buy a lunar flying machine.
M r . ATKINS. A n d
we did,
too.
Senator S C H M I T T . Well, you got them to consider—I mean the
backpack machine.
Mr. A T K I N S . That was the Buffalo plant that was doing that, but
we have the X V - 1 5 flying for N A S A right now.
Senator B R O O K E . Well, I can understand that the volume of the
business was so low that certainly the level of the vice-president or
the president of the company and certainly the president of the
parent company may not have any information.
Actually, though, at one time there was the question of this fee
or commission being in the neighborhood of $6 to $10 million.
M r . ATKINS. Y e s ,
Senator
BROOKE.
M r . ATKINS. Yes,
sir.
Before negotiations.
sir.
Senator B R O O K E . And I would suspect that that might be a sufficiently large sum of money to require the attention of the group
vice-president and maybe the president of the company.
Mr. A T K I N S . Well, sir, I think I've testified that Mr. Miller and
probably Mr. Ames, both—Mr. Miller probably recognized amendment 1 and 2; Mr. Ames and Mr. Miller recognized amendment
No. 3. And I did talk to them about it and I did scope it with
them, and I did background them in what we were doing.
We operate, Senator Brooke, on the basis that we bring to Textron the unusual things, the things that flow in the normal course
of business we would not bring to Textron.
But, for example, we just had a major meeting on a major research and development program that we want to conduct, and our
exposure on this thing is going to be $100 or $150 million. Now,
that is the kind of thing that we like to bring to Textron.
We would also bring to Textron something like our capital expenditure budget, and we will, say, for the next year we want to
103
spend $10- $20- $30 million, whatever it is, and that would go*
before Textron. But basically they gave a great amount of autonomy
to the presidents, and the normal selection of a representative or
something of that type would not be something that we would bring
to them.
Senator B R O O K E . Well, I won't pursue the questioning any
longer, except to say that it is not always the dollar volume that is
involved. There is the matter of the integrity of the company, and
as you said when you first addressed the chair, you are personally
concerned and your corporation is concerned about the corporate
integrity as well as individual integrity. And it seems to me that"
if General Khatami's interest in Air Taxi were a matter of corporate integrity, it was also a matter of, as Mr. Ducayet and Mr.
Jose both testified, being contrary to a corporate policy against
dealing with any sort of kickback arrangement and that it would
be a matter that would merit not only the attention of the president of the company but of the board of directors. And if I were
sitting on the board, I wTould certainly want to know about the
matter that concerned the integrity of the corporation and, potentially, the future life of the corporation.
Mr. A T K I N S . Yes, sir, and I think you brought up the very
reason that I discussed the whole thing with Mr. Miller and Mr.
Ames. The amount of money—I make $20 million decisions every
day of the week, but here was something that was a little bit different, and that is why I fully disclosed it to them before we carried
it out.
The C H A I R M A N . Before I yield to Senator Reigle I would just
like to make one quick observation and ask for your reaction to it.
I think all of us, Mr. Atkins, are impressed by your obvious competence and intelligebe. You are clearly a very able man. I think
Textron and Bell are very fortunate to have you as a top executive, and as soon as I looked at the transcript of your testimony
before us, I was very impressed.
But I cannot understand, for the life of me, how a man who is
as alert and intelligent and aware as you are could go to Iran 25
times and not hear about Khatami's ownership, in view of all of
the documentation we have.
I've got an affidavit here from Harold L. Price, stating that,
"General Khatami informed me in late 1969, early 1970, that he
had an interest in Air Taxi." The political and military affairs
officer in Teheran, Mr. Rouse, said he knew it in 1968 and 1972;
and furthermore, it was widely assumed among Iranians and U.S.
businessmen with defense industries that Khatami did have an
ownership in Air Taxi.
The deputy chief of mission in Iran said he knew it in 1969. The
counselor of economic affairs knew it and said it was fairly common knowledge in the U.S. and Iranian aviation circles.
The commercial attache, Mr. Wesley, said it was an accepted fact
bv those in the aerospace business and those doing business with
Air Taxi.
And Ambassador Andrew Trabor said he knew about it. Former
General Hamilton A. Twitchell, chief of the military adviser group
in Iran, knew about it.
104
It seems to be such common knowledge among these groups, and
they specified that in your business it was well known that General
Khatami was an ownership of Air Taxi.
And yet, with your awareness, your sensitivity, your concern
about this sale, and the fact that you were dealing with Air Taxi,
you did not know it.
How do you explain that?
Mr. A T K I N S . Well, Senator, I think this. By the end of 1 9 7 2 , I
had been in the country twice. That is when the sale was concluded.
The C H A I R M A N . Well, you said you did not know it until 2 weeks
ago.
M r . ATKINS. Y e s , sir. B u t let m e g o
on.
About that time, to me, there was a decided change in the morale
of the way business was being done in Iran. Now, these rumors
might have been going around in these circles, and I could not keep
track of all the names you were talking about, but the only one
I knew on that list was Mr. Miklos, and I know he did not bring
it up to me.
General Twitchell knew we were selling the program, and he
knew that Air Taxi was involved as our representative, I'm sure,
and I don't think that he ever—I don't think I ever met General
Twitchell, but some of our people did.
So, what was common, perhaps, inside the embassy in Teheran
*was not necessarily common to somebody like myself who came to
the country on a spot occasion.
The C H A I R M A N . Well, they're saying it was common among aviation interests and aerospace people.
Mr. A T K I N S . Well, I don't know what they mean there.
The C H A I R M A N . H O W about General Jablonsky? Do you know
liim?
Mr. A T K I N S . I think I met him once in Fort Worth.
The C H A I R M A N . Does he have a reputation for integrity and
honesty ?
Mr. A T K I N S . He certainly has.
The C H A I R M A N . He said, " I heard General Khatami was chairman of the board of directors of Air Taxi." He went on to say that,
"I first heard that General Khatami was chairman of Air Taxi in
approximately 1 9 6 6 , " " and so on.
How about General Price ? Do you know him ?
Mr. A T K I N S . I don't know General Price.
Senator S C H M I T T . I can, in a way, sympathize, although I am
far from finished with questioning of future witnesses, but I can
sympathize with Mr. Atkins, that you might not have found out,
and I doubt if you had quite the staff investigation looking for this
that we have had.
It is conceivable that on 2 visits and maybe even on 25 visits that
this subject would not come up. I, at least can conceive of that
happening.
Mr. A T K I N S . And you know, it is 6 years in hindsight, too, Senator, and that makes a big difference.
T he C H A I R M A N . Senator Eiegle.
< Senator E I E G L E . Thank you, Mr. Chairman.
105
Then, in 1973—you were in 1972 and I gather you may have made
orientation trips to Iran before, but then in 1973 you got this Dun
& Bradstreet—somebody in the company did.
Mr. A T K I N S . That was in 1 9 7 0 . .
Senator R I E G L E . In 1 9 7 0 the company got what they felt was an
authoritative crosscheck on who owned Air Taxi, so it is not as
though you did not have hard evidence to the contrary of the
suppositions that have been put here about General Khatami's
involvement.
So, in other words, you went in, presumably on the strength of
independent expertise that you would normally turn to on ownership so you would have in hand something that would be exactly
contrary to what now—sort of the rumor mill and the people that
w7e've located say that they thought or they had heard or they were
generally in the belief of the situation at that particular time.
But what you've testified to—and I listened very carefully to the
way you responded and you have not been equivocal—in other
words, I have not heard you hedging in terms of saying that you
are clear in your own mind that this issue never arose to you from
anybody within your company or from anybody outside your company.
Mr. A T K I N S . That's correct, sir.
Senator R I E G L E . Well, I think thait is significant, and it also
seems interesting to me that as a company you are still not sure
today, you are still expressing doubts as to what exactly may have
been the role of General Khatami in this whole scheme of things.
And he is not alive anymore. So, I assume that, despite the thoroughness of the investigations, we have not been able to get a hold
of his estate in terms of what happened to the disposition of his
assets upon his death or what they may have been.
But, insofar as I know, we do not have an ironclad case that can
resolve for you the question that still remains in your own mind
as to exactly what his role may or may not have been with respect
to an ownership interest, a cancelled check, an endorsed, that was
cash to go, notwithstanding.
Now, it's also significant to me that you were willing to go to
court and considered going to court to beat down the Iranians on
this commission.
Mr. A T K I N S . That's right.
Senator R I E G L E . And I can understand why. I mean, the logic of
that makes sense to me. It was coming out of your own profits.
You were prepared to drive a tough bargain and you drove as
tough a bargain as you could, and you had contemplated and were
prepared to go to court if you could not exact the figure that you
felt wras less than—that was a better break for you than what you
thought a court would give you.
Now, it seems to me that if we were to take the reverse supposition that somehow everybody in Textron was wired into the fact
that Khatami was part of the deal and we can draw all of the
negative and sort of scheming inferences that that requires, it
seems to me that you would have been very disinclined to think
about going to court, that you would have been much more in-
106
clined to pay whatever you had to pay to keep from going to
court, that your whole impulse would have been to steer clear of
that no matter what and that would not have put you in a strong
position to drive a tough bargain. And, as a matter of fact, you
drove, I think, a remarkably tough bargain.
And I think that if anybody were to try to decide whether the
people who negotiated finally the commission for Air Taxi would
be entitled to a "Golden Fleece Award," that they would not qualify because the percentage commission just does not qualify, according to the "Golden Fleece Award" standards that I normally
see used, to make this a large enough figure percentagewise or in
absolute dollars to have it look like, in effect, that it was an extortion or a payoff or an under-the-table deal.
And the picture that emerges to me is that you are being very
hardnosed about it. You were prepared to go to court, to go to the
mat on this thing, to beat down this commission to the lowest possible level, and I think the figure that you finally arrived at was
pretty much a bargain for your company when all was said and
done, considering, as you said, not just the magnitude of the first
sale—500 units is a big sale, especially in a market where you had
sold 15 transport planes over a 4-year period in an entire sector
of the globe.
So, this was a major breakthrough for you, and I think it is
also significant that, as a followon, you have done an additional
billion dollars worth of business. So, this has been a very substantial piece of work on your part.
All I'm saying is if somebody wants to build a case on circumstantial evidence, it seems to me that one could argue that if you're
going to construct such a case that your behavior along the line
would have been radically different than it was. In other words,
that it is not enough to simply draw an assertion here that, because this man may or may not have been involved in the picture,
that the company knew about it and behaved improperly.
It seems to me there would of had to have been a consistent behavior by the company that would reflect the fact that you knew
you were in that kind of an arrangement; that you were very sensitive about it; that you would go to great lengths to keep it hidden,
and so forth; when in fact your behavior pattern, from day one, has
been totally the reverse of that—totally the reverse of that.
And I would hope, as we have got other situations, frankly, with
other nominees—after the fact that this Administration has gotten
into some difficulty—whose circumstances were profoundly different, where the behavior patterns I think warranted a supposition
that somebody did not behave properly—but I don't find that here;
and others may—and I would certain respect the right of people
here to reach their own judgments.
But in any event, in terms of a very careful tracking through of
the facts, I have not been able to establish the fact that the behavior
patterns show the presumptions of deceipt, of lying, of doubledealing, and everything that presumably would have to work its
way, level through level of the company, and finally up to Mr.
107
Miller, who one would have to believe would be coming in before
this committee and putting his entire career, and professional and
private reputation on the line, and basically just out-and-out not
telling the truth—I mean, there not only isn't any evidence to support that—and I'm talking about Mr. Miller's honesty and integrity—there isn't any evidence to support that; not a shred, that
I can see.
And I would be happy to be challenged on that point, but I don't
think the case of the pattern of circumstantial behavior or actual
practical factual behavior, coming forward through this whole train
of events, can begin to support the assertion that somehow there is
a giant fraud being put forward here to try to induce people to
believe that he in fact knew what was going on, and in any way,
shape, or form condoned it.
I just think the exact reverse supposition is the deserved one. And
I think the committee record now bears that out.
Mr. A T K I N S . Thank you, sir.
The C H A I R M A N . Unless there are further questions, I want to
thank you very much, Mr. Atkins. On behalf of all the Senators
here, I want to say that you are an excellent witness, and certainly
are an able man. We appreciate what you have said, and we also
appreciate—we are all sensitive to the very trying effect this must
have on you and the people at Bell and at Textron.
It is very tough, and it is too bad that this has to happen. But
you can understand our responsibility, and the fact that we have
to pursue this, and we intend to do so.
Mr. A T K I N S . Senator Proxmire, there's one thought I had. It is:
Why can't investigations of this type be carried on, and the facts
not disclosed, until they are all in, so we don't have a lot of suppositions out in the press that turn out to be untrue?
The C H A I R M A N . Well, I will tell you why. If you had been in the
Senate as long as I have—over 20 years—you would find that, boy,
if you talk about suppositions when you are open—we had a meeting here with 15 members, with all of their staff, and so forth. Some
of these rumors would get out, and they would not be all of the facts
that are stated by the witnesses. They might be much worse.
I reallv think it is better to have an open session, in these circumstances. If we tried to conceal this, there would be leaks here and
there, and I think you would have been far more poorly served than
by an open one.
Mr. A T K I N S . We thank you for your time, and we thank your staff
for the way in which they have conducted their investigation.
Senator RIEGLE. Mr. Chairman, might I make one other observation before these witnesses go? And I agree with you, by the way,
that I think that if there is a question it has to be pursued.
I don't think there is any doubt about the fact that if there is
a question, it has got to be dealt with in open session, and not in
closed session. So we are together on that.
But I just want to highlight a summary of the committee affidavit
of responses. We went around—the investigative staff went around
asking people about if they had even heard, in the hearsay category,
about Khatami's interest in Air Taxi.
108
And it is interesting* to note, for example, in the State Department, of the people queried and we thought had reason to know, or
have heard that rumor, sdx said that they had heard this; seven
claimed that they had no knowledge whatsoever; and seven had
no reply.
Of military officers, there were two who said that they had heard
this
The C H A I R M A N . That is now three.
Senator EIEGLE. That is an adjustment to the chart that is printed
here.
There were four who had no knowledge; there were nine who
had no reply.
Under AVSCOM, there were zero that had knowledge of this
supposition; there were 10 who did not; three with no reply.
And Textron, again, zero who had knowledge; there were 10 who
did not; and five who made no reply.
I simply want to put that in the record, because if the inference
were left that, somehow, there was this "unanimous body of informed hearsay," where people were basically all of the same mind,
that that would not be an accurate description of what the committee
record shows.
The C H A I R M A N . If the Senator would just yield on that, I just
can't resist pointing out that: obviously there are millions of Americans who did not know this. All 15 members of this committee,
presumably all 100 members of the U.S. Senate included.
So the fact that the people in the State Department did not know
it—-but what we're trying to point out is that the people that were
in a position to know, we were told over and over again that this
was "reasonably common knowledge" among the people in the aerospace industry in Iran.
Senator EIEGLE. But if the chairman would yield, I mean I don't
want the chairman discrediting the list of witnesses that the committee selected to talk to.
In other words, I assumed the people who were included in here
were asked because they were logical people to ask. We just didn't
go out and grab people off the street.
In other words, these were people who presumably the questioning
would make sense to to put to them, as to whether or not they had
knowledge.
I mean, I have enough confidence in the staff to know that they
would not have included anybody in this question to which the
question was not relevant.
And so, in fact—I mean, if not, then this whole chart doesn't mean
anything. But I'm sure that that was their intent.
And I'm simply saying—Just to conclude, I'm simply saying that
there is not a pattern that shows that everyone who might have
heard this, when asked indicates that in fact they had.
As a matter of fact, less than half the people queried of those who
rn'+Vr had knowledge or said they had heard of knowledge, or
didn't, falls on that side of the argument. But then, if one adds in
the people who made no reply—I mean it is a very small number.
109
I'm simply saying that you do not have a uniform universe of
people who were all traveling under this assumption, and yet the
committee's document holds water. And I have to assume it does.
Senator B R O O K E . Mr. Chairman, I just want to say: Earlier, I was
appalled. Now I am alarmed.
We are not dealing with "rumors". We have not dealt with rumors.
I have paid no attention at all to what allegations there are against
Textron which the SEC might go into. That is not a subject matter
for this committee.
We know, as a matter of record, that at some time General Khatami was an owner of Air Taxi. Our question only is: whether Mr.
Atkins or others knew it and transmitted it to Mr. Miller. If Mr.
Miller knew7 about it, he therefore did not tell the truth to this committee when he appeared before us.
So it is not a question of rumor. We're not dealing in rumors;
we have facts that we're dealing in, and that's all we're dealing with.
We're dealing with facts.
Now, I would agree that, so far as your testimony is concerned,
Mr. Atkins, you have denied that you had that knowledge and
transmitted it to Mr. Miller. Jose has said the same thing. Mr.
Ducayet has said the same thing. Mr. Bell has testified differently,
and I think he was a very honest, forthright witness, and didn't have
any ulterior motives, and I believe that he told the truth. And Mr.
Jose,, who also testified before us, said, "yes, that Mr. Bell had told
him"; and that is where it appears to stop.
But it was our job to find out where it stops, and that is all we're
doing. So we're not dealing in rumors.
We're not trying to, in any way, embarrass Textron, or Mr. Miller,
or anybody else. But we have got to find the facts—and that is all
we have been looking for.
Senator R I E G L E . Senator Brooke, would you yield at that point,
briefly?
Because I don't think it is quite that simple, frankly. I think there
has been some damage done—and I am not suggesting that it was
done intentionally—but I think people in this process have had their
reputations put substantially in question. Perhaps that was necessary
Senator B R O O K E . Whose reputation?
Senator R I E G L E . I think the people from Textron; I think Mr.
Miller's. I think the whole purpose of the hearing is a test of Mr.
Miller's reputation.
Senator B R O O K E . It is a test of his credibility, not his reputation.
Senator R I E G L E . I don't think you can separate the two.
Senator B R O O K E . I think very clearly you can separate his reputation from his credibility. His reputation has not been anything
but the finest. His testimony before us was nothing but the finest.
He was an excellent witness.
I think we all commended him on that. It was not until we found
out that there was some information of General Khatami's ownership of Air Taxi, which we had to look into, that we even questioned
whether he knew about it. And he will come back before us tomorrow. But no one is attacking Mr. Miller's reputation at all.
25-067—78
S
110
There is a question raised as to what he knew. And we have no
evidence, from any source, as yet that I've heard, that Mr. Miller
knew anything about it, or in any way acted on any advice given
to him by any executive within his own company relative to General
Khatami's relationship with Air Taxi.
I think it is as simple as that. I think you are making it more
difficult than it is.
Senator E I E G L E . Well, just one other thought, Mr. Chairman, and
that is this: Mr. Atkins is still not sure, in his mind, Senator Brooke,
like you are sure in your mind, that General Khatami in fact owned
a chunk of Air Taxi up through, presumably, the time that he passed
away.
Senator B R O O K E . He hasn't seen the records I've seen.
Senator E I E G L E . Well, I think the fact that there is that difference, I think that is an important fact.
Senator B R O O K E . That's why he's not asking the questions.
Senator E I E G L E . I think it's important, then, that whatever documentation, and whatever hard proof leads you to that final judgment that in fact there was that ownership, that would be useful in
fact to transfer that to Mr. Atkins.
He's had the committee record, and so there must be something
in excess to what has been made part of the public print that he has
not yet had access to.
But I think it would be useful for them—he, and others, to have
that. Because I think we very much have put the reputation of the
company to a very severe test.
Senator B R O O K E . If he saw the records, that should not alter his
testimony. He is testifying as to what he knew, of his own knowledge.
Senator E I E G L E . I would like him, Senator Brooke, if you have
seen evidence that convinces you beyond any doubt whatsoever that
Khatami owned part of Air Taxi, and Mr. Atkins who has been here
as a very cooperative witness has not seen that and has not yet been
able to reach the same conclusions you've reached, I think it would
be reasonable to give him whatever it is that you've had access to
that led you to that conclusion so that he might come to the same
conclusion.
Senator B R O O K E . I think that's preposterous. He's not going to
make a decision as to whether he's going to vote on the confirmation
of Mr. Miller, at all. He's made his testimony. He's told us what he
knows. That's all he has to tell us. He doesn't have to look at our
documents, or anything of that nature.
He said he never saw the documents. Didn't you say that?
Mr.
ATKINS.
Yes,
sir.
Senator B R O O K E . Y O U had no knowledge of them. You did not see
the CIA documents. You did not see the Defense Department documents. You did not know of all of these names that Senator Proxmire read off to you. You had no knowledge of that at all. Isn't that
correct ?
Now to show you the documents and to say "well, now you have
knowledge of it in hindsight," that would be of no value to this
committee at all.
Ill
Isn't that correct, Mr. Atkins?
Mr. A T K I N S . Yes, I have not seen the documents.
The C H A I R M A N . Mr. Atkins, I want to thank you very much. I
^appreciate your testimony.
Our final witness today is Mr. Thomas Soutter, vice president and
general counsel of Textron.
Mr. Soutter, we are honored to have you. And, Mr. Soutter, do
you have any statement you would like to make initially?
Mr. SOUTTER. NO, I don't, Senator.
The C H A I R M A N . Well, before we begin questioning you, would
you give us briefly, maybe in just a minute or two, your association
with Textron and Bell and how long you've been there, and your
positions of responsibilities and so forth.
But first, would you raise your right hand, sir.
Do you swear that the testimony you are about to give will be the
truth, the whole truth, and nothing but the truth?
M r . SOUTTER. I
The
CHAIRMAN.
do,
sir.
Be seated. Thank you.
STATEMENT OF THOMAS SOUTTER, VICE PRESIDENT AND
GENERAL COUNSEL, TEXTRON
The C H A I R M A N . N O W would you go ahead and enlighten us on
your association with Textron, Bell, and with Mr. Miller?
Mr. SOUTTER. I have been employed as an employee with Textron
since late 1968, and I have been vice president and general counsel
of Textron since 1973.
The C H A I R M A N . What is your responsibility as general counsel?
Mr. SOUTTER. I'm the chief legal officer of the corporation.
The C H A I R M A N . All right, sir, in 1 9 7 5 , did Textron conduct an
"investigation into whethere had been any improper illegal payments made by Textron's overseas representatives ?
Mr. SOUTTER. NO, sir, not a full investigation. I did, in fact, make
an investigation of the payment of the $2.9 million to Air Taxi.
The C H A I R M A N . Y O U did what, sir?
Mr. SOUTTER. I made a specific investigation of the payment of
the $2.9 million to Air Taxi.
The C H A I R M A N . And how was that investigation initiated?
What was the purpose of it?
Mr. SOUTTER. The purpose of it was just to confirm in my own
mind the bona fides of the transaction which had been described to
me as a bona fide, legitimate settlement of a representative's commission obligation.
The C H A I R M A N . You say, in your own mind. Did Mr. Miller in: struct you to make the investigation ?
Mr. SOUTTER. I think perhaps the initiative came from me. He
certainly agreed and concurred that I could go—would be free to
go to Bell to make that investigation.
The C H A I R M A N . Precisely what was the role that Mr. Miller played
" in this investigation ?
112
You say, you thought of making the investigation; you suggested
it to Mr. Miller; and he told you to go ahead?
Mr. SOUTTER. Well, I think it was my idea. I think I probably
discussed it first with the group officer, Mr. Ames. I'm not sure
whether I told Mr. Ames and Mr. Miller in advance that I was
going, but it would not have been unusual for me to say we were
going down, and this was what was on my mind and that I wanted
to look into it.
The C H A I R M A N . H O W did you happen to pick out this particular
matter, this $2.9 million payment ?
Mr. SOUTTER. I asked a limited number of questions within the
company to ascertain where might be sensitive areas that ought tobe looked into, and this seemed to be the largest.
The C H A I R M A N . Who did you ask?
Mr. S O U T T E R . I'm sure I spoke at one time to Mr. Miller and Mr.
Collinson and maybe also to Mr. Ames and possibly other officers.
The CHAIRMAN."Did Mr. Miller bring up the $2.9 million?
Mr. S O U T T E R . He was aware of it. He did not single it out for me.
The C H A I R M A N . Did you tell him you were going to investigate
that particular area?
Mr. SOUTTER. I'm not sure when I told him, when I reported back
or that he simply became aware that I was going down.
The C H A I R M A N . Was this because o f — I think I instigated an investigation of the top 25 defense contractors back about that time.
Was this investigation related to that initiaive on my part at all?
Mr. S O U T T E R . A memorandum that was in the file, which I prepared, said indeed that that was part of the reason that I was
concerned.
Others have testified—and it is correct—that we were about to
undergo a registration statement for a public offering of some debentures, at that time the Iranian business becoming a substantial part
of our business, and I thought the underwriters would want to ask
questions in the course of their due diligence.
The C H A I R M A N . Y O U were about to make a public offering; is that
right?
Mr.
SOUTTER. Y e s ,
sir.
The C H A I R M A N . In connection with that, you wanted to have the
information available so that if it was necessary to disclose that
information in the public offering, you would be informed as to what
you had to disclose?
Mr. SOUTTER. That is correct—as well as to answer the underwriters questions in their due diligence.
The C H A I R M A N . N O W , would you describe to the committee who
actually conducted the investigation and the scope of that investigation.
Were you alone? Did you go down there by yourself?
Mr. S O U T T E R . I went down to Bell, and I don't remember whether
I went with Mr. Ames or not. But in any event, he joined me there.
The people with whom I discussed the matter were Mr. Atkins,
Mr. Farmer
The C H A I R M A N . Well, Mr. Ames, as I understand it, was Mr.
Miller's successor as the vice president in charge of aerospace; is
that right?
113
Mr. S O U T T E R . Yes sir; or at least as the group officer for Bell Heli- copter; yes sir.
The C H A I R M A N . Y O U say that Mr. Ames accompanied you?
Mr. S O U T T E R . I don't remember. I think we may have met there.
The C H A I R M A N . N O W , when you were there you interrogated what
officials of Bell Helicopter?
Mr. SOUTTER. My recollection of the meeting is with Mr. Atkins,
Mr. Farmer, and Mr. Rudning.
The C H A I R M A N . Any others?
Mr.
SOUTTER. N O ,
sir.
The C H A I R M A N . H O W long did the investigation last?
Mr. SOUTTER. It was either parts of 2 days or 1 full day.
The C H A I R M A N . And the investigation was confined to the
million; is that right?
M r . SOUTTER. Y e s , s i r , i t
$2.95
was.
The C H A I R M A N . Were there any documents that you reviewed in
connection with this investigation?
Mr.
SOUTTER. Y e s
The
CHAIRMAN.
sir.
I was shown a series of documents that led through the entire
payment. I was shown the 1968 agreement with Air Taxi. I believe
there was a subsequent one in 1970. I was shown the three amendments to the 1970 amendment. I was shown the Certificate of Authority which legalized—showing Mr. Zanganeh's authority to act.
I saw receipts for checks which had been drawn.
The C H A I R M A N . N O W , Mr. Soutter, I want to be fair to you, but
it seems to me that from what I've heard about this investigation,
that it was an extraordinarily limited investigation under all the
-circumstances given that particular time. This was not an exhaustive, thorough investigation, and it was not the kind of investigation
that was conducted at that time by other corporations.
For example, it was not conducted under the direction of a committee of outside directors; is that correct?
Mr. SOUTTER. That is correct, sir.
The C H A I R M A N . Outside counsel was not retained to assist or to
direct the investigation in any way.
Mr. SOUTTER. No, sir. I was doing it myself.
The C H A I R M A N . Outside auditors were not retained to assist.
Mr. SOUTTER. That is also correct.
The C H A I R M A N . Was any audit made in connection with the investigation ?
Mr. SOUTTER. Audit in the accounting sense?
Yes,
sir.
Mr. SOUTTER. Not to my knowledge, although in the course of the
investigation it became clear to me that Arthur Young did in fact
know—and it was recorded on our books.
The C H A I R M A N . Were you aware that about the same time or subsequent thereto many corporations were conducting internal investigations in connection with their disclosure responsibilities under the
Federal securities laws and elements of independence have been injected into many of those investigations through committees of
-outside directors and the hiring of outside counsel as advisors and
so forth?
114
Mr. S O U T T E R . Yes, sir, I was aware.
The C H A I R M A N . Were you aware that the reason that many of the*
corporations introduced such elements of independence into their
investigation was that there was a concern that they really could
not depend on internal corporate people to investigate themselves
when they might be the very people who had engaged in the improper activities?
Mr. S O U T T E R . That could be, sir.
I'm sorry, sir, I've lost the threads of the question.
The C H A I R M A N . Well, the question was, were you aware that outside people were called in to make the investigation inasmuch as
when you have insiders, and you were an insider—you were employed by Textron and Bell—that they might be the very people
who engaged in the improper activities?
Mr. SOUTTER. Yes, sir, I've heard that.
The C H A I R M A N . And were you aware that many of those same
corporations were conducting extensive personal interviews both
domestically and abroad and extensive document reviews?
Mr. SOUTTER. Yes, I've also heard that, Senator.
The C H A I R M A N . N O W , in the course of the 4-dav investigation at
Fort- Worth and the 4-day investigation up here and the subpoenaingof the records, our staff has uncovered a great deal of information,
including knowledge by employees of Bell Helicopter, that there
were at least rumors—Mr. Jose has testified to that effect, and others
who were subordinate to him knew that there had been discussions
of Mr. Khatami's ownership of Air Taxi.
Mr. SOUTTER. I understand that.
The C H A I R M A N . N O W , you confined your investigation to only three
people: Atkins, Farmer, and Eudning.
Mr. SOUTTER. Yes, sir. Those were the people who had firsthand
knowledge of the transactions with Air Taxi and the payment and
the negotiation of the settlement that was reached with them. I had
no reason in the course of my day or parts of 2 days—call it a full
day in all—to doubt what I was hearing—what they told me and
what the documents that they provided to me said exactly.
The C H A I R M A N . Mr. Soutter, that seems like a very limited, abbreviated, inadequate investigation. Perhaps in hindsight, maybe it's
not fair to you to make that assertion, but in view of the remarkably thorough investigations made by corporations like City Service,
Bristol Myers, Merck, Anderson Clayton, the Williams Companies,
J. Weingerten, Investment Engineering, and a number of others,,
that this seems to be a very limited and I might say superficial investigation.
What would be your response to that?
Mr. SOUTTER. Let me say, Senator, that I believe we thought, as a
management team, that we had the personnel and the policies in
place that should have been down throughout the organization to
assure that there would not be questionable payments.
The C H A I R M A N . We've had testimony just today from Mr. Ducayet
and Mr. Jose that there was no written policy about not paying
commissions to foreign officials; understood, but no policies in place?,
115
no basis on which that kind of—and no basis upon which that kind
of conduct could have been brought.
Mr. SOUTTER. I frankly believe that all senior management at Textron and its divisions would know instinctively and intuitively that
that is behavior that would not be condoned.
The C H A I R M A N . "Instinctively and intuitively"?
Mr.
SOUTTER. Y e s ,
sir.
Mr.
SOUTTER. Y e s ,
sir.
The C H A I R M A N . In other words, they would know without being
told by a kind of osmosis?
Mr. SOUTTER. Yes, sir, I think so.
The C H A I R M A N . Well, as you know, there were some 3 0 0 corporations who have admitted that they made improper payments,
so it is not as if this is something that was not being done overseas.
It seems to me, absent a written policy, absent from procedures,
there would be no way of your knowing that your people were following policies which undoubtedly you espoused.
Mr. SOUTTER. I do espouse them. Textron espouses them. In addition to that, we did beef up our internal audit procedures. We have
put out specific memoranda on the subject of questionable payments
and other questionable activities.
Mr. Miller, in particular, has brought this to the attention of
senior management of the divisions and the corporate office time and
time again.
I personally have given some talks on it.
The C H A I R M A N . I see my time is up.
Senator Brooke?
Senator B R O O K E . Mr. Soutter, how did you happen to pick this
$2.9 million fee as the one to target in on for your investigation ?
Mr. SOUTTER. It was a substantial number.
Senator B R O O K E . I mean, you had other substantial numbers, as
well.
Mr. SOUTTER. NO, sir; not, frankly, in that range.
Senator B R O O K E . Did you pick it out solely because it was $ 2 . 9
million ?
Mr. SOUTTER. I'm sorry, as to why I investigated the $2.9 million ?
Partly because of the size of the commission, of the settlement itself,
partly because the Iranian business was getting to be of such an
extent that there was and remains today—our disclosure documents
filed with the S E C — I frankly felt I had to know more aboutl its
business and its settlement.
Senator B R O O K E . I had a letter from the SEC in which they attach a letter from Senator Proxmire relative to the largest 25 defense contractors.
Did that have anything to do with the fact that you chose to look
into this $2.9 million fee?
That was a confluence of events, frankly.
Senator B R O O K E . Y O U said yes?
Mr. SOUTTER. A S I recall, Senator Proxmire's letter and Chairman
Garrett's replies were somewhere in the same time frame, and my
memo so reflects that.
116
Senator B R O O K E . So that in part was why you chose to look at
this; is that correct?
M r . SOUTTER. Y e s ,
sir.
Senator B R O O K E . Did you have any reason to suspect that there
was any illegal activity?
Mr. SOUTTER. NO, sir, I did not have any reason to suspect that.
In fact, I have been told that it was a legitimate, straightforward
settlement of the representative's rights, obligations in connection
with our Iranian business.
Senator B R O O K E . Have there been any questions raised internally
at Textron or in Bell Helicopter as to the propriety of the payment
of that $2.9 million?
Mr. SOUTTER. NO, sir, not to my knowledge.
Senator B R O O K E . And so it was primarily that you looked over
your business transactions and you found this $2.9 million and you
thought you ought to look into that one because of the size?
Mr. SOUTTER. Because of its size and the attendant business in
Iran.
Senator B R O O K E . Well, if you had been given information that
there was nothing illegal or nothing improper about this particular
transaction, why did you further investigate it?
Mr. SOUTTER. It seemed a prudent thing to do.
Senator B R O O K E . Y O U didn't look at anything else ?
Mr. SOUTTER. That's correct, sir.
Senator B R O O K E . Y O U had been told that everything was all right;
why did you look at it?
Mr. SOUTTER. Senator, I don't know how to say it any other way.
We had an offering coming up. Iranian business is significant to
Textron. I don't remember exactly how significant it was in 1975.
This was a large payment. From what had been described to me,
it was not unreasonable. And it warranted my attention.
Senator B R O O K E . Y O U say Mr. Ames, the group vice president,
assisted you in this investigation?
Mr. S O U T T E R . Yes, he was present with me.
Senator B R O O K E . N O W , whom did you question about the payment,
and what questions did you ask?
Mr. SOUTTER. Well, the people who were present were Mr. Atkins,
Mr. Farmer, and Mr. Eudning. And I believe we probably just went
through and in a chronological order, just how it came to be.
Senator B R O O K E . Did the ownership of Air Taxi ever became a
subject of discussion or inquiry?
Mr. SOUTTER. It was not a subject of discussion until, in looking
at that certificate of authority that Mr. Zanganeh presented, and
has been legalized before the American counsel, and at the end of
that it says who the 100 percent owners are of Air Taxi. And aside
from a specific question, were any of those people officials of the
Iranian Government, the issue of ownership did not come up.
Senator B R O O K E . And what was the response?
Mr. S O U T T E R . The response was no.
Senator B R O O K E . Did you ask anv question about the rehiring of
Air Taxi in 1968?
117
M r . SOUTTER. N O , s i r , I d i d
not.
I knew the chronology of the early days. I was told of that. I was
told of the intermediate representative.
Senator B R O O K E . Y O U knew about Mr. French?
Mr. S O U T T E R . Mr. French's name I'm sure did not come up at all.
But the name of International Helicopter Consultants was provided
to me, and it simply was an intermediate representative.
And the questions and the documentation which followed all
dealt with Air Taxi and the payment of the $2.9 million.
Senator B R O O K E . Did you ask who was the agent prior to Air
Taxi, and why that agency had been terminated ?
Mr. SOUTTER. I think they gave it to me in chronology, as there
had been somebody. And I think I may well have asked why the
change. And I don't think I got an answer. I don't think anybody
in the room knew.
Senator B R O O K E . Did you pursue your question?
Mr.
SOUTTER. N O , s i r , I
did
not.
Senator B R O O K E . Were any of the documents regarding Mr.
French's allegations during 1966 and 1967 about General Khatami's
interest in Air Taxi produced for your inspection?
Mr. SOUTTER. NO, sir, they were not.
Senator B R O O K E . Did you request to interview Mr. Jose who, according to his testimony, was responsible for hiring Air Taxi in
1968 ?
M r . SOUTTER. N O , s i r , I d i d
not.
Senator B R O O K E . Why not?
Mr. SOUTTER. His name did not come up in the entire meeting,
I'm quite sure. It was simply that Air Taxi was back again as the
representative, and we dealt with the developing business from the
1971 to the 1973 time frame through the negotiations of the three
amendments to the final amendment No. 3 in which we agreed to
pay the $2.9 million to Air Taxi.
Senator B R O O K E . S O you did not get an answer as to why they
switched, and you did not ask on your own to talk to the man who
was responsible for the switch. Is that good investigative procedure ?
Mr. SOUTTER. My investigative procedures may need sharpening,
but I was talking with people who I had no reason to disbelieve.
There was nothing in the entire day or day and a half conversation
that made me think in any way that this was other than a legitimate,
straightforward transaction that had been described to me.
Senator B R O O K E . Well, if you weren't going to ask the question,
why did you go through the exercise?
Mr. SOUTTER. Because I wanted to hear it firsthand myself.
Senator B R O O K E . Did you hear it firsthand?
Mr. SOUTTER. I was talking with Mr. Atkins and Mr. Rudning,
who had participated first hand in the negotiations, and Mr. Farmer,
who handled the financial matters.
Senator B R O O K E . N O W , during and after your investigation into
this $2,9 million, did you report to Mr. Miller about your findings?
Mr. SOUTTER. Yes, sir. I did report back to him on my return.
Senator B R O O K E . Was your report oral or in writing?
118
Mr. SOUTTER. I'm sure it was oral.
Senator B R O O K E . Why was it not in writing?
Mr. SOUTTER. I would say that I report most of the times orally
to Mr. Miller.
I would have a list of items——
Senator B R O O K E . D O you conduct most of your business orally,
are your memoranda and results of findings of investigations reported orally ?
Mr. SOUTTER. I can remember simply being in his office and reporting on the results of this investigation.
Senator B R O O K E . Did anyone other than you and Mr. Miller participate in this discussion?
Mr. SOUTTER. I do not believe so.
Senator B R O O K E . What did Mr. Miller say about the investigation
and your findings?
Mr. SOUTTER. I think he was pleased that I was able to confirm
to him exactly as he had understood it to be.
Senator B R O O K E . He was more pleased to find out what the facts
were wasn't he?
Mr. SOUTTER. He knew that there had been a $ 2 . 9 million settlement with Air Taxi, and that it had terminated Air Taxi's rights
to previous commissions, and that there were no more commissions
due for future sales to the Government of Iran.
This I had been told before I went.
Senator B R O O K E . Did he appear to be satisfied that the scope and
depth of your investigation was appropriate?
Mr. SOUTTER. Yes, I think he did, or was.
Senator B R O O K E . Did he ask you had you interviewed or asked
to see any of the documents that you obtained in your investigation ?
Mr. SOUTTER. I may have shown him some of the documents?
Senator B R O O K E . Do you recall which ones?
Mr. SOUTTER. I think I may have shown him the certificate of
authority of Mr. Zanganeh to act on behalf of Air Taxi.
Senator B R O O K E . Why did you show him that document, rather
than other documents that you obtained?
Mr. S O U T T E R . Because while I was satisfied with the investigation
there was a difference in the matter of payment. Those checks were
made payable to Mr. Zanganeh personally, and that is something
that I found different, and wanted to see at the time this power of
attorney, so to speak; this certification that had been legalized at
the American counsel that in fact delegated to Mr. Zanganeh the
full power of Air Taxi to deal totally in the settlement with Bell
Helicopters. And I may well have had that with me to say that this
was a document that had been properly legalized, and was, to me,
valid, and consisted of the power for the way the transaction was
carried forth.
Senator B R O O K E . You're satisfied with the validity of that document?
Mr. S O U T T E R . Yes, sir. I had seen the original.
Senator B R O O K E . Did you discuss with Mr. Miller any further
action that might be necessary with respect to your investigation of
that payment?
119
M r . SOUTTER. N O ,
sir.
Senator B R O O K E . Did Mr. Miller suggest that the matter be brought
to the attention of Textron's Board of Directors?
Mr.
SOUTTER. N o t t o m e ,
sir.
Senator B R O O K E . My time is expired.
The C H A I R M A N . Senator Riegle.
Senator R I E G L E . Just a few things, briefly, and I would like to
reserve the rest of my time.
Do you recall when you had this meeting with Mr. Miller if you
reported on any other items other than this particular one ? In
other words, was this one of several that you were talking about,
<or was this the sole purpose of the conversation ?
Mr. SOUTTER. It would be my practice to take up with him as
many items as I would have on my agenda whenever I meet with
him.
Senator R I E G L E . Well, what would that normally be, just on the
average? Would four or five items, or one or two, or a dozen, or
what?
Mr. SOUTTER. I would say four or five.
Senator R I E G L E . S O I guess you're saying you don't recall specifically how many others there might have been at this time. But
is it a fair assumption that there were other items that you were
also discussing with Mr. Miller at that time?
Mr. SOUTTER. Yes, it is a fair assumption.
Senator R I E G L E . If this were the only thing you were discussing
with him, would that remain in your mind? Would you remember
that this was a meeting of sufficient importance by itself, the subject
that had got the full attention of a session, or not?
Mr. SOUTTER. I remember the meeting.
Senator R I E G L E . Y O U do recall this specific meeting?
M r . SOUTTER.
Yes.
Senator R I E G L E . And do you recall, then, any other subjects ? Were
there any other subjects you discussed?
Mr. SOUTTER. I can't say for sure. It is my custom to come up
with a legal pad full of notes to remind me of the items that I want
to discuss with him.
Senator R I E G L E . Would you be inclined—if this had been the only
one would that stick out enough that you would likely remember
-that?
Mr.
SOUTTER. O h ,
yes.
Senator R I E G L E . In other words, if this had been a one-item meeting, you are saying that you feel that you would remember that it
was a one-item meeting ?
Mr. SOUTTER. NO, I'm sorry. I meant to say, I would simply remember this meeting, and I do remember the meeting. But I can't
tell you whether I had one or two or three other items on my agenda.
Senator R I E G L E . I see. But you are saying it is normally your practice to batch these things. And then you go in, and you run through
the items, and you take them off a yellow pad, and you discuss
them orally, and then you leave; is that right?
Mr. SOUTTER. That is correct.
120
Senator EIEGLE. SO the chances are, while you don't remember
specifically that this was the normal situation, there would have
been other items that you had been discussing that day in addition
to this one ?
Mr. SOUTTER. Very likely.
Senator EIEGLE. That is all for me at this point, Mr. Chairman.
The CHAIRMAN. NOW Mr. Soutter, let me just point out that some
of the documents you could have secured, if you had made a vigorous search: a letter of 14 January 1967, from Mr. French to Mr.
Feliton, in which Mr. French says: "Now that we have Gen. Khatami
as partner, the head of the legal department and others, we own 49
percent of the new company, and it is 51 percent Iranian."
Then a letter of 30 January 1967 from Mr. Kling, the export sales
manager, to Mr. French, in which he concludes by saying: "We hope
your new association will—why don't you keep us advised." In which
he also discusses, to some extent, the relationship between GenKhatami and Bell Helicopters.
And then I have a letter here from Mr. Duane Jose—from Eobert
Bell, dated July 7th, 1967, in which he says:
As I reported to you last November, I made a trip to Iran on behalf of
Mr. French and his company and made arrangements at that time with a
representative of General Khatami, whose name is Dr. Hassan Safavi, who
is vice president and high counsel of the civil aviation in Iran, for the
formation of a Persian corporation to act as representative to International
Helicopter Consultants in Iran.
Further, after making other statements :
He also informed me that the great general had also decided to handle*
transactions of STV in much the fashion he had set up for Air Taxi and
Heli-Taxi, and that is one company for fixed-wing aircraft and the other
for helicopters.
And he goes on to say, "General Bafaat, who has been a general
and Khatami's front man in Heli-Taxi for quite some time;" you
did not secure any of those documents, correct?
M r . SOUTTER. N O , s i r , I d i d n o t .
The CHAIRMAN. And you did not
make an attempt to interview
Mr. Orpen, the international sales manager who certainly was in a
closer position to monitor international sales of this kind, and to
have been familiar than the others, and who incidentally was awareof Gen. Khatami's ownership?
Mr. SOUTTER. Senator, I was again talking to people who had firsthand knowledge, who were telling me what transpired, and what
they said rang true to me, and I had no reason to disbelieve them,,
and I pursued only what was there.
The CHAIRMAN. And then you did not talk to Mr. Kling, the
export area manager, and Mr. Feliton, who was also export area
manager?
Mr. SOUTTER. Those names have never appeared, to my knowledge, before this set of hearings.
The CHAIRMAN. Y O U did not talk to Mr. Jose who testified before
us today, both the vice president for commercial marketing, and
of course in a very strong position to know, and to have heard two
121
<or three times about the report that Gen. Khatami was a part
owner of Air Taxi. Is that correct?
Mr. S O U T T E B . I did not talk to Mr. Jose.
The C H A I R M A N . He testified that he would have told you if he
had been asked.
Mr. S O U T T E R . In 1 9 7 5 I was still talking to people who had firsthand knowledge, intimate knowledge. Mr. Jose, in 1975, was the
commercial marketing man. It would not have occurred to me. I did
not even know his background, that he had ever had any responsibilities of an international kind.
The C H A I R M A N . But the three men you talked to had no knowledge about hiring Air Taxi. These people I mentioned did have
firsthand knowledge about the Air Taxi connection.
Mr. S O U T T E R . That is correct, but there was never any sinister
connotation put in any of the discussion, as to the hiring of Air
Taxi the second time being for any ulterior motive or purpose. It
was just simply a change in representatives.
The C H A I R M A N . But you did go down to investigate this $ 2 . 9 5
million payment, and the fact that there was a change in agents,
there, it seems to me, could very well have suggested to you that
you might ask the people who would be in the strongest position
to know.
Mr. SOUTTER. Perhaps in hindsight, I could have asked that question, Senator. But I did not, and the people who were there did
not know the answers.
The C H A I R M A N . Well, they didn't know, so since they didn't
know, why didn't you follow up with the people who might be in
a better position to know?
Mr. SOUTTER. Because I was pursuing a transaction that had arised
with Air Taxi since 1968. There was nothing, to my knowledge, that
would have led to anything prior to 1968 with Air Taxi.
The C H A I R M A N . N O W , Mr. Soutter, obviously what troubles me
more than anything else is the scope of this investigation. I think
it is serious inadequate.
Did Mr. Miller question you on the scope of the investigation?
Did he challenge you? Did "he say that he thought that perhaps it
was not adequate? Or did he accept it as being adequate?
Mr. SOUTTER. He did not challenge it. And we discussed my report
when it came back.
The C H A I R M A N . And you did tell him that you simply interviewed the three top people, that you did not go any further, and
that you could make the kind of comprehensive search that was
suggested in all of the documents that came to the attention about
Air Taxi?
Mr. SOUTTER. I think it's reasonable to believe that I told him of
the three people that I did talk with, and that they had confirmed
what his prior understandings had been.
The C H A I R M A N . Did you discuss with Mr. Miller, or did he at any
time, suggest that you might have an element of independence in
the investigation? In other words, have outside people make the
investigation, so you would have a greater degree of reliability ?
122
Mr. SOUTTER. NO, sir; it was not discussed between us.
The C H A I R M A N . Why not?
Mr. S O U T T E R . Well, he had confidence in me to do the job.
The C H A I R M A N . Well, again—and I don't mean to demean you in
any way, of course—but don't you recognize that when you're making this kind of an investigation, that there is a tendency for investors and SEC and others to wonder about the reliability of
investigations by people who investigate themselves?
Mr. SOUTTER. I can see wThere people make those assumptions, but
I don't think they are necessarily well founded.
The C H A I R M A N . Well, do you agree, with hindsight, that you've
made a thorough search of the documents having to do with the
Iranian sales program, and that if you had interviewed or sent
questionnaires to all of the Bell people that had responsibilities for
the Iranian program and the hiring of Air Taxi, including Jose,
you would have learned of the Khatami Air Taxi connection?
Mr. SOUTTER. I don't think it would have been reasonable to have
done that in view of what I had been told by people who had the
firsthand knowledge.
The C H A I R M A N . And who were those people again?
Mr. SOUTTER. Mr. Atkins, Mr. Eudning, and Mr. Farmer.
The C H A I R M A N . They didn't have firsthand knowledge.
Mr. SOUTTER. They had firsthand knowledge of the settlement with
Air Taxi, and that is what I was looking at.
The C H A I R M A N . They weren't the ones who actually went over to
investigate Air Taxi at the time that Air Taxi was retained as the
Iranian agent.
Mr. SOUTTER. NO, sir, they weren't.
The C H A I R M A N . N O W , Mr. Soutter, the staff originally made a
request of Textron for all documents relating to the $2.95 million
payment. Textron produced documents in response to that request;
is that correct?
Mr. SOUTTER. Yes, sir. As I recall the chronology, we were provided with a letter on the 25th from staff director Mr. McLean.
The C H A I R M A N . N O W was your investigative report produced with
those documents, too?
Mr. SOUTTER. Some of them, yes, sir.
The C H A I R M A N . But not all of them?
Mr.
SOUTTER. N O ,
sir.
The C H A I R M A N . Well, how do you account for the fact that when
this committee made a request for all of the documents, you supplied those documents more fully than they did with the investigation you made for Mr. Miller?
Mr. SOUTTER. I did not ask for, nor expect to receive, in my investigation for Mr. Miller, documents that did not relate directly to the
settlement and payment of the $2.9 million. I was provided with
the agreements, with the amendments, with explanations of how
the amendments had been negotiated, with certificates of authority,
with evidence that the U.S. Army had been kept advised of the
three amendments, with some recordation that Arthur Young was
aware of the accounting, with Mr. Farmer advising, and Arthur
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Young, I believe, affirming, that this amount was a selling expense
not being charged to the FMS or Government contracts.
That seemed to meet all the requirements.
The C H A I R M A N . N O W did you supply your investigative report to
this committee when we requested it by letter?
Mr. SOUTTER. On the 25th we received the request, which was
substantially duplicated in the subpoena of the 31st; on the 27th I
arrived here and provided what must be close to 90 percent. Somebody on the committee staff said it was over 600 documents. On the
28th, which was a Saturday, I believe, Mr. Marinaccio and I discussed the matter of whether there were any privileged documents.
And my report I considered privileged at the time. I did not tell
him of its existence, and it was there.
The C H A I R M A N . Well, we knew of the existence, I understand,
because it was in the Arthur Young report.
Mr. SOUTTER. I don't know whether I talked to Mr. Marinaccio
first or not, but I had no idea that Arthur Young had already provided Mr. Marinaccio the report.
The C H A I R M A N . Anyhow, you're telling me you did not provide
the document to begin with because you considered it privileged.
You did, however, on subpoena, supply the document?
Mr. SOUTTER. I most certainly did.
The C H A I R M A N . N O W , finally, what discussions did you have with
Mr. Miller and the board of directors concerning whether disclosure
should be made of the $2.95 million payment?
Mr. SOUTTER. I've had no discussions prior to the board meetings
that have been held in this current month as to disclosure. I was
satisfied that this transaction was straightforward, was legitimate,
was as described as the the settlement of commissions earned, and
terminated the rights to any other fees on business to the Government of Iran by Air Taxi.
I do not consider it to be an amount, overall, that would be material to Textron. And there were no obligations, in my judgment to
disclose this in our disclosure documents with the Securities and
Exchange Commission.
The C H A I R M A N . Senator Brooke. I beg your pardon; Senator
Schmitt.
Senator S C H M I T T . I am curious about management procedure
within Textron and within Bell.
There seems to be, Mr. Soutter, a great reliance on verbal communications within at least the upper management of both groups.
Is this, you feel, normal business practice from your experience?
Mr. SOUTTER. I think we're doing our best to try to not be bureaucratic. I think most of us feel there is probably too much paperwork,
that an awful lot of us walk into each other's office and discuss the
business that has to be done, and people take it from there.
I would like to think that it is a fair mix. But there is probably
more paperwork creeping into our daily lives everyday.
Senator S C H M I T T . . That is certainly very, very true.
Did-you ever find that Mr. Miller had any problem with this
verbal communication? Did he tend to want written communications
of any kind ?
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Mr. SOUTTER. We do have some written things. I mean, I can
brief a law brief for him, or something that needs to go before the
board. But lots of it is simply done on "What did you find out?
What has transpired? What should we be doing? Who should be
working on it? Can we put a team together?"
Senator S C H M I T T . And you had a frequent, if not daily, contact
with Mr. Miller of this kind?
Mr. SOUTTER. Frequent.
Senator S C H M I T T . H O W frequent?
Mr. SOUTTER. When he is there.
Senator S C H M I T T . Well, on the average, a few times a week ?
Mr. SOUTTER. Probably one a day on the days he is there. He has
been travelling fairly heavily in recent times, but two or three times
a week before that.
Senator S C H M I T T . Mr. Soutter, supposing that in the course of
your investigation of the $2.9 million payment to Air Taxi you had
uncovered rumors to the effect that Gen. Khatami was an owner
and, at the same time, a member or head of the Air Force in Iran,
what would you have done with some information like that?
Mr. SOUTTER. I would have reported it to Mr. Miller.
Senator S C H M I T T . What do you suppose he would have done?
Mr. SOUTTER. He would have continued a full investigation, I
am sure.
Senator S C H M I T T . Have you ever had an occurrence where something in the company—and you don't have to be specific—had occurred, in your mind, that represented a need for further and more
extensive investigation; and, upon your recommendation, Mr. Miller
authorized you to do so ?
Mr. SOUTTER. Not in this investigative technique. Sometimes in
the question of whether you want to become a plaintiff in a lawsuit,
or something like that. But not in an investigative role. It really
just has not come up.
We have had defalcations and embezzlements, or malicious vandalism, but those aren't things that have to be brought to his attention ; they're simply dealt with by the organization.
Senator S C H M I T T . Your inquiry into the $2.9 million payment to
Air Taxi was the only—at this time, the only inquiry that you made
into Bell activities. As I understand it, there really weren't any other
significant commissions or fees paid?
Mr. SOUTTER. That is correct, Senator.
Senator S C H M I T T . And did you, in your own mind, think that it
was appropriate to call this a "commission" in the bookkeeping side
of Textron and Bell?
Mr. SOUTTER. Well, the amendment number three—and this is the
testimony both here and—well, maybe it didn't come up today, but
with the staff—and people have called it a "commission," or a
"settlement payment." In my view, it was both.
I think the agreement speaks for itself on that. My understanding
of the accounting—and I am not an accountant—is that it was called
"other selling expense," which puts it below the line, out of "cost
of sales," and therefore not chargeable to the contractor in any
respect, so that Bell in fact would absorb that out of its own profits.
125
Senator S C H M I T T . Okay, just for the record, then, you did not
discover any evidence of illegal activities in your investigation
Mr. S O U T T E R . That is correct.
Senator S C H M I T T [continuing]. Of the $2.9 million?
Mr. S O U T T E R . That is correct.
Senator S C H M I T T . And you found no evidence of anything that
might have smacked of unethical procedures, not to mention—over
and above the question of Mr. Khatami's alleged involvement?
Mr.
SOUTTER.
No,
sir, I
did
not.
Senator S C H M I T T . And if you had, you would have informed Mr.
Miller?
Mr. S O U T T E R . Yes, I would have.
Senator S C H M I T T . Normal operating procedure, as far as you were
concerned ?
Mr. SOUTTER. It realty didn't come up, but I feel our relationship
is such that he would have respected, and I feel there's no question
in my mind that I would do it.
Senator S C H M I T T . Are you aware of the statement that is in the
Wall Street Journal of February 24—and I quote, again: "Auditors
for Textron, Incorporated, discovered that at least four divisions of
the company funneled kickbacks to foreign customers, generally
through secret Swiss bank accounts that could involve millions of
dollars," unquote.
Mr. S O U T T E R . I have seen that article.
Senator S C H M I T T . D O you have any reaction to that?
Mr. SOUTTER. I have several reactions to that, but none of them
are terribly germane to this hearing—other than, to the best of my
knowledge on any of those matters, there is no bribery; there are
no kickbacks; there are no political funds; there are no off-book accounts; there are no slush funds involved in any of those matters.
I believe them all to be of an accommodation over-billing type of
arrangement, and of amounts which I frankly don't have the aggregate amounts and so I can't say. Of the ones that I do know about—
which are two—they are very small.
Senator S C H M I T T . And are you currently looking into these—
frankly, being that it is in the press, I'm not sure what to call
them, but let's say—"findings of the auditors of Textron"?
M r . SOUTTER. Y e s ,
sir.
As an aside, our own people brought most of those to our own
attention, and it was not the auditors—just for one other inaccuracy.
Senator S C H M I T T . Well, that is not necessarily an "aside." It is
probably an important statement to make.
And at the appropriate time, when things like this are active within Textron, you presumably then would brief, or maybe on a systematic basis would brief Mr. Miller as to what was being found
out; what the status was; and what the implications were for the
company ?
Mr. SOUTTER. That is correct.
Senator S C H M I T T . Have you in fact done so on any of these particular items?
25-067—78
9
126
Mr. SOUTTER. On the three that I know anything about, I have
in fact now briefed him.
Some were briefed some time ago.
Senator S C H M I T T . This was over a general period of time you've
discussed these with Mr. Miller?
M r . SOUTTER.
Yes.
Senator S C H M I T T . S O generally, the record—and you would testify, at least, to the record of your activities in Textron, as when
irregularities, or alleged irregularities appear or come to your
attention, at a fairly early date you do discuss this with Mr. Miller ?
M r . SOUTTER. Y e s , s i r .
Senator S C H M I T T . And would have done so, had you seen any
irregularity in the $2.9 million?
Mr. SOUTTER. When defalcations are brought to the attention, I
think anybody in the organization—the ones that I've known of—
the appropriate steps are implemented to stop it, to investigate it,
to, I believe in some cases, to prosecute people who have stolen or
embezzled from us, no matter what the origin of the defalcations.
Senator S C H M I T T . But in the case of the payment to Air Taxi,
when you found no indications of irregularities, you so reported to
Mr. Miller?
Mr. S O U T T E R . That is correct.
Senator S C H M I T T . And his reaction? Can you recall that, at the
time?
Mr. SOUTTER. I would summarize: in general, I don't know how
many words, and I don't think I have got any quotes for you, but
I think he was glad that in fact after the investigation I was confirming to him what he had generally understood through, I assume, his conversations with Mr, Atkins at the time the settlement
was being negotiated. Because I had understood what it was for
when I went down there. I completed that investigation and reported back to him that it was as advertised.
Senator S C H M I T T . Have you ever heard, outside of what Mr. Miller
testified to this committee, his general statement of policy on his
part, his attitude toward kickbacks, or bribery, or foreign-—access
payments to foreign officials ?
Mr. SOUTTER. A number of times, Senator.
Senator S C H M I T T . Would you give me the general thrust of those
comments ?
Mr. SOUTTER. Well, I can tell you that he has made the statements at annual meetings where we pull all of our division chairmen together, and there has been a chairman's report, and that has
been in recent years a part of his report. We have put out memoranda on various aspects of exemplary corporate behavior.
I'm not sure that I'm very good in paraphrasing his, but it is
not a cursory—and don't forget about "questionable illegal or immoral payments." He takes the time to sit down, to discuss, to
stand before the group and discuss his personal belief that this is
not the way we are to do business; that we sell our products on
their merit; and it just cannot be misread by anybody who is in the
room.
127
I have also heard him, I believe on a couple of occasions-—I don't
go to all the business reviews—but I believe he has also made these
at specific divisions when, after dinner and a division review,
their forecast for the following year for the Textron management
team that is coming to town, he usually speaks after dinner. And I
believe that he has reemphasized his remarks there.
He has missed very few opportunities in which to counsel all of us
on the standards that he expects, and that we expect of ourselves.
Senator S C H M I T T . One final question: Has this ever been done
in reaction to a proposal by a subordinate that they, "when in
Rome, do as the Romans do," and offer some kind of an under-thetable deal to an official of some country?
M r . SOUTTER. N O , s i r .
Senator S C H M I T T . Nobody has ever proposed that to him, so he
has never reacted to it?
Mr. SOUTTER. Well, it has never come from me. And were it to be
proposed to him, I have no question that he would turn it down
without blinking.
Senator S C H M I T T . What do you think would happen to an employee that so proposed?
Mr. SOUTTER. I think that would be a very unjudicious thing
for an employee of Textron to propose.
Senator S C H M I T T . Thank you, Mr. Chairman.
The C H A I R M A N . Under the rotation, Senator Brooke is next, and
then Senator Riegle.
Senator B R O O K E . Mr. Soutter, it's not quite clear in my mind as
to what the purpose of your investigation was. I think some of
your responses are cloudy.
Why did you conduct it? What did you expect from it?
Mr. SOUTTER. I expected to find what I did find : That Air Taxi
had been compensated and terminated with respect to future business with the Government of Iran; and that there had been a payment of $2.9 million to do business. And I don't know how to say
it in any other terms.
When you are in a registration statement, selling debentures, you
have extra obligations to your investors, and to the public, to be
sure that you are totally up-to-date on your company and what is
going on.
This was a large payment, but the Iran business was large; and
so it was incumbent upon me to go down and learn.
Senator B R O O K E . That is precisely the point I am trying to make.
Was it merely your purpose to find out whether this was a prudent business settlement, a wise business settlement, on the part of
Textron, or Bell Helicopter?
Was that your sole purpose? Because it looks to me as that's the
only thing you actually did—was to determine that this was a wise
business settlement.
Mr. SOUTTER. Senator, that is what I understood it to be. And
I talked with the people, and we went through the documentation,
tracing it down, and that is what it turned out to be, in my judgment.
128
Senator B R O O K E . But couldn't it be a wise business settlement,
and illegal, as well?
Mr. S O U T T E R . Yes, I agree. I suppose it could be. I'm not sure
you can say "wise business," and have something that is in fact
illegal, but I think I understand your point.
Senator B R O O K E . Well, when you were considering the ProxmireGarrett letters, you would not be considering whether this was a
wise, prudent, financial settlement; and it escapes me whether you
attempted to find out if there was any illegality or impropriety.
Mr. S O U T T E R . That certainly had to be in my mind as I went
through the questions—what this was for. I did ask the question,
at the end, or whenever
Senator B R O O K E . But you didn't ask the question of anyone who
could give you that information, did you?
Mr. S O U T T E R . The question that I asked, Senator, was of the
three people that had signed off as 100 percent shareholders of the
company. And my question to the assembled group was: Were any
of those folks officials of the Iranian Government? And the answer
was, "no."
And all through the day, or the parts of days that we did this,
I was being told that this was for a legitimate business relationship,
and they were explaining it to me as we went through the documents.
There was never any indication that there were ulterior motives
in this payment, or that they were sinister, or that there was a
pay-off here.
Senator B R O O K E . Y O U did not go beyond the veil, did you, the
corporate veil ? I don't know if it is "corporate"—a corporation or
not, Air Taxi—but did you go beyond the "business veil" to ascertain what was there?
Mr.
SOUTTER. N O ,
sir.
Senator R E I G L E . Would the Senator yield, at that point?
Senator B R O O K E . Certainly.
Senator R E I G L E . Because I am sort of hard-pressed to know what
it is that he thinks should have triggered that kind of feeling that
something was amiss?
In other words, it seems to me they were in an SEC registration,
and there was a requirement to make the kind of general ascertainment that one normally does, that the facts were in order, and yet
it seems that you're feeling and sense of unrest is that maybe somehow he accepted assertions made on the face of them, all of which
were logical and sensible to him; that they were accurate and
correct.
Senator B R O O K E . Well, perhaps the Senator from Michigan did
not hear Mr. Soutter's testimony that one of the reasons why this
investigation was conducted was because of a letter Senator Proxmire sent to SEC Commission Chairman, Mr. Garrett. And that
came about at the time, as the Senator might recall, that we were
concerned, and the full committee was concerned, about the question of illegal payments to foreign governments by American corporations.
129
And therefore, Mr. Soutter said, that that was part of the investigation. That is the part that I am concerned about:
What did he do to determine whether there had been any illegal
acts, or any improper act on the part of this corporation in this
transaction? And not just the financial settlement.
I can see you going down and saying: "Was the $2.9 million good
business settlement?" "Yes." Obviously, it could have been $10
million, as has already been testified, so it could be still a good,
proper business settlement.
But if you did not go behind the veil and find out who the actual
owners were, then I'm saying that you may not have done all you
should have done in order to ascertain whether there was any impropriety.
And I think the Senator from Michigan would understand that.
The CHAIRMAN. If the Senator would yield at that point, I have
the letter here, and without objection I will place it in the record.
[The letter referred to is reprinted as part of exhibit 66. It may
be found on page 170 in part 2 of committee print titled "Stan
Investigation of G. William Miller."]
The CHAIRMAN. It is a letter to Mr. Garrett from me, and it lists
Textron as the 15th largest defense contractor, and it lists all 25
of them, and it says
You are undoubtedly aware of the great controversy there has been concerning the disclosure that the Northrop Corp. and other firms who do defense
contracts have been involved in irregular and improper payments, both in
the United States and abroad.
This letter is to request that your office make a detailed review of the
documents and materials filed by each of the largest 25 defense contractors in
order to determine whether there have been any unusual payments here
or in foreign countries.
Senator BROOKE. NOW, if I may—because most of my time is being
used, and I have not objected to yielding from the Senator from
Michigan at any time—but I have here, which we all have, what
appears to be an attorney work product. You are familiar with that
—your "confidential" attorney work product?
Mr. SOUTTER. Yes, Senator.
Senator BROOKE. And in that—I take it this is your work?
Mr. SOUTTER. That is correct.
Senator BROOKE. And in that, you even refer to the "ProxmireGarrett communication."
M r . SOUTTER. Y e s , s i r .
Senator BROOKE. Knowing
that, being motivated to some degree
by that, what did you do to go beyond—let me say "the corporate
veil," for lack of knowledge as to whether Air Taxi was a corporation.
Mr. SOUTTER. I did nothing to go beyond the corporate veil of
what was shown to me in a legalized document, Senator.
Senator BROOKE. Y O U were satisfied, without doing that, that
there was no impropriety and no illegality ?
Mr. SOUTTER. Yes, sir. The question was posed to the people who
knew who they were dealing with at Air Taxi, and what the answers were.
130
Senator BROOKE. I certainly cast no aspersions upon Mr. Jose,
or Mr. Ducayet, or any of those persons, but it is conceivable to
me that there could have been an impropriety and illegality, without even their knowledge, that you could have discovered in a
thorough investigation. They may not have known about it.
Mr. SOUTTER. In a vacuum, I agree, Senator. But in the facts,
and as I was dealing with people who I know and respect and
trust, nothing in that conversation would have led me to go any
further than I did.
Senator BROOKE. I don't think it is a question of their trust. I
don't think anybody is suggesting that Mr. Atkins, Mr. Ducayet,
or Mr. Jose, or any of them did anything improper at all. They
may not have known about this—I won't say they actually did not
know—but there is no evidence that they knew about it, other than
Mr. Jose who has testified that he knew something about it.
But I'm just saying, if you did not look at it, there would be no
way for you to possibly know about it.
Now let me ask you this question: Did you discuss with Mr.
Miller whether it would be appropriate or necessary to disclose
detail of this $2.9 million payment under the SEC voluntary disclosure program ?
Mr. SOUTTER. I don't believe that I discussed it with him in any
kind of a detail. I think it was understood on the basis of my
satisfaction in the report that it would not be, and that I was not
recommending, that we would need to make that disclosure.
Senator BROOKE. But if that decision was made—and apparently
it was made—not to make the disclosure, who actually made that
decision ?
Mr. SOUTTER. Well, I would have to say it would be me who made
the decision. Others probably acquiesced, but I would say it was I
wTho made the decision.
Senator BROOKE. Did you have the authority to actually make
the decision?
Mr. SOUTTER. I have been given guidance in Securities and Exchange matters to the management of the company; yes, sir.
Senator BROOKE. YOU would not have to clear that? You would
not have to make a recommendation and then have to have the decision actually made by Mr. Miller?
Mr. SOUTTER. N O , sir. Our disclosure documents are drafted and
they are circulated among top management for their views as to
the accuracy of what we've said, either about the divisions in which
the}' are the liaison or financials or whatever. People would have
an opportunity to comment to me, but no one ever did, and I did
not draft it to include it.
Senator BROOKE. N O W , again, as I look at this privileged, confidential attorney work product, which is your work product, and
I quote:
None of the principals of Air Taxi are known or believed to be Iranian
Government officials. One was a member of the royal family, but has held
110 official Government position.
Now, how do you know that if you did not make any investigation?
131
Mr. SOUTTER. I did ask the question, Senator.
Senator B R O O K E . Of whom?
Mr. SOUTTER. Of Mr. Atkins and Mr. Eudning, who had firsthand knowledge of Air Taxi.
Senator B R O O K E . H O W did they know?
Mr. SOUTTER. H O W do we know anything, sir?
Senator B R O O K E . Y O U only asked the people in your own corporation? You did not go beyond this or anthing?
Mr. SOUTTER. I'm sorry. I felt that I had no obligation to go beyond that, because I was dealing with people who were telling me
the truth.
Senator B R O O K E . Of course, they were telling you the truth as
they knew the truth, but I'm suggesting to you, Mr. Soutter, that
they did not know all of the truth. And yet, you made a statement,
a clear statement, that none of the principals of Air Taxi are "known
or believed to be Iranian Government officials."
Now, how can you make that statement on the basis of what
Textron or Bell Helicopter people told you?
Mr. SOUTTER. I don't have any problem doing that, Senator. I
asked the question; that was the answer. And that's why I include
it in my memorandum.
Senator B R O O K E . Well, lawyers differ, and I certainly could not
accept that on the basis of the witnesses that you questioned that
would make that statement. As a matter of fact, we now find out
that they did not know. As a matter of fact, we found out that we
did have, in all deference to the Senator from Michigan, that
Gen. Khatami was, in fact, a government official and was, in fact,
part owner of Air Taxi.
Senator R I E G L E . Would the Senator yield, having mentioned my
name ?
Who knew that ? Apparently the Senator from Massachusetts now
knows that, but that is different than Textron knowing it.
Senator B R O O K E . I think I know it, and I think the record is
replete with evidence that that was the fact. I don't think that is
really in contention.
The only thing that I see in contention is Mr. Miller's knowledge
of Gen. Khatami's interest in Air Taxi, which has not been proved—
and if I had to vote today on the basis of the evidence, there has
been no evidence as yet that Mr. Miller had anything to do with it
or had knowledge of it. But that doesn't mean that it was not a fact,
and I would think that you did the job that could have found that
fact, Mr. Soutter. That is what I am suggesting to you, most
respectfully.
Mr. SOUTTER. I understand, Senator, but the only two pieces of
evidence that are in the file that I know of are, in fact, that certificate
where the three people presented themselves to the vice-counsel in
Tehran and swore to him what they were saying. Admittedly, it was
an authorization from Mr. Zanganeh to deal, and it not meant to
be their testimony as to the ownership, but they did sign it, that
thev were.
The Dun & Bradstreet report later came along which confirms.
It came along, to my knowledge, although it predates that, and are
132
the only two documents that I was ever aware of and remain today
knowledgeable of that show the ownership of Air Taxi.
Senator B R O O K E . But you and I both know that everything is not
always what it is perceived or purports to be, and that is the reason
for investigations.
We also know what Dun & Bradstreet does, and I cast no aspersions upon them, but they look at the financial situation and they
record what the registration was as of that date. They don't do any
independent investigation of the company, as you very well know.
The kind of investigation of a company that would be merited by
your concern about compliance with the letter from Senator Proxmire to Chairman Garrett would be different—but I think I've gone
as far as we can go on that, and I think you understand exactly
what I mean, Mr. Soutter. And as I say, most respectfully, I do
not think that your investigation was thorough and in depth, which,
if it had been, may have proved nothing at all. It would not have
shown anything about Mr. Ducayet or Mr. Jose, and in the main
thing, it would not have shown anything about Mr. Miller. But it
would have certainly revealed Gen. Khatami's interest in Air Taxi,
which is a very pertinent factor.
And I thank you very much.
The C H A I R M A N . Senator Riegle.
Senator R I E G L E . Some years ago, I had the opportunity to work
in an area called plant and lab accounting coordination for IBM,
and one of the functions that I had at that time was to be a part
of efforts to carry out certain auditing responsibilities, to try to
find out if things that people said were so, were, in fact, so.
And the normal practice that I remember, and I think the practice that would logically apply here, is that in the first instance,
when you're trying to figure out if something is right and proper,
is you look at the facts of the case. Is there something that sticks
out, that looks strange, that looks odd ?
If the commission, for example, were an unusually large one in
terms of a percent of the sale, if the commission were out of line,
if there had not been an act of negotiation to sort of beat down the
cost of the commission with the person who had been serving as the
agent, if there was a failure of evidence in terms of an outside independent certification of ownership.
But, in this case, if I put myself in your shoes, looking at this
particular transaction, the amount wasn't out of line the amount
clearly was not out of line as a percentage or in terms of any kind
of standard yardstick for commissions of sales of this size.
Secondly, had there been a tough negotiation on the commission?
Clearly, there had been. It is obvious, from the history we've heard
here, that there was a thorough, tough pressure applied here to keep
this commission at a maximum. And percentagewise 6/10 of 1 percent, it looks to me as if it was.
Thirdlv, did you have some independent sense of who the owners
were? Yes, you did. There was the independent certification of
ownership by Dun & Bradstreet. It turns out that Dun & Bradstreet
was misled.
133
It seems to me if Senator Brooke is correct, that Khatami owned
part of Air Taxi secretly, that in the same way that Dun & Bradstreet was mislead, it appears to me your own company was misled.
But if that is the case and if, in fact, there was a fraud, there was
a fraud on the part of Air Taxi, not on the part of Textron. And
that, to me, is the critical issue.
And when we take and we blur that distinction and we take whatever fraud that Air Taxi may have successfully carried off, not just
against you but against Dun & Bradstreet, and to then make that
serve as, in fact, an indictment of Textron, and we sort of work
that along until we start impugning key corporate officers, we find
ourselves finally in the situation that we are in. And that is through
that kind of purported change of events we can end up drawing
some very negative inferences and end up using the language that
something is irregular and improper. And I think that is just phony.
In other words, if anybody wants to take the time to put these
facts together in the sequence in which they occur, they were neither
irregular nor improper, appearing on their fact. And there was substantial evidence that they were, in fact, regular and, in fact, proper.
Now, if one wants to assert that behind all of this that Air Taxi,
through a very clever subterfuge, had a partner that was hidden
from view, that may very well be so. Senator Brooke is satisfied
that that is the case. Then it's interesting to me that Mr. Atkins,
your president, based on what is still available to him, is not yet in
his own mind convinced that that is so.
Perhaps that is just a difference of opinion, but it seems to me
that when you look at the facts that you were being asked to take
a look at, and you were doing it for a purpose, it was not that somebody cried out, "Do we have a problem?" As I understand it; you
correct me if I'm wrong, it was not that somebody cried out and
said, "We have a problem with the payment to Air Taxi."
What happened was you were in the middle of an SEC certification process, and, as a matter of course, it was required for you to
go out and do sort of an examination, to take a look at each one
of the items that would have to be talked about that would fit that
time period that this certification process applies to.
And so you did that, and you went to the people who were involved. And on the fact of it, it all made sense. The amount was
appropriate. There had been a tough negotiation. You had an independent verification from Dun & Bradstreet.
Now, how, with all of that information and this being just—this
is not the only item we're paying attention to, but other things were
going on at the same time—how you are to be expected at that point
to somehow have the genius to figure out that even though everything was fine on the face of it that somehow something was not
quite right here and that back in Iran Air Taxi, in fact, had a
secret partner who somehow was getting a piece of this frankly
undersized commission, if one looks at the size of the sale.
Now, I think that is an unreasonable presumption, quite frankly.
T think for somebody to expect you to have that kind of sort of
sixth sense to spot a possible fraud that had been concealed by
134
Iranians is to ask something that I don't see, quite frankly, the
Senate needs.
We as Senators don't have that sort of spectacular insight where
we spot things like that where everything is fine and dandy, at least
as to appearance on the surface.
The C H A I R M A N . Would the gentleman yield?
Senator R I E G L E . In just a moment, I will.
It's easy for me to understand that the people that have testified
here, starting with Mr. Miller, or with Mr. Atkins today, could have
great difficulty understanding why it would be so easy for us to
jump to a presumption that somehow everybody was in on the deal
of perpetrating some kind of a fraud in this situation, because,
frankly, as I look at the whole pattern of facts, it suggests just the
reverse to me, and frankly, if the case has to hang to a very large
extent on Mr. Bell as a witness, you know, then I'm doubly troubled,
not because he may not be truthful, but because he is not a disinterested party.
The C H A I R M A N . Would the Senator yield?
Senator R I E G L E . Yes, I will yield to the chairman.
The C H A I R M A N . Y O U see, there is no point in this investigation at
all. If you make the assumptions that the Senator from Michigan,
as I understand him—and maybe I am unfair to him—makes.
The whole point in making investigations is to determine whether
there was anything illegal. You have to inquire and determine
whether or not that $2.95 million payment was illegal.
Now, what does "illegal" mean? What does "improper" mean?
Obviously, if it is on the basis that the various witnesses have described they thought it to be, then there is nothing to investigate.
But this was in the context of a letter that I wrote to Mr. Garrett,
with which Mr. Soutter said he was familiar and was part of his
investigation to investigate questionable payments.
Now, how do you investigate a questionable payment? You find
out where the payment went, who got it. Obviously, if it simply
goes to three people who are not officials, that is the end of it. But
if you're going to conduct an investigation to determine whether it
is questionable or not, it seems to me you ought to do more than just
to interrogate the three top people who were involved in this payment
and who themselves have an interest in having the payment legal
and proper.
It is hardly an investigation worthy of the name if you stop at
that point and then if you don't go through the various documents
that we did with the kind of investigation that our staff made in
jus a few days down there disclosed this.
Senator R I E G L E . I appreciate the point you're making, and let me
pursue it, because I think we are right where we need to get to. And
that is the question of whether or not it was a questionable payment
or rather the appearance, whether there was any probable cause at
thnt time to view this as a questionable payment, as if this was something that would sort of stand out as being out of the ordinarv.
And. as T try to apply the test, as we have reconstructed this thing,
that I think would flag it for me if I had been sent to do the investi-
135
gation, if the size had been percentagewise as a payment, as a
commission, on the sale had been inordinately large, that would have
been a trigger in my mind. If I had not had an independent verification from somebody like Dun & Bradstreet, that would have been
another thing that would have been a red flag in my mind.
If there had not been a protracted period of negotiation, if the
company had not been trying to beat down the agent here and reduce the size of the commission, that would be another thing that
would stand out as a red flag in my mind.
But all three of those things were present. So, it seems to me that
an auditor going in and an investigator going in and looking at this
and finding that this package of facts makes sense and was coherent
and did not have the appearance of being a questionable payment,
that for one to then make sort of the leap of judgment and imagination to imagine that hidden agent is a hidden partner—I mean, I
think that really stretches things.
The C H A I R M A N . Well, may I point out that the defense contract
audit agency singled out this particular payment as one that they
thought was unusual and bore investigation.
They singled it out. They thought it was sufficient. At page 296
of volume 3 of the hearings
Senator RIEGLE. Well, whatever their particular view and whatever factor they were coming in on, I think what is more significant
is what the internal auditor of the companybeing asked to take a
look at this situation in light of the facts that we have just discussed, what is a logical presumption on that person's part?
Let me ask you this. I mean, based upon what he has testified that
he knew, what would have flagged it for you? What would have
flagged it for somebody on the committee staff at that point? I am
just hardpressed to see what it would be.
The C H A I R M A N . Well, in the first place, they themselves—and I'm
talking about Mr. Soutter—and Mr. Miller agreed—thought that
this should have been investigated.
Senator RIEGLE. It had to be. The SEC requirements, I think,
made it necessary that they examine this situation. Is that not correct? I understood that to be the case.
The C H A I R M A N . There was nothing mandatory. They did not have
to investigate this if they thought it was a routine that did not require to be investigated. They decided they would. At any rate, they
decided that, and I think that although the Senator has his view
of that $2.9 million payment, I have mine, and I think I've made
it pretty clear in the course of questioning that I thought it was a
payment that did merit inquiry.
Senator RIEGLE. Based on its size?
The C H A I R M A N . Yes, based on its size.
Senator RIEGLE. 6/10 of 1 percent?
The C H A I R M A N . Sure. In relation to the volume. Yes, indeed. In
relation to the amount of work.
Senator RIEGLE. Well, it's 10 years of time. I mean, there's a
buildup to the time that they finally closed the $y2 billion order,
•and $2.9 million as a percentage of that—I mean, maybe we just
136
disagree on that, but that seems to me to fall very much within the
bounds of reason. In fact, I think it is on the short side.
The C H A I R M A N . It was the largest payment on the largest contract
they've ever made.
Senator R I E G L E . Are you suggesting that there were other %y2 billion contracts and situations similar to this where there were smaller
commissions paid? I mean, I don't know the history. Perhaps you
know of some.
The C H A I R M A N . Well, we just discussed them. I had a $28 million
contract on which $90,000 was paid.
Senator R I E G L E . But they said that was an altogether different
set of case facts, and that is a lot different than a %y2 billion order.
The C H A I R M A N . Well, Gen. Toufanian said that in his judgment
the Government of Iran would not pay costs measured as a percentage of sales, even y2 of 1 percent of a $100 million transaction,
which was 1/5 this size. It would be clearly disproportionate to real
services and real value to the Government of Iran.
Senator R I E G L E . Well, I think they've also made the point, however, that they felt that there was a legal obligation here, that they
have been involved in a contractual relationship for a long period
of time, and that they felt they would have to go to court to settle
this thing if they were not able to work out an agreement out of
court, which they finally did, and the figure was $2.9 million.
I'm simply saying that that figure, as a percent of the volume of
business, was of a size that would prompt one to say, on the face of it,
that this looks phony. I'm just saying that it does not come close to
meeting that test, at least in my mind.
If it were 10 percent, or if it were 15 percent, or if there were some
other sort of strange nuance; if there had been a negotiation; then
I think it would not smell right, and it would not look right. And
therefore, I think you would derelict if we did not pursue it, if we
did not find out why there had been negotiation, and if we didn't
find out why the payment had been excessively large.
But I think within the pattern of the way this whole situation
unfolded, I think this falls within the bounds of what an auditor
would find to be a reasonable pattern of events.
The C H A I R M A N . Well, Senator Riegle, it all depends on how you
look at this. You could argue that what you seem to be implying,
that a small bribe isn't that important.
Senator R I E G L E . I ' m not saying that whatsoever. I don't think any
bribe is justified. I don't think any bribe is justified.
The C H A I R M A N . Well, again, you have to look back and examine
what was done, and the judgment was—well, we've been over and
over that. Unless you have more questions of the witness, I think we
should conclude the hearing.
As the Senator knows, we have a long day coming up again
tomorow.
Senator R I E G L E . I just want to conclude by thanking the chairman
for his patience. It is seldom that we disagree on things, and it is
painful when we do, because I much prefer to be in agreement with
the chairman than in disagreement. And I suspect that will continue
to be the case once we get this particular issue resolve.
137
The C H A I R M A N . I want to thank you very much, Mr. Soutter. You
are a fine witness, and obviously are most responsive and thoughtful.
And we are very grateful. Thank you very much.
The committee will stand in recess until 9 o'clock tomorrow
morning.
[Whereupon, at 5:45 p.m., the hearing was adjourned until 9 a.m.
the next morning.]
[The following statement from Senator Schmitt was received for
the record:]
STATEMENT ON MILLER CONFIRMATION BY SENATOR HARRISON
SCHMITT
I will vote for G. William Miller's confirmation as Chairman of the Federal Reserve Board. In private conversations and testimony, Mr. Miller has
come across as a much more responsible individual with respect to monetary
policy and his independence from the White House than I had originally
believed him to be.
The investigation of the Bell Helicopter transactions in Iran has established
that Mr. Miller did not have any knowledge of those activities, including the
alleged irregularities, during the transactions. Further, it established that
later, for a different reason, he and his general counsel agreed to look at
this particular payment of a commission and termination fee to Air Taxi
of $2.9 million to see if it might have any irregular connotations. The general
counsel found nothing to raise his suspicions and therefore, again, Miller
was not informed of any possible irregularity. Instead, his belief was reinforced that there was no problem. In fact, there may not have been any
problem. It turns out that this was a very small commission, about 6 percent
of the total price, considering the size of the sale of 489 helicopters to Iran.
Finally, I believe Mr. Miller is a man of great experience, maturity, with
a dedication to public service as well as private service. In the course of
this very extensive investigation, I believe we came very, very close to discouraging not only Mr. Miller but many other individuals from ever exposing
themselves to a confirmation process. Mr. Miller's hearing not only required
that he prove his innocence of any wrongdoing anywhere in the past but that
he also prove that his associates are innocent of any wrongdoing anywhere
in the past. To prove innocence is not the basis of our justice system. In
the absence of proof of guilt, innocence is presumed, and should be. The
investigation conducted by the Banking Committee came very close to requiring the proof of innocence.
The merits of Mr. Miller's confirmation should be judged on the basis of
(1) an adequate monetary philosophy, (2) an adequate independence of the
White House, (3) no evidence whatsoever that he told anything but the
truth, and (4) that he is a man of great ability, competence, maturity and
experience. Miller is the type of person we need to attract to our Government.
CONTINUATION OF THE NOMINATION OF
G. WILLIAM MILLER
TUESDAY, F E B R U A R Y 28, 1978
U.S..
SENATE,
C O M M I T T E E ON B A N K I N G , H O U S I N G , A N D U R B A N A F F A I R S ,
Washington, D.C.
The committee met at 9 : 0 5 a.m., in room 5 3 0 2 , Dirksen Senate
Office Building, Senator William Proxmire, chairman of the committee, presiding.
Present: Senators Proxmire, Sparkman, Williams, Mclntyre,
Cranston, Stevenson, Morgan, Riegle, Brooke, Tower, Garn, Heinz,
Lugar, and Schmitt.
The C H A I R M A N . The committee will come to order.
This morning we have two witnesses. We have, I expect, relatively
briefly Mr. [J. H. "Bud"] Orpen before us, and then we're going to
have Mr. Miller, at, I imagine, somewhat greater length.
Mr. Orpen, do you have a statement you would like to make?
First, before you do that, let me ask you to rise and raise your
right hand. Do you swear the testimony you are about to give will
be the truth, the whole truth and nothing but the truth ?
M r . ORPEN. I
do.
M r . ORPEN. I
do
The C H A I R M A N . All right, sir. Be seated.
Now let me ask first, do you have a statement you would like to
make?
not.
The C H A I R M A N . Will you tell us exactly what your position was
with Bell Helicopter and how long, when you began your employment and when you terminated your employment?
Mr. O R P E N . During what period, sir?
The C H A I R M A N . Tell us when you were first hired by Bell Helicopter and what your responsibilities were.
Mr. O R P E N . I was first hired by Bell Helicopter in 1 9 5 7 and joined
the domestic sales organization and spent approximately six months
in Fort Worth and then was assigned to the Eastern Sales area based
out of New York.
The C H A I R M A N . And then were assigned where? I missed that.
Mr. O R P E N . I was assigned to the eastern sales division based in
the New York area and later the Philadelphia area.
The C H A I R M A N . Bring us up to date. Then what happened?
Mr. O R P E N . Okay. Then approximately, as I recall, in 1 9 6 1 , I was
asked to take over the export sales department for Bell and I re-
(139)
140
turned to Fort Worth as the headquarters for that work and where
I stayed until I resigned from Bell in 1969.
The C H A I R M A N . Y O U left Bell in 1969?
M r . ORPEN.
Yes.
The
Mr.
The
ORPEN.
Were you the international sales manager?
Export sales manager.
C H A I R M A N . And in that connection did you travel to Iran?
Mr.
ORPEN.
Yes.
Mr.
ORPEN.
Yes.
Mr.
ORPEN.
Yes.
CHAIRMAN.
The C H A I R M A N . When you went to Iran did you go for the purpose
of determining whether or not Air Taxi would be rehired in 1967
or 1968?
The C H A I R M A N . Y O U did?
Mr. O R P E N . Yes, among other things.
The C H A I R M A N . What were your instructions? What were the
other things?
Mr. O R P E N . Well, we had a proposal pending for the sale of six
of our military type helicopters to the Iranian Army and we wanted
to present that proposal and see what our potential chances for sales
would be.
The C H A I R M A N . N O W were you instructed by Mr. Jose or by Mr.
Ducayet or by any other executives in Bell Helicopter as to what
standards you should apply in determining whether or not to hire
Air Taxi?
Mr. O R P E N . Well, I had discussions with Mr. Jose prior to any
trip I would make and we would review the various goals and intentions in whatever country I was visiting. On this particular visit
we had reached a conclusion internally -that we were not going to
go along with Mr. French as our representative there under any kind
of an arrangement as long as French himself could not be allowed
to conduct his activities in that country. So we knew that we were
going to
The C H A I R M A N . Was it your understanding -that that was the
reason why you wouldn't go along with Mr. French, because he was
not able to get into Iran and had to work out of Beirut?
Mr. O R P E N . That's primarily the reason, yes. We didn't feel he
could be effective in any kind of an organization such as he was
proposing without himself being there to direct the activities and
this turned out to be the case by the lack of local people that we
were able to discuss or meet with during the particular trip.
The C H A I R M A N . All right. Now what did you know about the
ownership of Air Taxi, specifically the Khatami ownership interest,
before you traveled to Iran in 1967 ?
Mr. O R P E N . We knew nothing really other than some rumors that
had been put forth by Mr. French or Mr. Bell, his attorney.
The C H A I R M A N . That was the original source?
The C H A I R M A N .
besides you?
Mr. O R P E N . Mr.
The C H A I R M A N .
Mr. O R P E N . He
And when you say "we knew," who else knew
Pierrot and
Who was Mr. Pierrot?
was our export consultant based in Washington.
141
The C H A I R M A N . Who else told you about a Khatami ownership
interest in Air Taxi after you reached Iran? Anybody?
M r . ORPEN. N O
one.
The C H A I R M A N . Who did you tell at Bell Helicopter about the
Khatami ownership in Air Taxi?
Mr. O R P E N . I don't recall telling anybody about anything like that
because I didn't know about it.
The C H A I R M A N . Who at Bell Helicopter heard of Khatami's
ownership interest in Air Taxi besides you and Mr. Pierrot?
Mr. O R P E N . I don't know if it was ever discussed between Mr.
Jose and Mr. Atkins, but Mr. Jose and I would have had discussions
about some of the rumors or allegations by Mr. French or his
attorney.
The C H A I R M A N . What were the gists of those discussions?
Mr. O R P E N . Between Mr. Jose and myself?
The
CHAIRMAN. Y e s ,
sir.
Mr. O R P E N . Well, as I mentioned, it was a review of the particular
goals. He was anxious for us to locate a good, reputable representative for Bell and at that time the only company we had on our list
to check out was Air Taxi.
The C H A I R M A N . Did Mr. Jose or anybody else at Bell Helicopter
tell you that it would be improper or undesirable or against policy
to hire a firm that was owned by a foreign official ?
Mr. O R P E N . We all knew that from past experience with other
actions and activities that had taken place in other countries.
The C H A I R M A N . But was there any specific instruction in this
particular case?
M r . ORPEN. NO, sir.
The C H A I R M A N . None?
Mr. O R P E N . This was something that wouldn't be condoned by
our top management at Bell.
The C H A I R M A N . N O W you testified, as I understand it, that Bell
Helicopter officials decided to terminate Mr. French as your agent
in Iran before you went there. Is that right ?
Mr.
ORPEN.
Yes.
Mr.
ORPEN.
Yes.
25-067—78
10
The C H A I R M A N . Was Air Taxi the leading contender? I understood you to say that was the one you
Mr. O R P E N . They were the only contender that we had at that
time. We were also going to try to locate other potenially acceptable
firms or individuals.
The C H A I R M A N . And when was the decision made to rehire Air
Taxi?
Mr. O R P E N . Upon our return from that trip.
The C H A I R M A N . Who made the decision?
Mr. O R P E N . Mr. Jose and Mr. Atkins, upon the recommendation
of Mr. Pierrot and myself.
The C H A I R M A N . A S far as you're concerned then the decision was
made and approved by Mr. Jose and Mr. Atkins; is that correct?
The C H A I R M A N . Whom did you tell at Bell Helicopter or Textron
about the decision?
Mr. O R P E N . About the decision?
142
The C H A I R M A N . About the decision to hire Air Taxi?
Mr. O R P E N . Well, we would have reviewed our discussions, our
trip activities with Mr. Jose upon return to Bell.
The C H A I R M A N . N O W you testified that Mr. Atkins knew, Mr.
Jose knew—how about Mr. Ducayet ?
Mr. O R P E N . I don't have any knowledge that Mr. Ducayet knew
but I assume that he would have been briefed by Mr. Atkins.
The C H A I R M A N . And Mr. Miller?
Mr. O R P E N . I don't believe Mr. Miller would have any—at that
time—interest in that particular employment.
The C H A I R M A N . What type of investigation, if any, were you supposed to make into Air Taxi when you went to Iran in November
of 1967? What instructions did you receive?
Mr. O R P E N . Our standard instructions for a new representative
was, first of all, to find an individual or company who had a good
reputation in the country; secondly, who had access to the type of
people that we were trying to sell so if they called up to make an
appointment to present a propose or conduct a briefing they would
be acceptable.
The C H A I R M A N . Well, now you have testified that you had heard
before you left from Mr. Bell, Robert Bell, his allegations that
Khatami owned Air Taxi. Were you instructed to check that out
at all?
Mr. O R P E N . I could have been but I don't recall specifically.
The C H A I R M A N . Y O U don't recall whether you were or not?
Mr.
ORPEN.
NO.
The
CHAIRMAN. H O W ?
The C H A I R M A N . Were you supposed to check into the ownership
of Air Taxi at all?
Mr. O R P E N . A S near as we could, yes.
Mr. O R P E N . Well, to find a copy of their financial statement and
to determine their financial stability.
The C H A I R M A N . Were you asked to determine whether there was
any governmental, military, or royal family connections?
Mr. O R P E N . I don't recall being asked specifically that point but
I could have been asked.
The C H A I R M A N . And were you asked to check whether or not or
who the officials were or who the owners were in fact so you could
get them by name?
Mr. O R P E N . I don't remember specifically, but either Mr. Pierrot
or myself I'm sure would have brought that point up.
The C H A I R M A N . Did you talk to U . S . embassy or military personnel in Iran or American businessmen or defense contractors
about Air Taxi ?
Mr. O R P E N . We talked to the U . S . Embassy people as another
check of the company to see what they knew about this company, if
they were—if they had any reason to feel that they would not be
an acceptable representative of Bell Helicopter Co.
The C H A I R M A N . Was it considered important that Air Taxi would
have connections with the royal family or with Gen. Khatami?
Mr. O R P E N . Yes, and we knew
143
The C H A I R M A N . Y O U say that would have been a positive element
in your choice?
Mr. O R P E N . Yes. By connection, I don't mean ownership but access and knowledge of the royal family.
The C H A I R M A N . Well, although you say you had knowledge before you left that Robert Bell had made this allegation, you don't
recall whether or not you tried to determine whether or not Gen.
Khatami actually had an ownership in Air Taxi?
Mr. O R P E N . Not specifically, but it's very possible we did.
The C H A I R M A N . What did the U . S . Embassy and military personnel in Iran tell you ?
Mr. O R P E N . Well, among other things, if you mean specifically
about Air Taxi
The
CHAIRMAN.
Mr.
ORPEN.
NO.
Mr.
ORPEN.
NO.
Yes,
sir.
Mr. O R P E N [continuing]. That there was no reason in their mind
that Air Taxi would not be a good representative for us.
The C H A I R M A N . My time is up. Senator Brooke.
Senator B R O O K E . Mr. Orpen, in November of 1 9 6 6 , Robert Bell,
an attorney representing William French, Bell Helicopter's agent
in Iran from 1964 to 1967, met with Mr. Jose and Mr. Ducayet, and
at some time with Mr. Feliton, to discuss Gen. Khatami's alleged
interest in Air Taxi and his desire to acquire an interest in Mr.
French's firm.
Were you aware that such meetings took place?
Mr. O R P E N . I was not a party to any meetings by attorney Bell
on his visits.
Senator B R O O K E . I asked whether you were aware that such meetings took place, not whether you were a party to them.
Mr. O R P E N . I knew that Mr. Bell had made several trips to the
factory to talk to Mr. Jose and I don't know if he talked to anybody
higher than Mr. Jose or not.
Senator B R O O K E . When did you become aware that Gen. Khatami
had an interest in Air Taxi?
Mr. O R P E N . I would assume that it would have been pointed out
in one of Mr. French's letters or attorney Bell's letters to the export
department.
Senator B R O O K E . D O you remember what year that would have
been ?
Mr. O R P E N . Probably 1 9 6 6 , the time frame after he was trying to
form some other company that would be able to do business in Iran.
Senator B R O O K E . Having that knowledge, did you impart that
information to Mr. Jose?
Mr. O R P E N . Well, Mr. Jose received copies of the same correspondence that I got, so I assume that he was also aware of this.
Senator B R O O K E . Did you personally discuss it with Mr. Jose?
Mr. O R P E N . I don't recall a personal discussion of it.
Senator B R O O K E . Did you personally discuss it with Mr. Ducayet?
Senator B R O O K E . Did you ever at any time impart that knowledge
to Mr. G. William Miller ?
144
Senator BROOKE, D O you have any personal knowledge that Mr.
Miller at any time knew that Air Taxi was owned in part or in full
by Gen. Khatami ?
Mr. O R P E N . I'm sure that he did not. I don't think this would have
been a point that would have been of particular interest to him at
that time. I think he trusted the Bell officials to be discreet and
selective in their choice of representatives.
Senator BROOKE. And you say you're sure that Mr. Miller did not
know of this ownership or part ownership ?
Mr. O R P E N . I would say I have no reason to feel that he would
have been briefed specifically about this point.
Senator BROOKE. But at least at no time did you have any conversation with him ?
M r . ORPEN. NO,
sir.
Senator B R O O K E . Nor did you have any knowledge of anyone else
imparting that knowledge to Mr. Miller?
Mr. O R P E N . That's correct, sir; I did not.
Senator BROOKE. Did you communicate in any way in correspondence to Mr. Miller information concerning Khatami's ownership
interest in Air Taxi?
M r . ORPEN. N O , sir.
Senator BROOKE. Did
Mr. Miller personally ?
M r . ORPEN. N o ,
you have occasion to frequently meet with
sir.
Senator BROOKE. Did you ever meet with him on business matters
pertaining to Bell Helicopter?
Mr. O R P E N . Only more or less socially primarily during one of
the Paris Air Shows when he was in France.
Senator BROOKE. But in the so-called chain of command in Textron and Bell Helicopter, you did not have occasion to meet with
Mr. Miller on any matters pertaining to Bell Helicopter?
M r . ORPEN. I d i d n o t .
Senator BROOKE. And
any written communication that you made
would have gone through channels, is that correct, and may or may
not have reached Mr. Miller?
Mr. O R P E N . I assume they did not.
Senator BROOKE. Did you ever personally meet Gen. Khatami?
M r . ORPEN. Y e s .
Senator BROOKE.
Where did you met him?
Mr. O R P E N . On the visit that Mr. Pierrot and I made together with
Mr. Kling from our company in late 1967.
Senator BROOKE. And who was present at that meeting?
Mr. O R P E N . Mr. Pierrot and myself.
Senator BROOKE. H O W long did the meting last?
Mr. O R P E N . Oh, the actual face-to-face contact with Gen. Khatami
was probably only 15 minutes.
Senator B R O O K E . Where did the meeting take place?
Mr. O R P E N . In his home in Tehran.
Senator B R O O K E . And what was the purpose of the meeting and
who requested the meeting?
145
Mr. O R P E N . Mr. Pierrot requested it and we both felt it would be
a good idea because we wanted to further our sales proposals that
we were making at the time to the Iranian Army.
Senator BROOKE. Why did you feel that Gen. Khatami was important ?
Mr. O R P E N . Because he was the chief of the Iranian Air Force
and part of our sales duties in any country visit was to reach the
highest level of potential contact that we could make.
Senator BROOKE. At this meeting did Gen. Khatami volunteer the
information that he was an owner of Air Taxi?
M r . ORPEN. N O , sir, i n n o w a y .
Senator BROOKE. Did anybody at
that meeting ask Gen. Khatami
whether he was an owner of or partner in Air Taxi?
Mr. O R P E N . NO, sir. It was a social visit, Senator.
Senator BROOKE. Purely social, you did not get into any technical
matters at all?
M r . ORPEN. NO.
Senator BROOKE. Y O U
ownership of Air Taxi?
M r . ORPEN. N O ,
did not at any time discuss the question of
sir.
Senator BROOKE. At no time discussed having Gen. Khatami use
his good offices in behalf of Bell Helicopter?
Mr. O R P E N . Absolutely not. We wouldn't have asked that question.
Senator BROOKE. And so you would characterize it as a purely
social meeting and of no real substance ?
Mr. O R P E N . Primarily, that's correct, other than we did mention
our interest in the potential helicopter sale to the Iranian Army
which was one of the reasons for our visit, as I previously mentioned.
Senator BROOKE. Did you ever meet Mr. French?
Mr. O R P E N . Many times.
Senator BROOKE. And what business did you have with Mr. French
specifically ?
Mr. O R P E N . Well, at the time he was our sales representative and
we were trying to promote sales in Iran. It started out first mainly
with the potential commercial sales. We were selling both commercial helicopters as well as military helicopters and the two—the best
prospects that Mr. French had on my first visit with him was the
electric company as well as the Iranian oil company for the use of
civilian helicopters.
Senator B R O O K E . Did you know that Mr. French had been denied
reentry into Iran?
M r . ORPEN. Y e s .
Senator BROOKE. Did you
Mr. O R P E N . Only through
Senator BROOKE. Did you
know the reason why?
what Mr. French informed us.
have reason to believe Mr. French?
Mr. O R P E N . I had no reason not to, but it was a matter that he
had to clear up himself without our intervention in any way.
Senator BROOKE. D O you think that your company did anything
illegal or unethical in its negotiations with respect to the purchase
of thepo 489 helicopters?
146
Mr. O R P E N . Well, I know nothing about the purchase of that number of helicopters because this took place after I left Bell.
Senator BROOKE. Let me rephrase the question.
Mr. O R P E N . After all, knowing our company policies and the
officers of the company, I know that they would never have condoned any act that would be considered subversive or under the table
payments or that sort of thing.
Senator BROOKE. Did you know while you were with Bell Helicopter of any company or corporate policy that prohibited any payment to foreign government officials?
M r . ORPEN. Y e s .
Senator BROOKE. H O W
was it imparted to you, did you read it or
hear about it?
Mr. O R P E N . There was nothing in writing on it but we had sometimes discussed about the real world out there and what was going
on by other competitors of ours in Europe trying to sell helicopters
to the same countries that we were trying to sell them to and we
knew that there were payments of this sort of thing made by these
other companies, but any time we even suggested anything near that
it was given a very cold shoulder by Mr. Atkins and by Mr. Ducayet.
So we knew it was their policy not to condone any such acts.
Senator BROOKE. Did you understand this to be the policv of G.
William Miller?
Mr. O R P E N . Well, I can't say for that, but I ' m certain that—I
know for sure it was not Bell's policy and Bell was part of Textron.
Senator BROOKE. It was Textron's policy and Bell's policy ; is that
correct ?
Mr. O R P E N . I would assume that it is. I can only speak for Bell
Helicopter.
Senator BROOKE. For whom do you work now, Mr. Orpen?
Mr. O R P E N . I work for an air taxi company in St. Croix, Y . I . I ' m
a seaplane captain for Antilles Airboats.
Senator BROOKE. Thank you. My time is up.
The C H A I R M A N . Senator Sparkman.
STATEMENT OF SENATOR SPARKMAN
Senator S P A R K M A N . Mr. Chairman, I would like first of all to
read a brief statement that I have prepared.
I regret very much that the debate on the Panama Canal treaties
has prevented me from attending all of the committee sessions on
this nomination. However, I have been here for some of the proceedings and I have kept up with it through the staff.
I want to join with others on the committee who have complimented the committee staff on their investigation of this matter. I
think it's been one of the toughest, most thorough investigations that
I have ever seen by the committee. To me that is very significant
because so far as I have been able to determine from the results of
that investigation there has been no evidence that the nominee has
been guilty of any wrongdoing. If there is any such evidence, it
certainly should have come out by now or at least it should be pre-
147
sented today. Otherwise, the nomination should be acted upon by
the committee forthwith and in my judgment it should be acted
upon favorably.
I want to say that I think it's not good for the country to have
this position remain unfilled. While there is justification for the
delay—and by the way, I voted in favor of extending the hearings—
but I think that certainly we ought to complete these hearings today.
It may be that some of the revelations require further scrutiny by
other governmental bodies. I understand the Securities and Exchange Commission is already looking at some of them, but unless
there's something yet to be revealed to the committee bearing upon
the nomination itself, I can see nothing to be gained by prolonging
the matter further.
I am pleased that Mr. Miller has the opportunity this morning to
address the numerous allegations and insinuations that have been
tossed around and I look forward to what he has to say.
Let me say, Mr. Chairman, I have to go to the Foreign Relations
Committee and be there at 10 o'clock. We have a very heavy schedule today, a very important schedule, so I feel I must go over there.
I wrote out a proxy yesterday to Senator Morgan and he told me
he would be in and out, but it was my impression that I wrote the
proxy covering both days, but if it's not actually written out I
would like to say now that when Senator Morgan comes in he will
have my proxy.
Senator B R O O K E . Will the Senator yield ?
The C H A I R M A N . May I say to the Senator that under the committee rules I understand the committee can only vote by unanimous
consent and I don't think there will be unanimous consent with a
matter of this gravity—in 24 hours after the transcript of the last
hearing has been made available to the committee members.
Now if this is the last day of hearings—and it very well might
be—that wouldn't be available until probably Wednesday and that
would mean that we couldn't vote until Thursday, but I would
agree wholeheartedly that unless other members have strong feelings
about additional witnesses that I see no reason why at this moment
we can't proceed and vote this week on the nomination.
Senator B R O O K E . Will the Senator yield ?
Senator S P A R K M A N . Sure.
STATEMENT OF SENATOR BROOKE
Senator B R O O K E . I certainly would agree with everything that my
distinguished colleague, Senator Sparkman, has said. I think that
the monetary policy concerns of the country are of such magnitude
that certainly none of us can countenance any delay in acting on
this nomination.
I would disagree that there have been allegations and insinuations
against G. William Miller. There have been no such allegations nor
insinuations to my knowledge. As I understand it, we have been
ascertaining just what Mr. Miller knew relative to the ownership
of this company described as Air Taxi, and what he did, if anything,
about it. And to date there has been no evidence linking Mr. Miller
148
either to any activity or to any knowledge of the ownership of Air
Taxi by Gen. Khatami.
I would certainly agree that if we do not have any additional
information we should not prolong these hearings. To the best of
my understanding, Mr. Chairman, the only witness after Mr. Orpen
is Mr. Miller, who has already been before us and who has denied
any knowledge about the ownership of Air Taxi. I certainly don't
expect that Mr. Miller's testimony will be changed before the committee this morning, particularly since no evidence has been introduced by any witness that would indicate that Mr. Miller knew
about the ownership of Air Taxi. So failing in that, obviously it
seems to me that there would be no further witnesses and we could
terminate the hearings.
I don't like, however, to see us say that we must end the hearings
today or at any particular time until we have completed our job;
but I expect that our job will be completed soon after G. William
Miller testifies today. Then it seems that, as the chairman said, it
would just necessitate the transcripts (being made available for the
information of those Senators who, because of other duties, could
not attend all of these hearings. Thus, within a day or so of publishing the last transcript, we could take a vote.
I don't know of anybody who wants to delay these hearings or
does not want to get on with a vote on the confirmation of Mr. Miller.
And I don't think we ought to get the impression, or leave the
impression on the record, that there has been any effort to delay the
confirmation process or that there have been any personal allegations or insinuations against G. William Miller.
I have been at all of these hearings. I have heard no allegations.
T have heard no insinuations against him personally. I have heard
that there was knowledge by some officials in Bell Helicopter to the
effect that there was ownership of Air Taxi by Gen. Khatami. I
think Mr. Orpen himself is one. Mr. Jose certainly was another.
Mr. O R P E N . That was only by allegation, sir.
Senator BROOKE. I beg your pardon?
Mr. O R P E N . That was only by rumor.
Senator BROOKE. Yes. That's what I'm saying. Then, of course,
we have certain documentation before us as well. But leaving that
as it may, we have nothing that imputes this to G. William Miller
and that's, of course, the scope and the subject of our investigation.
The C H A I R M A N . I might point out to the Senator from Massachusetts, that the committee—I neglected to say and it was my fault
because I should have recalled it—the committee did indicate that
we invited Mr. Zanganeh and another Iranian citizen to appear
before the committee. The staff tells me that as of this moment we
have not heard about that and
Senator T O W E R . And you're not likely to.
The C H A I R M A N . Well, we'll have to decide after we complete the
hearings today whether to wait for such a response.
Senator S P A R K M A N . Mr. Chairman, I agree with everything both
of you have said. I simplv wanted to point out my feelings that we
need a .chairman of the Federal Reserve Board at work and I did
not intend to say that the insinuations with reference to Mr. Miller
149
have originated in this committee. I think some of the testimony
may cast doubt upon his fitness for the job, but there have been
insinuations in the press and the Securities and Exchange Commission I understand is checking into it. So it does present some
kind of a cloud as I see it. I want a perfectly fair hearing and, at
the same time, I hope we can get this important post filled.
The C H A I R M A N . Thank you, Senator Sparkman.
Senator Tower.
Senator T O W E R . Thank you, Mr. Chairman.
Certainly there has been no allegation or insinuation but perhaps
just a little soupcon.
I want to associate myself with the remarks made by my distinguished colleague from Alabama. I think if we prolong this we
cast a cloud on a fine and honorable businessman of good reputation
and inhibit him in his ability to do his work as Chairman of the
Fed. I might say that I am delighted that the President looked to
the business community for a man to place in this position and I
think that that kind of experience is the kind that should be brought
into considerations of monetary policy, particularly one that has
had some experience in the international arena, when you consider
the sorry state of the dollar these days.
Mr. Orpen, in your capacity as the export sales manager of Bell,
do you have much personal contact with Mr. Miller ?
Mr. O R P E N . Very little, sir.
Senator T O W E R . In other words, it was infrequent?
Mr.
ORPEN.
Yes.
Senator T O W E R . Were you ever told by Mr. Miller not to bother
him with details but to get on with it and do whatever is necessary
to conclude a deal with the Iranians?
Mr. O R P E N . N O , sir. We never discussed the Iranian picture.
Senator TOWTER. Were you ever instructed by Mr. Miller specifically to avoid any questionable practices?
M r . ORPEN. NO, sir.
Senator T O W E R . S O you received no instructions
M r . ORPEN. NO.
Senator T O W E R . Ordinarily, instructions to
from him; right ?
you would come
through channels, would they not, and not directly from Mr. Miller
to you?
Mr. O R P E N . That's correct.
Senator T O W E R . About how many levels of the administration
would you consider that would separate you from Mr. Miller?
Mr. O R P E N . Well, my main contact
Senator T O W E R . Looking at the lines of control and authority and
responsibility and accountability.
Mr. O R P E N . Mr. Jose was my immediate superior and then he
would from there brief Mr. Atkins. Occasionally I would brief Mr.
Atkins. Mr. Atkins would, in turn, brief Mr. Ducayet and then Mr.
Ducayet or both Mr. Atkins and Mr. Ducayet would have contact
with Mr. Miller.
Senator T O W E R . S O roughly about three or four levels of administrative controls separated you from Mr. Miller; right?
Mr.
ORPEN.
Yes.
150
Senator T O W E R . I have no more questions, Mr. Chairman.
The C H A I R M A N . Senator Eiegle.
Senator R I E G L E . Thank you, Mr. Chairman.
First of all, I appreciate your appearance before the committee
today and the responses that you have given. Can you tell me what
the circumstances were that caused you to leave Bell some years ago?
Mr. O R P E N . Yes, sir. There were two main reasons. One was that
I was involved in what I considered to be an excessive amount of
travel which took me away from my family and that situation wasn't
going to improve. Then, secondly, there was a new vice president
brought in from outside the company whom I didn't feel I wanted
to train.
Senator RIEGLE. That you didn't want to train?
Mr.
ORPEN.
Mr.
ORPEN.
Yes.
Senator RIEGLE. Would you say that your work career with the
company was generally a satisfactory one ? Did you find it a good
company to work for before the new vice president was in?
Mr. O R P E N . Very much so. I enjoyed my association.
Senator RIEGLE. And did you find it to be, in terms of your experiences in the business world before and since, an honorable and
reputable company?
Mr. O R P E N . Very much so.
Senator RIEGLE. H O W would you compare the ethical tone of the
company with the ethical tone of other companies that you have
had a chance to see before or since,?
Mr. O R P E N . Well, much higher than any of our foreign competition. I think it would be on the level with some of the practices of
our American corporations which were good competitors of ours.
So I couldn't have asked for working for a company with higher
respect.
Senator RIEGLE. Did that ever put you at a competitive disadvantage in sales situations in foreign countries?
Mr. O R P E N . Yes, but any time I complained about it Mr. Atkins
would say, "Well, we've got the best product. They've got to come
to us anyway," which has proven to be the fact.
Senator RIEGLE. S O you found that having to adhere to a pretty
rigid ethical code actually set you apart from some of the competitors that you found yourself having to try to out-compete in these
marketing areas?
Mr. O R P E N . Well, many times there was a disadvantage.
Senator RIEGLE. Were you ever aware of a time when an improper suggestion was made by a possible foreign buyer or intermediary for a foreign buyer where the suggestion was made that
some kind of a kickback or under-the-table arrangement would
breech the deal and where that was in turn rejected by your company ?
Senator
Mr.
Yes.
RIEGLE.
ORPEN.
Yes.
Your answer is yes?
Senator R I E G L E . Did that happen once or more than once?
Mr. O R P E N . T O my knowledge, that I was aware of, about a half
dozen times.
151
Senator RIEGLE. S O you're aware of half a dozen situations where
Bell could have received business if it had been willing to accept
those practices and where in fact it rejected the business because
of those practices? Is that your testimony?
Mr. O R P E N . That's my testimony; yes, sir.
Senator RIEGLE. Were those in one country or in a variety of
countries ?
Mr. O R P E N . A variety of countries.
Senator RIEGLE. In a variety of countries?
Mr. O R P E N . Yes, and Iran was not one of them.
Senator RIEGLE. And Iran was not one of them. So in other words,
it not only was your observation that you were being asked to adhere to a higher ethical standard than other people in the same
business you were in, but you actually can recall at least six incidences where you were compelled to reject business that had as a
part of it some kind of an under-the-table component?
Mr. O R P E N . Yes. That doesn't mean that we necessarily lost the
business.
Senator RIEGLE. Well, I take it that you mean you just worked
harder to try to secure a sale in that area rather than succumb to
that kind of inducement by whoever was trying to put the deal
together ?
M r . ORPEN.
Yes.
Senator RIEGLE. Did I understand earlier that you had or had
not ever discussed with Mr. Atkins, now the president of the company, the question of whether or not Gen. Khatami was a part
owner or in some way connected with Air Taxi?
Mr. O R P E N . I would not have, to my knowledge, discussed that
directly with Mr. Atkins. My discussions on that matter would
have been strictly with Mr. Jose.
Senator RIEGLE. S O you would not be in a position to know whether
or not anybody might have said that to Mr. Atkins, at least you
were not present or did not yourself pass on that suggestion to him?
Mr. O R P E N . That's a correct statement.
Senator RIEGLE. What was your sense in the company for Mr.
Miller in terms of the kind of person that he was both as a manager and in terms of his own ethical standards? I realize that in
terms of where you were located in the company at that time there
was some distance between the two of you, but in terms of the
general tone that he seemed to reflect, could you give us a comment
on what the appearance and sense for that was in your mind as
an employee of the company at that time?
Mr. O R P E N . I know that my own impressions of meeting him
plus anything that filtered down in conversations with members of
our executive staff at Bell were all highly favorable of Mr. Miller,
that he was a very sharp individual and couldn't have asked for
someone more knowledgeable about business practices to work for.
Senator RIEGLE. Was there ever a suggestion by anybody that
you talked with in the company that he would be a corner-cutter
or somebody who might say one thing and do another, or was a
person who was in any way just not exactly on the level?
152
Mr. O R P E N . I heard no negative comments whatsoever about Mr.
Miller.
Senator R I E G L E . I assume that if there were a feeling by people
in the company that he possessed any of those kinds of negative
characteristics that those things tend to rattle around the pipes and
presumably you would have heard that if that was something that
others thought?
M r . ORPEN.
Yes.
Senator R I E G L E . Let me just for a minute talk about Iran. I
sense—I have not been to Iran, but I sense that it's a more or less
one-man operation and we can talk about Gen. Khatami and others,
but when it boils right down to it the Shah is basically the center
of influence and the center of decision making and I get the feeling
that there aren't too many end runs on him in that situation.
Now was that your sense back at the time that you were involved? Was his power in the country apparently as absolute as
it seems today ?
Mr. O R P E N . Very much so, yes.
Senator R I E G L E . S O in a sense, if one wants to get into the intricacies of the decision making system in Iran and, frankly, I'm not
sure how relevant that is to the inquiry we have, but we are nonetheless into it—I would gather that one would almost be forced to
presume that if a decision were finally made for or against one
weapon system or for or against one supplier, that it's not likely
to be some person lower down in the hierarchy that necessarily
makes that decision but the Shah himself. Would that be a correct
surmise ?
Mr.
ORPEN. Y e s ,
sir.
Senator R I E G L E . Did you get the sense that the Shah had a very
deep personal interest in weapons decisions and in military decisions ?
Mr. O R P E N . I think all of the evidence is to that effect. I know
that when he made trips to the United States and got together with
our President that was certainly part of the discussion and we had
this impression from the Department of Defense officials who had
contact with him.
Senator R I E G L E . S O would it be fair to conclude that on something as basic as the purchase of these helicopters which eventually
came about in terms of a $y2 billion worth and something in excess
of $1 billion worth in total since that time, that that would be both
the type of decision and the size decision that the Shah himself
would tend to pay direct attention to ?
Mr. O R P E N . I ' m sure he would.
Senator R I E G L E . S O I then assume that it would also be reasonable to think if one were trying to act as a supplier—I would assume, then, that on a matter of this size that the Shah himself
would be directly involved in the decision and that an outside supplier, regardless of how they were trying to massage the internal
decision process within Iran and trying to find people who might
have influence in or out of the military and so forth—that the
bottom line finally was the question of whether or not the Shah
153
himself was well disposed toward a particular weapons system and
how he would finally make the judgment in his own mind?
Mr.
ORPEN.
Senator
Mr.
Yes.
RIEGLE. I S
ORPEN.
Yes,
that correct?
sir.
Senator R I E G L E . Well, I think that's important because it raises
the question of whether or not some clever maneuvering that might
be done by a supplier to people who were lower down in the hierarchy in Iran really is the way decisions ended up being made or
whether even prudent decisionmakers would think that decisions in
Iran are made that way, or whether or not the hard facts of the
case are that in matters of this size the Shah is really the kingpin
and that all roads finally lead to that one place, and I suspect that
in the case of Bell Helicopter it's very likely that in looking at this
kind of decision that while one tries to presumably reach and favorably impress the people in the military hierarchy across the board
—which is exactly, by the way, the way weapons procurement takes
place in the United States; that's why all the weapons contractors
hire up all the ex-generals and admirals and so forth, so they've got
sort of a built-in constituency and as a part of a disgusting situation, but nonetheless what we face—it seems to me you have the
unique situation in Iran where you've got one man rule and in the
end that's basically where you either do or don't have whatever influence one has to affect a decision.
So I would hope that we could keep the rest of the activity in
context and at least reflect the unique set of facts that one finds
in that country.
I thank you for you testimony.
The C H A I R M A N . Senator Lugar.
Senator L U G A R . N O questions.
The C H A I R M A N . Senator Schmitt.
STATEMENT OF SENATOR SCHMITT
Senator S C H M I T T . Mr. Orpen, are you aware of any proof that
Gen. Khatami or any other official of the Iranian Government
owned or in any way financially controlled Air Taxi?
Mr. O R P E N . I was never able to determine that situation.
Senator S C H M I T T . Mr. Chairman, I think it's unfortunate that
this committee hasn't spent more time on the monetary policy and
the independence Mr. Miller believes in or would have as chairman
of the Federal Reserve Board. I hope that when Mr. Miller is before us this morning we can get into that.
The C H A I R M A N . If the Senator would yield on that, as the Senator
knows, we had Mr. Miller before us for 6 hours. The Senator and
other members of the committee had all the chance in the world to
question Mr. Miller on that or any other issue. Furthermore, Mr.
Miller comes before us a little later. We have a chance to question
him this morning and this afternoon and tomorrow and the next
day if the Senator wishes to do so.
Senator S C H M I T T . I fully realize that, but it seems to me the
balance is wrong and although I have some reservations about some
154
of these philosophies and policies that Mr. Miller might have, I
have been somewhat reassured by personal conversations with him.
The question I have about the investigation into the alleged ownership of Air Taxi by Gen. Khatami—and that was the thrust of my
question of Mr. Orpen—I think we still have to refer to it as alleged, at least with respect to our witnesses because they have uot
been privy to some of the documentation that apparently the committee has and even that might be subject to some question—but
there is no conclusive proof that I have seen of any ownership.
There's been no testimony or documentation that Mr. Miller was
aware or should have been aware of such alleged ownership either
during the time in which the events in question took place surrounding the retention of Air Taxi as the agent for Bell in Iran or in the
payment of the $2.95 million to Air Taxi as termination or commission fees or during Mr. Soutter's inquiry instigated I guess in
part by the activities of Mr. Miller but not entirely.
The deeper question really has become, as a consequence of the
hearings—the last few hearings—the deeper question is, can we find
highly qualified people who have experience and who are willing
to undertake service in the Federal Government? Can we convince
such people that that service is worth it? Is it worth what we put
them through in order to finally prove that they are innocent of
any alleged wrongdoing?
I do not condone either bad management or bad ethics. I do,
however, feel that along with other members of this committee—
and particularly my colleague, Senator Stevenson, on the Ethics
Committee—that we are continually forcing the proof of innocence
and not just a proof of innocence but every time a man comes before us we are asking him again and again to prove innocence
rather than accepting the continued absence of the proof of guilt
as being sufficient.
I wish we could vote today, Mr. Chairman. If it were in the rules
of the committee I would so move that we vote on the nomination
today. The economic questions remain unanswered to some degree
and this committee has become bogged down in the complications
and complexities of doing business in a country like Iran. I found
it very educational and as a member of the International Finance
Subcommittee I think it will pay off in my future dealings on that
committee.
Senator RIEGLE. Can you use another word than "payoff" ?
Senator S C H M I T T . It probably will kick back into that activity,
but that is an investigation into the procedures of certain large
corporations and it should be more properly handled there than in
the depth that we have gone into it here, but as the confirmation
hearing of the potential Chairman for the Federal Reserve Board,
I and many others I think believe this morning it's become time
for the committee to leave this investigation behind us and proceed
with the real business at hand.
Now as I see it, there are three options facing us as a consequence
of all of this. The administration might choose to withdraw Mr.
Miller's name as a nominee and for us to have another nominee
155
put before us and potentially confirmed; the committee could at
the appropriate time hopefully this week vote one way or the other
on his confirmation and if we vote to approve Mr. Miller's nomination we take the chance thr
rro may keep this
matter up in the air with potential damage to his r 'ertiveness as
Chairman of the Federal Reserve Board or damage to the country
with respect to the continuation of an economic recovery.
Now this third option, if we choose to approve Mr. Miller, requires that we exercise a great deal of judgment and that we put
considerable faith in the integrity of the nominee as he has been
placed before us, based on his achievements, his reputation that's
been confirmed by all witnesses before us, and a long and distinguished career in not only private service but in public service.
How the committee chooses to exercise that judgment I won't try
to predict, but I think it's essential that wTe proceed as rapidly as
possible to that time and as a consequence I will not ask any further questions of Mr. Orpen.
I just strongly recommend that the chairman and the members
of the committee allow Mr. Miller to clear the air as he sees fit based
on the preceding results of our hearings and then to get down to
the business of either confirming or not confirming his nomination.
The C H A I R M A N . If the Senator would yield, the Senator has asked
why we couldn't act on this today. I do think under the circumstances with the tremendous amount of testimony we have had and
with the rules that have been established so that all Senators, including at least half the Senators on this committee who haven't
been here most of the time, will have a chance to review the testimony before they act; that the 24-hour rule should be abided by. It
would take unanimous consent to waive it and I would object under
these circumstances because I don't think it would be fair to all the
members of the committee if they can't have an opportunity to reflect on this.
Senator S C H M I T T . Mr. Chairman, I have no objection to that
delay.
The C H A I R M A N . If the Senator would permit, I might point out
this would only delay it 48 hours under most circumstances. Senator
Brooke is dead right. We may possibly in the testimony by Mr.
Miller develop a line that the committee would agree should require further inquiry. I don't think it will, but it may. So in all
likelihood we will be acting within the next 48 hours. It seems to
me that's rather promptly under the circumstances.
Senator S C H M I T T . Well, I think that it's only appropriate that
we wait. I personally feel that anybody who's paid any attention at
all to these hearings one way or the other—and I think the press
accounts have been quite accurate—pretty well knows now that
there's been no evidence or testimony put forward that Mr. Miller
in any way knew or should have known of the alleged involvement
of General Khatami in Air Taxi's financial operations. On that
basis, then I would say that unless Mr. Miller contradicts himself in
his testimony later today, which I don't think he will, I don't think
that this part of our discussion is any longer relevant and that's
156
why I wish to proceed as rapidly as possible to vote as soon as the
committee rules and the Senators involved will permit. I have no
further questions.
The C H A I R M A N . Senator Heinz.
Senator H E I N Z . N O questions, Mr. Chairmaii.
The C H A I R M A N . Are there any further questions of Mr. Orpen?
[No response.]
The C H A I R M A N . If not, Mr. Orpen, I want to thank you very,
very much. As the other witnesses, you have done an excellent job
and I know it isn't easy for you to come before the committee. We
express our gratitude to you for having done so. Thank you very
much.
Now we would like to ask Mr. Miller to come forward.
Mr. Miller, will you rise and raise your right hand, sir? Do you
swear that the testimony you are about to give will be the truth,
the whole truth and nothing but the truth?
Mr.
MILLER. I
do.
The C H A I R M A N . Be seated. Would you like to make a statement
to the committee? There's been a lot of water over the dam since
you were here last and we will be happy to hear whatever you would
like to say.
STATEMENT OF G. WILLIAM MILLER, CHAIRMAN OF THE BOARD,
TEXTRON; NOMINEE TO BE CHAIRMAN OF THE FEDERAL
RESERVE BOARD
Mr. M I L L E R . Mr. Chairman and members of the committee, I do
want to thank you for giving me this opportunity to be back with
you today in order to clarify some of the matters that have arisen.
Let me say that when President Carter invited me to serve in this
position, I looked at my personal life and at my business life, and
I honestly knew of no circumstances that would in any way embarrass the President or the Senate or the Federal Reserve or Textron or me or my family. I accepted his invitation on the belief
that that was the case.
As you know, the allegations about Air Taxi came as a complete
surprise to me. At the previous hearing I testified—and I want to
confirm now—that I had no knowledge of any undisclosed ownership by Gen. Khatami in Air Taxi. I also stated then—and I would
like to confirm now—that had such ownership existed and been
known to me I would not have approved the contractual payments
to Air Taxi.
In the course of this committee's investigation, there has been no
suggestion that I knew of an undisclosed ownership. In this Air
Taxi matter I dealt with James F. Atkins, the president of the
Bell Helicopter Division of Textron, and there has also been no
suggestion that he knew of any such undisclosed ownership.
In my opinion, Mr. Atkins is a highly competent executive and
a person of honor and integrity. I believe that I was fully justified
in relying upon him to handle the Air Taxi matter. He has testified
here that he had no knowledge or reason to believe that Gen.
157
Khatami had an undisclosed ownership interest. He therefore could
not have intended that any of the money paid to Air Taxi would
go to Gen. Khatami.
Likewise, at no time did I have any intention that payments to
Air Taxi would benefit any military or civilian official of the Iranian Government or that such payments would be for any purpose
other than compensation of a legitimate sales representative.
I think the witness this morning confirmed that that has been
our policy and it continues to be our policy. It seems to me that I
should not reasonably have been expected to discover such an undisclosed ownership under the circumstances. If Gen. Khatami did
have an undisclosed interest in Air Taxi, then Mr. Atkins and I
have been deceived. Deception by others certainly should not be
the basis for impugning the integrity of innocent parties.
A word about Textron. In 1973 I was president of the company
serving both as chief executive officer and chief operating officer.
There were then about 30 divisions. Bell Helicopter was one. There
were 60,000 or more employees operating through about 200 plants
and major facilities throughout the United States and in many
countries of the world. The company was growing and has continued to grow. Supervision of such an enterprise is a demanding
task, and it was necessary for me to delegate substantial responsibilities to corporate group officers and to division presidents. I
also relied upon corporate staff.
The performance record of the company has been excellent. Textron endeavors to maintain the highest standards of conduct. This
has been a subject discussed at every major management meeting
during my 22 years with the company. The subject has been continuously covered at divisional review meetings, at controllers meetings, at executive training programs, and in a variety of other
forums. Written statements and guidelines and special memos have
been widely circulated. The record of corporate conduct has been
good.
As might be expected in a company of such scale and scope, there
have been a few instances of shortcomings. In such a large company, I cannot guarantee to this committee that there will not be
isolated cases of noncompliance with company policy in the future.
Textron employees are dedicated, competent, loyal, honest men and
women, but it is inevitable that some individuals will fall short of
their responsibilities from time to time.
To assure that Textron maintains high standards, there is a regular process of internal and external audit to verify compliance with
company policies. There are also Government contract audits, GAO
audits, Internal Revenue audits; we are audited as much as a bank.
For the past 2 years Textron has also required statements from
over 1,000 key employees certifying as to the absence of any knowledge of illegal, improper or questionable payments. All these company procedures include as a purpose the detecting and correcting
of noncompliance.
Textron management has strived to be diligent to its commitment
to excellence. Textron's reputation is important to me, and I feel
25-067—7S
11
158
a great responsibility to its present 65,000 employees and 90,000
shareholders to maintain the company's good standing. I am therefore anxious to assist this committee in any way I can to reach a
conclusion on this matter which I feel confident will confirm Textron's good name.
In the process, I hope I will be able to merit your affirmative
judgment as to my own qualifications and integrity. Thank you
very much.
The C H A I R M A N . Thank you very much, Mr. Miller.
Mr. Miller, when you testified before here the last time, you said,
and I quote, "In 1973 or in 1969 before the law or after the law,
I would be opposed to paying money to agents, money which goes
to government officials buying goods from us."
Now that's an excellent policy. However, let's look at the facts.
First, Gen. Khatami owned Air Taxi. Second, Air Taxi was and
is Bell Helicopter's agent in Iran. Third, Gen. Khatami and Air
Tnxi helped Bell Helicopter get its biggest contract, a minimum of
$500 million. Fourth, responsible management officials at Bell Helicopter were told that Khatami owned Air Taxi. So Bell Helicopter
paid $2.9 million a substantial part of which went to Khatami
through Air Taxi.
To me, the facts ring loud and clear.
Senator S C H M I T T . Mr. Chairman, will you yield at that point?
The C H A I R M A N . N O . T O me, the facts ring loud and clear. Textron bribed Khatami. In retrospect, Mr. Miller, do you believe
everything you could have or should have done was to guard against
improper payment?
Mr. M I L L E R . Senator, I disagree with everything you said.
The C H A I R M A N . All right. In the first place, Gen. Khatami owned
Air Taxi.
Mr. M I L L E R . I have no knowledge of that. I have heard no testimony and I see no evidence to that effect.
The C H A I R M A N . Have you read the record we have provided here ?
Mr. M I L L E R . Senator, I am not going to defame a dead man. I
have no such knowledge.
The C H A I R M A N . Have you had a chance to read the record that
we have provided here?
Mr. M I L L E R . The stack of books? Of course not; no, sir.
The C H A I R M A N . Well, then, how can you make the flat
Mr. M I L L E R . I'm here to testify about myself, sir.
The C H A I R M A N . Well, I'm not asking you whether you knew at
this point.
Mr. M I L L E R . I see. Well, Senator, if you know that he was an
owner, you know something I don't know. I say that's a statement
and I accept it. But I don't know that he was an owner and I do
know my company did not bribe anybody. You're saying we bribed
Gen. Khatemi, and that means that Mr. Atkins or I must have had
an intention to do so. Bribery does not exist if somebody surreptitiously obtains money from Textron. A bribe is a payment which
must include an intent to influence a decision. I do not believe Mr.
Atkins paid money to influence a decision. I know that I did not
159
authorize such a payment or approve it, nor would I do that or
condone it at any time, any place, anywhere. So I'm sorry, but I
think that you made a conclusive statement which is interesting.
It's an interesting speech, but it doesn't give me a question 1 can
answer.
The C H A I R M A N . Well, let's go over these points one by one. I
say Gen. Khatami owned Air Taxi. You say you don't know whether
he did or not. Is that correct?
Mr. M I L L E R . I have no knowledge of his ownership. I find nothing in the record of the summary report that would verify it.
The C H A I R M A N . Y O U find nothing in the summary report that
would verify that?
Mr. M I L L E R . I find allegations, sir, but I do not find evidence with
which I would be willing to defame a man.
The C H A I R M A N . Would you deny the fact that until 1 9 6 5 it wTas
official on the official record that Gen. Khatami was an owner of
Air Taxi?
Mr. M I L L E R . Senator, I would say that your report states that,
but I have not seen the documentation.
The C H A I R M A N . Well, we have the State Department letter in
response to our inquiry.
Mr. M I L L E R . I have not seen it. If you say he was an owner of
record at that time, I don't dispute it.
The C H A I R M A N . Did your company ever check the public records
to determine whether or not Gen. Khatami owned Air Taxi during
that period of time?
Mr. M I L L E R . In 1965 ? I have no knowledge of it.
The C H A I R M A N . During much of that period they were your
agent in Iran.
Mr. M I L L E R . Well, sir, at that time we did practically no business
in that part of the world, and my attention was on other matters
of current interest and importance. I was not.—as I said before—I
was not at all aware of the Air Taxi representation before 1965 or
after until the 1970's. It became necessary for me to become interested then as business began to develop; it became a matter that,
would come to the attention of the president of Textron then because of its scale and importance.
The C H A I R M A N . Well, let me go over these points again.
Air Taxi is Bell Helicopter's agent in Iran. Is that correct?
Mr. M I L L E R . It is. Since 1973, it has not been the sales representative in Iran for government business. It continues to be our
sales representative in Iran for civilian helicopters.
The
CHAIRMAN.
1973?
Mr. M I L L E R . I do not believe we have sold any civilian helicopters
during that period.
The C H A I R M A N . Would you deny that Gen. Khatami and Air
Taxi helped Bell Helicopter get its biggest contract?
Mr. M I L L E R . Air Taxi was the sales representative that participated and assisted in obtaining the order in 1973 for 489 helicopters, which is among the largest orders we have ever received. I
think that we may have had contracts with the U.S. Army that
ran to larger numbers over their life.
160
The C H A I R M A N . Would you deny that responsible management
officials at Bell Helicopter were told that Khatami owned Air Taxi ?
Mr. M I L L E R . I have heard testimony that Mr. Jose and Mr. Orpen,
who testified here this morning, had heard of that rumor.
The C H A I R M A N . They were told it.
Mr. M I L L E R . Told it.
The C H A I R M A N . Told it by attorney Bell.
Mr. M I L L E R . Sir, someone who tells you something may or may
not know the facts himself. The person who told it may have believed it; the person who heard it may not have believed it. I heard
the testimony you heard, which says that these gentlemen understood this to be a rumor. I heard Mr. Orpen say this morning that
his purpose was to be sure that we had a reputable sales representative in Iran, and that it would be wrong and would not be
condoned by the company if there was any ownership or participation from government officials in that sales representative. He
said that just a few minutes ago.
The C H A I R M A N . This is more than a cocktail rumor. This was an
attorney who came to your office, sir
Mr. M I L L E R . My office?
The C H A I R M A N . I beg your pardon. Not your office. Who came to
the office of Bell Helicopter in Fort Worth for a business purpose
who sat down and talked to some of your officials. They admitted
that they heard from Mr. Bell that this was the case. It wasn't a
matter of picking this up somewhere or somebody saying maybe
this is true, maybe not. He came and made that assertion and he
represented the man who was your agent at that time in Iran and
he wrote a letter to you—he wrote a letter to Bell officials in which
he made this assertion in writing. The document is in the files.
Mr. M I L L E R . Senator, I have heard the testimony you have heard,
and we can all go back and read it. I don't think my purpose should
be to interpret testimony before this committee. I think you are
able to interpret the testimony.
The C H A I R M A N . When you testified before the committee I asked
you about an investigation you had developed and a report about
questionable payments. You said, as I recall, and as I understand
the record reflects, that you conducted no specific investigation.
Later we found that Mr. Soutter had done an internal investigation
focused on the $2.9 million. After the issuance of a subpoena, that
document was supplied to the committee. Now why didn't you inform me at your confirmation hearing that Mr. Soutter had conducted an internal investigation on the $2.9 million payment? Were
you fearful that the inadequacy of the investigation might prove
embarrassing?
Mr. M I L L E R . Senator, I may be in error, but I think the investigation you are talking about now was one in 1975, and I think we
were talking about 1973 at my confirmation hearing. So I may
have been confused, but I had no reason not to inform you and
would be delighted to inform you now that Mr. Soutter reconfirmed to me in 1975 that the transaction appeared from his review
to be a proper commercial transaction with no indications that he
161
could find of any questionable aspects. I would be happy to confirm
it to you here.
The C H A I R M A N . When I asked you about the investigation of
questionable payments, did you simply forget that that investigation had been conducted or did you not consider it an investigation?
Mr. M I L L E R . If your question was about questionable payments in
general, I may have misinterpreted it—I certainly apologize if I
did not get my time frame correct. I think I said at that time,
however, that I was sure I had my attorney look this matter over.
I believe I said that, but perhaps I did not.
The C H A I R M A N . Well, we can't find anything in the transcript in
your response with respect to 1973.
Mr. M I L L E R . 1973, sir?
The C H A I R M A N . Y O U just said
Mr. M I L L E R . I said I may have had the time frame wrong, but I
certainly didn't intend not to inform you. And, as I say, my recollection is that I did inform you that I was sure I had had my
attorney check the matter.
The C H A I R M A N . N O W in your testimony before this committee
you said that the $2.9 million payment had been through the group
vice presidents. It's curious to me that despite three amendments to
the contract and the payment of a substantial commission that was
discussed at the highest levels, there were no memos written. It
appears to me that great care was taken to see to it on this questionable payment nobody left a paper trail.
Mr. M I L L E R . I'm not sure that I understand the first part of your
statement about group vice presidents. I don't recall any statement
about group vice presidents.
But in any case, let me be perfectly responsive to what I think
is the thrust of your question. In running a business we talk on the
telephone with our associates. We discuss business matters, we authorize transactions. We have a record of hiring and employing
trustworthy executives, and I think it's justified. The written record
in Air Taxi would be the agreement. Did I approve that w7hich Mr.
Atkins negotiated to pay, $2.9 million? I say yes; the record of it
would be that Mr. Atkins had a signed agreement that confirmed it.
The C H A I R M A N . What puzzles me is this was the biggest payment
you made, as I understand it. This was one of the biggest sales, this
$500 million helicopter sale, and I'm puzzled by the fact that a^
though there were three amendments—you amended it three times
—one time you cut it down from $10 to $6 million and then to 1
percent and then to $2.9 million—but at no point were there memoranda on this very important series of transactions and agreements.
Mr. M I L L E R . I don't know what memoranda there should be. Senator. The officer carried out exactly what we agreed to and signed
exactly what Ave agreed to. You know, quite often an attorney will
come into my office and say, "We are negotiating an acquisition,
and the issue is whether we agree to this;" and I make a decision.
The evidence of my decision is what the attorney writes into the
contract. I don't know what the purpose would be of my writing
a memo saying that I said to write into the contract what is
162
written into the contract. I'm sorry. I'm not familiar with the way
the Senate does business, but in the world I work in we have an
agreement, we mark it up and put what we want in it, and we type
it up—and that's the evidence. I don't know what other evidence
you're looking for.
The C H A I R M A N . Well, my time is up, but what I'm talking about
is usually an agreement of this type I would think would take
some time. It would not be simply a matter of reaching fruition
immediately. You wouldn't go right to your final decision. On each
of these amendments there must have been a process in the course of
which you would want to leave a record so that you knew just
where you stood and be able to remind you when you were negotiating.
Mr. M I L L E R . Well, Senator, I'm absolutely confident that when an
officer calls me and asks, "May I have your approval to sign this,"
that he signs what I approved. And that's what happened in this
case. So I didn't need anyone to tell me what I had agreed to. Let
me put this in context. When I joined Textron in 1956 the company had about $250 million in sales and it had $6.5 million in
profits. Last year it had $2.8 billion in sales and $137 million in
profits. That's a fantastic growth, a fantastic accomplishment. And
during the course of building that company a $2.9 million payment
is a small payment. I hate to say this to you, but those were among
the smaller transactions that I was concerned with. I have handled
deals where we paid several hundred million dollars. So I don't
see why, from your point of view, I would be as concerned as you
assume to think I would be about a payment of that scale when
Bell Helicopter was doing hundreds of millions of dollars of business. I don't see why I should worry about whether Bell officers
knew how to handle a payment of $2.9 million when they paid
much larger amounts than that many, many times. They bought
engines and negotiated for purchases; last year I suspect Bell
Helicopter bought $350 million worth of items from suppliers. I
have absolute confidence that we have an organization in place that
can do that, so I don't go out and check the mail at Bell Helicopter
in the morning to see if they get their checks out. I think you may
have a misunderstanding of how a very large enterprise works.
The C H A I R M A N . My time is up. Let me just refer—as I yield to
Senator Brooke—on page 142 of the transcript, Senator Brooke
asked, "As a formal report to you as chief executive officer?"
Miller: "This had been through the group vice presidents in discussion of this over time as they tried to negotiate as best they
could and ask for counsel of us and I don't know that there was a
formal report." That's why I referred to the group vice presidents.
Mr. M I L L E R . Let me clear that up. You see, the organizational
structure in Textron is normally a two-man top team made up of
a chairman and chief executive and a President and chief operating
officer. That allows a division of the great burden of running the
company. In 1973, I was covering both posts. Our organization includes half a dozen group vice presidents who work with several
divisions and then report to the president. That is the normal pro-
163
cedure—and my answer at the confirmation hearings about this
was in response to a general question, not about Air Taxi specifically, as I recall it. Generally, the reporting at that time was from
the division president to a group vice president to me as president.
When Mr. Gaylord retired in the late 1960's and for a period of
several years, I had Bell Helicopter, as a large, important division,
report directly to me.
Now by 1973, I think we had again assigned a group vice president to Bell and from that point on, as I recall, Bell was handled
again like all other divisions, through a reporting system. My comments at the confirmation hearing had to do, as I recall, with the
general organizational arrangement of Textron. In the time frame
that we were talking about I had a mixture of arrangements. Part
of that time, when the Iranian program was developing when Bell
Helicopter reported directly to me; part of that time it was reporting through a group vice president.
But on Air Taxi the discussions were directly between me and
Mr. Atkins, because we had already started the conversation in
prior years.
The C H A I R M A N . Senator Brooke.
Senator BROOKE. Thank you, Mr. Chairman.
Mr. Miller, Mr. Bell, who was counsel for Mr. French, testified
before the committee that after traveling to Iran in 1966 on behalf
of Mr. French, who had been denied reentry into the country, and
having been told by Gen. Khatami and others that Gen. Khatami
was an owner of Air Taxi, Khatami wanted a share of French's
business, Bell came to Bell Helicopter in Ft. Worth and told Mr.
Jose of his findings. Mr. Bell has testified that at the conclusion of
that meeting Jose picked up the telephone or the intercom to contact Mr. Ducayet, the president of Bell Helicopter, and that Bell
then went with Mr. Jose to meet with Mr. Ducayet. Mr. Jose testified that he remembers the conversation with Bell, that is, that Mr.
Bell did tell him about Gen. Khatami's ownership interest in Air
Taxi and desire to gain an interest in French's firm, but he does not
recall whether he and Bell had a meeting with Mr. Ducayet. In
addition Jose testified that he would not deny that such a meeting
could have happened. Mr. Ducayet testified that he did not recall
such a meeting, but he would not deny that such a meeting could
have occurred. At any rate, we know that Mr. Jose was informed of
this fact and that Mr. Jose said that it was sort of such a fantasy,
as I think he mavbe described it, that he was somewhat shocked
by it.
Now whether Mr. Jose actually told Mr. Ducayet we don't know.
We've got not testimony. They don't recall the conversation. But in
the due course of events, it would appear that Mr. Jose would have
imparted this information to someone other than himself.
My question to you is, do you think that Mr. Jose, if not Mr.
Ducayet, were negligent in not passing on information of this magnitude to their superiors? As I see it, it's not a question of money
but a question of integrity. Textron is a very large and respected
corporation and I know, as Mr. Atkins clearly made clear in his
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statement to us, the embarrassment to Textron and to Bell Helicopter that has the results from this investigation. But since Textron and Bell have very zealously guarded and protected their integrity, would it have been appropriate for Mr. Jose to have passed
on the information he received from Mr. Bell and would you consider that some sort of breach of his responsibilities as an executive
of Bell Helicopter?
Mr. M I L L E R . Senator, it's hard to judge, in hindsight, the circumstances of the case. I think there are two answers. If Mr. Jose heard
such a tale and gave it credibility and failed to pass it on, I woiild
be very disappointed in his stewardship. On the other hand, if Mr.
Jose heard rumors and gossip—which we hear all the time—and
thought, "That was just somebody putting me on to influence me
about something he wanted done, and didn't take it seriously, I
can see why I might not have felt he had to report it. I don't think
every piece of gossip and every word on the street corner is correct. If Mr. Jose heard this story and gave it credence, I would consider it important that he report it to his superiors. And if the
superiors heard it, I would not necessarily have considered it important that they report it on up immediately; but it would be important that they either verify and stop any problem, or tell me of
the problem so that together we could address how to solve it.
Senator B R O O K E . Mr. Miller, I would hardly characterize Mr.
Bell's testimony as gossip. Mr. Bell I think was a very excellent
witness. Of course you did not have the benefit of hearing his testimony. He certainly is a highly qualified member of the bar, took
very seriously his responsibilities as a member of the bar and a
member of the court and, of course, his client was going into the
arrangement. So it was not a matter that was gossip. It was a matter of actually reporting what he had found as the facts to Mr. Jose.
Mr. M I L L E R . Senator, perhaps
Senator B R O O K E . And I just question the judgment. Now as I said
earlier, there had been no evidence, no testimony that any of this
information was imparted to you. There is evidence of course—and
an admission by Mr. Jose—that it was imparted to him and there
is evidence that it possibly could have been imparted to the president of the Bell Helicopter who was Mr. Ducayet. That's the evidence.
Now I'm not trying to in any way quantify it, but that's the evidence before the committee and you have said yourself that you
didn't want to deal in rumors and I agree with you, or allegations,
but I'm talking about facts now. Those are the facts, the undisputed
facts.
Senator R I E G L E . Would the Senator yield at that point just very
briefly ?
Senator B R O O K E . On your time, yes.
Senator R I E G L E . I appreciate that I ' m yielding my time but I
would not want that to stand as an undisputed fact with respect to
vour characterization of Mr. Bell as a witness because one of the
thiriofs that
Senator B R O O K E . That's not the undisputed fact. That's my
opinion.
165
Senator E I E G L E . Well, it certainly came in the same sort of paragraph or sounded like it.
Senator B R O O K E . I will now clarify it. Is that the only question
the Senator from Michigan wishes to raise ?
Senator E I E G L E . I just want to file a dissent with respect to the
fact that I question whether Mr. Bell was the kind of witness that
you say because he admitted yesterday that he has a prospective
financial interest himself in this very transaction because he admitted here yesterday, under oath, that he is in the process of putting together a possible legal move in court for Mr. French that
goes back and relates directly to this series of events, and the Senator knows that in the case of this sort Mr. Bell can use these hearings or whatever other device as a discovery technique for himself
for this prospective legal action with a financial consequence for
him and his client. That means that in my judgment he's not a disinterested party and I just think that that part of the story ought
not to be left totally off the stage because I think it may have a bearing. And I appreciate him yielding, by the way.
Senator B R O O K E . I would just say to the Senator, if I may, I am
further appalled. I am appalled this time because we are not talking about the interest that Mr. Bell may have in a further case. We
are talking about the information which lie recited to Mr. Jose at
that time. There was no indication at that time, at the time that
Mr. Bell had the meeting with Mr. Jose, that there was going to be
any case against Bell Helicopter. There wras no indication at all,
there was no possibility or thought of any case against Bell Helicopter. In fact, they were going to be working with Bell Helicopter.
So Mr. Bell had no reason at the time he met with Mr. Jose to be
acting in any interest other than the interest of his client.
Senator E I E G L E . I wras referring only to your characterization of
Mr. Bell as a witness yesterday.
Senator B R O O K E . Thank you.
Mr. M I L L E R . Senator Brooke, may I answer }'OUR question?
Senator B R O O K E . Yes. Would you, please?
Mr. M I L L E R . I think I can remember it.
Senator B R O O K E . I would be grateful. Thank you.
Mr. M I L L E R . But let me see if I can clarify something. I have
found Mr. Jose to be a person of integrity over the years I have
known him, and I believe he understands responsibility. Maybe I
misunderstood the testimony of Eobert Bell, but I thought the primary thrust of his disclosure to Mr. Jose was about the activities of
International Helicopter Consultants in Iran. Since Air Taxi was
not involved in any way with Bell Helicopter at that time, it seems
to me that any glancing blow to an unrelated party may not have
registered with Mr. Jose. I'm not trying to defend him here, but
the essence of the discussion was about Mr. Bell's client and International Helicopter Consultants, and I can well understand—since
I believe Mr. Jose is responsible and would have brought it up—I
can well understand that it didn't particularly register with him
ftiat a company that Bell wasn't doing business with may have had
some kind of interest that Mr. Jose wasn't even thinking about.
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Senator B R O O K E . Well, I thought Mr. Jose was a very honest witness. I think he said that he recalled the conversation; he did not
deny anything that Mr. Bell has testified that Mr. Bell told him.
Mr. Jose did not even deny that he met with Mr. Ducayet. He said
he didn't recall, but he didn't deny it. I thought he was a very
honest witness, but if Mr. Jose did nothing more with that information than keep it to himself, then I ask you whether you would
call that poor judgment on the part of Mr. Jose.
Mr. M I L L E R . Certainly the information on International Helicopter Consultants should have been carried further up; it certainly
should have been.
Senator B R O O K E . At any rate, it was not imparted to you, Mr.
Miller?
M r . MILLER. N O , sir.
Senator B R O O K E . At any time ?
Mr. M I L L E R . At any time. I was not aware of International Helicopter Consultants at all until this hearing.
Senator B R O O K E . Why did you ask Mr. Soutter to conduct an investigation?
Mr. M I L L E R . As you recall, a few years ago we had a rash of disclosures about payoffs of various kinds in international transactions,
some involving military equipment. So when we were beginning to
look at our financial statements and our responsibilities for disclosure I think Mr. Soutter brought to my attention the fact that, in
issuing a registration statement, we had an obligation of due diligence and that perhaps we should look at this transaction. This is
how I recall it; I don't know whether I initiated the investigation
or he initiated it—I rather think he may have. And I certainly concurred immediately that this one large transaction deserved renewed scrutiny. I had relied on Bell Helicopter at the time of the
transaction. I trusted them. My experience with them since 1960
has been that they are people of high standards, and I, myself,
know of cases where Bell has declined business because it would not
engage in practices that were not completely proper. And so I felt
no concern about this transaction, but I agreed that Mr. Soutter
should investigate it, and he did. And he reported back to me that
he had seen the documents, he had seen the evidence of ownership,
and he saw no trail that had led him to believe that this commercial transaction had not been what I understood it to be.
Senator B R O O K E . Was that a written report to you?
Mr. M I L L E R . A S far as I recall, he reported to me verbally.
Whether he made a memo in his file, I don't know.
Senator B R O O K E . Were you satisfied with the sufficiency of that
investigation and the depth and scope and breadth of that report?
Mr. M I L L E R . In 1975, Senator? Again, I don't suppose that was
the most important matter on my mind at the time, but I would
suspect that I was satisfied with his conclusion. I doubt that. I inquired of him of all he had done. He told me about his visit to Bell.
I consider Tom Soutter to be a well trained lawyer; I consider him
to be a man of unquestionable integrity. He has served me well for
many years as general counsel; and before that in our legal department. He's served the company well, and I had no reason to
167
doubt his professionalism. I suppose when one goes to the doctor
to interpret an X-ray, one doesn't ask the doctor all his techniques.
I guess I just accepted the lawyer's opinion; that is often what one
does when relying upon professional advice, and I considered his
advice to be professional.
Senator B R O O K E . D O you know of any particular reason why the
$2.9 million fee was investigated and nothing else ?
Mr. M I L L E R . I don't know if he investigated anything else. It was
the only payment to a sales representative of substantial size in
recent years that I could recall. I don't know whether he looked at
other payments, but he may have.
Senator B R O O K E . D O you know whether it was because of the fact
that there was some suspicion of illegality or impropriety?
Mr. M I L L E R . NO, sir. It was because it had been disclosed at that
time that some aircraft companies had paid very large sums, admittedly in the form of payoffs, in Iran. Therefore, since we were
building a big business in Iran, it was very important that we make
clear that we were clean in this major transaction. This was entirely different than worrying about two helicopters sold in Australia; this was a big program. It was important to the company
at that time, and I wanted to be sure of our record, particularly as
I read about companies—which I won't name—which had very
serious problems in Iran as you know. Mr. Soutter may have brought
the matter to my atention, but I then said, "Absolutely. Let's make
sure that we don't overlook the opportunity to verify that that was
a normal transaction."
You must recall, too, that the purpose of the $2.9 million was not
only to compensate, but to end—it did end—the relationship. It
was on the books; there was no falsification; it was disclosed to the
U.S. Army and it was disclosed to the Iranian Government. This
was not a case where we had developed some tricky technique for
funneling money somebody's way
Senator B R O O K E . But I didn't
Mr. M I L L E R . And it was a case of ending a relationship, while the
cases of payoff that I knew of were ones in which companies were
trying to set up a technique for continuing
Senator B R O O K E . But I didn't believe, Mr. Miller, that the sole
purpose of Mr. Soutter's investigation was to determine whether
this was a sound financial transaction.
M r . MILLER.
NO.
Senator B R O O K E . Y O U didn't either, did you?
Mr. M I L L E R . NO. I understood he was to make sure that there was
no impropriety about it, in hindsight.
Senator B R O O K E . Precisely.
Mr. M I L L E R . Absolutely.
Senator B R O O K E . And Mr. Soutter's investigation, again in my
opinion, was not in such depth that he could have found that impropriety if such impropriety did exist.
Mr. M I L L E R . Well, Senator——
Senator B R O O K E . Anybody looking at a Dun & Bradstreet report
and asking persons within Bell Helicopter—he didn't go outside of
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Bell Helicopter. I think you know that now if you weren't awrare
of it then.
M r . MILLER.
Yes.
Senator BROOKE. One final question. Mr. Ducayet testified that at
a meeting of the board of directors you took the position that Textron should not cooperate with SBC's request for voluntary disclosure. I'm sure you are aware of the time frame I'm speaking of.
I think it grew out of a letter from Chairman Proxmire and Chairman Garrett of the SEC, and several corporations voluntarily complied with the request for disclosure. It is my understanding—I
think the actual testimony of Mr. Ducayet was that your position
with the board of directors was that Textron had done nothing
wrong and therefore you w^ould not cooperate in that disclosure.
What was your reasoning, Mr. Miller, for that position, if in fact
you took that position?
Mr. M I L L E R . I'm sorry. I think I'll have to rephrase your statement, because I have never taken a position of not cooperating with
the SEC. I'm sure Mr. Ducayet was reflecting his viewpoint, but I
think the terminology you used is absolutely incorrect. I have always, and will always, cooperate with the SEC.
The SEC—when we had this experience of a large number of
companies disclosing that they had slush funds and that they had
accounts off the books and that they had arranged to make some
foreign payments and some illegal political payments and this sort
of thing—the SEC began a great deal of reexamination into this
w7hole process. The SEC was immediately confronted with how to
handle this shocking revelation which was a shame to the Nation.
I just saw a report the other day where, in retrospect, it turns out
that corporate officers deliberately involved themselves in a very
large number of these cases.
Now the SEC's solution was to offer the opportunity for companies to undertake a 5-year review to discover their sins, and report their sins, and thereby to be forgiven. Everybody had to decide
whether to take advantage—not to cooperate, but to take advantage
—of that chance to cleanse their sins, to make a confession.
Senator BROOKE. Absolution?
Mr. M I L L E R . Absolution. I have served on other corporate boards
and I don't personally know of any corporation that decided upon
a 5-year examination that didn't have something that led to starting it. I served on a board where no examination was done and
none was planned until an auditor discovered something. The board
of directors said, "Well, if you discovered that, let's look at the
whole 5 years." Textron discovered nothing that required confession. I know the biblical viewpoint—the greater the sin, the greater
the forgiveness—and I suppose I should regret that Textron had
not sinned and therefore will have no forgiveness.
Senator BROOKE. Well, my time has run out on your forgiveness,
so I will defer. Thank you.
The C H A I R M A N . Senator Cranston.
Senator CRANSTON. Mr. Chairman, my first question is addressed
to you. I was unable to be present when you made your opening
169
statement because I was chairing another committee. Is it firmly
agreed that we will vote on this nomination within 48 hours ?
The C H A I R M A N . No, it's not firmly agreed at all. The rules require
that there be 24 hours after the transcript is made available before
we can come to a vote. It's up to the committee whether to vote at
that time. I think that after we hear and complete the testimony
today from Mr. Miller the committee then will be in a position to
decide. My own instinct is that we should terminate the hearings at
that time and vote on Thursday, but I don't want to—I can't speak
for any of the other 14 members of the committee and somebody
may feel we ought to wait for the Iranian witnesses to appear.
Somebody may have some other suggestion, and we will just have
to entertain it at that time, and I think we should wait until we
have all the testimony in so we are clear what we are doing.
Senator C R A N S T O N . When will the transcript be available?
The C H A I R M A N . It should be available tomorrow morning and
24 hours after that would be Thursday morning.
Senator C R A N S T O N . When will wTe have an opportunity to make a
decision as a committee on when we vote?
The C H A I R M A N . I think it would be fair to serve notice now that
as soon as Mr. Miller is through the Senators will be free, if they
wish, to propose further witnesses or additional hearings to do so
at that time, and then I think the committee can make a decision,
unless there's objection. Is there objection to that procedure?
Senator B R O O K E . N O .
The C H A I R M A N . Then that's the way we will proceed.
Senator C R A N S T O N . I think that's the appropriate way and I thank
you.
Mr. Miller, some people who are not too familiar or are rather
casual observers of w7hat's been going on with regard to your nomination have thought that perhaps you're in a sort of a no-win position because if you knew about an improper payment then you
should not be confirmed and if you did not know about it what
sort of administrator are you, and therefore, should you be confirmed? I take it that your response to that basically is that you
do not know now that an improper payment occurred ?
Mr. M I L L E R . That is correct, Senator. And I also think a fairly
thorough investigation here has confirmed not only that I had no
knowledge or reason to, know, but that the division president who
directly handled the matter had no knowledge or reason to know.
In terms of your comment, I don't consider my position a no-win
position, because I consider I acted properly, i had no knowledge
of any improper payment, and the officers on whom I relied did not
either. And, therefore, I don't know how it could be implied that I
should have known something that even those who were dealing
with the matter directly did not know.
Senator C R A N S T O N . Let me make it plain that I do not consider
it a no-win situation either.
Mr. M I L L E R . Thank you.
Senator C R A N S T O N . I think you should win and I think you will
win confirmation of this committee and the Senate because I have
170
not seen any evidence that indicates that you knew of any improper
actions that occurred and I'm aware of the fact that Dun & Bradstreet when they looked into the matter at the time they did it and
also the U.S. Government, through its Foreign Military Sales Group
did not know of any improper action.
I just have one other question. It's in regard to Mr. Soutter's
investigation of the payments being made. As I understand it, that
was really an investigation simply to satisfy your SEC registration
requirement and it was not an in-depth investigation of any questionable payment?
Mr. M I L L E R . That is right, sir. It was intended to do no more
than make sure we had no evidence that would cause us to want to
do a more thorough investigation. Its purpose was not in any way
to engage us in one of these 5-year extensive investigations, but
merely to assure us—by talking to those who knew about the matter
and by looking at the files and the records—that the payment appeared to be what it had been represented to us to be.
Senator C R A N S T O N . I understand that you have a policy in your
concern not to engage in improper payments.
Mr. M I L L E R . That is absolutely correct.
Senator C R A N S T O N . I understand you find it possible also to do
business without making improper payments.
Mr. M I L L E R . We have taken the view that the way to do business
in the world is to have superior products, to represent them thoroughly, to sell them as hard as we can, to service them well, and
to win on the merits of our product. We have lost business where
business could be obtained in other ways, but we do not consider
that to be a detriment. We believe that in the long run a company
prospers better by making itself competitive enough to win on the
merits.
Senator C R A N S T O N . I understand that to be consistent with what
I believe to be your general philosophy and approach to the conduct of business affairs, it is my impression that you are a man of
integrity and that you are creative, enlightened and have social
concerns. I think you are just the sort of person who should be
encouraged to be willing to serve in the government and I hope
very much that we conclude these hearings very rapidly and proceed to vote in what I think will be a favorable way. I think beyond
the travail you have been going through it's important to have a
head of the Federal Reserve at a time of some difficulty because of
Mr. Burns administering that body is, in effect, a lame duck and
because interest rates are going to be set soon. I think it's very
important to have you there full time. For those reasons I will ask
no further questions. I hope we can expedite all this and get to a
decision.
The C H A I R M A N . Senator Tower.
Senator T O W E R . Thank you, Mr. Chairman.
I feel almost apologetic. This kind of proceeding and this kind
of inquiry is how we get our jollies here in the Senate. Over the
past 45 years we have steadily delegated away legislative authority
through a gigantic bureaucracy that we created that we cannot even
171
exercise adequate oversight over; therefore, from time to time we
feel it necessary to assuage our damaged egos and our deteriorating
prestige by an inquiry of this type so that we can call attention to
ourselves and impress on the public our enormous diligence and importance.
I might note that the mass media always cooperates splendidly.
We have the television cameras and the lights and some of the best
known reporters in the business. But in my view, what we are doing
is pursuing what has come to be rather easy practice for us—to
harass publicly spirited business and professional people and business institutions and I suppose it makes good press but I wonder
how much damage we dp to the course of orderly Government and
the prospect of getting people to make sacrifices to serve in Government.
Mr. Miller, what policies did you lay out for Textron or any of
its subsidiaries with respect to questionable payment practices?
Mr. M I L L E R . Senator, from the beginning of my stewardship I
have laid out the policy that Textron would abide by the spirit and
the letter of the laws of the United States and of every jurisdiction
in which it operates. I have laid out the policy that it would even
go further and live by the highest standards of ethics and conduct
that are perceived to be possible in the world in which we live. I
know of instances where, as a consequence of that policy, we have
foregone business. I know that if my standards had not been so
high some of the things recently reported in the SEC investigations
were liable not to have come up, because they are legal and allowable. But because I have asked Textron to go further, I am now
finding these items questioned. So I have obviously done some soulsearching in the last few days, but my decision remains the same.
The right way to run a business is to reach for standards even
higher than the law, because only when you can marshal the loyalty
of 65,000 employees and their faith in a company that is honorable
and honest, only then can you expect and get high standards of
performance throughout the company.
Senator TOWER. And you feel satisfied in your own mind and
conscience that you have been diligent in pursuing these goals ?
Mr. M I L L E R . Senator, when the record is finally completed in this
case, I think Textron will be proved a shining example of a company that has grown from a small to a substantial enterprise in 20
years, with the lowest incidence I know of employee noncompliance
for any company of its size.
Senator T O W E R . Did you ever instruct any of your subordinates
to not bother you with details but do whatever is necessary to conclude successful sales and contracts with foreign entities? Would
you in effect say get on with the job and don't bother me with, details and I don't want to know that sort of thing—protect me, don't
allow me to have to take the rap for anything that you might do
that is slightly questionable from an ethical standpoint?
Mr. M I L L E R . To the contrary. Senator. I have insisted that I be
fully informed about any question of ethics that comes up in these
matters. I suppose my associates would say that I have on occa-
172
sion been too much involved in the details of the business, because
I consider it essential for me to be vigilant. I know of several cases
where, because of this policy, officers came to me and reported a
situation far down the line, saying, ''We know what your policy is,
but we want you to be aware of this before we make a decision."
In each case I said that if any questionable payment was required
we would discontinue the negotiation, and that was done in each
case. I have been informed on a number of occasions, so I'm sure
the system is working, and I'm sure my officers understand it. I do
not seek to be protected. I seek to be involved, so that I can guide
our officers in a way that will protect them from making mistakes.
Senator T O W E R . D O you feel that your potential effectiveness as
chairman of the Fed has been in any way impaired or inhabited by
this investigation, or this inquiry I should say?
Mr. M I L L E R . I think that only my sleep has been inhibited; my
opportunity to perform at the Federal Reserve has not. I had
dinner last night with the 12 presidents of the Reserve Banks and,
based on their warm support, I would say that there's no indication
that this investigation has caused any erosion of my ability to serve
—and I hope with credit—as chairman of the Federal Reserve.
Senator T O W E R . I get a little tired of this country wallowing in a
sense of guilt and self-recrimination over the way we have done
business abroad and for the most part I think American conduct of
business abroad has hued to acceptable standards. I might note
that means of doing business in other countries might be considered
quite routine and legitimate and acceptable that are viewed as
somewhat alien in this country and we can't expect to apply the
same standards to business operations everywhere in the world that
we apply to standards in this country. I think, by comparison, we
Americans and American business concerns look pretty good. That's
all I have to say, Mr. Chairman.
The C H A I R M A N . Senator Riegle.
Senator RIEGLE. Thank you, Mr. Chairman.
Mr. Miller, I have a few thoughts that I would like to share with
the committee and others here at the outset and until I finish those
thoughts I will not yield, although I will be happy to yield after
I have completed them with whatever time I have remaining.
Mr. Miller, I think you are one of the best nominees that the
administration has put forward and I don't take these proceedings
lightly. I have been in the Senate a year and I have had the opportunity to go through other experiences on other committees. I have
had the privilege, for example, of sitting on the Judiciary Committee when we were examining the qualifications of Judge Bell to be
Attorney General and I was not satisfied and so I voted against his
confirmation and spoke against it.
I have done that other times with respect to other nominees here
in the Senate. Most recently Mr. Tucker who was a nominee to the
Civil Aeronautics Board before the Commerce Committee on which
I served, whom I thought clearly was an unsatisfactory nominee
and I might say that nomination was withdrawn. It's with seriousness with which I take this new responsibility.
173
On the other hand, I have been involved in the Congress for a
longer time. I spent ten years in the House on various committees
and so I have had some experience in trying to go through committee examination processes and evaluating the credibility of witnesses and things of that sort and I must say that I have very deep
and strong feelings about the situation that I think has taken place
with respect to your nomination. I think in many respects what has
happened has been excessive in terms of what has actually transpired, what the facts warranted.
I think your reputation has in effect been damaged. I think unfairly so. Frankly, I am troubled about it and I am not just troubled about it from the point of view of you personally or the point
of view of the fact that I think that does not reflect well on this
committee, both of which are concerns of mine, but I think there's
a bigger issue involved. I think we are at a point where the process
w^e use to try to examine the honesty and capability of high officials who seek to take posts in the Federal Government, who respond to requests to serve, has gotten to a point wThere it is not doing
the job the way it should be clone and I'm not exactly sure why it's
come to this. I know Watergate clearly has something to do with
it. I have watched this situation unfold very carefully and I said
to you—I have said publicly and I said to you privately—if I found
one shred of evidence to the effect that you were involved in improper or illegal activities or had in any w^ay misled this committee,
I not only would not vote for your confirmation, but I would work
with a vengeance to prevent it, and I think you and others know
that's exactly how I feel.
But I think you have been very badly used by the process we
have been following. And the concern I have goes far beyond you.
I think it is necessary for us to attract, in larger numbers, good
people from the private sector, some from business, others from
labor, the professions, what-have-you, to come and take positions
of responsibility in the Federal Government.
We are an abysmally run Government. The executive branch of
Government is, and this is a pile-up of deficiencies over many many
years, almost a model of inefficiency. The Senate, by the way, is not
far behind in terms of our own operating procedures.
One doesn't have to look far to find the conditions of bad management, frankly, within our own internal Senate process.
We badly need^ to attract new talent into the Government. It
means going out into other areas, where people of quality and decency have established their reputation as effective performers, who
can come into the Government and who for a period of time can
serve and hopefully serve with distinction.
And I am pleased that you were willing to accept the call from
the President to come and serve as chairman of the Federal Reserve. I think you will do an exceptionally fine job. I think it is a
major improvement, frankly, in the Federal Reserve. I mean no
disrespect for Arthur Burns, we had disagreements on issues, but I
will feel much better, much better, with you in that particular position.
25-067—78
12
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But I think what has happened here, is in effect sort of a minitrial. You have not really been the focus of the trial, I think you
have sort of been a central player in the trial, I mean a central
character, but I don't think that has really been the point of the
exercise, because I think what is happening here is that we have
gotten to a point where the process is not really a straightforward
process of an effort to have a finding of fact, a civilized discussion
and a presumption of innocence until there is some finding of guilt,
but I have watched the press accounts very carefully, I have read
them, and the press people here in the room know exactly what I
am speaking about as well as the other members of the committee.
There hasn't been a single item developed here in the committee
that was not first presented in expose fashion in the press ahead of
time.
That is where the essential part of the conduct of this sort of
trial has taken place.
Now I am not here to pick a fight with the press, because that is
not my purpose, and you don't win those fights anyway. But I think
it is important for the press to reflect a little bit on the way they
are sometimes used in a situation of this sort. Because you are not
Robert Vesco, not Bert Lance, not Mr. Tucker, and not a lot of other
people whose personal records were highly questionable, and where
I think people ought not to have been put forward as nominees,
and in some cases when it later developed they ought not to be in
government, they were finally denied appointment.
I must say, Mr. Chairman, you know the friendship and regard
I have for you, and I just want to make a very personal comment
about it, because you were kind enough to allow me to take the
chairmanship of the Consumer Affairs Subcommittee of this committee, and I was honored to do so. I knew this was a subcommittee
chairmanship you felt very keenly about and I have done the best
I could to carry out that responsibility.
I have been honored by the showing of trust and faith that was
represented by you in me.
So I feel badly commenting with respect to what I took to be
your opening question to Mr. Miller. Because, I must say that I
thought it was needlessly provocative. I thought the points were
presented in an accusatory fashion. I think built into the way it
was phrased was essentially a presumption of wrong-doing or bad
faith. I don't think it was fair. I don't think it is a fair representation of how I think you think and work, and I don't think it gives
a fair impression to people here in the room, and I don't think it
probably gives a fair impression to Mr. Miller.
I think these questions can be tracked down, we can get the answers to them, in the most civilized way.
After all, if Mr. Miller is confirmed, we are going to have to
work together as part of this Government. That doesn't mean we
are going to agree on each and every issue. That is really not the
point. The point here is the fitness to serve and a very careful finding of fact. I don't think that that has to be done in the framework
of basically the conduct, in a sense, of a trial, where there is a bill
of particulars, that is basically put forward through either leaked
175
information or through questions that are put that you don't have
a direct opportunity to answer for some period of time.
And then we finally wind back around, and even when all of the
facts are on the table, and I think it is absolutely crystal clear that
there has been nothing improper that Mr. Miller has been involved
in and that his nomination is really an exceptionally fine nomination, for anyone to kid themselves and to say that a shadow hasn't
been cast is quite incorrect. It has been cast, it was cast I think as
a very natural and logical consequence of the way we have been
behaving and the way we carried this thing out.
I don't think anybody here ought to kid themselves about the
fact that that is what has happened.
The reason I make that point is not because of just yourself or
this committee, but I think unless all of us, at least pause to consider the way we are handling this process, I think we are going
to do a good deal more damage than we are good.
I am not going to say that there shouldn't be the most rigorous
kind of examination of candidates proposed for high public office.
I would like it to be more rigorous. But I think there are bounds
of fair play and directness and presumptions of innocence until
there is some guilt shown that we ought to abide by.
I think that we have not done this in this case nearly as well as
we might have. And I think it is sort of an accumulation of a long
buildup. But I think it is important for us to reflect on, because
w^hile no one else here might think of themselves as some day sitting in your seat, they might be.
But I am concerned because I want other good people to be willing to come forward and sit where you are sitting today and be
willing to accept serious assignments in the Federal Government.
I think that is absolutely vitally necessary. I think it is a strategic need and shortfall in the United States today. And to make
that process such an ordeal, and a harassing experience, that while
you may have the fortitude to stick with it and come through it,
is absolutely no guarantee it won't send great numbers of other
people who are out involved in other activities running in the opposite direction, because they say, well, who needs this.
So this is why the object lesson is important. I think if we don't
take the time to understand what has happened here, we make a
great mistake.
I know my time is up, and if it were not, I would have asked you
the question of why it was you agreed to take this job. And I ask
this in great seriousness, because I think it is important that the
public and every member of this committee have an opportunity to
hear from you and to reflect carefully upon what your purposes
and motives are, why it is that you have agreed to accept this job,
if confirmed, what your feelings about it are, what your intentions
are, how you would like to carry it out.
I think if there is one question that is most important to have an
answer to, I think it is probably that question.
Now in the traffic jam of accusations and other things, that has
sort of gotten lost. But on the same point, and my time is up, I
would like to pull that out of some of the wreckage and try to get
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it elevated again, because I think it is part of what is essential to
restoring some equity and directness and fairness and elevation to
the kind of proceeding this ought to be.
Mr. M I L L E R . Senator Eiegle, the chairman has been kind enough
not to give me a time limit. So I might answer your question, because it can be answered very simply.
This Nation has certainly been good to me. From the time of my
early days until this time, I have been blessed with progress beyond
what I might have expected.
The reason I accepted the assignment is simple: I don't think we
can always take; we must also give.
Senator REIGLE. Thank you. I thank the chairman, by the way,
for his patience in allowing me to finish.
The C H A I R M A N . Senator Heinz.
Senator H E I N Z . Thank you, Mr. Chairman. Mr. Miller, just in a
general way, so that there is no confusion, there is a man serving
in the White House who said that simply staying narrowly within
the law would never be enough for his administration, President
Carter said that on numerous occasions. What he really was saying
is that he was going to set a high ethical standard for his administration, and that a narrow construction of the law would not be
enough to satisfy that.
And that is the same standard that I think every Senator agrees
we should set in the confirmation process.
I know you wouldn't want it any other way. It is an important
responsibility we have to examine all of our nominees, not only for
their ability, but for their ability to meet a high ethical standard.
It is a responsibility that is ours, whether we like it or not. It is
not something we should be squeamish about, it is not something we
should moralize about, it is part of our job.
And therefore I say to you, and I say to all of the people who
are interested, to the extent that this committee raises questions,
hard questions of any witness before the committee involving your
nomination, we are doing our job, and nobody should take it personally, nobody should take it unfairly, and I am not saying you
have, but I say that to anybody who thinks that we are giving any
nominee or any witness a rough time.
I think you know that, but I am not sure everybody else does.
Let me ask you if you had reason to believe—without asking you
to evaluate the record today—but if you had reason to believe that
in fact Air Taxi was owned in whole or in part by General Khatami, as has been alleged by members of the commitee, and the committee staff, would you believe that you had been deceived by somebody, either in Textron or by the principals in Air Taxi?
Mr. M I L L E R . On the basis of the record today, Senator Heinz, I
would say if that were a fact, or if we assume it is, I have certainly
been deceived. On the basis of the record, I would say I have been
deceived by the principals of Air Taxi, and by General Khatemi.
I know of no one in Textron or in Bell Helicopter who has deceived me, because the people who acted on this themselves had no
reason to know or believe.
177
Senator H E I N Z . You don't have to worry about General Khatami
taking offense, of course ; he is dead.
The other principals in Air Taxi——
Mr. MILLER. I hope we get through this hearing in time for us to
all make it past that point.
Senator H E I N Z . Every member of this committee agrees with you
one hundred percent on that.
Air Taxi, however, is an organization with which Textron now
has a business relationship involving its civilian sales of helicopters,
and we know you wish they were more, to Iran.
Do you think Textron should start an investigation to find out
!
whether in fact Textron and you have been deceived?
Mr. MILLER. Senator, this committee has far more resources than
we could ever have. We could never get access to the intelligence
reports to which you have gotten access. This has all come as a
surprise to us, Because of information revealed here, we have an
obligation to make a prudent evaluation of Air Taxi, and we shall,
when this is all over—on the merits, with no witch hunt.
If we have been deceived, we will not be able to continue our
relationship with Air Taxi. If wTe have not been deceived, Air Taxi
shouldn't be punished.
Senator H E I N Z . If you have been deceived, would you anticipate
you would sue to recover the monies paid?
Mr. MILLER. I would have to leave that decision to the attorneys.
I don't know whether we could even bring such an action in Iran.
And I don't know what the statute of limitations is. I do not have
any idea whether that would be possible.
General Khatami is dead. If the money did go to him, I suppose
it is a long, long trail to Tipperary,
Senator H E I N Z . Or Tehran, as the case may be.
I would like to question you on the rather intricate procedures
that Textron as a corporation had involving the billion dollar audit
committee.
On page 76 of this document you stated to the committee:
W e have a continuing audit committee that has been in being for a number
of years, made up of outside directors, that have the responsibility of reviewing the audit with the outside auditors, reviewing the scope of the
audit, reviewing any comments of the auditors, and inquiring of them as to
whether they have used due diligence to be sure the assets and expenses
of the company are as reported and that there are no defalcations or aberrations.
That sounds pretty good. Now let me read the memorandum erf
Arthur Young dated February 27. 1977, by Mr. Slattery of the New
York office to the Providence office, involving the Textron audit
committee meeting, on February 23 and 24, 1977.
I met twice with Textron's audit committee during their management
meeting at Ocean Reed, Florida, February 23 and 24. Present at the first
meeting held on Wednesday were Messrs. Campbell, Gengras, Ledbetter,
Colinson, Van Brocklyn, and Sisco. The agenda for the meeting is attached.
I think you and I recognize only three of those people, Campbell,
Gengras, and Sisco, are outside directors. The other three are officers of Textron, they are hardly outside directors.
178
What were they doing at that meeting?
Mr. MILLER. Reporting to the audit commitee. Usually the audit
committee goes into executive session, the officers leave, and the
outside directors discuss matters of their choice with the auditors.
One of those you named is the president, one is the vice president
for finance, and one is the comptroller; they are the people who are
directly involved. They report to the audit committee and answer
their questions. I would say I have not attended these audit committee meetings because I feel that my length of term and position
with the company may give me too much sway; I am the chairman.
But I am always available to the committee if they would like to
call me and ask me questions. I felt I shouldn't be there, so I don't
believe I have attended recent meetings. I wanted them to be free
to make their decisions without being influenced.
Senator H E I N Z . This meeting was in February 1 9 7 7 , just a year
ago. And the report goes on, just exactly as follows: "later in the
meeting I was asked whether I had any confidential comments to
give the committee"—this is from Arthur Young
Mr. MILLER. That means it would be time for the officers to leave,
yes.
Senator H E I N Z (reading) :
I responded that I had no confidential comments. But while I had no confidential comments, I did wish to bring to the committee's attention the $2.9
million payment to Textron's former agent in Iran over '73, '74 and '75 in
connection with Textron's contract with the Iranian government for the
sale of helicopters. I added that while I had understood this situation had
been discussed, either at a previous audit committee meeting at which I had
not been present, or at a board of directors meeting, I felt it was appropriate
it should be discussed while I was present, should there by any questions
or further action desired of me. The outside members of the committee first
expressed some surprise and lack of knowledge about the item. However,
Mr. Campbell, upon reflection, stated he did recall it being discussed at a
Board meeting. Ms. Sisco had apparently never heard of the payments.
Is there any way of
Mr. MILLER. I think Ms. Sisco came on the board after this had
aready been reviewed.
Senator H E I N Z . I S there any reason you can think of why this
outside audit committee of the board would not have either heard
about this, either from Arthur Young, or from the officers of the
company, before 1977, which was two years after the last installment on the payment had been made?
Mr. MILLER. I would assume it had been discussed, but I think, I
don't know why it came up at that meeting. I can't enlighten you.
Senator H E I N Z . It came up because Arthur Young brought it up.
Mr. MILLER. I know, but I don't know why they brought it up.
As I recall, unbeknownst to me at the time, there was a minor
disagreement between Arthur Young and Bell Helicopter over the
year in which to book the expense. That may be the problem they
were concerned with; I don't know. I think Bell wanted to expense
the payment as fast as possible, and Arthur Young thought ma}^be
it should be slower.
Senator H E I N Z . At that point, even though you had had in 1 9 7 5
your own in-house counsel, Mr. Soutter, check out the propriety,
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there was never any thought that the audit committee should be
aware of the payment, even with a clean bill of health?
Mr. MILLER. I would have thought the important thing would be
if Arthur Young had reviewed it and found no problems. I hate to
say it, but many, many payments larger than $2.9 million are made
during a year.
Senator H E I N Z . Oh, certainly. Had you terminated any contracts
for anything close to $2.9 million in the 20 years of Textron that
you have been associated with it?
Mr. MILLER. I don't know. I would expect that we had larger
payments, but I can't recall any specifically.
Senator H E I N Z . Yes, everybody purchases large quantities of
goods and services.
Contract terminations of that size were a bit unusual, wouldn't
you say though ?
Mr. MILLER. Oh, yes, I would think so.
Senator H E I N Z . Then, again, seriatim in the letter:
Bell Ledbetter—he is the vice president of finance and the treasurer of the
corporation—Bill Ledbetter described the arrangement as a buy-out of the
agent's franchise and also said the company was satisfied there was nothing
illegal about it. No further action was taken on the matter. I was satisfied
that it has been brought to the committee's attention and they would not be
surprised if the amount was disclosed in the future.
Why would they not be surprised about the future disclosure if
this was something that had happened in the past?
Mr. MILLER. I have no idea.
Senator H E I N Z . Well, I can't complain about your explanation.
It does seem strange to me that this did not surface in the audit
committee until 1977, particularly inasmuch as you and the general
counsel had wanted to be sure about the propriety of it in 1975.
Mr. MILLER. Audit firms have become pretty skittish in recent
years since some of them have been sued. I don't know and it
would be hard to speculate with you as to why Arthur Young
wanted to be sure that it was known. It had been known to the
directors, as I recall, well before that and contemporaneously. As
I recall, I covered the termination of the Air Taxi contract at
board meetings when I explained our development of major business, how we were proceeding, in our decision to sell directly and
to discontinue using a sales rep, and so forth.
So, I don't know. Maybe Arthur Young was just cleaning up the
old files, making sure nobody could accuse the firm of anything.
Senator H E I N Z . Would you say it looks like Arthur Young and
the audit committee are going to have to open up this file again ?
Mr. MILLER. I would not think so.
Senator H E I N Z . Y O U would not?
Mr. MILLER. I am sorry. Open up what?
Senator H E I N Z . Open up the file on Air Taxi again ?
Mr. MILLER. Oh, on Air Taxi. I misunderstood you; I thought
you meant the file on the committee meeting.
Senator H E I N Z . I meant on Air Taxi.
Mr. MILLER. Yes, sir, I think we should look at this again. TVe
have learned things at this hearing, as I said, that we had no reason
180
to know before. Your investigation was triggered by some intelligence reports, as I understand it. Although the statement made by
the chairman on the 24th of January came as a surprise to me and
was unidentified, I understand his information was from intelligence reports. We did not have access to them; and now we must
pursue the matter.
Senator H E I N Z . I wTant to thank you for inferring, if not stating,
that the committee has performed a very valuable service to Textron.
Mr. M I L L E R . This committee, I am sure, will in the end perform
a very valuable service to Textron by voting for me unanimously;
that will show Textron is a good company, and I hope you will
vote that way. I don't know if that is lobbying or not.
Senator H E I N Z . Since you are not yet confirmed, I think it is
legal. But if you are confirmed, you better watch it.
Mr. Chairman, thank you very much.
The C H A I R M A N . Senator Mclntyre.
Senator M C I N T Y R E . Thank you, Mr. Chairman. I regret, Mr.
Chairman, not having been able to take an active part in these
hearings, but I have kept abreast of the proceedings. I have just
a few questions.
Mr. Miller, do I assume from your earlier remarks that you are
confident that the ongoing SEC investigation will not impair your
effectiveness as Chairman of the Federal Reserve board, if and
when you are confirmed by the Senate?
Mr. M I L L E R . I believe it will not impair my effectiveness, Senator.
Senator M C I N T Y R E . Mr. Chairman, and members of the commitmittee: I share the opinion expressed by others that the evidence
presented to date will constitute no impediment to the confirmation
of Mr. Miller. And I too would like to express my desire for a
resolution of this matter at the very earliest possible moment.
I think it is important to the administration that this man be
put on the job, wre need you dowrn there.
Now my intention, Mr. Chairman—as I understand it rather
vaguely, the rules of this committee require something like 48
hours after the hearing for the vote. I will, because I do think it
is urgent, and I don't think you have laid a glove on him, move we
go ahead and try to vote him onto the job today. So even though I
am trying to be in three places at once, like many of my collleagues,
I will try to be back here at the conclusion of the hearings and at
that time I will move we waive the rule.
The C H A I R M A N . I object to it, so the objection would prevent it.
Senator M C I N T Y R E . That is all right, you are on the record as
objecting to it. I will be back for that.
The C H A I R M A N . I might point out to the Senator that there are
Senators who have not been here during most of the testimony. The
purpose of the rule is to provide at least 48 hours after the transcript is available, so all Senators have an opportunity to review
the record.
Senator M C I N T Y R E . That is perfectly understandable, and I don't
want in anv way to impugn in any sense the chairman's patience,
and his desire to do a thorough job.
181
I just think the job has been done and the Federal Reserve needs
a chairman, and we have got one. I don't think we should wait 48
hours. Your objection may kill my attempt, but that is all right,
I want to make it, just in the interest of sanity.
The C H A I R M A N . Senator Lugar.
Senator L U G A R . Thank you, Mr. Chairman. Mr. Miller, during
the 1960s, in order to accommodate what was then termed the guns
and butter type economy, the Federal Reserve Board cooperated
substantially wTith the administrations in expanding the supply of
money. And, in fact, the Federal Reserve Board has been doing that
subsequently. Without oversimplifying the problem, but the comment I want from you I think will be obvious, essentially if we
have inflation of 6 percent a year, and the economy is growing at
4 percent a year in terms of real growth, the nominal increase in
the gross national product would be roughly 10 percent. And the
supply of money that the Federal Reserve Board must provide will
be somewhat in the ball park of 10 percent, as a rule, if it is to
match that sort of growth without impinging upon it, unless the
velocity of money changes one way or the other.
Now we have had some good fortune in the country with regard
to the velocity of money during I)r. Burns' regime. And the misfortune that growth didn't come to the order of 4 percent in some
years.
So that meeting the 5- to 7^-percent increase in M-2 was a possibility.
Now the question that I have for you boils down to this: If in
fact our economy did grow last year somewhat better than 4 percent real growth, and inflation was 6 percent, and both are predicated again for this year, and the velocity of money apparently has
slowed down, although we might have some good fortune on occasion, we are looking toward an increase in the supply of money
under the way things have been proceeding of something close to
10 percent.
Now to play the devil's advocate, Robert Samuelson, in an article
in the National Journal of January 21, 1978, suggested that the
Federal Reserve Board, if it really wanted to, could stop inflation.
He suggested as a hypothetical example that regardless of the scenario of 10 percent nominal growth I have talked about, the Federal Reserve Board could simply decree that the money supply will
increase by no more than say 4 percent.
At that point, in fairness to Mr. Samuelson, he says no one really
knows what the results would be; a massive recession, even a depression is a good possibility. Credit needs, businesses, consumers, local
governments, would collide with the stingy money supply, starve
for credit, and weak firms would collapse, new home construction
would shrink, investment would shrivel. But perhaps this discipline
ultimately would be a healthy shock treatment to destroy the inflationary mechanisms and psychology, and what-have-you/
As you take a look at your potential leadership, granted there are
six other persons sitting around the table who will do more than
assist you, all of whom have a vote, what is your outlook? Is it to
be one essentially of accommodating the growth plus inflation, so
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that all of the vested interests that come into this committee and the
suggestion, for example, that housing is being stifled, or that general business is being shot down by the Federal Reserve Board, are
they to be accommodated at each turn?
Is inflation really that serious in the country? I am inclined to
feel it is, and from private conversations I know you share that
view. And what are the limits of authority of the Federal Reserve
Board, or how are you prepared to test them?
Mr. M I L L E R . Senator Lugar, the most serious economic problem
we have is inflation; there is no doubt in my mind about that.
As I have said before, I don't believe it is in the national interest
for the inflation rate to continue at 6 percent or that that can be
allowed to happen. I think 6 percent is far too high.
But I also think that abrupt action on the economy can bring unexpected consequences and that we might trigger results that we
cannot predict and that we might live to regret. We have a very
serious dilemma. We cannot afford inflation and, given the present
state of the economy, wre cannot afford a recession; a recession would
generate more inflation for sure because we would go up to a deficit
in the $100 billion range, and we would dry up investment, and wre
wrould be in deep trouble.
So the Federal Reserve has a very, very difficult task of staving
off inflation over a period of years, by pulling down the rates of
inflation and of growth of the money supply, but in a prudent fashion and with some leeway. We have to look at the economy as it is
operating each year with a view to keeping it on a moderate path
of growth—not letting it grow too fast, which would get it into
bottlenecks and more inflation, and not letting it grow too slow,
which wrould trigger a recession and certainly end up being inflationary as wrell as distressing.
Senator L U G A R . Y O U are saying to lean on it?
Mr. M I L L E R . T O lean against the problem. But this is a very big
economy; it is a big vessel. It should be turned gently, otherwise it
will keel over and be liable to collapse.
So the problem has to be leaned against gently. As I have said,
T wish I would give you a magic solution, but I think we have many
years ahead of us of leaning and trying our best.
Senator L U G A R . Admittedly the figures yesterday were for about
1 month. But let's say the inflation rate in this country, as opposed
to being 6 percent or 6V2 percent for this year, should in fact turn
out to be 9.6 percent. What do we do then in terms of policy as you
see it ?
Mr. M I L L E R . I think we have to take more drastic action. I don't
know that the Federal Reserve alone could stem inflation if it went
to that rate. The President has proposed a form of incomes policy,
and trying to seek moderation in prices and wages. I think that if
we came to a 9 percent rate of inflation, we would have very difficult problems. The Federal Reserve would have to take, I think,
much stronger action. But it would have a very, very difficult problem of balance. If the action resulted in a collapse of the economy,
it would be too strong. If the action weren't effective in slowing the
inflation rate it would not be strong enough. You know, we have
183
seen higher rates of inflation come to be accepted in other countries.
We used to accept an inflation rate of 2 percent. Then we got used
to the idea—some people did—that it should be 6 percent. I can't
accept that. I don't think wre can allow conditions to develop to
allow it to go that high. We have got to stop it.
And I suppose I am not willing to concede, even hypothetically,
that we would do such a poor job as to see higher rates of inflation
in my career as chairman.
Senator LUGAR. One of the encouraging things from these hearings, at least for me as a citizen of this country, was your opening
comments this morning, Without offering any gratuitous comment
about the colloquy that followed, it seemed to me that you were
properly tough and independent. I think this is of the essence. I
don't think you know and certainly I don't know what really we
will have to do in this country if we are faced with a 9.6 percent
inflation. But I do know, just from one of your experience that
when you come before this Committee there will be senators who
will suggest that regardless of the conditions in the country, that
the interest rates ought to go down. They will attempt to push you
all over the spectrum. I think you know one of the factors about
this particular job that you are facing, and you already appreciate
this, is that the vested interests play hard ball and the stakes are
very high. And the fact is that hopefully you will be tough enough
to analyze, as independently as you can, the advice you must give
the President as well as the Senate, and I appreciate, as many have
pointed out, the FEB is not an independent agency. But very
clearly, unless there is some lean against inflation in our economy,
it is not in the Congress currently, and in fairness to the President,
his budget is sort of nominally inflationary, too. It assumes 6y2
percent, and moves it upward, incorporating all that in the budget,
plus 2 percent, whatever we have.
Heaven help the country if someone, such as yourself and your
colleagues, are not setting the policy as an alternate government,
but are in an independent position to lean. I think this is tremendously important, simply as a characteristic of the person we are
looking at.
So I admire your courage, and I have no brief one way or the
other about Air Taxi. I think it is simpv important that in this particular controversy, you were able to hold your own ground, and
did so.
Now let me ask one final question. How are you going to get more
members to join the Federal Reserve Board? We have mavbe two
out of five banks in the country, maybe fewer than that if the total
was brought up to date, that are in the system. Even if you have
good policies, how in the world are they to be effective?
Mr. MILLER. Senator Lugar, inflation is the number one problem,
but the membership problem is of high priority for the Federal
Reserve.
I think the solution, a solution I have favored, is that of paying
interest on reserves. I would like to couple that—and this is a personal comment; I do not speak for the Board—I would like to couple
that with charges for services. I think that would be the best way
to go.
184
I think that would mean that those who have access to the services
of the Fed wouldn't get a free ride on the reserves of member banks.
And I think that would start a healthy trend in terms of knowing
what- services cost instead of having the Fed furnish services for
free in order to reduce the burden of membership. A schedule of
charges is also necessary for the efficient use of the payments mechanism.
A fall-back position, although I think it has some monetary policy disadvantages, would be to allow part of the reserves to be held
in interest-bearing securities. That would be another solution. My
personal view is that either reform would lessen the penalty on
banks' earnings for a member of the Federal Reserve, and should
be coupled with some system of charges that would be equitable in
its reimbursement for the actual use of Federal Reserve services.
Senator L U G A R . Thank you very much.
Mr. M I L L E R . Senator Lugar, I didn't realize—I appreciate your
remarks—that the Senate wrent in for hazing. If there is any concern about my firmness, I guess this process of going through a hazing will test it more than usual for nominees. Thank you.
The C H A I R M A N . Senator Schmitt,
Senator S C H M I T T . Thank you, Mr. Chairman. I am glad to see
my colleague, Senator Lugar, move us back towards some balancing
of the scales, towards the original concerns that some of us had
about the substance of your activities on the Federal Reserve Board
as its chairman.
I must admit to you, Mr. Miller, that my original concerns have
been somewhat lessened by our personal conversations, and by the
very fine answers that you gave to Senator Lugar just a moment ago.
I still have a few more questions along that line. One is that we
talk very blithely, and I don't mean this in disrespect to the Senator from Indiana, about percentages of money growth, when we
also know measuring the actual supply of money is a very difficult
proposition to say the least, and may in fact have been the undoing
of Chairman Burns, who I heard say almost the same thing that
you have just said in answer to Senator Lugar about the need to
gradually reduce the rates of growth in the money supply until
some day it comes into rough equality with the rate of growth of the
gross national product.
Do you have any ideas on how we can get a better technical grasp
of the amount of money, and of the rate of growth?
Mr. M I L L E R . I am very concerned about the current tendency for
the weekly figures to be evaluated by Wall Street. I read that the
market went up or down on somebody's guess of what the figures
will be.
That is a fad that has had its day and should be ended: it should
have gone out with the hula hoop. The only meaningful way we
know how to measure money is to look at averages over longer
periods of time. Weekly figures can be distorted by the delivery of
the mail, by a snow storm, by a holiday, by the arrival of government checks on a particular day.
As a matter of fact, we should try to improve our seasonal adjustments. But the Federal Reserve has tried, and it is a very difficult
185
task to predict from year to year how all of these influences of the
weather and mail and holidays will affect the figures. I think we
have to go for more consistent 3-month averages—or something like
that—to get better measures.
I must warn you that as the payments mechanism changes—as
developments occur in parts of the country in telephone transfers
and automatic transfers of savings—we are even going to have to
watch our definitions of money. We have a new technical problem,
which I want to address very quickly: that is, how to redefine money
according to new realities. I think we need to do a big job in education on this.
But I can't tell you today how I am going to do this. The process
will evolve this year and next year, and it needs very close attention.
Senator S C H M I T T . It is something before this committee at the
present time, and I, for one, would agree with you, that we are all
premature right now in understanding how electronic funds transfer and like communications of money are going to affect the velocity or the growth of money supply in the future.
I hope that we can study it, we can understand it, and keep on top
of it before either you or we take action that might be premature.
Mr. M I L L E R . Thank, you, Senator. When we have a technological
change, even though we can theorize, we are not really sure of what
the consequences will be—whether we are going to do our business
with a lower stock of money and therefore can be sure the Fed will
bring down those aggregates, or whether the stock of money actually won't change. We just really don't know. The theories go both
ways.
Senator S C H M I T T . Then I would take it from your remarks that
you expect to try to establish certain steady-state situations within
your power over the money supply?
Mr. M I L L E R . It seems to me—excuse me.
Senator S C H M I T T . And watch the longer averages to see what is
the effect of those steadystate situations, and then adjust again on
a much less frequent scale than maybe has been done even by Chairman Burns?
Mr. M I L L E R . That is more or less what I am saying. I certainly
think it is very important—if the velocity of money changes, or the
mechanism of settlement and payments, changes—that we don't lose
control by failing to realize that we are working from a new baseline. We have got to know where that baseline is, in order to lean
against the growth of the money supply.
Senator S C H M I T T . But in the best of all possible worlds, I would
guess that within five-plus years, you would like to see the growth
of the money supply approximately equalling the growth of the
gross national product. I give you leeway in whether it is 5 years,
or 6 or 7. But it is something that hopefully will happen by that
time, assuming no other major catastrophes happen with respect to
the economy.
Mr. M I L L E R . I certainly would like to see that happen, yes, sir.
Senator S C H M I T T . Mr. Miller, would vou summarize vour perception of your relationship with the White House and the Treasury
Department ?
186
Mr. M I L L E R . I don't know that I have much of a perception of my
relationship with them.
Senator S C H M I T T . Future relationship.
Mr. M I L L E R . In the future, it seems to me that the Chairman of
the Federal Reserve needs to be in fairly close contact with the
Treasury on a number of things.
I think the procedure wyould be to have, perhaps, a weekly conversation with the Secretary of the Treasury, to make sure that in
such areas as the international monetary situation or domestic economic policy we each know everything we should.
I think it has been the practice to meet with the Council of Economic Advisers from time to time to coordinate with them. I believe—
I am not sure of this—that the Secretary of the Treasury and the
Chairman of the Federal Reserve and, perhaps, the Chairman of
the Council of Economic Advisers meet with the President from
time to time, for a joint review of the economic situation.
Senator S C H M I T T . Would you try to insure that that would happen?
Mr. M I L L E R . That would be a very useful and desirable thing. My
own philosophical view is that the more we exchange ideas, the
more likely we are to address our options in a coordinated way and
to choose courses of action that are prudent and desirable, rather
than to act independently, with uncoordinated and usually not very
good results.
Senator S C H M I T T . But would you conceive of yourself as well an
interactor in these affairs, as an adviser in the development of administration policy ?
Mr. M I L L E R . I don't think so. As I understand it, the administration develops its policy, and then it has the courtesy to consult
the Federal Reserve Chairman to see if he has any comments on,
say, a tax problem or program.
Senator S C H M I T T . What if you thought the particular policy was
a turkey? Would you be willing to say so, or would you wait and
see how it came out in Congress?
Mr. M I L L E R . NO, sir. I would be prepared and would welcome an
opportunity to explain why a proposed policy is a turkey, why
something should be done differently. That is exactly the process of
coordination I am talking about. It is too late after a policy has
been adopted, because by then everybody has a vested interest in it.
Senator S C H M I T T . I was hoping you would improve it.
Mr. M I L L E R . Bury the hatchet. But anyway
Senator S C H M I T T . I am not even sure why I used the term "turkev." It is in vogue, I guess.
Mr. M I L L E R . There are a lot of Indiana turkeys, I understand.
Thev raise them
["Laughter.]
Mr. M I L L E R . I mean real turkeys.
Senator S C H M I T T . Mr. Miller, may I advise you your nomination
is in fa^rlv good shape right now, don't destroy it. The next statement I thought you would make is now there are a lot of cold
turkevs in Indiana. You have to think about that one.
Mr. M I L L E R . I will.
187
Senator S C H M I T T . Mr. Miller, would you similarly describe your
perception of your future relationship with the Congress, over and
above the regular meetings that we expect to have with you in this
committee and also in other similar committees?
Mr. M I L L E R . It seems to me the Federal Reserve should maintain
liaison with the principal committees that deal with the economy—
I would think not only with the banking committees of the House
and Senate, but also the tax writing committees. It is important to
maintain liaison and have a chance to discuss thoughts on monetary
policy with the chairman and members of that committee. It is important to do that.
I think the same is true of liaison with the budget committees,
perhaps the appropriations committees and with the Joint Economic
Committee. There are a number of places in Congress where the
Federal Reserve has an obligation to create a dialogue and to interchange ideas and have opportunities to discuss policies.
Senator S C H M I T T . D O you feel in those kinds of interchanges that
your position would be to at least encourage the search for ways to
gradually decrease the deficit, as you in turn try to gradually decrease the deficit, as you in turn try to gradually decrease the rate
of growth of the money supply?
Mr. M I L L E R . There is a dual aspect to the problem of decreasing
the deficit, Senator. I would like to see the deficits decreased. I think
the large deficits we have made it hard to shift resources to the private sector where I believe they can do the most good. But quite
apart from the theory of deficits is the theory of how we are selecting actions that perpetuate the deficits. It might be more effective
over a period of a year, not just to reduce the current year deficit,
but to determine whether we are building a program that will perpetuate the deficits or one that will create private investment and
decrease the deficits in the future.
Not only should we reduce the current deficit, but we should seek
impacts down the line by shifting more resources back to the private
sector.
Senator S C H M I T T . Excellent.
Mr. Miller, finally, I want to wish you well in your endeavor, and
I hope that you won't think too ill of us. If nothing else, I now
have a new ally in some of my other confirmation battles in the form
of Senator Riegle, and his very good statement, one which I appreciate very much, about the types of individuals we hope to bring
into our Government.
You certainly seem to fulfill most of those qualifications. Thank
you, Mr. Chairman.
The C H A I R M A N . Senator Garn.
Senator G A R N . I have no questions, Mr. Chairman, just a brief
statement.
I am sorry that I had conflicting committee assignments this morning, and was not able to be here the entire time. I started out the
hearings, Mr. Miller, as I am sure you remember, the first day telling you I wished Arthur Burns were staying and that was no reflection on you whatsoever. I still wish Arthur Burns were staying and
that is still no reflection on you.
188
Mr. M I L L E R . At this point, I am not sure I don't agree with you.
Senator G A R N . But in any event, I think we have had the most
detailed nomination hearings in the three years I have been on the
committee. I see nothing in the hearing record whatsoever that should
prohibit you from being confirmed.
The only reservations I have had from the outset have not
changed, as I have read the record and gone over your background
over a period of weeks, what some of my colleagues have been saying, and that is independence. It is very important to me that you,
as Chairman of the Federal Reserve Board, and the whole Federal
Reserve Board, stay independent of the Congres and of the President.
I think that is an extremely important check and balance in our
economic system. I have been pleased with some of your answers
and displeased with some of them. But I do hope if you are confirmed that you will maintain a very strong independence from
influence from us, as well as this Administration or any other.
I think that independent judgment is so important to serve as a
check and balance. So I am prepared to support your nomination,
as a matter of fact, I believe we have carried this on sufficently long
that I would suport Senator Mclntyre's efforts to bring your nomination to a vote today, so that we can report it to the floor.
The C H A I R M A N . Senator Stevenson.
Senator STEVENSON. Mr. Chairman, I don't have any questions. I
would only observe, Mr. Miller, that while I had some doubts about
the wisdom of continuing these hearings, and conducting the investigation that has been conducted, I don't have any more, because
they have demonstrated beyond any doubt whatsoever that you are
well-qualified to serve as Chairman of the Federal Reserve Board,
and, Mr. Chairman, I feel, as do other members of the committee I
am told, that the nation should not be made to suffer any more by
delay in this committee on this nomination.
I regret that I couldn't have been here earlier, I had three other
committee meetings, including one that I had to chair. And I hope,
Mr. Chairman, that it won't be necessary to be here for any more
meetings of this committee on this.
If the motion is made to report the nomination favorably today,
I would support it.
Thank you.
The C H A I R M A N . Thank you, Senator Stevenson. Mr. Miller, I just
have a couple more questions on that beloved Air Taxi matter. Then
I just have a few more in another area.
Mr. M I L L E R . We should get a code name for Air Taxi; maybe a
fish name.
The C H A I R M A N . What is that, sir?
Mr. M I L L E R . I said we should get a code name for it.
The C H A I R M A N . Yes, You had a code name for Mr. Khatami No. 1,
in your cables.
Mr. Miller, our staff, as you know, when you were nominated,
knew nothing about Iran, Air Taxi, Bell Helicopter, or General
Khatami. Yet within a short time after your testimony, on the $2.9
million payment, we knew that General Khatami was a secret owner
189
of Air Taxi. Yet your men were on the spot, they investigated Air
Taxi in Iran, cables went back and forth, people were interviewedi
met with, talked to, and you set up your own investigation through
Mr. Soutter, and yet our staff learned in a very few days what has
since been confirmed, that you and your company's top executives
tell us you did not know.
How do you account for that?
Mr. M I L L E R . Senator, I think the information that you have, the
lead you had, was from intelligence files to which we have had no
access.
I would like to describe to you a little bit of the realities of doing
business if one is a hardworking diligent person.
I have been to Iran twice. As I recall—and the dates may be a
little off—the first time was at the end of 1974; indeed, I tnink I
even spent New Year's there. I spent a week there then. I worked
every day on trying to develop the new program we were working on
when we had no sales representative there. We were discussing the
prospects, visiting our bases of operations, meeting the people. I was
getting acquainted with what we were doing in that country, because it was becoming more important that I know.
And during that time, I did not meet with any embassy people,
attend any cocktail parties, or go to any place where one would hear
rumors and gossip.
I went again in the fall of 1975—after a sabbatical in the summer
of 1975—and negotiated a very large sale, much larger than the
one we have been discussing, directly with the government of Iran,
with no sales representative.
I was there for two weeks. I attended no cocktail parties; I attended
no social events other than dinner with my own executives; and I never
ran across any rumors or gossip that are apparently the way this sort
of thing comes to one's attention. So I don't criticize my officers, who,
I believe, may have worked too hard. Maybe they should go to some
cocktail parties and pick up information.
The_ C H A I R M A N . N O W let me just give you what the staff evidence
w^as, other than intelligence sources, that were available, freely available to anybody who inquired.
The public record of the registered companies in Iran from 1958
through 1965 showed Khatami to own 40 shares of Air Taxi. As I
said, during much of that time he was your agent. That was uncovered not by our staff or by an official of any kind, but by Mr. Robert
Bell.
Mr. M I L L E R . Senator, could we do them one at a time?
The C H A I R M A N . All right.
Mr. M I L L E R . Y O U see, you have already mentioned the record
through 1965, and our people selected Air Taxi in 1968.
The C H A I R M A N . Y O U selected them first in 1 9 5 9 , did you not? Was
it not your agent earlier?
Mr. M I L L E R . I had no knowledge then, nor did anybody pay attention to the dealers in Iran of any substance at that time, because we
sold no aircraft. We looked at whatever existed at that time. Before
then
The C H A I R M A N . You don't look into prior history when you select
an agent?
25-067—78
13
190
. Mr. M I L L E R . Y O U heard this morning from the man who headed
the team, who went to Iran to look at Air Taxi in 1967 or 1968. He
said he inquired; he said he found no evidence. You say he should
have looked at the record of the registry for 1965 and before. I don't
know whether that was available to him.
The C H A I R M A N . All right. The State Department conversation
with the Iranian Ministry of Justice, which showed that Khatami
was chairman of Air Taxi from 1957 to 1965.
The availability of William French, who was your agent in Iran.
The availability of Robert Bell, who came to the offices as you know
of Bell Helicopter in Fort Worth to make his report.
The documents of French and Bell in the Bell Helicopter files.
The availability of Khatami's agents, Safavi and Rafaat, to give
oral testimony respecting Khatami's ownership of Air Taxi.
The availability of military and State Department officials to testify as to the reputation of Khatami as owner of Air Taxi.
Furthermore, General Jablonsky was available to you, the head of
MAAG, his, predecessor head of MAAG, General Twitchell, and
General Price, military attache.
All of these people testified they knew of, have deposed in affidavits that they knew Khatami was the owner of Air Taxi. And of
course General Khatami himself.
Now I can't understand how we can make an investigation of this
matter with these public sources and U.S. sources available, and you,
having had an allegation that General Khatami had silent ownership of Air Taxi, didn't discover it.
Mr. M I L L E R . Senator, the comments you attribute to M A A G officials, if I read those right, say I heard rumors, I heard gossip, I heard
something second or third hand. I don't find any statement, outside
of intelligence reports, of direct knowledge by any of those people.
And, as I said a moment ago about my travels to Iran, my people
don't go to cocktail parties or social circuits to hear gossip.
The C H A I R M A N . This wasn't a cocktail party. General Price said
he was told by General Khatami himself. He testified General
Khatami informed him in late 1969 or early 1970 that he had an
interest in Air Taxi.
Mr. M I L L E R . Why would that have been available to Bell Helicopter, Senator? If General Khatemi said that to General Price,
General Price would have had to tell us; and he didn't.
The C H A I R M A N . Did you ask General Price?
Mr. M I L L E R . I had never heard of General Price.
The C H A I R M A N . He was the military attache.
Mr. M I L L E R . Y O U may have a different technique, but I don't go
to embassies and go up to the military attache and say, "Are any
generals in the country I am in now on the take?" That is not my
usual opening comment.
The C H A I R M A N . I am talking about your man, when he made the
inquiry. I am not talking about you. I know you didn't make an
inquiry, I am not saying you should have. I am saying when this
investigation was made by Bell Helicopter in 1967-1968, as to
whether or not they should sign them on, when they had these alle-
191
gations and these relationships were continuing, they, at that time,
it seems to me, should have made this kind of inquiry.
Mr. M I L L E R . Senator, you had before you this morning the man
who headed the team. I suppose he could find out; you could ask
him whether he knew General Price and whether he asked him. I
don't know.
The C H A I R M A N . The investigation that was conducted by your
counsel, Mr. Soutter, that was on his initiative, is that correct, in
1975, of the $2.9 million payment, I should say?
Mr. M I L L E R . Yes, sir. I think I said this morning I can't recall if
he brought the matter of an investigation to my attention in 1975 or
I brought it to his attention. I said I rather thought he called it to
my attention.
The C H A I R M A N . At any rate, it had your approval and knowledge ?
Mr. M I L L E R . It certainly did. and my endorsement.
The C H A I R M A N . What direction did you give to Mr. Soutter as to
the kind of investigation he should conduct?
Mr. M I L L E R . He brought it to my attention. I said look into it and
make sure you are satisfied. He is a lawyer——rThe C H A I R M A N . Why don't you do what a number of corporations
did, and retain an outside counsel to make an investigation, so it
wouldn't be a matter of your company investigating itself?
Mr. M I L L E R . Because we had no evidence of wrongdoing. We don't
hire outside counsel to investigate our employees when there is no
evidence Of wrongdoing.
The C H A I R M A N . Well, you did investigate this $ 2 . 9 million payment ?
Mr. M I L L E R . We had no evidence of wrongdoing, Senator, at that
time, nor would the files
The C H A I R M A N . This is in connection with the concern that I expressed in a letter to the SEC chairman, to investigate the 25 leading
defense contracts, and you were 15th, one of those 25.
Mr. M I L L E R . I am sorry, I don't understand the question. We did
investigate, and we didn't have any indication from anything in
the Air Taxi files or from the people who had dealt with Air Taxi
in the 1970's and who were concerned and responsible that would
lead to any sense that there was something amiss.
In the absence of something being amiss, a fishing expedition is
hardly called for.
The C H A I R M A N . Well, Mr. Soutter testified that he didn't talk to
Mr. Jose, he didn't talk to other people at Bell Helicopter who knew
about it.
Mr. M I L L E R . Mr. Jose had nothing to do with this business in the
1970's. He had gone; he had been assigned to domestic marketing. I
doubt that he was even aware of the negotiations with Air Taxi.
Since Mr. Atkins had never heard from Mr. Jose, and since no one
else who was then involved had heard from Mr. Jose, I don't know
what would be the clue that would have sent Mr. Soutter to look
further than he did. I suppose you would have suggested that our
general counsel put an ad in the paper and say, "If anybody knows
about Air Taxi, come in." Mr. Jose was not involved ; nobody who
192
was a principal knew he had this information. He did not hide it,
I didn't even know-——
The C H A I R M A N . I can't understand what kind of investigation of
this $2.9 million payment this was. Our staff went down to investigate it, and they looked at the records, and had no trouble finding
out that you had in your files, in your own files, at Bell Helicopter,
the allegation by a responsible attorney, that the General owned an
interest in Air Taxi. It was there, if you asked the right people for it.
Mr. M I L L E R . Senator, I commend your staff for digging up information that was not available to us. We did not have a clue, Mr.
Souter did not have a clue that the information about Air Taxi
was in a file of International Helicopter Consultants. That was a
name not even known to Mr. Atkins; he would not have remembered
it. Our counsel in Bell Helicopter did not have any clue that Air
Taxi information could be found in that file.
Again, I don't know what the procedure is in your world, but in
our world, we file things by subject. Air Taxi is a file ; International
Helicopter Consultants is a file. You found the clue through this
intelligence probe, which I assume means that the intelligence information must show French as a source; that led you to the clue.
If he was the source—
The C H A I R M A N . Absolutely not. Mr. French was not.
Mr. M I L L E R . I don't know how you found out he was a source.
Maybe he sent in a letter or something; I don't know.
The C H A I R M A N . A S I say, we found out through the documents
not initially given to us.
As to the Arthur Young audits, they discovered over the past year
that at least four divisions of Textron funneled kickbacks to foreign
customers, in some instances through secret Swiss bank accounts.
These kickbacks, that took the form of overbillings, and accommodation payments, were going on for at least a year after you officially
put Textron and its divisions management on notice that these practices were unacceptable.
What Steps did you take, as Textron's chairman, to carry out your
policy edict, issued in 1976, against questionable or illegal payments ?
Mr. M I L L E R . Senator, those statements are, I am afraid, from the
press; and they are incorrect. None of the transactions you talk about
involved any Swiss banks; none involved any secret bank accounts.
They involved a common practice, which we do not happen to
allow in our company, but which is perfectly legal and proper: that
is, at the request of a customer, an invoice is sent in a larger amount ;
he pays a larger amount and builds up a credit. He may do this
because he feels the currency may devalue in his country.
This is perfectly legal; there is no violation of law. But I don't
like the practice. We did a 5-year investigation and we found over
that period of time something like $200,000 in billings where there
had been no falsification of the records, there had been no slush
funds, there had been no kickbacks, there had been no secret bank
accounts, there had befen no violation of law. We stopped the practices instantly, and they do not warrant the characterization that
has been put upon them.
193
The C H A I R M A N . Y O U took a bit more than a year while those
practices continued?
M r , MILLER. NO, sir.
The C H A I R M A N . My time is up. Senator Brooke.
Senator B R O O K E . Mr. Miller, I think this matter should be clear
for the record, because it did come into the testimony. The Securities
and Exchange Commission wrote a letter, dated February 22, 1978,
to the committee in which they said there were certain matters regarding Textron that were under review, but that the details of such
matters would not be discussed because of privacy rights.
I quite agree with them. But the same general description of these
matters mentioned in the SEC's letter have been made a part of the
committee's public record, I would like to discuss them with you.
One, the remittance of $300,000 by a Textron subsidiary to an independent foreign sales representative in connection with a $1.6 million sale of equipment manufactured by that subsidiary to a foreign
government entity.
What is your comment on that?
Mr. M I L L E R . Senator, I learned of that situation at the hearing
on the 24th, and I looked into it.
The story is as follows. Back in February 1971 a company called
Tropical Aircraft Sales Nigeria was appointed Bell Helicopter's
sales representative in Nigeria. Later, after a few months, it was
given the right to sell in 17 other African countries on a case-bycase basis.
At the Paris Air Show that year, there was an interest shown in
a couple of our model 212 helicopters by the Government of Ghana.
And as a result of that, Tropical Air worked on the sale of two
helicopters to the Government of Ghana for VIP transportation.
Tropical Aircraft submitted a standard purchase agreement, proposing to buy these helicopters and their spare parts and accessories
for about $1.9 million. The proper Bell list price would have been
about $1.6 or $1.7 million, so Bell rejected the order.
A new order was submitted for the proper amount of money, and
it was accepted. By September of that year—September 20—the
helicopters were delivered.
Now the payments that Bell received between September 10 and
September 22, 1971, came in two forms. There was $613,000 in
cheeks or deposits, and there were notes, promissory notes. This was
a finance sale through the Export-Import Bank, and the notes that
came in for about $1.3 million were assigned to the Continental
Illinois National Bank. So Bell received about $1.9 million in cash,
way more than the order of $1.6 million.
The administrator in the export marketing department took the
$1.6 million due Bell. And then, since the money had been received
for the account of Tropical Aircraft, he sent the balance, which
happened to be $310,000, to Tropical Aircraft's account in Miami,
Fla.
In my opinion, that was not handled properly. In my mind, that
should have been surfaced through the top management of Bell and
should have come to my attention.
194
I don't know at this point that anything wrong was done, but it
was a strange transaction. I think it was wrong, and I would not
approve of it. I did not know of it, and I regret and apologize to
you that we didn't find that incident and surface it. We should have.
Senator B R O O K E . Well, on the surface of it, it would appear to
-me to be an improper arrangement. Do you agree?
Mr. M I L L E R . On the surface, I don't like it at all. I don't see that
Bell Helicopter people had any benefit from it. But I don't know
why, after we had already rejected the order, they had it rebilled
and then accepted the money and did not bring it to the attention
of someone higher up. That to my mind, is not good handling.
Senator B R O O K E . That matter came to your attention, you said,
on the 24th?
Mr. M I L L E R . It came to my attention here at the committee hearings.
Senator B R O O K E . That is the first time you had heard of it?
M r . MILLER. Y e s ,
sir.
Senator B R O O K E . And no Bell Helicopter official had reported that
to you?
Mr. M I L L E R . NO, sir, no Bell Helicopter officer knew of it. Bell
Helicopter officers themselves had rejected it. And then, down in the
export department, when the order came in, the people just sent it
on. They shouldn't have done that.
Senator B R O O K E . Have you taken steps to correct that now?
Mr. M I L L E R . Yes, sir. We will see that that is cut out. As I said
before, when you are working with 65,000 employees, there can be
shortcomings. But we do have strong controls, and we have strengthened them a lot. This nation has learned a lot in the 1970's about
these kinds of things, and we have tightened and toughened our
controls, even though I think we had good ones.
Senator B R O O K E . Second, the use of push money, salary contributions, and other promotional practices by another Textron subsidiary.
Mr. M I L L E R . Yes, sir. In December, 1977, the SEC was in touch
with us because of some questions about promotional allowances,
which are common in consumer products. You know, cooperative
advertising, arrangements to pay compensation for clerks, are offered uniformly to all stores.
One of our products has engraving, and engraving machines are
offered with it. These practices are common; in fact, these practices—
some of them— are regulated by the FTC.
When our representative appeared before the SEC, it turned out
that this matter came before the commission because of forged
documents that, apparently, had been sent to the SEC by an employee who had been fired. We looked into it, and there was no
substance to it; that is the whole story.
Senator B R O O K E . Are you satisfied
Mr. M I L L E R It satisfied me. There was no problem. It shows you
how information coming out indiscriminately can do serious damage
to the reputation of a company. I don't know how one can protect
oneself against vengeance from a fired employee who thinks it would
be nice to injure the company.
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Senator B R O O K E . The next matter listed in the S E C letter concerns the disclosure of instances of overbillings, underbillings, and
other billing practices apparently employed by several divisions of
Textron to accommodate their customers in the establishment of
questionable funds of cash?
Mr. M I L L E R . Senator, it is against our policy to do this, although
it is legal and many companies do permit it today. It is not, in my
opinion, a matter of illegal and improper payments; it is a matter
of going beyond what the law requires.
Senator B R O O K E . Have you always been
Mr. M I L L E R . I have always had that policy, but I have strengthened it in recent years. You see, we didn't have an international
business until the 1970's. In 1969, I started developing a strategy.
A very small percentage of our business was international in 1969;
today our business is one-third international. As we became an international company, I tightened all of the procedures, because it became more important.
Senator B R O O K E . When you say you didn't have an international
business, you did have Air Taxi as an agent in 1960, but you had
no volume?
Mr. M I L L E R . Let me revise that. Textron's international business
in relation to its size was small. As we began to expand internationally, we paid more attention to controls and procedures as a
deliberate policy. And we have more subsidiaries now; we must be
sure they are audited properly. We insist that foreign subsidiaries
use American standards for accounting, and pay their taxes—do
all of the things we think are proper.
In 1976 two cases were brought to our attention by Arthur Young
in its audit of some of these practices. I will describe a few to you,
so you will understand them. They were innocent, but I don't like
them, and they were against our policy.
Let me give you one case. One division was exporting its product
to a foreign country through a very reputable distributor. The product was shipped in one shipment and invoiced properly, and the
packaging materials were shipped separately, because the two weren't
easy to pack together. The distributor took the two and packaged
them for display at retail.
It turned out that in order to clear customs in this country the
distributor needed to place a value on the packaging material. So,
at the request of the distributor, our division sent an invoice for
the material and credited it back to the account, because he didn't
owe us for material; he had already paid for it.
That was an overbilling technique. It is just an innocent overbilling.
Today we bill differently: We send the material with one invoice—
minus the cost of packaging—and we bill the cost of packaging
separately. The distributor pays the same amount of money in either
case. There was no deceit then, no hidden record. But it was technically an overbilling.
Senator B R O O K E . Y O U are saying in effect it was not an overbilling
though?
196
Mr. M I L L E R . N O ; it was not. But I don't like that kind of procedure, because when you are trying to run a large company, if
you let that happen somebody will take the next step. So I don't
like to have that kind of procedure.
Senator B R O O K E . But the customer does not pay twice, does he?
M r . MILLER. O h ,
no.
Senator B R O O K E . Nor does the customer pay any more than the
contract price?
Mr. M I L L E R . N O ; never. That is one example. There was another
case in another country where, at the request of the customer, the
invoices were higher than the cost of the shipment—that is called
an overbilling—and he paid more; the balance was shown as a credit.
A lot of people in foreign business do that because it is convenient.
If they have some need—if they are coming to New York, for example—they may just use the money in their account—it is like
having an excess balance in your account at the department store.
There is nothing illegal about that, nothing wrong with it. But we
don't approve of that practice.
Now because that had occurred, we did an investigation using the
SBC's kind of rules. We found that, over 5 years, one division had
exported over $40 million of products and had accumulated about
$200,000 using these kinds of techniques. We stopped that immediately. A 5-year investigation was completed; it was reported to
the audit committee; and our audit committee and Arthur Young
agreed that it was not material and that it was not any problem.
At that same time, there was a second incident, which happened
to involve a subsidiary of ours in Switzerland that had been doing
somewhat the same thing. Hence, no doubt, the rumors that there
are secret Swiss bank accounts. You know, you would expect to deal
in Swiss banks if you are in Switzerland.
But it was the same sort of thing. I think that division was
smaller, I can't remember. It had shipped maybe $15 million of
products over the period and had accumulated a little more, maybe
$300,000 or so. The effect was the same.
Senator B R O O K E . But you would agree that the practices are not
the best practices?
Mr. M I L L E R . I do not think they are. I do not think they are
illegal, or, in these examples, improper, but I don't approve of them.
Senator B R O O K E . And you have discontinued them ?
Mr. M I L L E R . They all have been discontinued.
Senator B R O O K E . Finally, the SEC has under review the adequacy
of Textron's disclosures with respect to information regarding numerous proceedings brought by Federal or State governmental
authorities regarding alleged employment discrimination on the
basis of race, sex, age, religion and so forth?
Mr. M I L L E R . We have, I think, a very fine record. I have, as you
know, been very active personally in the whole field of equal employment and equal opportunity for 15 or 20 years.
And our company has had a good record. I don't know to what
you refer so I am not sure I can answer your question.
There are discrimination cases brought from time to time. There
are always some pending. I don't know of any examples that would
respond to your question.
197
Senator B R O O K E . The allegation is there was a failure to disclose.
Mr. M I L L E R . I am not sure to what that refers. I don't know of
anything we have failed to disclose that is required.
Senator B R O O K E . Have you looked into this personally?
Mr. M I L L E R . NO, sir, I haven't.
Senator B R O O K E . When did you become aware of this?
Mr. M I L L E R . I think I read it in the newspaper.
Senator B R O O K E . Y O U mean recently?
Mr. M I L L E R . I read it in newspaper stories of the last few days.
Senator B R O O K E . But as far as you are concerned, Textron's record
regarding fair employment opportunities is a sound one.
Mr. M I L L E R . Senator, I believe it is sound. And, from our corporate
point of view, we have had a rigorous policy in this regard. I can not
guarantee that every plant manager and every office manager in
every part of our company is as rigorous as I think they should be.
But we will continue to make this a higher priority within Textron.
Senator, there are three other kinds of incidents that have been
referred to in the papers that I think are unfair and ought to be
cleared up a little.
Senator B R O O K E . I was going to get to them, but my time is up.
If the chairman will permit you.
Mr. M I L L E R . Maybe I can take my time, because I am very anxious
to help this committee clear this up, and I am very anxious to make
sure that Textron's reputation is not harmed in this process. The
words that have been used—kickbacks, secret accounts, bribes—are
false; they are false. And the SEC investigation will be resolved, I
have no worry there.
The three other things that came up were as follows. After the
incident of some overbilling practices in 1976 that I described a
moment ago, I wanted to reemphasize to all of our people that they
should be very, very alert to this kind of problem. So I wrote a
memo saying, "Even though you understand me, please look further."
As a result, two of our divisions came to our corporate offices and
said, "well, we had such practices. We didn't know there was anything wrong with them; we had misinterpreted; we want you to
know about them and to make full disclosure." Our offices have been
gathering data and will gather data over 5 years and will thoroughly
investigate these matters.
I don't know when this first came to the corporate office's attention—sometime after mid-year or so. I think our financial people
are onto the investigation; it may take months to make sure they
track everything down.
One of those divisions had a situation where an employee who had
been terminated had used such a practice, unbeknownst to the billing
department. Our people apparently were concerned about this, and
asked for a legal opinion. They received an opinion from outside
counsel that what they were doing was proper. But even if that is
true, I am not satisfied with it.
But again, these are two incidents which, are in the process of
being reviewed, and which do not, on their face, warrant any of the
characterizations that have been made.
AT Textron, none of these situations involved any slush funds, any
corporate officers or directors, any bribes, any kickbacks, any falsi-
198
fication of records—one of that has been involved. Everything has
been a question of how far we want to go in being super-clean.
The third incident—I might as well complete this—as I told you
involved push money and was a fraudulent claim.
The other incident I have talked about. In summary, two incidents were settled by a 5-year review. Two are under review. The
last incident involved a single check sent by one of our overseas
offices for a sales representative in payment of his commission in
the proper amount and in the proper name. But, instead of sending
it to his country, they sent it to Switzerland—not to a secret account,
but to an open account.
No law that I know of was violated. But I still don't want that
kind of thing done. Now maybe my being too puritanical has hurt
Textron, because these things wouldn't now be questioned if I had
made the test one of legality.
I think my company has suffered because I have asked them to
go too far. I am really saddened if that is true, because when I
accepted this nomination, I thought one might get credit for that
sort of conduct, but it turns out one may not get credit for it.
Senator B R O O K E . Thank you.
The C H A I R M A N . Senator Williams.
Senator W I L L I A M S . I have not been able to be present through
these lengthy hearings. I have several questions for Mr. Miller concerning his philosophy in connection with the use of the Federal
Reserve authority, our declining dollar, and using the discount rate.
However, I would assume at this advanced point in the hearings
that this record, as voluminous as it is
Mr. M I L L E R . It has good things to say, Senator, good things.
Senator W I L L I A M S . I will review that. And I would like to yield
to the Senator from New Hampshire.
Senator M C I N T Y R E . I thank my good friend from New Jersey.
Mr. Chairman, we have made some inquiry because of your statement that the rules require the opportunity for all members to have
an opportunity to read the hearing record. As a result of a check
by the staff, Mr. Weber of the staff, we find that the following
senators are willing to proceed to a vote on Mr. Miller's confirmation
as of today: John Sparkman, Harrison Williams, myself, Alan
Cranston, Adlai Stevenson, Robert Morgan, Donald Riegle, Jake
Garn, Richard Lugar, and Harrison Schmitt.
We were unable to reach Mr. Sarbanes, Mr. Brooke can speak
for himself, and Mr. Heinz apparently has left the hearing room.
But on that basis, and on the urgency that we have to fill this very
important office, I would like to move the committee into executive
session, so we can consider the question of the confirmation of Mr.
Miller.
The C H A I R M A N . Well, the orderly procedure would be to complete
the interrogation of Mr. Miller. I don't think it will be more than
a relatively short time before we do that. And then we can go into
executive session.
Of course the committee can do whatever it wishes. If the committee prefers, and I take it the Senator from New Hampshire
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obviously has all kinds of votes for all kinds of motions today, if he
persists, I suppose he can out-vote me and one or two others. So if
the Senator wants to move us into executive session, I will recognize
him for that purpose.
I think the orderly procedure, however, would be to complete the
inquiry of Mr. Miller, and then act.
Senator M C I N T Y R E . I would be agreeable, although the hour is
getting late, to withhold, if there are any other senators who desire
to question him.
Senator BROOKE. I have more questions that might I ask. And
concerning the rules, as I understand them, the chairman said that
it would only take one objection in order to consider the nomination
prior to 24 hours. In other words, it would take unanimous consent.
Is that correct or not ?
Senator M C I N T Y R E . I don't consider myself a parliamentarian
but
Senator BROOKE. I am asking the chairman.
The C H A I R M A N . I am going to to turn to the staff director, who
has looked at the rules and get his opinion on this.
Mr. M C L E A N . Senator Brooke, the procedures formally adopted
by this committee on January 27, 1976, provide in substance that
there shall be no vote on a nomination until 24 hours after the
transcript has become available.
However, that rule can be waived by unanimous consent. Technically these are procedures of the committee adopted at the organization meeting and are not formally a part of the committee rules.
Senator BROOKE. Mr. Chairman, if I may
Senator CRANSTON. I would like to ask the rule specifically be read.
Senator STEVENSON. Where does that appear in the rules?
Mr. M C L E A N . These appear in the procedures adopted by the committee and these procedures have been appended to the committee's
standard questionnaire that has been in use for the last 2-plus years.
Procedure No. 2 provides:
The committee shall vote on the confirmation not less than 24 hours after
the committee has received the transcript of the hearing, unless waived by
unanimous consent.
Senator M C I N T Y R E . I have a question, Mr. Chairman, a parliamentary question. I don't believe that this rule would apply to taking
the initial step of moving the committee into executive session to
consider the nomination. Then at that point it may be that rule No. 2
here permits one senator to object. I still think we can move to
executive session.
Senator BROOKE. I am not objecting to that, Mr. Chairman. But,
if I may, Mr. Chairman, at this time
The C H A I R M A N . Senator Brooke.
Senator BROOKE. I respect the right of each and every senator on
this committee, or any other committee for that matter, to voice
his own opinion, make his own statements and make his own judgments.
I want to voice mine relative to the direction in which this hearing
appears to be going at the present time. I also want to state that I
200
don't think that the direction the committee is taking, or appears to
be taking, is in the best interests of the confirmation of Mr. Miller.
There have been all sorts of statements made that there have been
delays in these hearings. Mr. Miller, I want you to know from the
beginning, and I think you do know, that your rights have always
been protected by this committee. I stated that to you when you
first appeared before this committee. There have not been any delays
in my opinion, so far as your confirmation is concerned.
Information came to this committee regarding the ownership of
Air Taxi during committee's January 24 hearing, as you will recall
Mr. Miller, because you were sitting in that seat, which came as a
shock to those of us on the committee who were here. When the
committee learned of this issue, the committee members in attendance approved a motion by Senator Heinz of Pennsylvania to conduct an investigation to determine what actually was behind those
allegations.
I think that is not only the right, I think that it is the duty and
responsibility of this committee.
The committee voted unanimously to conduct that investigation.
That investigation was conducted, in my opinion, and I think in the
opinion of most people, because I have heard them commend the
staff, as a thorough in-depth investigation and was completed in a
reasonable period of time. And a report was made back to this
committee.
Since that report was made to this committee, we have had 1 and
a half days of hearings to review the facts contained in the staff
report. At no time have there been allegations or insinuations from
this committee, and at all times we have tried, in a courteous and
fair manner, to give Textron officials and all of the witnesses who
have appeared before us every opportunity to clear up this record.
I have said time and time again, and I think I have been at all
of these hearings along with the chairman, that we have been zealously watching and protecting Mr. Miller's rights and the rights of
his corporation.
The reason I asked my most recent questions, Mr. Miller, was to
give you an opportunity to clear the record. Now in many ways I
think the hearings have helped you and your corporation. You said
yourself the whole question of overbilling was a practice that you
never even had heard about until just recently you found out about
it. which would never have come up.
There are other matters I could go into, because I have lived with
this so long, I know every strain of evidence that has been presented.
But I do want to assure my colleagues on this committee that there
is no attempt whatsoever to delay or in any way impede the progress of these hearings. I think it is appropriate that those members
who have not been able to attend all of these hearings, because they
have had commitments in other committees, to at least have the
opportunity to review the transcripts and review the record.
T think that is their duty, I think that is their responsibility. I
think to surreptitiously go into an executive session and try to vote
out your confirmation is not in your best interests, it is not in the
201
best interests of the chairmanship of the Federal Reserve, or in the
best interests of this country.
I implore my colleagues not to proceed on that route. A$ of now,
from the testimony I have heard, I intend to vote for your confirmation. But I do object to any attempt to rush to judgment without
giving full hearing to what would now seem, to be the completion
of your testimony, and without providing some time for an opportunity for my colleagues to review the transcripts.
As a man who has done a phenomenal job with the building of
this corporation, I am sure that you would want the full record
before any confirmation vote is taken on };rour confirmation.
Senator S C H M I T T . Would the Senator yield?
Senator BROOKE. Yes.
Senator S C H M I T T . I certainly can confirm the Senator's presence
at these hearings. I have been here most of the time myself. I think
we both felt it was our obligation, as well as our duty, to insure that
the hearings were conducted properly.
It is my feeling, however, at this point, that the basic questions
of Mr. Miller's knowledge or lack of knowledge of the alleged
ownership of Air Taxi by General Khatami, and whether he should
have taken measures to insure he had that type of knowledge, have
been answered and that is the basic reason why I think the situation,
as far as this committee is concerned, has been largely resolved, and
would support Senator Mclntyre's motion.
I do feel, however, that there are other questions that it would be
only appropriate to have clearly identified for the record and maybe
those questions could be in fact asked for the record and supplied
bv Mr. Miller for the record, in order to do what I believe the
Senator sincerely wants to do.
Senator BROOKE. There is more involved in these confirmation
hearings, if the Senator would yield, than General Khatami's ownership or part ownership of Air Taxi. We are concerned with the
issues that the Senator from New Mexico raised, the nominee's views
on monetary policy in this country, his administrative qualifications,
all of his qualifications.
There is much of this in the record on the first day of the testimony. I dare say that many of our colleagues have not had an
opportunity to review that transcript. It is voluminous. And all of
the record has not even been printed yet, so obviously it can't be
reviewed. That is all I am suggesting to you.
I don't think that the chairman has tried to have a delaying tactic
by virtue of his request that 24 hours after the conclusion of this
hearing, that this committee meet and vote. I don't think that is
an undue or unreasonable request by the chairman.
Senator R I E G L E . Mr. Chairman, may others be heard at this point?
The C H A I R M A N . Of course. Senator Riegle.
Senator RIEGLE. We are proceeding in a somewhat irregular order.
I will be very brief. I know the Senator from New Hampshire apparently wants to proceed with his motion. But I, at least so far,
have not called on the committee to move this matter today. I have
said that I would not object to the Senator's request. Bftt I toy self
202
have not yet called for that, because I am not sure that we ought to
focus at all on the question of whether we try to do it today or
whether we try to do it Thursday.
But I think it is important to note, and it is my judgment that
one of the reasons we have this disagreement, in other words, the
circumstances that are behind the comments that I hear being made,
is that I think the Air Taxi case, which was in a sense the thrust
of the test of Mr. Miller's integrity, his forthrightness before this
committee, that the house of cards, of bits and pieces and scraps of
evidence were constructed, and worked on very carefully and it
collapsed, and it collapsed loudly, in my judgment, and in full view
of all observers. I think, as flat as a pancake today.
Senator B R O O K E . Would the Senator yield ?
Senator R I E G L E . I will momentarily.
Senator B R O O K E . On the house of cards, that is all?
Senator R I E G L E . Let me complete my comment, and if the Senator
wants to comment on it, he is certainly welcome to.
But I think what we have pretty clearly established and what I
thought I had heard virtually every Senator, including the Senator
from Massachusetts, indicate at one point or another today, if not
before today, is that the issue of whether or not Mr. Miller had
been derelict in some fashion or been untruthful to us in some
fashion with respect to the Air Taxi case, which has certainly been
the centerpiece of investigation here, was really no longer a question.
And it seems to me that some of us, I think, have the suspicion
and the concern that there may be an effort afoot to try to put the
house of cards back together again because it has collapsed.
I don't want to hurry this committee, and if there is some member
of the committee who has indicated a sincere interest in wanting to
have the committee transcripts to look at for an additional 2 days,
and those are the rules, I have no question about that.
Although it seems to me, I have not heard any senator, arguing
for the need for an additional time, other than those who have been
here the whole time, or say they have, and have seen and heard the
whole committee record.
The thing I am concerned about, because I think this has become
very much a borderline inquiry, I am not for shutting it off in terms
of the desire of people to carefully reflect, if that is needed, but if
the whole exercise is to in any way, the time is to be used to try to
put the house of cards back together again, then I would have objection to that possibility.
I do, because I think—wait until I am finished and I will yield—
because I think some damage has been done. And it has not been
done to the people who have an interest in pursuing this. I think
it has been done to others, and people have different views on that,
but that happens to be my view. ^
And therefore I am very sensitive to the issue that if we have got
something hard, something real, something concrete that the Senator
from Massachusetts can lay on the table that we have not previously
h^sherl and rehashed, or if the Senator from Wisconsin has it, or
any other Senator has it, then I think the time to do that is now,
203
and short of that, then I think we are very close to a point where
we ought to be able to wrap up this proceeding.
I, frankly, would be at a loss to understand what additional time
is designed to do in the absence of some finding, some new piece of
information, or fact, that we have not all immersed ourselves in with
the same degree of time and effort as has the Senator from Massachusetts.
Senator B R O O K E . Would the Senator yield?
Senator E I E G L E . Yes, I yield.
Senator B R O O K E . G. William Miller is not on trial. There have been
no indictments, no informations, no trial and we are not here trying
him. We are finders of the fact. I can't conceive of whom you would
believe would be the architect of your house of cards, either who
built the house of cards, constructed it, or who would want to put
it back together again.
Senator R I E G L E . Would the Senator want me to describe that?
Senator B R O O K E . Yes.
Senator R I E G L E . A S I size up our investigative effort by the committee, there was a question at the outset as to whether or not this
particular transaction was something that was illegal and improper,
and that possibly Mr. Miller had some involvement with or contact
with it. And, if he had, in terms of his testimony to this committee,
had been untruthful in even one instance in terms of his testimony
here, that that would constitute, I think in the minds of most of us,
a measure of his unworthiness to be considered for this post.
So there was an effort to ascertain whether in this case there was
such knowledge.
And as the Senator knows, and he may want to forget it right
now, but there are at least 100 questions that he himself has asked
to try to pin that down very specifically. And I respect him for doing
so. I have done so myself.
The point is we have been over that ground, and it seems to me
the pursuit of whether or not there was that link, whether or not
there was something that would indicate there was that kind of
untruthfulness or impropriety, we have completed that work, insofar
as I can judge, unless there is something new the gentleman wishes
to offer.
That is the thing that concerns me. It was the construction of that,
what I consider to be a house of cards, because in the end, and I
think the Senator from Massachusetts can rephrase his own comments to this effect, we have not found anything that can in any
waveshape or form, tie Mr. Miller to this activity in terms of Air
Taxi.
Senator B R O O K E . Would the Senator yield?
Senator R I E G L E . Yes; I yield.
Senator B R O O K E . We directed our staff, by your vote as well as
mine and others, to look into this matter and to report back to us,
which the staff did. The staff was not delegated to create, construct
a house of cards. Nor did it create nor did it construct a house of
cards. It found out certain information and reported to us.
On the basis of that information we have sat as a committee to
find out facts.
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We have been trying to find the facts, not trying to pin Mr. Miller
down to anything.
Senator R I E G L E . What did we find with respect to Mr. Miller?
Senator B R O O K E . We have found cartain information and certain
facts. I personally have found, and each one has to make their own
finding, that Mr. Miller was not personally connected with any
decision or had any knowledge of General Khatami's interests in
Air Taxi. That is what I personally have found.
I don't know what the Senator from Michigan has found, or what
any other Senator has found. That is what I have personally found.
But I am not prosecuting, Senator Proxmire is not prosecuting,
no Senator is prosecuting Mr. Miller. We are trying to find the facts.
The Senator from Michigan would indicate that we have created a
house of cards and that we are going to try to pin him down to it
because the staff has given us that. That isn't right at all. The staff
found out certain information, and you complimented the staff in
the most flowing terms, as did other Senators. You would not go
back and say the staff erred in its work, it went beyond what its job
was in the first instance. I complimented them because they made
no conclusions. They didn't make any conclusions. They stated what
facts they found and they gave us the documentation, we looked at
it, and, as a result of it, we asked the questions. It is our job to ask
those questions. As long as I sit here, I will ask those questions, whoever the witness happens to be. I did it with Mr. Miller, and I think
to Mr. Miller's best interests and I think Senator Proxmire and
others did as well.
But now to come back and try to imply we have made a case, and
there was a presumption of guilt, and that we are trying to prove
him innocent from that presumption of guilt, or to make him guilty
is just not the fact.
Senator M C I N T Y R E . Would the Senator yield ?
Senator R I E G L E . Yes.
Senator M C I N T Y R E . Does the Senator from Massachusetts have
additional questions he desires to inquire about?
Senator B R O O K E . Yes.
Senator M C I N T Y R E . Let's set a date for tomorrow and come back
then.
Senator B R O O K E . I don't think it is necessary to set a date for
tomorrow.
Senator M C I N T Y R E . Why?
Senator B R O O K E . Because we can ask them right now.
Senator M C I N T Y R E . Why don't we get off the argument and ask
the questions?
Senator B R O O K E . Y O U started the argument. Senator.
Senator S T E V E N S O N . If the Senator will yield
Senator R I E G L E . I think I still have the floor. I would be happy
to yield to the Senator from Illinois.
Senator S T E V E N S O N . Mr. Chairman, no member wants an investigation to become an inquisition. That is the concern of some of us.
No member wants undue delay. And every member, Mr. Chairman,
wants a thorough investigation. The only difference that I detect
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between us is that some of us are now convinced we have the facts,
we have been through the transcript, we haven't been here personally, rarely are we in such proceedings, we have been represented by
staff. The questions have been asked
Senator B R O O K E . H O W could you read all of the transcripts if we
don't have them?
Senator S T E V E N S O N . The questions have been asked and answered.
Now we have been represented all day in here, in this hearing, by
staff, we know what took place today, we know what took place
yesterday, when we weren't here.
Now my only reason, Mr. Chairman, for asking the Senator from
Michigan to yield, is to ask how much longer, how many more questions ? Is this going to go all day and tomorrow too ?
The C H A I R M A N . May I say I have questions that I think should
take about 6 or 7 minutes, then I have a short proposition, whatever
you want to call it, to put to the nominee, and then I will be through.
Senator B R O O K E . I may also have one or two questions. But as I
said, I thought we would have been completed with Mr. Miller's
testimony had we not had this exchange. But I still feel and I wish
the Senator from Illinois, who is a very reasonable man, would
understand, that even though some of the Senators have not been
here, they might want to review the transcripts. The transcripts
have not been reviewed, because they all haven't been printed. I
know whenever I tried cases, and I have been in the courtroom and
asked questions, I would go back over and review the transcripts
myself to determine if I have considered all of the facts and issues.
Senator S T E V E N S O N . Mr. Chairman, those Senators can represent
themselves. There are two Senators, as far as I can tell, who need
more time. And they are the two Senators who are familiar with the
record, I believe.
The C H A I R M A N . Would the Senator yield on that point?
Senator S T E V E N S O N . My question is how much more time. I think
the feeling of the committee is that if this is going to go on and on
and on and over until tomorrow, it ought to be brought to a head
now, but, on the other hand, if it is going to take another hour or 2,
we can come back this afternoon and act on the nomination.
The C H A I R M A N . May I say to the Senator that in the first place
is is undoubtedly the most important nomination this committee
will act on and one of the most important nominations the Senate
will act on. The head of the Federal Reserve Board is a position of
enormous power, we should take our time, be very careful, scrutinize
the nominee with considerable care and I think we have made some
record in that regard.
In the second place, disregarding this particular nomination, more
important to me is that we establish and stick by a procedure which
Senator Morgan emphasized so well in the Blackburn case, where
we did not wait until the transcripts were available, when we did
not give Senator Morgan an opportunity to read the transcript
before we voted. Senator Morgan made that point, he made it
emphatically, and that is one of the reasons why we have this in
the rules. And we should have it in the rules, we should protect
25-067—78
14
206
every Senator, we shouldn't permit eight Senators to decide for the
committee as a whole, for all Senators, that we are going to cut off
the opportunity for further consideration.
That certainly isn't the way the Senate was designed to operate.
It is not as if we are asking for a delay of any significance on this.
We are asking for 48 hours. Forty-eight hours. The country is not
going to collapse in 48 hours.
Furthermore, let me make one more practical point, and that is
it is obvious to all of us, we know any Senator can delay action on
the floor for some days, maybe for a week or two. If we want to
get prompt action on the floor, I think it is a mistake for four Senators to rush this through.
It seems to me if we proceed in a reasonable way, wind up today,
vote on Thursday morning at 9 o'clock, then it could go to the floor
promptly and be taken up.
I don't think any member of the committee will want to delay
or any member of the Senate ; I think we can act within an hour or
two of debate on the floor and that will be done.
Senator R I E G L E . I think I still have the floor. Does the Senator
want to make additional comments ?
Senator S T E V E N S O N . Mr. Chairman, I wouldn't quarrel if I thought
this was unreasonable. But what I fear is that this committee is
acting as it is, not as it has done in the 7 years or more that I have
been a member of this committee, from what has been called a sense
of righteousness and with not a prayer of producing any more relevant information. And why? Because it is calling this honorable
man, it is calling upon him to prove the unprovable, to prove his
innocence of something that he never did.
The C H A I R M A N . If the Senator would yield, that is an outrageous
statement.
Senator S T E V E N S O N . I did not yield, Mr. Chairman, and the further point is that proceedings such as this, the decision and the
delay in the Congress, and this is but one of many examples, there
is a Conference Committee on Energy going on which is another
example, are going a long way toward convincing the world that
the United States is no longer capable of managing its own affairs,
let alone offering the world economic leadership.
I don't want an investigation, I don't want undue delay or an
inquisition, and if there are reasonable questions to ask to ascertain
facts, I would be all for it. But so far there is no indication, at least
none of which I am aware, that there are any such questions, or any
ba^is for them. And if there is, it shouldn't take 48 hours to ask them.
The C H A I R M A N . We are not asking for 48 hours. We are asking
for 15 or 20 minutes, and then we are asking for 48 hours for the
entire record to be made available to all members of the committee.
That is a procedure which I think we should follow in all cases,
without exception. We shouldn't break that precedent here.
Senator B R O O K E . There must be something I am missing, Mr.
Chairman. There is something going over my head as to the direction in which this whole approach to this hearing is going.
I just want to say most respectfully that I don't see how anyone
can conceivably say that a day and a half of hearings to consider
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the staff's investigative report is an undue or unreasonable amount
of time in which to question witnesses.
And no one can say that there have been any effort to delay this
nomination. There is no evidence to warrant a finding that anyone
on this committee wants to delay these hearings at all. If things
had gone in their normal course, I say to you that Mr. Miller would
have been finished here a long time ago.
I will further say that I would have joined with the chairman in
objecting to any vote on this nomination until such time as all
Senators have had an opportunity to review the transcript, not only
in the Miller case, but in any case. I think Senator Morgan was a
very distinguished attorney general before he came to the Senate,
and was absolutely right. We have rushed through judgments on
other nominees and I think such actions set a very dangerous precedent.
I don't know why the rush this time. As I said—yes, rush.
Senator M C I N T Y R E . Six weeks?
Senator B R O O K E . Six weeks has not been the extent of this hearing
and you know it. It hasn't been 6 weeks, it has been a matter of days?
Senator M C I N T Y R E . January 24 the nomination came up.
Senator B R O O K E . We have had iy 2 days here. One day before, on
January 24. Two and a half days on the Chairman of the Federal
Reserve Board, plus an investigation by the staff. Is that unreasonable ? Is that delay ?
Senator M C I N T Y R E . The point is
The C H A I R M A N . Before I recognize Senator Morgan
Senator B R O O K E . We took up the nomination even before the
President had sent his name up here.
The C H A I R M A N . This isn't just a straight-forward situation, where
we come forward with routine questions. This is a case where Textron, fairly or unfairly, and I think Mr. Miller made a very strong
case that the SEC investigation may not be substantial, but they
have made a series of charges against the nominee.
Senator R I E G L E . I beg your pardon? Against the nominee?
The C H A I R M A N . They made a series of findings that they are investigating, maybe I should put it that way, against the nominee.
Senator R I E G L E . That is a very important distinction. That is part
of the trouble.
The C H A I R M A N . They made a series of findings they are investigating. In view of the fact we are called upon to act on this, the
questions that Senator Brooke has just asked were not asked before,
nobody has really gone into detail on this. I think there were one
or two questions following up on that that we should ask. I think
if this committee should be criticized at all, it is that we haven't
conducted a sufficiently thorough investigation under all of the
circumstances.
As the Senator says, we are not trying to delay this, we have had
21/9 clays of hearing in total, we have had an investigation, we are
ready to act in 48 hours. Senator Morgan.
Senator R I E G L E . Mr. Chairman, if you would
The C H A I R M A N . I yield to Senator Morgan. He has been waiting
longer.
208
Senator E I E G L E . I thought I had the floor before.
The C H A I R M A N . N O ; the Senator lost the floor.
Senator M O R G A N . Mr. Chairman, I will be very brief. While I
haven't been present during the 2 days of hearings, Mr. Engstrom
of my staff has, and we have kept up continuously with what wras
going on. While I personally am ready to vote today, I am caught
by the rule that the committee made at my request, when I raised
the question before. And I think it is really a good rule.
I remember in the other case I had to be out of town, and I asked
for an extension of time until I could get back from Bethesda Hospital. When I came back, the confirmation had been rejected, and
the transcript had not been typed, and while I didn't know how I
would vote, I felt that I hadn't had my day.
So I would just say I would support the chairman on the rule,
although I personally am ready to vote for Mr. Miller's confirmation.
But I think it is a reasonable rule, and while it might be reasonable to suspend it today, it might not be the next time. I might
obieet on the other side next time.
The C H A I R M A N . Senator Eiegle.
Senator E I E G L E . Thank you, Mr. Chairman. First of all, I too
will be very brief. I don't have any burning feeling one way or the
other about the 2 days that you and Senator Brooke feel particularly strongly about.
I do think it is important, however, if we can try to conclude our
hearings today. You both have indicated I think you could do that
to your own satisfaction in a fairly short period of time, and I think
you should certainly have that opportunity.
I would hope that what we could do is somehow resolve our differences here. If the vote is going to be on Thursday, and you have
indicated you object to Senator Mclntyre's request, and you suggested, Mr. Chairman, 9 o'clock on Thursday, and that is not a long
time from now. I think the thing that I would be concerned about,
and I want to make it very clear, so that you and Senator Brooke,,
who feel strongly about this, understand the concern at least that I
have. And that is that I would hope that after we conclude the hearings today, and we have gone through everything we found that is
a relevant point of questioning, and you have satisfied yourselves
with the questions you wanted to raise, and Senator Brooke has, or
anybody else has, that in the time intervening we are not going to find
that wThat I called earlier a minitrial, which I think it has been, and
it is interesting, Senator Brooke, when you chose your analogy a
moment ago in terms of looking at the record, the analogy you chose
is when one is conducting a trial, and one wants to look at the
transcript before rendering a decision.
I think we have, in effect, conducted a minitrial here. And I would
hope in the next couple of days or until such time as we take a vote,
we are not going to continue to see accusations of one sort or another, wherever they are discovered, basically working their way
out in a well-publicized way in an effort to cast doubt over this
nomination. That is the part that troubles me.
At some point, it seems to me, we owe it to ourselves to look at
the ovidonce and make a judgment. So if Thursday is the date, I
would not strenuously object to that.
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Senator M C I N T Y R E . I would like to ask the chairman, in view of
the solid phalanx on the committee who would like to expedite this
nomination, if we could by unanimous agreement among ourselves,
agree to vote on this nomination by proxy, or by any way, by polling
the members at 2 o'clock tomorrow afternoon, just so that we can
move this thing as expeditiously as possible. This will allow for
questions from both you and Senator Brooke, and then we could
have some acceleration of getting this man on the job, because I
think it is pretty widely conceded that he will overwhelmingly be
confirmed.
The C H A I R M A N . Tom, I think you are right, I would like very
much to accommodate you, but I don't know how I can. The rule is
very clear. I don't see wThere we gain anything by saving a few hours
there. I would have to object under those circumstances.
So I would hope that we would simply meet and vote at 9 o'clock
Thursday morning.
Senator R I E G L E . I S the chairman making a motion to that effect,
so we can at least have it settled?
The C H A I R M A N . Well, I move that the committee meet at 9 o'clock
on Thursday morning, for the purpose of acting on the nomination
of Mr. Miller.
Senator B R O O K E . I second it.
The C H A I R M A N . Without objection, it is so ordered.
All right. Now I have a few more questions, Mr. Miller. When I
was discussing the SEC letter with you, you said there were no Swiss
bank accounts?
Mr. M I L L E R . N O ; I said there were no secret accounts.
The C H A I R M A N . I understood you to say no Swiss bank accounts.
Mr. M I L L E R . N O secret ones.
The C H A I R M A N . Y O U concede there were Swiss bank accounts?
Mr. M I L L E R . When you operate A business in Switzerland, Senator, you deposit your money in Swiss banks. We have subsidiaries
who sell products and carry on business in Switzerland, and in Germany, and in England. We have bank accounts in each country.
The C H A I R M A N . Let me give you some examples of what I am
talking about.
Textron's divisions did pay commissions to some of its agents
into Swiss bank accounts, and bank accounts in third countries, not
countries where they were located, not where you had business. Last
year Bell Helicopter paid over $60,000 into a Swiss account for
Mohammed Baksh & Sons, Ltd.
Mr. M I L L E R . That is the situation I just described. I said the
check was made in the proper name and was deposited in a Swiss
bank account—not a secret bank account—an open bank account. I
know of no illegality. It happens to be a practice I don't condone.
The C H A I R M A N . I apologize if I am repeating. I don't mean to,
but I did miss that. I may have missed the next one, too.
The Fafnir Division paid $45,488 in commissions to its Iraqi
agent in a country in which he didn't do business.
Mr. M I L L E R . That is one of the divisions in our 5-year survey.
That is one of the cases I mentioned, where there has been some nonconformity with what I consider to be our standards. I do not know
if any of those instances involve any illegal or improper payments,
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but they are practices I don't want to carry on. So we are doing a
5-year review and our audit committee will review it in due course.
I mentioned this incident to Senator Brooke previously.
The C H A I R M A N . Did you respond on the Shuron Division?
Mr. M I L L E R . Yes, sir. That is the case where there was an outside
opinion that what they were doing was legal. But I said I didn't
even like that.
The C H A I R M A N . That was the case where the Shuron Division
accepted overpayments ?
Mr. M I L L E R . Yes. There was nothing illegal, but I don't like the
practice.
The C H A I R M A N . Textron's Schaeffer Eaton Office Supply Division engaged—-Mr. M I L L E R . That is the 1 9 7 6 case I described.
The C H A I R M A N . That was the $ 1 0 2 , 0 0 0 in overbillings and the
$78,000 in accommodation payments to third parties?
Mr. M I L L E R . I think over 5 years there were a couple of hundred
thousand dollars involved on a very large amount of business.
The C H A I R M A N . That involved payments to overseas agents of
Schaeffer Eaton in countries such as Japan, Chile, Liberia, Belgium,
and so forth?
Mr. M I L L E R . The Japanese case was the one where the packaging
material was handled separately. There was nothing wrong; this
was done to make it possible to get through customs. The customer
was not overcharged.
The C H A I R M A N . The Textron Talon Zipper Division
Mr. M I L L E R . That was the Swiss case I discussed.
The C H A I R M A N . That was the $ 3 2 , 0 0 0 in overbillings?
Mr. M I L L E R . Yes, over 5 years.
The C H A I R M A N . That division engaged in $ 2 3 2 , 0 0 0 in overbillings
and $ 1 6 4 , 0 0 0 in accommodation payments to third parties overseas
from 1 9 7 2 through 1 9 7 6 ?
M r . MILLER.
Yes,
sir.
The C H A I R M A N . Let me ask you about one other thing. Mr.
Miller, Arthur Young reported that questionable payments totaling
over $1 million had been made by Textron's Fafnir Precision Bail
Bearing Division since 1972, and that overbillings and accommodation payments had been engaged in by the division for up to 20
years.
An Arthur Young memo of January 26, 1978, indicates that certain senior Textron officials did not want to report the overbillings
and accommodation payments to the SEC.
The memo says that Mr. Van Brocklyn, Textron's comptroller,
considered the payments to be "unusual" rather than "questionable,"
and thus need not be reported to the SEC.
If thev weren't questionable, why did you order that they be
stopped ?
Mr. M I L L E R . In the first place, that is one of the cases that is
under our 5-vear review; the information is being gathered. We will
ascertain and our audit committee will review our determination of
whether any of the practices were illegal, improper, or questionable.
It certainly is prudent, prior to an investigation, not to assume them
211
to be. There is no reason to report to the SEC until we have the
facts, which we will gather shortly. The SEC is aware of the situation, has been advised of it, and will make its own determination of
whether any special disclosure is required. The division had this
practice before Textron acquired it, and its view is that these are
customary practices in foreign transactions, that none of them involved any falsification of records or any kickbacks; they were all
normal and customary and none of them was illegal. We will have
to check that, though. Some of the other cases I can tell you about;
we have reviewed them. But I can't tell about this case now, other than
to say we are going to review it and if it is questionable and material, we shall disclose it in our next registration statement.
The C H A I R M A N . This is the point of the letter, isn't it, the point of
the letter is to find out whether you should have reported it?
Mr. M I L L E R . I think I have characterized our auditors as bringing
up that particular situation. Actually the division brought it up because I sent a memo around saying, "Be sure you double check. Hereis how I want things done."
The C H A I R M A N . Why did it take so long to uncover the overbillings and accommodation payments at Fafnir that Arthur Young
indicated were considered acceptable by Fafnir's management?
Twenty years.
Mr. M I L L E R . Let me ask that question of you, Senator. Arthur
Young has been auditing that division for a long time. If the practices were questionable, why didn't they find them? That is a question for the world. I don't think the practices are established yet as
questionable. The fact that a practice occurred and that Textron
doesn't like it doesn't make it questionable. It did take Arthur
Young a long time to find it, and the firm has been aduiting those
books since 1968.
The C H A I R M A N . D O I misunderstand overbilling? Isn't that clearly an unethical practice?
Mr. M I L L E R . No, sir. It is quite often used in international transactions for the convenience of maintaining a credit balance in
dollars.
Let me give you an example. People in the United States today—
businesses—may maintain credit balances in Germany, because they
think the deutschmark is sounder than the dollar. My job at the
Federal Reserve is to reverse that.
The C H A I R M A N . D O you then consider overbillings and accommodation payments under some circumstances to be proper?
Mr. M I L L E R . Perfectly proper. I do not like the practice; I don't
condone it; I don't want to do that at Textron. But I know major
companies whose rules permit it unless it is illegal. My rule is not to
permit these things whether legal or illegal.
The C H A I R M A N . But they were done for 2 0 years, 1 0 years o f
which you were the executive officer?
Mr. M I L L E R . NO, sir. We acquired Fafnir in 1 9 6 8 .
The C H A I R M A N . Then 6 or 7 years.
Mr. M I L L E R . Ten years. But the division considers they were not
imnrcper, illegal, or questionable. Arthur Young audited the books..
Why has it not discovered these practices if they were questionable f
212
If they are not, why are we implying the division has acted improperly? We shouldn't do that. We should now investigate in a
proper and prudent way. We should not even allow divisional people to be impugned when they may have been operating perfectly
properly and not understood that Textron standards are more demanding than legal standards.
Senator B R O O K E . But you testified you had discontinued that?
Mr. M I L L E R . Yes. Whenever we found these things, we said,
"Stop it now. Now we will look back 5 years and see what you have
been doing."
There are only five cases in all of Textron history that we have
ever found, and I have discussed them all this morning.
The C H A I R M A N . Let me see if I understand overbilling. A N invoice is sent to a customer in connection with a sale by Textron and
there is a record of that at Textron, isn't there?
Mr.
MILLER.
Yes.
The C H A I R M A N . If Textron agrees to sell a product to a customer
for $1 million and then sends an invoice to that customer for $1.5
million, isn't that a false invoice?
Mr. M I L L E R . NO, sir; not if he does it at the request of the customer. The customer says, " I am willing to send you extra money,
you hold it in my account, hold it for my credit." It is right there
on the books; there is no false record; anybody can go and read it.
The C H A I R M A N . Isn't that the kind of thing that ought to be disclosed fully?
Mr. M I L L E R . If your wife had a credit balance at Bloomingdale's
to pick——
The C H A I R M A N . D O you retain a copy of the invoice in your files?
Mr. M I L L E . R It is on the books.
The C H A I R M A N . Isn't that a false invoice then?
Mr. M I L L E R . The order is invoiced according to the agreement
with the customer.
The C H A I R M A N . At an inflated price?
Mr. M I L L E R . At the customer's request. Now in some cases, don't
mix these up
The C H A I R M A N . I am listening to you. I beg your pardon.
I am sure the questions wTould be far better, too, if the staff asked
them.
Mr. M I L L E R . If there was an intent in such an overbilling to
violate a law, then that would be a violation, and that is why I
worry about it. That is why I don't want this done even in cases
where it is not illegal—because once you allow it, then some employees will get into a habit. And then in some country where it is
illegal—because the currency laws prohibit it—it will be questionable. and I want to avoid that.
The C H A I R M A N . Mr. Miller. I was extraordinarily impressed
when you appeared before us before by your articulate persuasive
personality and manner. I am even more impressed now. I think
your responses this morning have been remarkably good and clear,
and I think you have made a fine record.
213
Now I want to say that you are in a very difficult position, this
is the kind of embarrassing thing nobody wants to talk about, but
we have to talk about it under these circumstances.
So I am going to ask you something that is going to be very tough
for you, but it is something that is going to haunt us if I don't ask
it, and if we don't get it into the open, and you don't have an opportunity to consider it, and I am glad you will have 48 hours to do so.
In a sense it is cruel and unfair to ask you to consider what I am
asking, but I don't see any alternative other than bringing you in as
a full participant, in fact, the crucial participant.
You have heard the sentiments of the members of the committee.
There are no other witnesses to come before the committee. We are
going to act on Thursday morning, and under those circumstances it
is clear that you are going to be overwhelmingly approved. In fact,
you might get 14, conceivably even 15 votes.
Mr. M I L L E R . Let's go all the way, Senator.
The C H A I R M A N . Well, you are going to get a solid vote, even if
you may not get my vote.
So, option one is to stand tough and become as I think you certainly will in that event, Chairman of the Federal Reserve Board.
Let's consider the consequences of that option. If you are confirmed, and if you take office as Chairman of the Federal Reserve
Board, you wiil be serving for several months while your former
firm and your conduct as chairman of that firm are under investigation by the SEC. You will be under a cloud. The findings of the
SEC, when they are made next summer, may seriously reflect on
your judgment, possibly your competence as a manager, and conceivably your character. These findings may simply indicate that Textron violated the law, and the SEC will bring a civil case. It is conceivable, not impossible, it may mean a criminal case against Textron
officials, including you.
Now the executive department, including the Attorney General,
may be called on to decide whether or not to proceed in court on the
criminal charge against the Chairman of the Federal Reserve
Board. If they decide to do so, you can imagine the consequences
for the country. Suppose they decide not to do so? A member of the
Federal Reserve is supposed to be independent and particularly independent of the executive branch. How credible will that independence be if the administration's chief law enforcement official has
considered the evidence and decided to forgo prosecution? Won't
there be grounds for suspicion that the administration holds a
unique and potent influence over the Federal Reserve Board through
its chairman? Assume that there are no actual grounds for such
suspicion. Isn't it as sure as day follows night that the public suspicion will be there throughout your tenure as Chairman of the
Federal Reserve Board?
And whenever the Board goes along with the administration's
economic policy, whenever you decide to ease credit, for example, to
stimulate the economy, if that is what the administration wants, T
can hear the cries from the critics now. They can say what do you
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expect, tlie administration has Miller over a barrel on those Textron
activities, if he doesn't come across, they will go after him in court.
I would agree such a charge and suspicion might very well be
grossly unfair, in fact, outrageous, but it is not unrealistic. At the
very least the Federal Reserve's independence will in the judgment
of some Americans be less than it has been.
Now for option two. As you know, the New York Times which
is viewed by many as the Nation's most responsible and thoughtful
newspaper, on Sunday called for you to withdraw your name as an
act of statesmanship. I know some will counsel you to say to hell
with the New York Times, they will tell you to hang in there and
fight it out.
If I were in your position I would be inclined to do exactly that.
The Washington Post, on the other hand, said this morning the
call for you to withdraw is unfair to you. It is unfair to you. The
choice I asked you to make this morning, and tomorrow, before we
act on Thursday, is to consider this and it is a tough decision and
if you want to be Chairman of the Federal Reserve Board, there is
no question but that you are going to get it, as I say, because the die,
in my judgment—I could be wrong—but the die is cast in the
Senate.
It is a cruel situation for you, maybe it is an unfair decision, but
only you can make it. I hope you will consider what the New York
Times has suggested soberly and quietly, as I am sure you will, consider what is in the overall best interests of the country in deciding
whether or not to withdraw.
You have 48 hours to make that decision, and I don't ask you to
respond to that now, but it is a decision which I think we should be
aware of, because I think you can imagine, as well as I can, what
the situation may well be
Mr. M I L L E R . Senator, I don't want or need 4 8 hours.
Thp C H A I R M A N [continuing.] What the situation may well be
-over the next few months and what the situation could be 6 months
from now if there is prosecution by the SEC.
Senator B R O O K E . Mr. Chairman——
Senator R I E G L E . Mr. Chairman, I think he ought to be allowed to
respond.
Senator B R O O K E . Before the witness answers, I am compelled to
say this: If vou are under indictment bv a court, or if you were
personally under investigation bv a committee, I might agree with
what Senator Proxmire said. You are not under indictment by a
court, you are not personally under investigation bv a committee or
by the Justice Department. I think the New York Times is wise, but
I think it was wrong for them to ask you to step down under these
circumstances.
T think the New York Times has preempted the- responsibility of
this Banking Committee to look into your qualifications for the job
to^ which the President of the United States has appointed you. I
think the New York Times was premature in making any suggestion
relative to this hearing prior to the conclusion of the hearing and the
"taking of all the evidence before this committee. I don't want to see
215
the day when the Congress of the United States or the Senate, more
particularly, in its advice and consent responsibility should make
judgments based upon what may happen in the future. We are acting on G. William Miller's qualifications today to serve as Chairman
of the Federal Reserve Board. We don't know what is going to happen to you next year, or 5 years from now or 4 months from now.
We didn't know what was going to happen to certain Presidents
of the United States after they had been elected to office. There is no
way for us to know. We have done, I think, the only job we could
do as a result of information that has been given to us.
I don't ask you to make that searching, soul-searching question
that Senator Proxmire has put to you. I respect the chairman, I respect his right to give you that question. But I don't think that that
is a consideration.
The only thing I would ask of you is to tell this committee the
w7hole truth, nothing but the truth, and we have no evidence that
you have done anything other than that.
Senator RIEGLE. Mr. Chairman if I may, I strongly concur with
Senator Brooke's statement and I feel as he does that that would
not be a reasonable request to make of the nominee, and I think if
lie were to walk away at this point it would be exactly the reverse
presumption, and that is, he was guilty of something, or his company was, and I think he would personally be spending the rest of
his days with that cloud over his head.
Quite frankly, I think what has happened is that we conducted
a very hard tough thorough no-holds-barred investigation. I would
challenge anybody here who has watched this or listened to it to
state an example where more care was taken in the investigation of a
nominee before the fact than was done in this case.
I compliment the staff on incredible diligence in doing this. I
mean anything that was there to be found has been found. It has
Teally, I think, done a profound job in that respect.
But having taken everything that could be found, piecing it together, in whatever circumstantial way one could as a test of the
standards of integrity and honesty of this nominee, the committee
lias taken every shot at Mr. Miller that it can take. I mean it has put
every question, every theory, every construction of the pieces of
evidence and whatever to test him in every fashion they could think
of doing.
I would say the chairman and the Senator from Massachusetts are
among the best and most effective questioners in the Senate in terms
of really putting an issue as direetlv and as bluntly to a witness or a
variety of witnesses as anybody that serves in this body. But having
taken every shot we could take, and having not in the slightest
wounded Mr. Miller, it seems to me what we are now doing is saying
liere, you take the gun and shoot yourself.
That is basically what it boils down to. And I am troubled by
that, because I don't think that is a fair proposition.
It seems to me that he comes with a high reputation earned over
a long period of vears, not just in terms of being a successful corporate executive, because that by itself may mean a lot or it may not.
216
But that is not the extent of his record. There is a record of public
involvement, and public service, with respect to the problems of the
unemployed, with respect to the unfair employment practices. And
when I look at the entire record, I say to myself, it is almost beyond my comprehension that we would ask at the end of a proceeding, when we have not in any way, in my judgment, dented his
integrity or shown any finding of fact that he has behaved improperly, or untruthfully, to basically ask him in light of our
efforts to bow out of the act at this point.
I mean no disrespect to you, Mr. Chairman, because as I have
said, my fondness for you is as great as it is to anybody in the body
and I think you know that to be the case. But we are off base on
this situation and we have got a good nominee here, he is well above
the average of what I have seen coming along from the administration, if I might say so, frankly, and I am encouraged by that.
I want to in every way we can encourage good people who are
progressive and have good records of accomplishment in their past
to come forward and be willing to take a term of service in the
public interest.
No matter how cynical we all may be, maybe it is a function of
how long you are here, I have accumulated 11 years of cynicism,
myself, and I have seen a lot to be cynical about as have my colleagues and members of the press and others here.
But I would hope we never get to the point where someone who
comes forward in good faith, wTho wants to do a job in public
service, who has a good record, is a decent person, about whom
there is no blemish on their public record, to end up after a hearing of this sort and invite that nominee to basically walk away,
in effect in disgrace, is really very troubling to me.
Quite frankly, I don't understand. It is beyond me.
Mr. M I L L E R . Mr. Chairman, are there any other questions of me?
The C H A I R M A N . I have no further questions. I might comment a
little further, but I will yield to Senator Brooke, who does have
some other questions, I understand.
Mr. M I L L E R . If there are no other questions, I would like to make
a comment.
The C H A I R M A N . On this particular issue I just raised?
M r . MILLER. Y e s ,
sir.
The C H A I R M A N . Fine, by all means.
Mr. M I L L E R . I would like to make my comment when you are all
through with your questions.
The C H A I R M A N . All right. Senator Brooke?
Senator B R O O K E . I yield.
The C H A I R M A N . All right. I do have one other statement, not a
question. You are not going to be determined guilty by any action
you take as to whether you accept the job or not.
You are going to be determined guilty or not guilty by the courts,
bv the SEC investigation, and what follows the SEC investigation
in the event that the SEC should find adversely and in the event it
should involve you, which it may not at all, even though they find
adversely. But that is the basis on which you would be found guilty
or not guilty.
217
Furthermore, as I say, this is, I called it unfair and cruel. But
we are in a dilemma here. The Federal Reserve Board is the most
sensitive agency, the only agency I know of that clearly and should
be by the Constitution independent of the executive branch. And
under these circumstances, there is going to be a cloud, there is going to be a problem that is going to continue at least for 4 to 8
months, and perhaps longer.
That is why I am putting it to you and I think it would take a
man of considerable character to say no under these circumstances.
Mr. Miller.
Mr. M I L L E R . Senator, this whole process has been a revealing experience to me. I have been introduced to the world of government
service with a high degree of exposure to a process I had, perhaps,
not expected.
In the whole course of this I hope I have endeavored—and will
continue to endeavor—to cooperate fully with this committee and
its staff. I certainly have tried to do that in every way.
I appreciate that you have put a difficult proposition to me, and
that two of the Senators here have suggested that perhaps the question does not need to be answered.
I don't need 48 hours to answer your question. I have in my conscience no qualms at all; I have no concerns that any investigation
by the SEC will disclose any wrongdoing that wguld involve my
attention or bring into question my integrity. I know that, so I
don't have to think about it.
I also know that I have seen the editorials, and I have had many
people press me to do this or that. The easy thing to do in life is to
run.
I can tell you my withdrawal from this nomination would be the
most irresponsible thing I could possibly do. It would be irresponsible to this committee, irresponsible, certainly, from the point of
view of the Federal Reserve, irresponsible from the point of view
of the President, irresponsible from the point of view of the Nation. It would be irresponsible from my point of view and that of
my wife, Adriana.
I do not intend to withdraw from my nomination and I hope you
will reform your ways—and vote yes.
The C H A I R M A N . Mr. Miller, thank you very much. The committee
will stand in recess until 9 a.m. Thursday morning, when we will
act on your nomination.
[Thereupon, at 1:30 p.m. the hearing was concluded.]
A P P E N D I X
To: Senator Proxmire.
From: Bruce F. Freed.
Re Chronology of G. William Miller confirmation.
January 24, 1978—Senate Banking confirmation hearing on nomination of
G. William Miller. [Hearing held before White House formally submitted
Mr. Miller's name to the Committee.] Senator Heinz requests staff investigation into the $2.9 million payment by Bell Helicopter to Air Taxi and General
Khatami's possible ownership of Air Taxi. Investigation begins. [Agreed to by
chairman, no objections raised. Five Senators present: Proxmire, Sarbanes,
Brooke, Heinz, and Schmitt.]
January 25, 1978—White House formally submits Mr. Miller's nomination
to the committee. Staff director McLean sends memo to Chairman Proxmire
with copy to all committee members outlining scope and method of staff
investigation. [No comments received from Committee members.]
January 27, 1978—Textron gives the committee its first submission of
documents.
January 31, 1978—Senate Banking Committee with quorum present and
without objection approved issuance of a subpoena to Textron after committee staff discovers that Textron failed to voluntarily provide committee
with a copy of a 1975 investigation of the $2.9 million payment by Thomas
Soutter, Textron's general counsel. Scope and method of investigation furtherdiscussed by committee members. Staff indicated investigation would take a
week to 10 days. Senator Heinz indicated it may take 2 weeks.
February 2-5, 1978—Committee staff takes depositions from five Bell
Helicopter officials at Fort Worth, Tex. [President of Bell Helicopter, Mr.
Atkins was out of town and not available for questioning until February 2.]
February 8, 1978—Committee staff learns of new evidence of Khatami
ownership of Air Taxi and knowledge by Bell Helicopter officials from C.
Robert Bell, a Wichita, Kans. lawyer. This evidence included correspondence
in Bell Helicopter's files but not furnished pursuant to the committee's subpoena referring to General Khatami's link to Air Taxi. Subpoena's issued to
First National Bank and Trust Co. of Oklahoma City and Citibank N.A.,
New York, for bank records of A. H. Zanganeh and Air Taxi.
February 8-16, 1978—Affidavits sent to approximately 63 individuals asking for their knowledge of any ownership interest in Air Taxi by General
Khatami.
February 10, 1978—Senator Proxmire asks for, and fails to receive, unanimous consent from the Senate to allow the Senate Banking Committee to
meet on February 21, 1978 to consider the staff investigation.
February 13-17, 1978—Senate recesses. Staff takes depositions from William French, Robert Bell and past and present Bell Helicopter officials.
February 15, 1978—Textron makes second submission of documents to the
committee in response to the committee's subpoena.
February 21, 1978—Staff sends summary of investigation to committee
members.
February 22, 1978—Senate Banking Committee meets to consider the summary of the investigation prepared by the staff. Committee asks that the
staff attempt to interview Mr. Zanganeh, managing director of Air Taxi, and
Mr. Khalil Iranzad, sales manager of Air Taxi. Staff also directed to take
steps to get Mr. Zanganeh's and Air Taxi's bank records from Citibank's
Paris, France branch. The committee scheduled followup hearings for February 27 and 28. [These decisions were unanimous. Seven Senators present:
Proxmire, Sparkman, Sarbanes, Schmitt, Heinz, Lugar, Brooke. Reigle came
in at the end of the meeting.]
(219)
220
February 25, 1978—Committee subpoenas documents from Arthur Young
and Co., Textron's auditors, on accommodation payments and overbillings
by several Textron divisions and Bell Helicopter's sale of helicopters to
Ghana in 1971 which involved a $300,000 questionable payment.
February 27, 1978—Senate Banking Committee hearings at which Mr.
Bell; Mr. Jose, Bell Helicopter vice president for commercial marketing;
Edwin J. Ducayet, former Bell Helicopter president and chairman; James
Atkins, Bell Helicopter president; and Thomas Soutter, Textron general
counsel, testified.
February 28, 1978—Senate Banking Committee hearing at which J. H.
(Bud) Orp§n. former Bell Helicopter International sales manager, and Mr.
Miller testified.
At the conclusion of these hearings the committee decided to meet Thursday, March 2, to take action on the nomination.
THIRD SUBMISSION OF DOCUMENTS
FROM TEXTRON - FEBRUARY 21
40 Westminster Street
Providence, R.I. 02903
401/421-2800
Textron Inc.
February 21, 1978
Charles L . Marrinaccio, E s q .
Special Counsel
Committee on Banking, Housing
and Urban Affairs
5300 Dirkson Building
Washington, D . C .
20510
Dear M r . Marrinaccio:
In the course of searching its records in connection
with the recently served subpoena of the Securities and
Exchange Commission, our Dalmo Victor unit brought to my
attention yesterday and today two documents, one which has
reference to General Khatami and one which is an apparent
reference to the settlement with Air Taxi. Copies of both
are enclosed.
I am advised that Dalmo Victor did not retain nor even
make contact with Air Taxi as a possible representative of
Dalmo Victor.
Ygj^r; f v i i l tr
TDS/jmf
(221)
25-067 O - 78 - 15
t/mire
222
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INTEROFFICE CORRESPONDENCE
TO
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DEPT.
DATE April 30.
FROM:
D. Thiodornu
DEPT. 9 1 7
E*T
?iun;r<L:T
S riles Commission in Iran
i-olluv.'iii; Uili Gisel'fc r e c o m m e n d a t i o n ,
1975
47Z
OISTKISUTION TO BC AT VO^p*,
AWOTHt"!
I catted p»vc Miller at Bell Aero-
s p a c e to obtain m o r e i n f o r m a t i o n on i n t e r m e d i a r i e s in Iran.
B e l l A e r o s p a c e , a c c o r d i n g to D*.ve, does have a r e p r e s e n t a t i v e t h e r e to
handle " c o m m e r c i a l s a l e ? " . D a v e ' s definition on c o m m e r c i a l s a l e s w a s
any a a l « that was not cloned through FMS c h a n n e l s . T h i s could b e m i l i tary equipment as w e l l as c o m m e r c i a l . He did not know i£ Bell w o u l d r u n
into any difficulty with their agent {I gathered f r o m that they had not clostsd
any s a l t s } and He g u e s s e d that the question of c o m m i s s i o n would h a v e to b e
negotiated at a fairly high l e v e l . H i s f e e l i n g w a s thai they w e r e " s a y i n g . o n e
thing in Iran and doing something e l s e " .
Dave w.is unaware of the ASPR regulation, e x p l i c i t l y excluding Iran f o r any
commission through FMS.
I p r o b e d in some depth in h i s m e e t i n g with F r a n k S y l v e s t e r at B e l l H e l i c o p t e r ,
During his visit there, he informed me that he learned that the Shah had o b j e c t e d to the Bell H e l i c o p t e r agent during the signing of the big c o n t r a c t .
Apparently, .in understanding w a s reached, and ,i one* shot lump payment
was m a d e to the agent who w a s then t e r m i n a t e d . T h i s i n f o r m a t i o n , D a v e
said, war- obtained not f r o m F r a n k S y l v e s t e r but was absolutely r e l i a b l e ,
Dave had the following recommendations; 1) Call D i c k Violet, Director f o r
Sales N e p i l a t i o n . The D e f e n s e J>ecurity A s s i s t a n c e A g e n c y at T h e P e n t a g o n
for i n f o r m a t i o n on this s u b j e c t ; 2) call Benjamin F o r e m a n , A s s i s t a n t G e n e r a l
Counsel ior International A f f a i r s , Dept. of Defense; 3) keep the M A A G inf o r m e d and, 4) be e x c e e d i n g l y c a r e f u l in your c h o i c e of agent. He suggested
that v/e obtain both the MAAG'S and the customer's recommendation on any
agent we consider f o r r e p r e s e n t a t i o n .
Dave had just returned f r o m an international m e e t i n g of the International
P a n e l of A i r c r a f t Industries Assor., (AIAA). S e v e r a l of these subjects w e r e
discussed. He has written a report and has promised to forward it to m e .
Paul Stunners and 1 have a l r e a d y c o n t a c t e d his Deputy, M r . G l e n n
Rudd; regarding c o m m i s s i o n s in G r e e c e . R e f e r e n c e IOC f r o m D,
T h c o d o r o u / P . Stanners dated Z-J A p r i l 1975.
DT:cw
223
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BELL. HEUCOP
CORRESPONDENCE
June 17,
MEMO TO:
Mr. Cran Thayer
COPY TO:
Messrs. E. Farmer i
Please prepare a check for $950,000 payable to:
A. H . Zanganeh
c/o Air Taxi Company
Mehrabad Airport
Tehran, Iran
This check is for final payment in accordance with our dealer
agreement and should be delivered to me no later than Friday
morning, June 20th.
W. F. Joiber
Controller
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Please issue a check in the amount of $1 million payable to:
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c/o Air Taxi Company
Mehrabad Airport
Tehran, Iran
This payment is in accordance with the dealers agreement with the
above firm. The check voucher should show that the payment is for
"Dealer' s Commi ssion."
Charge Account No. 4505.
C . S. Thayer
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To:
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Subject:
Air Taxi Company - Dealer .Commission
Please issue a check in the amount of $1,000,000.00 payable to:
AIR TAXI COMPANY
MEHRABAD AIRPORT
TEHRAN, IRAN
This payment is in accordance with the dealers agreement with
the above firm. The check voucher should show that the payment
is for "Dealer's Commission." The check should be dated June 29,
193? and should be delivered to Mr. J. F. Atkins' office by
8:30 Friday morning, June 29th, in an envelope marked personal.
13:ELF:bjr:8239
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Vice President - Finance
229
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KLLL lUi.i'iLiLiillhL Ui.L
BOLL HELICOPTER
COMPANY
July 30,.1973
fp?
Messrs. Bjeletich, Jankowski and Keglovits
pubpect;
Dealer Commissions - Iran Program
Xn accordance with the ^recently negotiated agreement with our authorized
dealer in Iran, The Air Taxi Company, Mehrabad Airport, Tehran, a total
fcppmission is to be paid as follows:
Due
June 29, 1973
July 1 , 1974
July 1 , 1975
Amount
$1,000,000
1,000,000
950,000
The above amounts, of course, assume continuation of the program. If
the program is terminated or reduced, then an adjustment will be made to
the above commissions. The above connission arrangement covers the entire
Iranian transaction as now contemplated, which includes tht present FMS
Contracts, additions that nay be made thereto for spares, etc., the
training program, the logistics program, the contemplated operation of
Iran Helicopter Industry and the direct sale by Bell of spares, which is
now in progress together with any additional sales of such spares. In
Other words, this commission agreement is all inclusive and covers the
total commissions to be paid for the entire Iranian program as it is now
known or foreseen. The accounting handling will be as follows: the
$1,000,000 commission paid in June, 1973 will be transferred from the
suspense account to the Selling Expense and treated as a separate line
item on our P&L as "Other Sales Expense." This commission will not be
charged to the Foreign Selling Expense pool, since it is not allocable
t o FMS sales, and therefore must be treated as a separate item and excluded from the FSE pool. The two remaining commission payments will be
treated as a separate P&L item when paid in the same manner. We should'
not set up any accrual accounts for these commissions, but simply pay
them when they become payable and absorb thsia in our P&L as outlined
above. We had already made a small commission payment on the direct
spares sale, which has been in progress for several months, but then
Stopped any further payments. This memo is to advise that no further
commissions will be due on subject contract spares because the above
outlined commission 'understanding covers all commissions due on subject
spares.
13:ELF:bjr:8300
E . L . Farmer,
Vice President - Finance
231
BELL HELIC0?T2R COHPAMY
INTER OFFICE MEMO
3 1 July 1973
13-CST:bvn-882
TO:
A l l Holders of Chart of Accounts
SUBJECT:
KEV7 ACCOUK?
Effective with the accounting month of J u l y , the following
new account is established:
Textron
70100
Bell
4505
-
Other Selling Expense
C« So Thayer - Manager
General Accounting
1973
BELL HELICOPTER TEXTRON
SCHEDULE OF ACCRUALS AND PAYMENTS IN
SETTLEMENT OF THE AIR TAXI REPRESENTATIVE AGREEMENT
ACCRUAL
PAYMENT
1973
M y - Journal Voyigh^ 7-$l$B
D R A / C 70100
C R A / C 16220
M l S . - Tournal Voucher 6 - 2 0 4
$1,000,000
$1,000,000
November - Tournal Voucher 11-422
D R A / C 70100
C R A / C 36386
$
500,000
$
500,000
D R A / C 16220
C R A / C 33104
00
to
$1,000,000
$1,000,000
BELL HELICOPTER TEXTRON
SCHEDULE OF ACCRUALS AND PAYMENTS IN
SETTLEMENT OF THE AIR TAXI REPRESENTATIVE AGREEMENT
ACCHVAI,
PAYMENT
1974
Tung - Journal Voucher 6-422
DRA/C 36386
C R A / C 70100
$
500,000
$
fcO
500,000
CO
CO
Tyne.- Journal Vougher ft-214
DRA/C 70100
C R A / C 33102
$1,000,000
$1,000,000
M Y - Jpumal Voucher 7 - 2 1 5
DRA/C 33102
C R A / C 70100
$1,000,000
$1,000,000
PecembQr - jQum^l yougher
DRA/C 70100
C R A / C 36386
M y - Journal Voucher 7 - 2 0 4
$
& 12-$82A
500,000
$
500,000
D R A / C 70100
C R A / C 33104
$1,000,000
$1,000,000
BELL HELICOPTER TEXTRON
SCHEDULE OF ACCRUALS AND PAYMENTS IN
SETTLEMENT OF THE AIR TAXI REPRESENTATIVE AGREEMENT
ACCRUAL
PAYMENT
1975
Mav - Tournal Voucher 5-53OB
D R A / C 70100
C R A / C 36386
$
•
to
00
Tune - Tournal Vpughey $-2Q4
450,000
$
450,000
D R A / C 36386
C R A / C 33104
$
950,000
SUMMARY
DRA/C 70100
C R A / C 33104
$2,950,000
$2,950,000
$
950,000
NOTES
A.
Dgggrlptfon of AqgoyntS
Accoyipt Number
B.
PQggrlptlpq
70100
Other Selling Expense
16220
Suspense - Factory Ledger - Costs of Specific
Nature Subject to Subsequent Distribution
33104
Accounts Payable - Vendors Vouchered and Paid
36386
Reserve for Contingencies
33102
Accounts Payable - Unrecorded Liabilities Non Vouchered
Journal Voucher 5-530B in May of 1975 was a combination entry as follows:
D R A / C 70100
C R A / C 36386
$450,000
$450,000
to set up the last accrual for the final amount due on the Iran representative
settlement
D R A / C 36386
C R A / C 84910
$333,000
$333,000
to recognize a lower liability on the AFLC leases and to provide for additional
losses on doubtful accounts.
The Journal Vouchers reflecting the above transactions appeared as follows:
D R A / C 70100
C R A / C 36386
C R A / C 84910
$450,000
$117,000
333,000
to
CO
ACCRUAL 1
'
ACCOUNT NAME
ACCOUNT OR
WORK ORDER
'
J O U K N A L V O D C H E K
FACTORY LEDGER
DEBIT
EC
•'
CREOIT
^ - W i s L L - U i
GENERAL LEDGER •
F.L.C. - Suspense
16220
Selling Expense -Other
70100
'
CREOIT
DEBIT
ACCOUNT -
1! 000.000J
I
—
1 000 000 00
_ I'
V,
[
—
-
I
i
—
—
I
-
[
-
—
-
—
I
F
1
;
..
I
:
V
!
-
—
-
—
...
-
T
-
-
EXPLANATION
PREPARE D
To distribute-suspense-work, order 3362
for the month of July, 1973.
VERIFIED BY
UEMEP./U. .'-.C'.'.lHhTriKG
NNN n n n
/ O
0 . G. $r e
APPROVED BY
H
J . !
no 1 000 000
/j
mnon
_ S(T . L. J WC&
I!
JY
i
1
^
.
-TT
D. C. Pan ere
i
i
(ipks^ra
-
JOURNAL VOUCHER
'eFACTORY
t/Tnov LEDGER
i cnneo
ACCOUNT NAME
f.OMORMR
OEBIT
EC
CREOIT
GENERAL LEDGER
Iteserva for Contingencies
3S386
Other Selling Expense
70it?C
CREOIT
DEBIT
ACCOUNT -
500 000 O
—
See 000 00
.....
_
—
—
-
—
— -
1
<
(
;
-
T
!
—
-
*
—
—
..
!
—
f~
I
1
—
-
i
-
r
-
—
-
EXPLANATION
To provlda for cealcr coccasszocI .
PREPARE D 8Y
VERIFIED B Y '
-
-
;*•
APPROVED BY
!
i
1
i 500 000 0
500 COO 00
S. L* Karcfcrjoy
S. E* Ashley
V
~ .
-
,
D» C« Pcntla
~
"
6-2 Q4
7-3-73
ACCOUNT NAME
Riggs Natl. Bank-Gen.Account
FACTORY LEDGER
WORKOROEIt EC
OEBIT
CREDIT
GENERAL LEDGER
OEBIT
1 183 96 V*
ACCOUNT 11109
CREDIT
667 70 A
Accts. R e c . - Government
13101
Expenditures to be Reimburse* t
Under Govt, cost Contract
13102
785 355 89 t>
Expenditures to be Reimburse* 1
Under Govt, cost Contracts
13103
2 459 88 V/»
Accts. Rec. - Commercial
L3110
Advances to Aerospace GmbH
14101 -2
Bell Raw Material and
Purchased Parts - Common
L6101
Variance Applicable to Raw
Material and Purchased Parts
for Account 1071
L6102
739 00
Model 204 Castings, Forgings
AN - Vendor Parts
16103
1 964 840 69
Variance Applicable to Model
204 Material in Acct. 16103
L6JLQ4
J.78 1 6
JL22L
Commercial Inventory
L61Q9
EXPLANATION
PREPARE
513 137 55
•
5 700 00
(
760 690 76 +
-
6lJY
VERIFIED BY
APPROVED BY
1
GENERAL ACCOUNTING
to
CO
00
tt
r
JOURNAL VOUCHER p a q e ^ ^ - g J M .
ACCOUNT NAME
FACTORY LEDGER
ACCOUNT OH
WORK ORDER
EC
OEBIT
ACCOUNT
CREOIT
Consignment Contra K Account
G E N E R A L LEDGER
DEBIT
-
16112 -2
Die Metals on Hand in Raw
Form inventory Lead and
Kixksite fox M f g . of Dies
and Punches
16120
F.L.C. - Model 47 W/O's
16201
CREOIT
111 161 45
—
_
117 023 20
7 413 05
F.L.C. - Model 204 Majox
Militaxy Prod. W/O's
16202
2 749 133 75
F.L.C. - Othex W/O's
16203
94 393 83
F.L.C. - Model 206 Jet Range
16204
3 942 975 68
1 260 220 46
-
—
*
F.L.C. - Overhead
16205 7
F.L.C. - Model 204 Cammexcia
M i s c . Military W/0*s
16206
F.L.C. - R & D
16207
F.L.C. - B & P
W/O's
W/O's
16208
Helicopter Model 47 Finished
Paxts Production inventory
Suspense - Factory Ledgex
EXPLANATION
-
2
*
47 562 98
300 994 24 y
16211
(
392 175 57
55 884 30
-
SA
-
16220
)
PREPARE
61BY
1
229 154 91 -
VERIFIED BY
APPROVED BY
GENERAL ACCOUNTING
ItoESom* „
ACCOUNT NAME
JOURNAL VOUCHERpa
G E N E R A L LEDGER
FACTORY LEDGER
EC
OEBIT
CREDIT
ACCOUNT -
AN - Vendor Industry ind.
Barts-Spare Parts inventory
16303
Variance Applicable to Parti;
in Account 16303
Perishable Tools Bell Owned
Returnable Containers
16802
prepaid Rent - Real Estate
18103
Accts. Rec. - Employees
Accts. R e c . - Subcontractors
DEBIT
CREDIT
324 601 79
1A
16304
500 00
v>
16801
82 408 13 w
19101 -1
1/J Itici
19110
A
950 44
39 696 73
1
1 403 55
27 601 21
Machinery and Equipment
26104
39 750 74
Office Furniture and
Equipment
26107 -1
14 214 00 Vk
Engineering Test Equipment
26107 -3
13 437 40 X
Short Term capital Assets
26107 -4
516 00
Suspense Equipment in
Construction
26109
Accts. Payable Vendors
33101
EXPLANATION
PREPARE b i IY
667 945 56
VERIFIEI 0 BY
APPROVED BY
GENERAL ACCOUNTING
*
s —
621 95
© h ^ p ^ o c
ACCOUNT NAME
JOURNAL VOUCHER
FACTORY LEDGER
ACCOUNT OR
WORK OflOCR
EC
OEBIT
GENERAL LEDGER
CREOIT
ACCOUNT -
Accts. Payable Vendors
Vouchered and Paid
33104
Accrued Employees Group
Insurance Plan
36301 -2
Accrued Supplemental Unemployment Benefit
36319
OEBIT
i
CREDIT
21 330 576 JL4
640 862 29
37 624 90
+
V/V
-
Accrued Rent - Government
Owned Facilities
36320 -2
245 654 06
A
Accrued Tooling Rental Commercial
36320 -3
103 389 15
*
Accrued Tooling Rental R&D Recovery - Foreign
36320 -4
28 250 00
Accrued Tooling Rental R&D Recovery - T53 Engine
Foreign
36320 -5
6 168 00
Accrued Legal Fees
36331 -2
270 00
Accrued Patent Expense
36331 -3
5 711 10
Accrued Display Advertising
36345
EXPLANATION
PREPARE b 3Y
—
51 950 29
VERIFIED BY
APPROVED BY
GENERAL ACCOUNTING
n
A
JOURNAL VOUCHER
ACCOUNT NAME
p a q e
^
o£
GENERAL LEDGER
FACTORY LEDGER
ACCOUNT OR
EC
OEBIT
CREDIT
DEBIT
ACCOUNT -
CREDIT
Customer Deposits, Funds
Accrued from Commercial
Customers to be Applied to
Purchase of Helicopter and
Spare Parts
36360
Accrued N e w York Sales Tax
36363 -3
172 49 >
Accrued Florida Sales Tax
36363 -5
75 42
—
—
15 000 00
AccruecL Employees" Welfare
Fund
36385
24 100 00
A
Sundry Accounts
36390
10 440 22
A
Accrued Garnishee and Wages
Assignment Deductions
36403
Accounts Payable - Humanity
Fund Employee Payroll
Deductions Prepaid
36404
20 820 68
Accrued Employees Deductions
Union Dues
36406
42 230 27
Accrued Employees Deductions
U . S . Savings Bonds
36407
Accrued Employees Payroll
Savings Plan
36408
EXPLANATION
PREPARE D
207 77I w
-
JL8Q _3L75 J30
-
2 6 1 165 00
jY
VERIFIED BY
APPROVED BY
GENERAL ACCOUNTING
VI
JOURNAL VOUCHER
6-204
paqe
FACTORY LEDGER
.^COtMTOR
EC
D€»IT
G E N E R A L LEDGER
CREOIT
DEBIT
ACCOUNT -
fV
10805
ibiof
CREDIT
4 4 7 26
00000
—
72 00*
83
/u
7IT1
—
„
CO
21 332 751 43 21 332 751 43
EXPLANATION
ACCOUNTS PAYABLE INVOICES V O U C H E R E D A N D PAID FOR M O N T H O F
JUNE, 1973.
C . S . Thaver'
>*KtlMtUCV.tM
r.rNrRii
ArcniiMTiNG
8ell_Helicopter Company
...Division of Textron,_Ino.
Consolidating State:r<int_pf__Jncome..for_pe_ripd_j:n<!<
/
Month nf
, __Pt.rWorth;i_ Amarillo
-
1.
.!
/'
/Xistr.ilia consolidated^.
iyviyrv'ti ..
.. jrwi»:cr. fer Sisullowcd'co^t« ! ', j ' ' 1 •. ;pDlj-03
. _'y *
. .If.fjr'cst Ir.cor •» - :;otcs Ficeiv.-i'bXa j i_|.J ] ij ..J;..,621-02 .
_;:.:«:«•.
.- other, i.;
. jf.t*j:ost
| . f! • i; ' ! „ i
. ic-rei j.-. v ixcs v."it>..\tld oh. i'*yr»cnt:.o
invoiced;
|; : i ; , i 11 _
scuii .r.i.oji C'."i.<)c» .!;M:;| i;
j id
] !_ .:_ .[.:_!.< !.; I
Prs-visio- for^ Cc.: :.-'.rcinli Fin
•
Ir.ccr» Xiefore. Textron,Chae'je*.
c.^ctior.s
1 |i j
Acriir.istrative Service Chsrj*
_::ct Worth Capi-tnl Ct.arye' • m
.. Otr.*t v.
r/ision for Australi»n_J nccrejjaxj
. Z r.ccrc After Taxoi | ^
j' ; ! ,
._:ncc-c >rior .Pjf .io^ij -HtHft
'
L _
1
-m;rr
r l•i :11:1
i!n;
:! n't
!
"V i/7fl it.-ft.
r .icc^t-.
r £..f-3 & Sorvicp
___. >;oi-OL —; • yZt'Sti V'
--//.«,
. Expense,
< costs
..<"—- r
.._« ivis.ivr..
fcr .i-soc-it. DovelQancnt
;i
:'c.r »l jr., •>
; ;s \:i z':.r.11 d_or. I,i c o n s o_ I n c o.-i c
!
r-|
. Ci:-.« c y - -j••s. to K i t of Coods sold
. tlviti<»h£ Ir.zcr?
' . : ..L | ' : ' j j..;^ j
. ?iroi-jr.
'..•..•...lie op. Dividend Inccer.o;
"i kCOll;. r.:>.s tr.CW« ...j.!''
'1 1 '
cr.toiitfsrt.'
.•VI. I 13J
-
^•y^r.W}
..'..-
I•
Year t.p r»t«
.>.Ft. Korth;Ji_ ,v-arillo
^•-.f-l-v-i-i
"Pit
ft1-
Cost pi Goods Solo J . _ ; : . ! . _
in is trail /<.. Service. c)i*rg<*
'I.-.sc.- « or. Sale*
|n
--IH
-r-fr;
J. jf522«0
la^pUl-ji.;.
-HI
'i i ; • • i :
i ;"„
701-04
if
6i J
!7;7fI'i i\
41. _ i
!! ;
|
4
|
"il
_> I !i•11 * l i . i n
i p f T j f
1. J/.':<•<« p
jr.-u-c.tTujr:...
^lAti.TcLirf
._!.,.:
!
S
j :
I!.: i
j'/j j,:!:
,: 'wt/al
I T
. .v./. f
::.;
'^v^^i-L-lLJ
| | ! | j;
' I !:!i-i
S41-69
J : M ;:
iMOO
j- ^
i j-
iij
!
to
Number.
Ft, Worthy Amnrillo
Lii-li—
JjLjJ. V
l . Jj/ikl/iiiv!!
>:;:I: • I '
"jlrthciirt ' J . V -I3!*/* ?«.»,7? ^i/>,7lHf7-?/>
CO«t pi SOOCS Sold |. j ' • j :J
Asrxr.. srrativt Service,. Charge .
-
.Australia _conso1 idated,
f-fH^-Rii
TT
uFt.
-C-'-—
1
a*. ..,,,!',!..;. j.,]'
; M lb i
'HT
!... zr.rcre 3cfore. Toxtron.Charge*.
—; :
• I- • i
otr.4: n'-e-ieticr.r. ' . I ; ; ! ' . }
Administrative Scxvicq Charge;
.Set.MortJi Cejitcl c&»*.g«J ; .L
;
.
.
|
;::it ir-cor-? lor period.;
?r'Wi«ion fcr, fustr'nljan .ijncoma [?i
::et Ir-co-e After ?sxc» | i •
' |!Itj
.SesjSaccrc. ?r:ot
:c-t
X'ccr.c
Voaj. to Eate_.
M&-09
04
Ii
il
JTI....! LI i_ • fft ft...
. *SJ~t3.13-i<(l (tsutt
T'
EJ
|.r:. Lx_|//i;vs.7:.*.>-L. 1 - :
.
u
I1 ! I ^
| '•!: i f ' • :
|:. } . . j
| j: I -
i it
!1
_.. : «/II.MJRF... |!: 1:!
L1 j 4
Q:
...r^xit;-I' 'af:l!f
'
/ FJ-f7l*7f
1
"•jyifov" foilIRI'I
T-iJsia v.: t.'.held on Jpayrtont t
in cv. .r-j«r» • j t '; ; I .;
t9«J .on £ ad.Bo;,-.3. J ^.Xl.l'.Llj i.3von. for Cor-T.ctcinlj Financing .
. •ftiXtttifi . . . { . . ! : . ' . S./-.:.-".* •
ni.ttit! <
Gthar c^arjCo
to Cost of Cooes Sold' J.,
iri^d^T:!'!:!"
-jr J J». A 3crv icc txpci
• J-^a U j
I . 1
?:ov;2. "r. £.vr . rociicc. D^yelopsicnt.CP'ts , I
Pxovis-or. for x; i n.iiiowoci; Costa i
... 1 rx-f/'isA'ie. •• ' ! ' 1 '
Ojo'.rfctinj ir.cc^e.
At-/ 7
W
ni;r
•co-o .
rniiizHii^t.
: i :!': I H:;r,;
I.-.t-jrc-v Jr.-or
.Zr.tftr'.s': Ir.c—
8
'. 22-,00 | +
Gain or toss c disposal' of Capital.|Assets
—
...... >2S-Ol4lL :. .1 j.t|a/>«/
:r.heli
on
Li
c
n
n
3
e
_
J
ilcorne
.
..TY* «•'.«.
wMwJiJ yMr/jitl.
- Ir.cc::
jttasj-04.:::!:•
rcrci;.-. T-3XC3
old on Sividen^I incorr.e
;''
'829-09 ;
J-.iscoiii•Jnuoia
V«ar to ratf
Koith_, ;Ar.ar ilio . ,
slia , Cor.:c>l-.c
. ........ „.SttS.uS.
r
• i ' • ! • I : ' II ;
- IZliZ^lkkki;
1.., U
iIHL
J. i;; i. i ... !:.!:.!_.....
-MtswMn
lif^tT
J.!
_ t i w . f i . j; !..•—.
\
' /fiv,--
j..
i:
to
01
£
o>
GENERAL LEDGER
-
JUL
ACCRUAL
ACCOUNT TITLE
ACCOUNT
COOE
• * • • MASTER MISSING • • • *
, / 70100
70100
70100
.00
,00
• 00
70100
HELICOPTER SALES AND
EXPENSE
__
SERVICE
_
__
—
PROVISION FOR PROOUCT
DEVELOPMENT COSTS
P R O V I S I O N FOR D I S A L L O W E D CJPFF
COSTS
1973 - FINAL
PRIOR MONTH REFERENCE
AMOUNT
J . V . LIST
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70X01
579»539•89
22.39
7,500.00
605.00
1,432.60
CURRENT MONTH
AMOUNT
YEAR TO OMFC
J . V . AMOUNT '
BAL F W D
513
10
MO TOTAL
GL
TOTAL
1,000,000.00
1,000,000.00
1,000,000.00
711,105.21
11.39
3,100.00
605.00
2,316.28
2»544.13
20*556.26
16,833.98
131,565.32
BAL FWO
115
06
118 06
119
07
144 _ 03
146
17
405
15
413
02
417
17
418
17
513
15
530
MO TOTAL
70101
711,105.21
GL
TOTAL
795,450.11
70102
70102
70102
70102
70102
2,102,782.00
BAL FWD
146
523
15
523
17
MO TOTAL
2,661,350.00
209,354.00
219,354.00
2,880,704.00"
70102
2,661,350.00
GL
TOTAL
2,880,704.00
2,120,422.00-
170,000.00
BAL FWD
146
_ 5 0 * 0 0 0 . 0 0 _ 4 0 9 _ 10
409
17
50,000.00
MO TOTAL
220,000.00
70103
70103
70103
70103
70103
70103
82*070.96
558,568.00
558,568.00
_
_
220,000.00
GL T O T A L
89.18
43,670.18
4,510.01
10,143.93
1,902,725.96532,786.38
16,500.00
330.95
12,902.47
111,962.97
62,554.04
59,055.07
16,500.00
330.95
1,869.07
4,033.14
3,476.0084,344.90
1,107,275.85-
5,001,126.00-
10,000.00
222,000.00R
245,000.00
50,000.00
25,000.0025,000.00
245,000.00
T: .K:
<
: 23,000.00
to
REPORT NO.
3202-045
REPORT TITLE
GENERAL LEOGER
ACCOUNT
JUL
.ACCOUNT
CODE
TITLE
1973 -
CUT-OFF 7DATE/ PROC
08-13-73
FINAL
PRIOR MONTH REFERENCE
AMOUNT
J . V . LIST
5 4*4 8X»3Q_-_MO TOTAL.
EELL MATERIAL
VENDORS
EXCHANGE PARTS
CUSTOMERS
IN H A N D S
16213
414,015.13
GL
16215
16215
16215
16215
16215
16215
212,229.32
2,972.70
BAL FWD
606
07 _
636
07
636
10
636
17
MO TOTAL
16215
215,202.02
TOTAL
YEAR TO DATET
J.V. AMOUNT "
16» 4 7 0 . 7 8 397T544.35
46,495.01
OF
2.972.70
GL
E X C H A N G E P A R T S IN H A N D S OF
CUSTOMERS - WESTERN DIVISION
JL79,136.83
BAL FWD
MO TOTAL
.00
16216
16216
.00
• 00
16216
00
16217
16217
.00
16217
• 00__ G L T O T A L .
.00
215,202.02
20,747.81
56,813.0056,813.0056,813.00
36,065.19-
TOTAL
IN H A N D S OF
SUSPENSE - FACTORY
CURRENT MONTH
AMOUNT
PAGE
46
GL
28,334.0CL
84,920.0 in
.00
• 00 _
TOTAL
BAL FWO
MO T O T A L "
_56,586.01_.
.00
.00
• 00;
LEDGER
16220
16220
13220
1S220
16220
16220
16220
16220
16220
16220
16220
16220
16220
770,779.35
32.50
6,652.88
_18,351.58
677,256.95
175.67
5A393.97_
533.33
1,497.77
BAL FWD
101
01
101
06
102
103
103
15
104
10
105
07
107
115
01
15
131
136
10
123
10
1,798,280.89
.00
30.00
1,145,405.73122.41
•
5,149.17
.00
40,272.34
239,138.14
3,591.20
3,056.53
4,309.05
37,889.25
^
146,508.11
3,787,338.93
23,409.86
E
30,115.52.
8,351.75
533.33
E
24,560.51
to
00
.mUm
niPrRT TITLE
GENERAL
JUL
LEOGER
ACCOUN
COOE
ACCOUNT TITLE
1
1
_
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
-
C U T - O F F / D A T E / PROC
08-13-73
1973 - FINAL
PRIOR MONTH REFERENCE
AMOUNT
J . V . LIST
§36.07
137
139
140
87-75 _ 142 _
146
20.82
147
. 152,304.85_ 201
201
31,711.45
202
18,121.87- 203
,216,155.84
204
204
204
204
30,706.54- 205
205
206
212
__ 7 , 5 1 5 . 8 6 - 2 1 3
5,168.67
214
3,924.42- 215
215
218
219
22<\
23,065.11- 312
591,589.00-401
397,397.78
403
19,083.08
405
227.90
406
406
410
411
413
414
420
76,646.31
501
501
13,746.41- 502
502
.CURRENT M O N T H
AMOUNT
Y E A R TO DATE
J . V . AMOUNT
Q7
400.27
07
60.14
01
01
06
07
01
01
03
10
15
01
06
20.8252,223.7840,374.20
23,661.23
31,711.45- __
206,530.80
6,406.98
777.504,271.37
134,940.3017,364.55-
01
01
03
10
15
17
17
10
15
10
15
02
03
07
03
06
13,405.38
5,168.67.00
_____
__
22,032.00
221,319.00124,987.15
34,207.95
705.99
44.006,864.0043,400.00112,449.1263,117.18
1,645.26
496.61.00
^
2,432.96
37.60
1,171.32
#
669.83
336.38913.43
#
426,390.96
180,374.57
%
182,220.85*
2,671,480.72
*
_557,700.28424.867,892.86
«
10,950.4186,582.57
«
_ 74,901.055,086.992,687.45 4
..
33,265.34R
2,175.513,071,346.00- «
_ _ 1,998,695.44
237,509.83
<
.... 4 , 5 4 5 . 6 7 996.00
25,014.00-<
43,400.00282.50112,449.12-F
.
432,680.72
«
<
i' ,i ;iaicopic» Ci.v.; amy
R
FTEPO* N O .
JZC2-045
REPORT TITLE
GENERAL LEDGER
ACCOUNT TITLE
JUL
ACCOUNT
CODE
LU220
U.220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16; 20
16220
16220
16220
16220
16220
16220
16220
16220
16220
(
r
GLNbRAL LtUGER
CUT-OFF /DATE/ PROC
08-13-73
1973 - FINAL
P R I O R MONTH R E F E R E N C E __ C U R R E N T M O N T H
AMOUNT
J . V . LIST
AMOUNT
502
7,760.00- 507
21,423.43
509
509
509
509
2 0 5 , 8 8 0 . 0 9 - 510
108,898.42- 513
513
513
513
526
526
526
527
527
527
50,096.67
530
530
532
415,649.00- 543
143,476.93- 545
549
83,753.85- 553
553
70,710.03
554
558
566
3 7 , 6 2 2 . 3 2 - 567
567
567
347,843.09
601
8,213.54- 602
602
4,720.45
604
3,785.89 606
18.12
607
607
293,668.18- 608
608
07
15
05
09
14
17
18
01
10
17
19
05
09
14
05
09
14
10
17
03
10
06
15
02
10
01
10
05
09
14
03
03
06
03
07
03
06
05
09
2,148.89
4,860.0013,849.98
3,552.99
1,776.51183.86
318,600.44 ^
I FT, CLTQGVI
FI,OOO,OOOT5FE>
.00
7,091.05
290.34145.543,911.45
164.5980.2862,400.0919,983.7431.88114,546.0078,435.6211,224.5090,578.4629,788.6983,753.85
29,427.0040,530.916.50
.00
114,203.07
9,325.92.00
1,645.07
29,666.73
5,356.475,516.00
5,530.90.00
:
PAGE
48
YEAR TO DATE,
J.V. AMOUNT "
22,932.9737,155.00-
113,275.60
79F204.52__
2,127,377.806,647.17'"
3,666.58~
3,701.79
1,978.16
1,990,139.00621,007.1711,224.501,664,711.101,753,951.91"
34.30
29,427.00360,734.792,089,025.13
56,677.5237,126.81
100,982.39 „
12,398.09
/
-9
JIJL
1 9 7 3 - FINAI
i'
\ j. "" ^ T Tl C
GCNfcKAL LfUGER
ACCOUNT
TITLE
SUSPENSE - UNDISTRIBUTED
TRANSPORTATION
CJI-OH- /UAT t/ PROC PAGE
09-13-73
ACCOUNT
CODE
PRIOR MONTH REFERENCE
AMOUNT
J . V . LIST
CURRENT MONTH
AMOUNT
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
608
14
608
18
611
03
612
03
614
01
618
03
620
10
624
03
630
„10.00
631 _ 01
631
10
9,993.48- 632
02
6,801.87
636
6,658.45
639
8,193.60 702
07
24,448.00- 705
15
706
15
707
803
3,973.75
805
15
1,027,501.54
MO TOTAL
3,539.08
940,663.55-
16220
1,798,280.89
857,617.34
16221
37,483.03- GL TOTAL
162
83,426,408.70
__
SUB TTL
__
__
GL TOTAL
4 8 , 4 1 7 . 9 4 - BAL FWO
4 , 0 3 5 . 1 5 - 101
06
91,492.53- 103
10
106,462.59
104
10
143
07
. 10,934.91
MO TOTAL
1,782,636.8414,425.3244,484.44_
1,166.00
605,305.0481,858.73_
22,862.084,729.20
38.00287.93
10,387.784,284.29
209.2144.00
_
37,483.031,372.0175,455.8094,290.72
360.41
17,823.32
19,659.71-
49
Y E A R TO D A T E ,
J . V . AHOUNT '
80,111.29.00
3,436.45
6,797.80
24.0036,966.643,118.14
5,217.89-
82.98
24,817.12
191.00
103,289.392,425.50 _
2,163.17-
16221
16221
16221
16221
16221
16221
_
232.93
76,390.5040,745.13T25,032.28
61,505.49
32,601.03414.00
14,817.612,000.00-:
13,431.17
238,482.47-
_
17,414.97524,744.57542,951.04
360.41
1,151.91
86,784,653.80
CELl HfcUCOPT£R COMPANY
<
2
^
,fro*T
NO.
3202-0+5
REPORT TITLE
GENERAL LEDGER
ACCOUNT
CODE
ACCOUNT TITLE
ACCRUED
NOV
EMPLOYEES WELFARE
PRIOR MONTH REFERENCE
AMOUNT
J.V. LIST
.00
MO
TOTAL
.00
36365-2
.00
GL
TOTAL
.00
36386
36386
36386
36386
36386
_ _
.00
171,245.481,093.60306,889.40
217,802.65-
TOTAL
83,252.33-
83,252.33-
BAL FWO
116
07
422
11
575
12
MO TOTAL
1,950,713.50-
71,664.57- GL
~
~
INSURANCE EXPENSE
1,953,228.502,515.CC
2,515.00
3,898,198.50-
BAL FWD
119
07
204
420
513
12
MO TOTAL
311,287.293,381.66-
C
36387
36387
36387
36387
36387
36387
PRODUCT
36388
36388
36388
36388
36388
319,445.271,861.6710,000.OC
"
19.65
8,157.98
2,515.00^
<500^000^0^
1,45070007001,947,485.00-
TOTAL
1*950,713.50— GL
36386
36387
RESERVE FOR
DEVELOPMENT
YEAR TO DATE
J . V . AMOUNT '
71,664.5715,878.26174.0017,364.00
12,899.SOLL,587.76-
145,114.95- BAL FWD
4,184.72-101
06
197.00- 106
12
117,841.30
204
01
4 0 , 0 0 9 . 2 0 - 501
06
73,450.38
MO TOTAL
36385
36385
36385
36385
36385
36385
CONTINGENCIES
T
12-11-73
CURRENT MONTH
AMOUNT
36365-2
36385
ACCRUEO SELF
Cu I -011 / u A 11 / Hr.uv. n^,*
FUND
-
RESERVE FOR
1973 - FINAL ;
311,287.29- GL
23,829,519.58- BAL
339,122.00- 523
523
284,186.41
530
20,000.00
569
TOTAL
FWD
12
14
11"
12
19.653,401.31314,688.6023,864,455.17— ~
373,860.00
747,720.00~
172,316.61
10,000.00
29,562.50
500,000.001,450,000.00-
1,920,437.50-
23,821.6757,500.00
28,770.00
.00
62,448.33
X
4,409,944.003,629,183.15
55,000.00 <
to
Oi
to
"
~
OtNtHAL
ACCOUNT
NOV
LkUOtH
TITLE
OTHER SELLING EXPENSE
HELICOPTER SALES ANO SERVICE
',PENSE
PROVISION FOR PRODUCT
DEVELOPMENT COSTS
PROVISION FOR DISALLOWED CPFF
COSTS
ACCOUNT
CODE
1973 -
FINAL
PRIOR MONTH REFERENCE
AMOUNT
J . V . LIST
l^OOMOG^
70100
70100
70100
70100
~I,OC0,OOO.OO
70100
1*000*000.00
GL
TOTAL
1,500,000.00
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
1*151*949.C8
16. C5
6,300.00
1,451.67
1,928.99
1*315*435.11
15.89
6,300.00
2,888.33
2,247.19
163,486.C3
BAL FWD
06
115
118 06
07
119
144 01
146
12
405
413
414
10
417
418
11
513
12
5 3 0 11
530 12
MO TOTAL
70101
1,315,435.11
GL TOTAL
1,465,703.84
70102
70102
70102
70102
70102
3,696*962.00
4,036,084.00
339*122.00
BAL FWD
146
523
12
523 14
MO TOTAL
70102
4,036,084.00
GL TOTAL
4,409,944.00
70103
70103
70103
345,000.00
^00
85,214.20
240.89
2,246.29
15*974.20
50,113*14
339*122.00
50,000.00
BAL FWD
422
11
513
MO TOTAL
BAL FWD
146
409
10
YEAR TO DATE
J . V . AMOUNT ~
CURRENT MONTH
AMOUNT
500,000.00
(^500,000.00)
1,000,000.00
500,000.00
1,500,000.00
155.41°
70,370.18
10,443.35
17,820.61
1,902,725.96850,686.19
16,500.00
16,500.001,537.33
21,684.03
212,133.62
80,715.59
~
489.47
2,161.45
19,829.43
7,106.6042,727.98
150,268.73
•
280,873.12"
437,022.12-
5,001,126.00-
373*860.00747*720.00
~
373,860.00
^
4,409,944.00
591,182.00^
395,000.00
50,000.00
222,000.00445,000.00
*tro*r tttLt
PAYMENT
GENERAL
ACCOUNT
ACCOUNTS
PAYA8LE
JUL
LEDGER
ACCOUNT
CODE
TITLE
1973 -
/OAtt/
CUI-UHF
FINAL
I^LC
07-16-73
PRIOR MONTH REFERENCE
AMOUNT
J.V* LIST
CURRENT MONTH
AMOUNT
33102
295»307.39-
MO
TOTAL
33102
8,154,847.14-
GL
TOTAL
7,401,576.46-
33103
33103
33103
33103
25,663.9185,364.7385,364.73
.00
BAL F W O
301
07
633
C6
MO TOTAL
25,663*91276,302*55262,632*55
13,670*00-
33103
25,663.91-
GL
YEAR TO O A t t D
J . V . AMOUNT 1
753,270.68
93,805.75
-CONSIGNOR
ACCOUNTS PAYABLE - VENOORS
V O U C H C R E O A N O P A 10
1
TOTAL
39,333.91-
33104
33104
33104
33104
•00
BAL FWO
15,025,552*38
102
12
1 5 , 0 2 5 , 5 5 2 . 0 1
.00
MO TOTAL
•00
21,330,576*10
33104
•00
411,344,65397,674.65
13,670*00--
-
331
12,372*228.77-
GL
TOTAL
SUB
TTL
—
nn
• oo
14,373,102*01-
"
106,518,160*48
106,518,160*48-
• 00.
ton
C
* f s. .
t-ir:/* f ft
JUL
OTN£KAL IGOGFCK
ACCOUNT
COOE
A C C O U N T TITLE
16215
16215
E X C H A N G E P A R T S IN H A N D S OF
CUSTOMERS
E X C H A N G E P A R T S IN H A N D S OF
CUSTOMERS - WESTERN DIVISION
SUSPENSE - FACTORY LEDGER
/
1973 -
C U T - O F F / D A T E / PROC
07-16-73
FINAL
PRIOR HONTH REFERENCE
AMOUNT
J . V . LIST
CURRENT MONTH
AMOUNT
18,600.00- 636
1,833.47 MO TOTAL
2,972.70
TOTAL
215»202,02
.00
•00
BAL FWO
MO TOTAL
.00
.00
16216
.00
GL TOTAL
_ _ ,00
16217
16217
•00
• 00
BAL F W O
MO TOTAL
.00
.00
16217
•00
G L TQTAL._ * _
16215
212,229.32
16216
16216
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
U>220
16220
16220
16220
16220
GL
872,535.64
BAL F W O
5 0 , 2 6 8 . 4 6 - 101 0 6
102
8,556*35
103
10
29,212.35
104 0 7
104
10
451,158.72
105
10
107
06
1,279.01
115
01
2,748.16
123
131 0 7
8,764.35
136
11
137 07
302,19
139
140
58.50
142 0 7
146
147
506.33
02
01
_ 3 0 , 2 4 1 « 4 2 201
201
02
201
10
201
11
,
..
«00
770,779.35
32.50
6,652.88
18,351.58
• 00
677,256.95
175.67
5,393.97
533*33
1,497*77
536,07
87.75
20*82
134,940*30
16,122*21
1,242*34
• 00
4*
Y E A R TO OATE M
J.V* AMOUNT F
85»147,00
120.985,20
.00
^
Oi
OR
1,145,435.73122.41
32,740.08 ,
106,235.77
3,548,200.79 A
23,409.86 "
26,524.32
5,295.22
533.33
20,251.46
2,032.69
37.60
1,171.32
609.69
336.36934.25
t
I
438,240.54«
': .1 I I ICOI rt- I > >'"••'
REPORT N O .
3202-045
REPORT TITLE
GENERAL LEDGER
ACCOUNT
TITLE
JUN
CUT-OFF /DATE/ PROC
07-16-73
1973 - FINAL
ACCOUNT
CODE
P R I O R M O N T H !R E F E R E N C E
AMOUNT
J • V . LIST
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
18*121.87
202
30,932.28- 203
204
257,857.90
204
204
204
59,190.84
205
205
206
7,515.86
212
377.00- 213
214
3,924.42
214
~
6,077.89- 213
218
219
8,078.71
220
1,053.00
312
469,930.00- 401
284,638.80
403
21,563.58 405
5,409.53- 406
996.00
410
6,120.00- 411
414
33,909.29
501
501
476.52
502
502
507
25,588.00
14,667.94
509
509
509
82,792.14- 510
1 6 6 , 0 6 9 . 3 1 - 513
513
513
513
29»516.88- 530
530
03
01
01
06
07
10
01
02
C E R E N T MONTH
AMUUNT
31,711,45
__U*.12LFFL7-
fT,229.154.9lJ
Y E A R TO DATE T
J . V . AMUUNT \
156,713.34
150,509.40-
11,721./3-
35.001,242.3430,241.42465.12-
01
01
02
01
7,515.865,168.67
.00
3,924.42-
07
U
12
12
07
23,065.11591,589,00397,397.78
19,083.08
227.90
03
07
03
07
11
05
09
11
12
CI
11
12
13
70,204.56
6,441.75
15,786.572,040.16
7,760.0017,495.99
3,500.17
427.27
205,880.0913,828.38
145,863.7423,136.94
.00
67,451.36
17,354.69-
11
. 12
PAGE
44
2,455*049.07
405,395.43424.867,892.86
10,950.41-:
73,177.19 ,
69,732.38-'
5,086.992,687.45
33*265.3424,207.512*850*027.001*873*708.29
203*301.88
5,207.66996.00
18,150.00282.50-1
;
»
367,918.28
24,585.2532,295.0097,465.28
239,395.92-
1
1,007,944.40J
86,085.62
rru HEIICOPTER rOMr'ANY
JSM-0+5
NO.
hCPURT TITLE
GtNEHAL LEDGE
ACCOUNT
TITLE
JUL
ACCOUNT
CODE
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16220
16*20
16220
16220
16220
162*20
16220
16220
16220
16220
1973 -
P R I O R M O N T H LR E F E R E N C E
AMOUNT
J • V . 1LIST
29.68267,944.0098,480.6570,710.03-
CUT-OFF /DATE/ PROC
07-16-73
FINAL
CURRENT MONTH
AMOUNT
147.51
101,756.29-
532
543
10
545
06
553
07
553
11
554
01
558
567
05
567 09
601
03
601
13
602
03
604
03
604
06
606
07
607
03
608
05
608
09
6C8
11
611
03
612
03
614
01
618
06
620
01
620
07
624
03
630
631
01
632
01
636 07
639
U
702
10
705
11
705
12
706
707
803
805
10
MO TOTAL
3,973.75
1 ,027,501.54
770,779.35
GL T O T A L
I
61,648.93
86,929.66315,572.16
38,625.093,620.41
23,533.50
732,15
313,117.574,064.3611,756.04226,00
94,848.7677,454.39
10,182.631,780.80
73.008,822.19U,999.008,193.60
7.70-
415,649.00143,476.9383,753.85
167,507.7070,710.03
37,596.6225.70347,855.63
12.548,213.544,720.45
.00
3,785.89
18.12
309,679.8216,011.64
.00
82.98
24,817.12
191.00
103,289.39178.802,604.30
2,163.1710.00
9,993.486,801.87
6,658.45
8,193.60
992.1423,455.86-
PAGE.
45
Y E A R TO O A T E 1I
J . V . AMOUNT
2,010.04
1,875,593.00542,571.551,544,343.951,670,190.06
34.30
320,210.381,974,822.06
47,351.6035,481.74
71,315.66
12,238.56
1,696,994.6517,861.7737,686.64
1,190.00
568,338.4078,740.59
17,644.194,729.20
_ _
17.0066,002.7240,745.1325,032.28
57,221.20
32,391.82370.00
14,817.612,000.009,892.09
/• > |M vt
1974
P.csarv:?
MI E U C O P T C R
UXOtiNT NAME
ACCRUAL •
JOUliNAL VOUUIEU
GEM'.IIAL U I>GEH
£cr Contingencteo
3G33I
Other Lcllir.3
_Provl~
•M,_j7jd*f % mt
FACTORV LEDGEn
I::.r SJUatlcaoa
875 000 00
7010C
500 000 00
70X03
375 0C0 00
to
Qji
00
:
v-—I
•;
adjust
I
REPARED BY _375 000
for Coatiag?nttiea»
VERIFIED BY
APPHOVCD BY
ORIGINATOR
£•
OD 375 033 00
EnrCavcy .
S , E . Asfclay'
D» C» Pontic
H f= L I C O P T C R OOMIMNV
ACCOUNT NAME
W)WKOWDtH tC
Expenditures to be Reimburse!
Under Govt.Cost Type Contrac
JOUHNAL VOUCHKKpaqe Tot 3
GENERAL LEDGER
FACTORY LEDGER
21 662 00
Expenditures to b e Reimbursed
Under Govt.cost Type Contrac
F.L.C.
Model 47
F.L.C.
Model 204
"t
iI-
13103
16 790 75*
.6201
3 782 50
16202
13 830 01
F.L.C. - Model 206
16204
104 191 96
F . L . C . - Overhead
16205
76 479 50
_J
7000
7012
7054
7056
7063
7905
30 153
956
4 173
16 482
1 291
7 250
8000
8001
22
8013
8054
8980
8981
8986
8990
18
}.
ton
C
CO
1 829
143
452
61
! 969
24
472
!
o
WfrAHCU uV
VERIFIED BY
APPROVE O tlY
CLNCriAt ACCOUNTING
tBt£Li_
)HEUCOPTER
COMPANY
ACCOUNT NAME
F.L.C. - Overhead (cont'd)
F.L.C. - Model 204 Misc.
F.L.C.
JOUKINAL VOUCH EH
Page. 2 of 3
FACTORY LEDGER
WUHKOHUEB
9000
9001
9006
9010
9013
9054
9056
9059
9067
995F
995H
9924
9937
9965
s
23 374
52
057
149
253
373
684
849
280
270
826
: 159
04
80
74
00
48
20
27
75
80
00
25
00
GENERAL LLOGER
-
r
} -
j 2^0 80
! 166 95
I
5 314.63
23 045 45
' 216 0Q
16206
16207
- R & D
F.L.C. - B & P
I
- » - ~4 - t
I
I
16208
Suspense - Factory Ledger
!
Machinery & Equipment.
Portable Tools
26104
.—..I
Office Furniture & Equipment
EXPLANATION'
1 980 00
26105
.980.00
26107-
.! 30 1 6 1 2 0
PREPARED BY
VERIFIED BY
APPROVED BY
GENERAL ACCOUNTING
2 108 48
7-215
7-9-74
ACCOUNT NAME
GENERAL LEDGER
FACTORY LEDGER
EC
KBIT
CREDIT
Expenditures to be Reimburse* I
Under Govt.cost Type Contrac :s
ACCOUNT -
L3102
DCBIT
CREDIT
n
662
oou
Expenditures tP__be Re'jnburse< I
Under Govt.cost Tvoe Contrac a
L3103
790 I f
F . L . C . - Model 47
16201
3 782 50.
F . L . C . - Model 204
16202
F . L . C . - M o d e l 206
16204
F . L . C . - Overhead
16205
13 830 01*
104 191 96
76 479 50.
F . L . C . - Model 204 M i s c .
L6206
5 314 63.
F.L.C.
- R & D
16207
23 045 45-
F.L.C. - B & P
L6208
216 00'
Suspense - Factory Ledger
L6220
Machinery & Equipment
26104
2 108 48.
j,
1 980 00
Portable Tools
26105
Office Furniture
2610-7 1
Suspense Equipment in
Construction
26109
-
PREPARE 6 IV
EXPLANATION
VERIFIED BY
APPROVED BY
nM-IIMI MV. M4
GENERAL ACCOUNTING
„
9Q0 00
161
It
46 125 90
ACCOUNT NAME
FACTORY LEDGER
WORK OR OCR EC
DEBIT
GENERAL LEDGER
CHCMT
ACCOUNT -
Other Selling Expense
70100
Accounts Payable Unrecorded Liabilities
33102
crn-otT
OE.IT
, 1 000 000
00'
1 346 668 38
—
to
Oi
CO
—
1
346 668 38
1 346 668 38
PREPARi b i
EXPLANATION
TO REVERSE J.V. 6-214.
Ruth Brothers
J>7
VERIFIED B Y
T a n Pekurney j f ^ f ^
APPROVED BY
J ^ V
C . S. T h a y e r C x ^ ^ ^ ^ C ^ T
GENERAL ACCOUNTING
y
( f o S S ^ m , . .
ACCOUNT NAME
Reserve for Contingencies
JOURNAL
VOUCHER
GENERAL LEDGER
FACTORY LEDGER
ACCOUNT OR
WORK ORDER
EC
CREOIT
OEBIT
DEBIT
ACCOUNT -
CREOIT
3638<
—
- -
Helicopter Sales & Service
Comm'l Selling Expense
- -
*
447 000 00
7010]
r
'i
441 OOC 00
i
i
!
—
' T
""
1
-
T—
—
— -
j
-
•
1
j._.
|
-
•
!
—
-
- - -
-
_
-
-
EXPLANATION
—
Reserve fox contingencies.
-
-—
1
1
447 000 00
447 000 00
N . J. Truesdale / |
Ut^M^^d^JLK^.
PREPARED JY
—
—
VERIFIED BY
nJsyS'~
J /
S. E.
APPROVED BY
C. S.
GENERAL ACCOUNTING
^
^
(3)
^
V HELICOPTER OOMWWV
ACCOUNT NAME
WORK ORDER
JOURNAL
VOUCHER
OEBIT
EC
Provision
for
CREDIT
ACCOUNT -
.7.010 <)
.„ Other Selling Expense
Commercial Selling E x p .
GENERAL LEDGER
FACTORY LEDGER
—
_
OEBIT
CREDIT
-5QQ. 000 00
557 000
7010
Disallowed
000 00
7010;
CPFP Costs
-
_
-
—
-
T o correct in p a r t account
557 000 00
6 iBY
s,. L . Hardawa]
PREPARE
EXPLANATION
d i s t r i b u t i o n
JV
12-582.
^557^ 000 00
!j
VERIFIEID BY
S,. E . Ashley
APPROVIEO BY
C,. s .
GENERAL ACCOUNTING
/
"
/LT h ^ r ^ - ^ v r ^ y - t ^
( D H ^ o p ^ ,
ACCOUNT NAME
Riggs Natl. Bank - General
JOURNAL VOUCHER
FACTORY LEDGER
WORK ORDER
Expenditures to be Reimburse i
Under Govt.Cost Type Contrac
Expenditures to be Reimburse i
Under Govt.Cost Type Contrac :s
DEBIT
EC
-it
!
!
~t
t
!
1
!
Accts. R e c . - Commercial
Interdiv. Accts. - Amarillo
™
-
2 9
7
' *
GENERAL LEDGER
DEBIT
CREOIT
1 3 8 0 07 A
I
"" f"
.... j
i
|
;
••• - i-
i
13102
39 086 41'
j •
• 777 708 42:^ ;
1 !
' 300 204 88'*"!
13103
13110
14101 -3 _!___ 5.
1
Accts. R e c . - Bell Helicopte
Atlantic Belgium S . A.
5
L _
--j-
—
o t
ACCOUNT -
CREDIT
:• - T] -
1
7
p a g < r l
157
i
.!."!'
T•
. .!' •
; 75
1
T
"
14101 .5 } 36 298 34
Bell Raw Material and
Purchased Parts
—
Variance Applicable to Raw"
Material in Acct. 16101
16101
1 164; 526 90
:
16102
!
!
i
*
f
2 889 50
»
A
Castings,Forgings AN &
Vendor Parts
16103
-1M 1 551 546 04
Variance Applicable to Mater Lai
in Acct. 16103
16104
101 635 91
Commercial Engine inventory
16109
1
t
I
j —
-
"j
t
|
j
'
. <A.
—f-
1 057 047 41
....
1
1— —
1
i
PREPARE O I
EXPLANATION
jy
V E R I F I E D BY
~
~
APPROVED BY
1
GENERAL ACCOUNTING
!
1
JOURNAL VOUCHER
ACCOUNT NAME
ACCOUNT OR
WORK ORDER
FACTORY LEDGER
DEBIT
EC
GENERAL LEDGER
CREDIT
F.L.C* - Model 47 W/O's
F.L.C. - Model 204
•
-
j
i!
i
OEBII
ACCOUNT -
CREOIT
L6201
;125.672 93
L6202
5 543 641 21
16204
2 303 043 58
!
16205
1 173 605 21
~t
- -j-
F.L.C. - Model 206
j
--- *
.
i
i
16206
3 086 561 23
F.L.C, - R & D
16207
"X?00;791;48 U. ~T
i
F.L.C. - B & P
L6208
1 942 92
Model 47 Finished Parts
Production Inventory
L6211
F.L.C. - Overhead
F.L.C. - Model 204~7 ". *
1
Commercial & Misc. Military
!
'
Helicopter Reconditioned and
Exchanged Finished Parts
L6213
Suspense - Factory Ledger
L6220
--
7 T
;
""
L I T '
h—;—
; 189 898 68
' ['• •
j
j
T{II | . T'.'
!
!
2 700 00
i
!
>
:
r3i3|135:97
AN & Vendor industry Std.
!
Parts - Spare Parts
Inventory
L6303.—
Variance Applicable to_ Parts
in Acct. 16303
L6304
PREPARE D J Y
EXPLANATION
VERIFIED BY
" "
'
APPROVED BY
GENERAL ACCOUNTING
687 889 59
Y
1
i
I
i
1
407 00
!
!
i
i
j
(BBJUPD^RMM
Xy HELICOPTER o o m b w
ACCOUNT NAME
JOURNAL VOUCHER
GENERAL LEDGER
FACTORY LEDGER
ACCOUNT OR
WORKOROER
Perishable Tools,Bell Owned
ACCOUNT -
CREDIT
OEBIT
EC
L6801
—
-;
Returnable Drums
CREOIT
64 776 53
L6802
prepaid Insurance Premium
General insurance
8J474 00 * i
•
;
_
L8101- •1 __ .10 000 00
prepaid R e n t - R e a l Estate
M i s c . Deposits - Bid Bonds
Utility Deposit, e t c .
—
-
Machinery & Equipment
— ,
~T ~ 7 0 8 0 00
-••-+
«-•••• • 1
I 3 i085 50
26104
2j103 120
26105
Automobiles, Trucks and
Equipment
26106
Office Furniture & Equipment
26107
Engineering Test Equipment
26107 •3
Suspense Equipment, in.....
Con s tr uc t ion
26109
ZZ£ 4 9 5 [93
A
4 829 895 85
+
-
VERIFIEI D BY
- -
-
-
-
—
GFNFRAI ACCOIIMTIMfi
T
!
APPROVED BY
r
.
—
1
1
*
i
i
J
!
\
|
y *
10 00
-
;
i
PREPARE D JY
'
A. —
10 249 50
33101
EXPLANATION
'
3 5 156;52
•i
-
Vendor s
i*
r
1 9 1 0 7
—<
*
138 59 ^ I"
1
L9101 1
' —
Portable Tools
50;384 59
L8103
- -----
A c c t s . R e c . - Employees
Accts. Payable
Vouchered
DEBIT
~r
1
O
H
?
^
^
ACCOUNT NAME
A c c t s . Payable -, Vendor si
Vouchered and Paid
JOURNAL VOUCHER
FACTORY LEDGER
OEBIT
EC
ffloRMfl
GENERAL LEDGER
CREDIT
DEBIT
ACCOUNT -
—
CREDIT
i • i
!
--:
i
33104
26' 204; 804 17.
j
Accrued Employees G r o u p
Insurance Plan
!
i
:
Accrual Suppliment Unemployment Benefits
36319
—
Accrued Legal F e e s
Accrued Patent E x p e n s e
674'103'89'
1
;
. 1 1 3 4 . 655 24
36331 1-2 '
3 128 26
V
!
7-
36331 -3 X J 5* 32.2 68
-I
—j
Accrued Display Advertising
:
36301 -2
36345
T
25; 579 : 56 ^ " " ' j
—
Customer Deposits
36360
Accrued Texas Sales T a x
36363 -2
-
168;567[97 1
"[
42 141 98
"i
196 j 86
Accrued Local Sales T a x
36363 •4
36363 •5
Accrued Employees W e l f a r e
Fund
36385
!
j
2 5 1 6 2 00
1
|
9 092j29
Sundry Accruals
36390
36404
EXPLANATION
PREPARE D JY
"*
205;444 32
Accrued Florida, Sales T a x
Accounts Payable Humanity Fund
___
—
:
- 4 —
i
• • 1 • -
—
-
VERIFIED BY
- OFMFRAI /^rmiiftTinn
APPROVED BY
A1
42 i 5 0 2 8 1
I
1
*
i
!
7-204
ACCOUNT NAME
ACCOUNT OR
WORK ORDER
DEBIT
EC
CREDIT
Accrued Employees Deductions
Union Dues
-
Accrued Employees Deduction.
Savings
GENERAL LEDGER
FACTORY LEDGER
16406.
_
Other S-ellina Expense
._.
- -
- —
1
—!
113 943 75
/
L* # /
-
-
.
70100
-
-•
w
j158 975*00' . E _ E
r
36408
3000
30000
L0641
L0715
L0810
L0813
L0819
CREDIT
E L l l l 1795 *54
36407
Bonds
Accrued Employee Payroll
Savings Plan
_
DEBIT
ACCOUNT -
E1EE
1; 000 000 00
~ j 16 116
j 11 800
1
"" i
X '
1 567
150
j
i c r
[ 23 40"
56
00
H
1
18 28*
' * "1"'
: ttU 1 36 002 0 0 '
50
r
00 >
I —
-
'
-
-
E
-
.JEE
—
K '
-
-
i
- -
; >
!
16 240 857 85 26 240 857 85
EXPLANATION
PREPARED BY
ACCOUNTS PAYABLE INVOICES VOUCHERED AND PAID FOR MONTH OF
JULY 1974.
VERIFIED BY
E . J . Trimboli
T o m Pekur ney
loaAwcn dBY
v
APPROVED
C . S . Thayer
GENERAL ACCOUNTING
fj
. j
/
tell /Iel icopter Ccfl>pany__
__D i visi on_o f_Toxtron, I nc.
Ccr.Eolidot lr»3 State.T.cnt_o2_Jncome_for.Period_Ended
Month of
e
ri,
i if '
.. .'i-inistxanv. Service.charge.
d f tjrVitr'i f#;-xfB
f *
< r.; _.J/A.-»;v.<1«
(j'
k ; Y/
-'Sis* 1,713
1
! on Saics
:'jos to Co it of'Cocoa Sold: ,
: Siii-s £. Service. Expense h.
lf-r*V'rVc.:ct..Ilcye.lo£nant_CosJ:s_ j
JX-02
J
fcr iisaiioved. Coata ; !_i.: " „ J _701-63L L
_ Ooeratir.j incite.
_ .Consolidatcd,^
'
i"?!ii—!''':
fecci-'nblc .1 ..I;!'. J
ntr
.... raii-03[ J :..*#,
or. Eisyosol of ,C->[Jit«l jAsscta.i 122-00• ..:..!! i .!: ....:._
-xc.t ''11i.hid.pn_Licqi sc rpqp.~!e _
. Elvicc;.: .; :
'.••'i*.r.!.-iio oh Lividendllnecne
Pf::c ijn
lr.t^sec t
i J i J L ' J
-I•I I
'l^ll'
..•Ir.c'cri Lefor.e. Textron. Chac-jea
: AJstraXian
: r.-cc-e fri&r.periods;
.
.
j
,!-
ft
I
1trr
nt
I.I.
ii^^vJ/iL/t.
"j[..
SJ:c.fxirjyi"yr>.i 7^... ;....
H
:
»
B
. i. !...;_. -f.
•mi;
;
1
—
IT:
mil
UlJ-09 !• hill!
:
:
i: i j " ^ i'
i:,>L63!TjiT n
Uoj-wl . £ l!; ii
-UWu.
;70 lj- 04
'ii
|j
C c r. t o i ic c r
• f,
.
III.!
:L!.!.MLJl!M
i foe Cor r-t-rcioi; Financing ,
Other Zci ;<
_ Ac-irtist.raiive Service Charge.;
charge; . ..1^.1
_.Set Jfort:-. C
; ib29-01-jl " jJT'VU
JaSff.ZliiJ,.
.: I—Jr/3 tj.il-TJ'.~ | —T- ; t 'if I
irilziliiir
\r.~.'*r.i r
.3{.?"titni
1—h
i•
J.,.: j—.j'fV/3//jrv...»!
.4
!
J
i; •}
.
—Mt^.tiAit
' I
'-J-1
i.
,I F t.__Kort h. A-nari 11©^ ^
1
-; 'Niil ! i ' i
; i!>il I ;i |:.i!l
';: i: I; i7
•i :
iii. I
to
JUN
GENERAL LEDGER
ACCRUAL
.ACCOUNT;
CODE
ACCOUNT TITLE
ACCRUED EMPLOYEES ACTIVITY_
FUNO
36385
36385
_36385
36385
36385
36385
36385
36385
R E S E R V E FOR
106,654.74—
22,338.23308.50111.462.00
40,326.3548,488.92
BAL
101
106
204
501
901
FWD
03
01
01
07
MO TOTAL
_ 58,165.82- GL TOTAL
YEAR T O DATE
J.V. AMOUNT
CURRENT MONTH
AMUUNT
58,165.8242,811.0587.502,144.00
17,214.13-
138,656.12535.00127,157.50
99,100.885,000.00-
57,968.68-"
116,134.50—_
1 1 6 , 1 3 4 . 50*-
CONTINGENCIES
A C C R U E D SELF INSURANCE
R E S E R V E FOR
DEVELOPMENT
19 74 - F I N A L
_PRIOR MONTH REFERENCE
AMOUNT
J . V . LIST
_36386
36386
36386
36386_
3,884,358.50- BAL FWD
2,515.00 116
01
422
11
2,515.00
MO T O T A L
36386
3,881,843.50- GL TOTAL
3,881,843.5047,50
^s.ooflrmh
16,355.00
975? 0 0 0 . 0 0
878,147.50
891,355.00
3,003,696.00-
EXPENSE
36387
_36387
36387
36387
36387
36387
2 0 3 , 0 4 9 . 1 5 - BAL FWD
101
3 , 5 1 1 . 6 6 - 119
03
204 *
530
3 , 5 1 1 . 6 6 - MU T O T A L
206,560.81-
36387
206,560*81— GL TOTAL
364,845.81-
_36388
36388
36388
36388
36388
36388
36388
36388
2 4 , 6 4 9 , 8 7 0 . 4 7 - BAL FWD
444,352.00-523
10
27,210.60- 530
359,014.43 540
11
15,000.00
569
07
575
02
_
582
97,548.17- MO TOTAL
24,747,418.64588,342.00-
_36388
24,747,418.64- GL TOTAL
24,477,295.63-
CO
153,285.00-"
5,000.00*
177,763.3242,286.50
308.37
158,285.001 4 0 , 168.45-
PRODUCT
719,676.01
25,000.00
113.789.00
to
*<l
2,493,353.0025,206.51_2,197,499.43
150,000.00'
113,789.00
4,339.12-
270.123.01
61,610.20«'IU H6LICO-TFS CV : v, ir
Mi'U.U
HU.
KLPUKt
3202-045
ACCOUNT
OTHER
IIILfc
GENERAL
SELLING
ACCOUNT
CODE
TITLE
CUT-OFF
1974 — FINAL
SALES
ANO
P R I O R MONTH R E F E R E N C E
AMOUNT
J.V.
LIST
*
ivi
CURRENT MONTH _ _
AMOUNT
YEAR
J.V.
70100
70100
70100
70100
70100
.00
.00
BAL FWD
148
214
01
422
11
MO T O T A L
70100
.00
GL
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
/U101
70101
643,727.34
19.16
161,911.20
14
420
513
11
513
14
530
11
MO T O T A L
70101
805,638.54
GL
70102
70102
70102
70102
1,460,659.00
70102
1,905,011.00
70103
70103
70103
100,000.00
_ _
.00
__
•
^
r - f C n n n . n n n . r^ft
fSOU.Mft-OO-^
500,000.00
1,500» 000.001,000,000.00
500,000.00-
TOTAL
500,000.00
7,100.00
3,018.33
2,866.05
75,094.67
222.36
2,401.77
21,991.75
49,197.11
444,352.00
444,352.00
BAL
115
115
118
119
144
148
FWD
405
417
418
14
01
03
10
01
03
02
TO DATE
AMOUNT "
1,000,000.00-
112,920.55
193.52
2,975.20
32,525.45
13,071.14
54,398.17
380,401.81
TOTAL
1,186,040.35
BAL FWD
148
523
10
MO T O T A L
1,905,011.00
GL
[
805,638.54
7.45
69.00ti,900.00
153,395.00
2,084.33
588,342.00
588,342.00
4.7
46,200.0
170,315.0
12,611.8
1,660,057.4
524,781.4
1,062.6
14,522.6
7,399.3
.
*
6
0
0
5
20
2
3
6-
J
150,804.70
273,136.75
474,017.07-
4,938,710.002,493,353.00
TOTAL
2,493,353.00
CUSTS
FOR
PROC
07-16-74
SERVICE
P R O V I S I O N FOR PRODUCT
DEVELOPMENT C U S T S
PROVISION
/DATE/
EXPENSE
/
HELICUPTER
EXPENSE
JUN
LEDGER
2, 445,
357.0(i-
DISALLOWEDjCPFF
_
55,000.00
BAL
148
409
FWD
155,000.00
01
495,000.00—
55,000.00
210,000.00
— , , ,
— " j r n * i iir
nMi
GLNfcrt'AL LfcDGCK
ACCOUNT
ACCOUNTS
ACCOUNT
CODE
TITLE
1974
. •
- FINAL
P R I O R MONTH R E F E R E N C E
AMUUNT
J ., V . 1L I S T
CURRENT
i >i«« t > /
MONTH
AMOUNT
. »
Ol-lbYEAR
J. V.
TO DATE
AMOUNT
PAYABLE - _VENDORS
ACCOUNTS P A Y A B L E — UNRECORDED^
LIABILITIES
V
V J I
JUN
z
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
6 ,061,057.074 , 4 3 3 . 9 7 2 , 3 4 2 , 2 0 3 . 6 1 95,637.48
6 . 7 0 7 ,356,721.8112,630.227 ,318,400.43
293,755.24
257,636.28
743,252.29
875,279.10
50,460.2260,385.40
12,7t>0.11134,870.42-
33101
6 , 1 9 5 , 9 2 7 . 4 9 -
33102
33102
33102
33102
33102
33102
33102
33102
10,327,333.66-
33102
33102
33102
33102
33102
33102
33102
33102
33102
8 ,498,325.20
8 ,749,729.37
155,644.06
173,660.55
901,219.09
434,071.23
186,097.60
-
569,715.92
176,982.00295,691.00
304,600.12
VP , 0 2 2 , 7 3 3 . 5 4 -
BAL
101
102
102
123
138
201
204
205
206
FWD
03
03
11
07
6,
1 9 5 , 9 2 7 .4 9 . 64. 38
. 13. 40
45,937
25,927,327
28,285,164
135,677
01
01
01
01
01
01
01
01
01
02
208
210
216
217
225
MU T O T A L
8,621,694. 103 , 5 6 2 . 00
7 , 3 5 6 , 7 2 1 . 81
3 4 9 , 9 2 9 . 21
171, 148.77
6 6 0 , 4 5 2 . 00
9 8 7 , 4 9 2 . 51
43,763. 775 0 , 4 6 0 . 22
10,04U. 721 , 3 6 3 , 6 2 9 . 06-
GL
TOTAL
7,559,556. 55-
207
BAL
149
202
203
212
213
214
215
218
219
413
414
633
705
FWD
8,608,028. 678 , 4 9 8 , 3 2 5 . 20
566,642. 3506
(fl,34o,668.
02
01
14
308,946. 371 8 6 , 0 9 7 . 60
262,219. 00176,982. 00
10
901
MO T O T A L
GL
TOTAL
869,347.
16.
38,545,780.
57,061.
32, 638,724.
1. 9 3 2 , 8 8 4 .
1, 1 2 1 , 6 0 6 .
3, 221,632.
4,204,266.
360,811.
336,380.
11,540.
7)9
•00
1979
40323504
58"
36
J4
33
3062
18-
4, 606,916. 76-
f
10,022,733. 54-
06
01
02
01
01
01
.01
161,854. 08-
9t 7 9 4 , 6 9 5 .
_ 50,
51,
1,
1,
4,
4,
1,
2,
1,
It
75,000. 00544,625. 266 2 7 , 1 5 1 . 15
525,751. 832 1 7 , 9 9 2 . 79
339,195. 892 9 9 , 2 8 9 . 45
998,494. 271 2 9 , 3 4 1 . 15
834,439. 009 1 7 , 2 3 7 . 83
36,248. 00
30,555. 625 , 0 0 0 . 00
1,174,236. 8211,196,970. 36-
884,198. 50
TJTTC
/.ct'vn
c i c
i
CTHc'<
- y
PKI )t, KJHTH r.hFci.f :;Cl:
AMOUNT
J.V.
LIST
C U P W J T MOMTH
AMIJUNT
I. ING uXPt Jj-:
/
V
70100
70100
70100
70100
73100
70100
70100
70100
.00
BAL FWO
148
204
01
1,000,000.30
214
^
215
01
< 1 5 0 0 , 0 0 0 . 0 0 ^ 422
500,000.00
MO T O T A L
500,000.00
GL
805.638.54
61.558,900.00
153,395.00
2,034.33
BAL
115
118
119
144
148
405
417
TOTAL
5DO,GCO.OO
1,500,CO"!.00-
1,000,O K .:
1,000,000.00-
5v^0, 000.00-
500,000.00
1',000,300.00-
H E L I C O P T E R SALES A M ) SERVICE
EXPENSE
70101
70101
70101
70101
70101
P R O V I S I O N FUR PR•OUCT
OEVELGPML: *T C O S T S
PROVISION
COSTS
FOR
0 1 SALLOWED
73101
70101
70101
7Q101
70101
70101
70101
70101
45,596.59
54,398.17
380,401.81
70101
1,186,040.35
GL
1,905,011.00
BAL
148
70102
112.920.55
193.52
2,975.20
70102
70102
70102
588,342.00
588,342.00
70102
2,493,353.00
FWD
07
06
06
06
12
11
418
12
420
513
12
530
11
MO T O T A L
.64,216.71
255.05
2,275.43
23,730.02
20,928.31
116,730.06
TOTAL
1,302,820.41
FWO
2,493,353.00
523
12
MO T O T A L
GL
1,136,040.35
32.74
3,800.00
2,783.00
1,761.^0
TOTAL
271,042.00
271,042.00
2,764,395.00
37.50"
50,000.00
173,095.00
14,373.65"
1,660,057.42588,993.11
1,317.67
16,793.06
7,399.367
171,534.72'
294,065.06
357,237.01-
4,938,710.CC2,764,395.00"
2,174,315.00*
CPFF
70103
155,000.00
70103
70103
BAL
FWD
165,000.00-
148
55,000.00
409
495,000.0007
55,000.00
265,030.00
1
g
qJ
JUL
ACCOUNTS
ACCOUNT
TITLt
PAYABLE
-
ACCOUNT
CODE
VENDORS
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
33101
ACCOUNTS P A Y A B L E
LIABILITIhS
-
1*74 - H.mAL
P R I O R MONTH REFER &NCE
AMOUNT
J.V.
LIST
6 ,195,927.4945,937.642 ,357,836.75135,877.40
8,621,694.103,562.00
7 ,356,721.01
349,929.21
171,148.77
660,452.00
987,492.51
BAL
101
102
102
123
138
FWO
06
Oo
201
204
01
01
01
205
206
207
203
210
210
216
11
10
02
CUR RLNT MONTH
AMOUNT
7, 559,556.555,612.0824, 650,237.30
26, 204, 804.17—
143,618.95
6, 679,452.2310.00-
a, 6 2 1 , 6 9 4 . 1 0
2
2
l , 0
9
18,6:5
59
05,675.45
65,452.46
04,935.59
T">
AMU O i l
*
167,466.1611,349,262.061,012,966.74
lo.4045,225,232.5557,071.35-
41, 2 ^ 0 , 4 I S . 1 '
2, 1 5 1 , 5 3 7 . 1 7
1,327,281.3!
4,287,084.80
4,
9,
3,
3,
5,
'
3, 694,
950.16
371.69763.77
454.78
601.66
412.16
193.80
5,804,152.03
400,182.993 30,14^.39
1,363,629.06-
217
225
225
225
MO
02
02
01
02
01
01
01
03
07
TOTAL
33101
7 ,559,556.55-
GL
TOTAL
3, 865,357.75-
912,717.96^
33102
33102
10 , 0 2 2 , 7 3 3 . 5 4 -
33102
33102
33102
33102
33102
33102
33102
33102
8,608,028.678,498,325.20
566,642.35-
43,763.7750,460.22
10,040.72-
69
3
4
2
4
JNRECORDEO
L/
YrA',
J.V.
33102
33102
33102
33102
33102
155,644.06
1,346,668.38901,219.09
308,946.37-
BAL
149
202
203
212
212
213
214
215
218
218
218
219
FWO
07
01
07
12
02
03
01
01
07
186,097.60
262,219.00-
413
11
02
12
176,982.00
414
07
11, 1 9 6 , 9 7 0 . 3 6 12, 0 7 2 , 5 2 7 . 9 4 8 , 608,023.67
339,249.003,445.59566,642.35
<1-3 4 6 , 6 6 3 . 3 $ /
"
62,928.42
....
75,030.0062,617,153.2060,235,179.32"
1,868,446.421,784,635.14 ~
4,947,655.825,645,957.83.
- -4.
145,53'+.826 , 6 1 0 . 0 0 -
2,845,639.25-
308,946.37
2,438,287.52 ~
323,904.00262,219.00
2 , 1 7 9 , 4 5 6 . 8 3 •>
2,156, 343.0'--
JUL
ACC3JMT
ACCOUNTS
PAYABLE
ACCOUNT
CODE
TITLS
-
CUT-OFF
FINAL
P R I O R MONTH R E F E R E N C E
AMOUNT
J.V.
LIST
33102
33102
33102
33102
1,174,236.82-
33102
11,196,970,36-
33103
33103
33103
75,339.64-
633
705
12
901
MO T O T A L
GL
/ O A T F / r>OC
Jd-13-74
CURRENT MONTH
AMOUNT
YEAR
J.V.
TO D A T E ^
AMOUNT
36,248.00
30,555.6 25,000.00
.00
3,102,226.67-
TOTAL
14,299,197.03-
2,218,023.17-
BAL FWO
301
10
633
10
MO T O T A L
75,339.645,235.855,235.85
.CO
87,108.18-r
37,432.45''
GL
75,339.64-
49,675.73-
CONSIGNOR
33103*
ACCJUMTS PAYAdLE VOUCHERED ANO P A I O
VENDORS
75,339.64-
33104
33104
33104
33104
.00
28,285,164.13
28,285,164.13.00
TOTAL
-
331
ACCOUNT
rirL.
.00
33103
33104
accjjmt
1974 -
CODE
.00
18,831,866.55-
BAL FWD
102
11
204
01
MO T O T A L
GL
.00
26,204^804^17
1 6 , 2 0 4 , 8 0 4 . 1 7 ^
TOTAL
SUB
TTL
P R I UK RTUNTH ' V T H T K T N C T
AMOUNT
J.V.
LIST
~
162,030,367.73
162,030,367.73-
.00-- K
.CO
18,239,894.42-
C'Ji<h t M
H i-il
AMO J--IT
J.V.
A."\.LJVII
to
M
0 0
ri C
ACCOUNT
PTH r P
SPLLINC
T ITL*-
ACCOUNT
CODE
ujT-i.rr
l
l 74 -
FINAL
PR I rip MONTH REFERENCE
AMOUNT
J.V.
LIST
/ l / . t i / pr.cc
01-22-7S
YEAR
J.V.
CURRENT KL't'TH
AMOUNT
face
170
TP r / . T E l
AhOUNT
fXPtNSl
HELICCPTER SALES AND SERVICE
EXPrNSE
70100
70100
703 00
70100
70100
70100
70100
70100
500,000.00
70100
500,000.00
70101
70101
70101
1,927,852.87
70101
70101
1,015.47
70101
70)01
PROVISION FOR PRODUCT
DEVELOPMENT COSTS
.00
7,620.CO
2,£30.00
157,193.27
1C9.07
2,377.92
B A L FWD
148
204
214
215
422
582
17
MO T O T A L
GL
BAL
115
118
119
144
2,173,146.38
167.00
14,15£.04
2,830.00
1,849.90
17
148
16
405
417
16
418
16
420
06
513
513
17
530
17
— 540
04
582
17
582
MO •TOTAL
2,173,146.38
GL
70102
70102
70102
70102
4,243,768.00
B A L FWD
14G
52.3
09
MO T O T A L
70102
4,762,399.00
GL
500,000.00500,000.00
FWD
09
13
04
70101
5IP,*3I.OO
518,631.00
1,000,000.00
1,000,000.CO
245,293.51
23,698.99
1,500,000.00-
1,000,000.00
1,000,000.00-
TOTAL
70101
70101
70101
70101
70101
70101
70101
70101
70101
70101
52,?57.7?
1 ,989.00
500,000.00
TOTAL
TOTAL
80,185.77
365.62
1,803.56
4,497.72
8,707.25
50,262.64
557,000,00—
54,827.50
2,227,973.88
500,000.00-
2C1.*6
"
96,52£.04
185,815.00
21,541.92
1,660,057.421,200,760.65
2,520.74
2?,S15.?9!
7,399.36283,274.73.
537,776.94
11,951.^3-
110,000.00567,916.46
4,762,399.00
522,193.00
522,193.00
5,284,592.00
4,938,730.005,284,592*00
345,882.00
to
CO
REPORT
NO.
3202-045
REPORT
TITLE
OFC
GENERAL LEDGER
ACCOUNT TITLE
RESERVE FOR CONTINGENCIES
ACCRUED SELF INSURANCE EXPENSE
RESFRVE
PRODUCT
DEVELOPMFNT
1974 - FINAL
CUT-OFF /DATE/ PPvCC
01-22-75
ACCOUNT
CODE
PRIOR MONTH REFERENCE
AMOUNT J.V. LIST
36386
36386
363 86
36386
36386
36366
36386
36386
36386
36386
,543,003.50- BAL FWD
2,515.00 116 04
1 8 0 , 0 0 0 . 0 0 204 02
204 04
204 10
204 13
421
575
582 04
182,515.00 MO TOTAL
1,360,488.503,147.50
90,000.00—
90,000.00
36386
1,360,48 9.50— GL TOTAL
1,894,341.00-
36387
36387
36387
36387
36387
36387
36387
393,665.81- BAL FWD
101
13,970.00 119 04
204
530
540 19
13,970.00 MO TOTAL
379,695.£1-
36387
379,695.81— GL TOTAL
351,601.87-
36388
363P8
36388
36388
36388
36388
36388
36388
36388
36388
36388
36388
36388
24 ,007,492.81- BAL FWD
513 17
51F,631.00- 523 09
461,91?.97 530 17
540 09
540 17
60,000.00 569 06
575
999,464.67 580 13
580 17
582
583 17
1 ,002,747.64 MO TOTAL
23,004,745.174,814.60
522,193.00278,973.40
It 415,000.00
It178,148.40
50,000.00
"f r
t aOA,74*.17-
GL TOTAL
CURRENT MONTH
AMOUNT
180,000.0090,000.00
<j47T000.QC^
i^thbA.bO-
3,080.0031,173.94
2P,093.94
1,552,676.89
260.45567,075.39
4,524,235.23
18,4CC,509.94-
PAGE
117
YEAR TO DATE3
J.V. AMOUNT
32,710.00
90,000.00
875,000.00
1,450,000.00
447,000.004
2,000,710.00.
5,000.00195,693.3242,266.50
303.37
31,17?.94
126,924.51-
4,814.60
,284,592.001 ,450,122.42
6 ,196,424.09
34C,000.00
113,729.00*'
2 ,551,881.11
4,339.12—
567,075.39
5 1935»175.4 V
JT7I
PAYMENT
''.
...
•'.CL'urjT
c . c
II
iv
-
t i TTTOT
PKI )i. y.jrjTH <*.{
AMOUNT J . V .
;CI:
LIST
CU» -UMT M i ,Tit
A MlJM NT
Tilt. i.\:; u <.«>/.• i J
HELICOPTER
EXPENSE
SALcS
FOR
1,000,000.OC
70100
500,000.00
70101
70101
70101
70101
70101
7 3101
70101
7 0101
70101
70101
70101
70101
70101
805,633.
61.
8,90C.
153,395.
2,034.
.00
BAL
FWD
140
204
01
1,500,00^.00-
uon.cv.;
1,000,000.
214
-=-215
01
500,00).30-
<1500,000. OOp 422
500,000.00
MQ T O T A L
GL
lvOCO,330.30-
TOTAL
A M D SERVICE
PKLVISiU.M EUR PftJDJCT
OEVELOPMc MT. C O S T S
PROVISION
C3STS
70100
70100
70100
7 0 1 JO
70100
70100
70100
0 1 SALLOWED
54
5500
00
33
1 1 2 , 9 2 0 . 55
193. 52
2,975. 20
4 5 , 5 9 6 . 59
5 4 , 3 9 8 . 17
3 8 0 , 4 3 1 . 81
BAL FWD
07
115
06
118
06
119
0
6
144
148
12
4 'J 5
11
417
418
12
420
513
12
530
11
MO "TOTAL
1,
23,730.02
20,923.31
116,783.36
171,534.72'
294,065.06
1,302,820.41
357,237.01-
136,040.35
32.74
3,800.30
2,780.00
1,761.80
.64,216.71
255.35
2,275.43
7,309.367
70101
1 , 1 8 6 , 0 4 0 . 35
GL
70102
70102
70102
70102
1,905,011.00
BAL FWD
148
523
12
MO TOTAL
70102
2,493,353.00
70103
70103
70103
155,000.00
BAL
FWD
165,000.30-
55,000.00
148
409
07
55,000.00
588,342.00
588,342.00
GL
TOTAL
TOTAL
37.50"
50,000.00
1 7 3 , 0 5 . 0 0
14,373.65'
1,660,057.425D8,99i.H
1,317.67
16,793.06
2,493,353.00
271,042.00
271,042.00
2,764,395.00
4,938,710.C02,764,395.00*
2,174,315.00*'
CPFF
- - - - 495,000.00265,000.00'
tO
00
^
tffPORT
N»0.
3202-045
REPu*T
TITLh
GENERAL L E D G E *
ACC3JMT
CUT-OFF
JUL
ACCOUNT
CUDS
T I TLi£
1974
-
P R I O R MONTH R E F E R E N C E
AMOUNT
J.V.
LIST
633
705
901
33102
33102
33102
33102
XOUNTS
PAYABLE
-
12
/OATE/
08-13-74
CURRENT MONTH
AMOUNT
.00
YEAR
J.V.
PAS':
81
TO D A T E .
AMOUNT
36,248.00
3 0 , 5 5 5 . 6 25,000.00
3,102,226.671,174,236.82-
33102
FINAL
MO
TOTAL
14,299,197.03-
11,196,970,36-
GL
2,218,028.17-
TOTAL
CONSIGNOR
ACC'JUNTS V'AYAdLE VcNOORS
VGUCHEKEl) ANO P A I O
33103
33103
3 3103
33103
75,339.64-
33103
75,339.64-
33104
33104
33104
33104
.00
28,285,164.13
28,285,164.13.00
.00
BAL FWO
301
10
633
10
MO T O T A L
75,339.645,235.855,235.85
87,103.1837,432.45
GL
75,339.64-
49,675.73-
TOTAL
.00
-
33104
331
.00
18,831,866.55-
BAL FWD
102
11
204
01
MO T O T A L
GL
TOTAL
SUB
TTL
162,030,367.73
162,030,367.73-
.00
Vdt H E L I C O P T E R
COMHWY
197 5
JOURNAL V O U C H E R
ACCRUAL
WORK ORDER
FACTORY
.5r.530B
GENERAL LEDGEH
CREDIT
DEBIT
EC
6/4/75
LEDGER
ACCOUNT
-
I'w.t
oroii
—
-
F . L . C . - Model 204
16202
F . L . C . - Model 206
16204
F . L . C . M o d e l 204 Misc.
16206
_497 559 81
C / S - Helic. Mod. 204/205 Govt.
61106
.2 233 575 00
61111
1 499 745 97
C / S - Spares Mod. 206 Govt.
_.._
C / S - Misc. Mod. 204/205 Govt."
___
C / S - - Spares Foreign Govt. _
61135
"V.
61165
- - R
7 9 249.'
318
76 024 00
073
A
jc
i
486 019 To
......
210 761
71 j x O O
61164
—
—
673 666 33
-
61153
—
C / S - Spares Mod. 206A Comml.
M n H l . 20fi P n m m l .
!
i
t-
.175 000 .(
61152 •1
C / S - - Helic.ytod...212 -..Comml,.
r/<? - A m o s *
—
A
—
61152
M o d . 204 Comml.
C / S - Spares Mod. 204 - Comml.
550 256 67
....
61116
—
61123
C / S - Helic. Mod. 206A .- Comml
-
61112
—
C / S - Helic. Mod. 206 Govt. .Intl.
r/s -
....
i
-
< y s - S n a r e s M o d . 204/205 G o v t .
2 301 444
-
—
-
—
61172
[
.. :
175 000 0(
1
1
277 200 0C
i
61186
C / S - Mod. 204/205 Sales Intl.
PREPARE D I Y
EXPLANATION
VERIFIED BY
A P P R O V E I ) 1J Y
rrMFR."!
WsUriT!''
162 034 00
-v
1
1
JOURNAL VOUCIIEK
A C C O U N T NAME
F A C T O R Y LEDGER
wSlMOftOEM EC
oeair
—(J^I.
CMCOIT
~~
L.
C/S - Mod. 206A Heli. Sales - Int
61188
C/S - Access. Mod. 206A Intl.
61192
C/S - Mod. 204/205 Spares IntL__
61194
C/S - Mod. 2 OCA Spares Sales Jnt:
61196
C/S - Helic. Mod. 214 Iran Govt.
61201
C/S - Ilelic. Mod. A1I-1J Iran Gor'/i.
___
Other Selling Expense
GCNCRAL U O G F H
AM.'Nmt
—
r
*
61202
- - •
: 128 162 00,
i
_[. 82 .800 00 •
323 .900 .00
j.
175 loOO JOO
-
26 761 00
....
70100
C/S - Helic. Mod. 212 jjntL
51136- 1
Reserve for 'Contingencies
36386
Loss . on Bad Debts
34910
H
41..108...00.
-
"450 ooo 00
_1 _027 ;022 0<j
inJoocT
I
333 000 0C
-
-
j
-
—
-
e 210 73(j 78
r\
PREPARE b BV
i
L. D. Wicker
EXPLANATION
Program Review for Cost of Salts_May.l975
VERIFIED BY
APPROVI ioi
BY
John G. Rve
GENERAL ACCOUNTING
.....
1
-
6 210 i730 j7j
LlsJ'^j
PAYMENT
©
Eliggs .National Bank General Account .
V nq 6-2Q4
JOURNAL VOUCHER
GENERAL LEDGER
FACTORY LEDGER
__
11109
Accounts Receivable - Gov't
13.1Q1
Expenditures to be reimbursed
under gov't cost type contrac :s
1310?
.656 13 A
-
49 221 31
>
_110 869 71
*
-
Expenditures to be reimbursed
13103
1 629 093 07
Accounts Receivable . Cornnercial ..
13110
498 051 67
Tnt^rdlvisional Account, Amarillo Facility
- ..* ...
14101 3
Accounts Receivable - Bell
Helicopter Div. of Textro i
Bell raw material and purchas a4
parts - common —
_...
Variance applicable to raw
material and purchased parta
in Account 16101
/
<•
r \
( )
431 16
to
00
01
%
—
33 250 14
(fa
—
.117..85 r
16101 - J
—
Castings, Forgings, AN & Vend or
P a r t s > A l l Mnd«ln
16103
EXPLANATION
PREPARl b
J L 4S
IS
H
A
•
w
VERIFIED BY
APPROVED SY
GENERAL ACCOUNTING
(y-
12 890 68
16102
<3*
6-?fl4 Fg.2
JOURNAL VOUCHER
GENERAL LEDGER
FACTORY J-EDGER
EC
OCMT
cmorr
16104
Zooxnercial Engine Inventory—
16109
Consignment Contra Account
16112 2
F.L.C. Model 47 and other W.O r ' f
16201
P,t
MrtHal 9flA Majftr- M H U * p y
DEBIT
ACCOUNT -
Variance applicable to materi il
Ln Account 16103
—3.8
_9A2 JO
3 631 259 33
_ i i o
556 74 >
62 662 91
Production W.O.'s
16202
691 959 13
F.L.C. Model 206 W.O.'a
16204
5 Z25 766 67
16205
1
260 "307 88
F.L.C. Model 204 Commercial
& Misc. Military. W. 0. ' s ,.
16206 -
f
"508 - 4 7 7 95
P.I..C. ft & D W. 0 . ® a
16207
F.L.C. B U N , 0._ 's_.
16208
Helicopter Model 47Tr Finished
nt
ir
Parts »v« 'O y
16211 -
"486 022 37
Suspense - Factory. Ledger
16220
378 372 56
AN-Vendor-Industry-Standard .
farts - Spares
16303
404 639 77
-
VERIFIED BY
nrwrnAi AccoiiMTirin
CMEMT
>
888
—
r
to
00
141 49
29 "522 65
—''
X
JOURNAL VOUCHER
'
6-3Q-75
FACTORY LEDGER
ACCOUNT NAME
CC
OMIT
!
Jw w>—6=204—
GENERAL LEDGER
CMDir
16801
Returnable Containers
16802
General Insurance
Prepaid Rent. - Real Estate
es
Advance for Travel and other
expenses
oewT
ACCOUNT -
Perishable Tools -.Bell Owned
CMDir
165 903 31
3 205 17
-
18101 1
20 000 00
18103
67 878 80
19101 1
.3 490 61 A
19101 2
1 000 00
93fi 46
19102
Receivable'.
26104
Machinery end Equipment
667 65
*
Portable Tools
26105
1 772 90
Automobiles, trucks & Equip.
26106
23 507 05
Office & Photographic Equips.
26107 1
31 285 61
Engineering Furniture.-and
Office Equip*
M107 2
2 150 00
26107 3
145 321 86 •j*
Engineering Test-Equip.
—
FREESEl61IY
EXPLANATION
VERIFIED BY
APPROVED BY
ornrnAi AccniiNTiNn
"V.
„
ACCOUNT NAME
JOURNAL VOUCHER
FACTORY LEDGER
EC
OEBIT
GENERAL LEDGER
CftEOIT
OEBIT
ACCOUNT -
Office Furniture
16107 5
•6109
.3420
1 637 18
Accounts Payable Vendors Vouchered
13101
5 1 799 40
Accounts Payable V e n d o r s Vouchered or Paid
Accrued Payrolls Western Division
13104
—
%
51 237 539!
862 726 34
16301 2
Accrued Bonuses Payable
Commercial Salesmen
16301 3
Accrued Supplemental Onemployment Benefits
16319
Accrued Tooling Rentals Commercial
16320 3
161 486 ,32
Accrued Tooling R e n t a l
R&D Recovery and Foreign
16320 4
27 500 00
Accrued Tooling Rental R&D
Recovery T-53 Engine Forei g n
16320 5
9 252 00
-
PREf-AbE b i IV
EXPLANATION
VERIFIED BY
APPROVED BY
nmrnm jurniifmnn
CREDIT
1 005 524 79
Suspense Equipment in constz uction
Cafeteria Equipment
-
|
2 268 43
84 536 79
58 985 99
n
•A
(Hty
8 ) HJ ELUTOI ORP- .T. E™R. O Q M W W Y
JOURNAL VOUCHER
GENERAL LEDGER
FACTORY LEDGER
ACCOUNT NAME
EC
OEBIT
CREDIT
OEBIT
ACCOUNT -
4 r r n t ^
n-f c p l n y
AHvat^I
19 .664 08
>
36345
86
J-
36360
30 000 00
36331 3
Accrued Patent Expense
sing
Customers Deposits
Accrued New York Sales Taxes
_
-
36363 3
Accrued Florida .Sales Tax
36363 5
Accrued. Employees Activity
Fund
36385
Reserve for Contingencies
36386
Accrued Self Insurance Exp..
36387
Slindiy
2
Accrued Garnishes & Wage
Assignment Deductions
36403
788
89
585 04
*
57 51
_
151 331 14
_950 .000 .00
4
"opo 00
18 "855 58
36390
Arrrii^l s
CREOIT
767 66
36331 2
...
219 72
•
Accounts PflypM° —
Human1ty
frund
36404
45 293 83 J*
Accrued Employee Deductions..
Union Dues
36406
81 964 90 >
EXPLANATION
tttEPAtt61BY
VERIFIE D BY
APPROVIEDIBY
firrirriAi. AcrniiMTiMO
—
®
H^T^QF^GR QOMP^NR
ACCOUNT NAME
JOURNAL VOUCHEE
ssstigsr*
cc
—
FI-30-71
FACTORY LEDGER
DCBIT
CKHNT
AOCOUMT
Accrued Employee Deductions.
U . S . Saving'Bonds
^
36407
310
Accrued Employee Payroll.
Savings Plan
36408
Employee Personals Accident
Insurance - Employee Payrol 1
Deduction
36409 5
593
445
5
75
—
712
09
284 08
»»
>r»
— a
0
167
10611
1 9fifl
10810
!
850
774
in7n5
t&m
i
PG.6
CKCIMT
—
0000c
FI.704
GENERAL LEOGER
DCBIT
-
60
fiO
. 2 1 2 ~87
Lit. JUL l.
618
-
45
s
p art A
-
D "
-----
il
EXPLANATION
MEPAM a!
June, 1 9 7 5 /
VERIFIED BY
407
?71
E . J . Trimboli
T o m Pelairney
rfTcrfSntlfe
55
51 4 0 7
/
>
—
773
/
^ O ^ i U ^ ^ ^ y
cj.
-
Itv
»
TW.I
M
: 1J
i.;
>.i
'Vw
_
r >4*4.1
rl.t.«IV.<
1
>
...
" " "
-
JUnk. .
-----
I1JA...
+
<
/
Hi
>
i
nfLti
j .
1
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>J f t b
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! JJJ
if—.
,mir
i
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-
-
?
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L
ft-tr
nfir
{
: *J .
"t
—
iDttfnigi
i
mf
1
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1
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Jab SM
t
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1/7
i(f.tj
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tu;
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-
4'JM
H
Other
jctior.J . • ._!..! '4 jZl
Acrlniazracivc Service char$«.j_i ;
. :;et .Worth _cipit«l chaf5«' ..'.ii.1 :L
-.
-'g^ J.PCQ.TC
incorc .for 1; |»er iuu
ipd. •
t
:
• •j i
... _ _ > r c M i » i « a . for. A u s t r a ^ ^ j j o:j i e B
1
I
...!;_
i
. _ "at jr.care After yaXei! ' I '
Jj
.
:-r:or period*
• i - j * ,-
»«
ACCRUAL
Marwn «
i a» CK
MAY
oc/rwAi. L C C G I R
ACCOUNT TITLe
-ACCOUNT..
CODE
C U T — O F F — / D A T E A PROC- —PAGE—130
.
06-0V-75
|9?S - FINAL
— P R 1 OR... M O N T H . R E F E R E M C E
AMOUNT J . V . LIST
CURRTNT MONTHAMOUNT
_*ILAR—TO O ATEL—
J . V . AMOUNT
-AIMER SELLING EXPENSE
70100
70100
-70100_
70100
•00
• 00
SAL F W D
152
530-..id
MO TOTAL
I.000.000.00jAiiO-.QOQ-.00
• 00«—GL—XOT.
HELICOPTER SALES AND SERVICE
TEXPENSE
P R O V I S I O N FOR PRODUCT
O E V L O P M E N T COSTS
_70101_
70101
70101
-7010170101
70101
-70101_
70101
70101
-.70101 _
70I0I
70101
_70101_
_J604.416.34137*000*350*00
r»a3o.oo
1*220.52
106*969.74
_0AL-FW0
115
or
IIS
06
.J 19 _ 0 7 —
144
«2
152
.40S'__. 1 2 _
513
11
530
11
£30
12—
540
IT
540
12
...MO..TOTAL—
70101
791*406*06
GL TOTAL
.97*760*1723*924*22
53*041.03
91*406.oa_
21*00
8*350*00
-2 .830 * 0 0 _
1*239*17
1 1 9 *606 . 4 4 —
24.456.16
1
26.4 0 _
26.4026*40
—204*179 . 4 2 —
995*565*50
24.00 4
43*640*00
1 4 *150*00- M.
5*728*64 "
2*227*973*66516*114*76^-136*766*82,
2TA-*.9A1 . 0 6 —
1*232*368*36f
70102
_70102_
70102
70102
1*634*866*00
745*675*00
745*675*00
523
12
MO TOTAL
664*293*00
664*253*00
70102
2*560*541.00
GL TOTAL
3*244*794*00
BAL
FWO
. P R O V 1 S I Q N — E Q R JD1 S A L L O W E D C P F F _
COSTS
70103
70103
7 0 1 0 3 .....
70103
Tfttftl ,
cfwe^i
ACCOUNT
fTOf"
CODE
ACCOUNT TITLE
0*000^00-^-
2*560*541*00
-£-•264.SV2.00-.
3*244*794*00
2*039*796.00-
196*530.00- I
_ _?ff° ±9
AMOUNT
•00
.00
NOTOTM.
R E P O R T NO.___ R E P O R T T I T L E ....
3202-045
G E N E R A L LEDGER
!;.
MAY
ACCOUNT
ACCOUNT TITLE
; I
CODE
36365-2
;
36365—2
ACCRUED EMPLOYEES ACTIVITY
FUND
36385
36365
36385
36385
36385
36385
36385
* '
i
RESERVE FOR CONTINGENCIES
36385
^
;
ACCRUED SELF INSURANTS
J
..
RESERVE FOR PRODUCT
DEVELOPMENT
1975
-
PRIOR MONTH REFERENCE .
AMOUNT J * V . LIST
_»00
•00
..CURRENT M O N T H
AMOUNT
M O TOTAL....
-00 _
GL TOTAL
•00
72.024.17- BAL FWD
1 6 * 8 4 0 . 3 8 - 101
06
106
10
4.189.50
204
01
501
07
902
12•650*88— MO
TOTAL
84*675*05- GL TOTAL
PAGE _
88
C U T - O F F VT>ATE/ P R O C
06—09—75
FINAL
YEAR
J.V.
84.675.05II.720.83702.501*300*00
__ 64 * 3 7 2 • S O TS *495.83160*170.88-
TO OATEL.
AMOUNT
95.376.53-^
765.5076*226*50
_72.277*35—_
67.978.00-
.
160.170.8E-
36386
36386
30386
36386
1*883*521*00- BAL FWD
3*330*00
116
07
530
10
3*330*00
MO TOTAL
1*880*191.003 * 3 3 0 *0Q
117*000»00~)
T13»A70*o6-
c
17*480.00
1 1 7 * 0 0 0 .00-TL_
36386
1*880*191*00- GL TOTAL
1*993*861.00-
_99.520.00-
EXPENSE
,36387
36387
36387
36387.
36387
36388
36JJ18
BAL FWD
119
07
204
S30
11
MO TOTAL
_ 353.672*607*520.00-
.353*672.60- GL T O T A L
358 .767.94-
_349.309.457*905*001*500.00
2*041*85
4.363.15-
18.05B.558.61- BAL FWO
74 . 6 7 5 . 0 0 IP
rO«.3?L'.4T 5 3 0
II
29*515.0011*500.00
10*848.93.
2 * 4 2 4 *66
5*095*34-
19.436.911.14664.2f.3.0030I
71
7*166.07-
y.
.
. oo-
to
co
Oi
!.
PAYMENT
if.'t.l
DILI-
JUN
GfcNCKAL LEDGLR
ACCOUNT
TITLE
_.ACCJJWNl
COOE
:
1975 -
FINAL
P8lQJ5_RQNtb_R£F£RLNC£
AMOUNT
J . V . LIST
Of-11-/*,
Y £ A « TO OATL
J . V . AMOUNT
- C U R R E N T MONTH
AMOUNT
UNCLAIMED. WAGES
36 365— 2"
36365-2
.ACCRUED_£MPLOVESS
FUNO
.00
.00
GAL F * 0
MO T O T A L
.00
GL T O T A L
ACTIVITX_
36385
36365
_363 B5_
36385
3638£»
36365
6 4 . 6 7 S . 0 5 - BAL F*0
1 1 . 7 2 0 . 8 3 - 101
03
702#.t»J&!=__i 0 6
03_
1.300.00
204
01
6 4 . 3 7 2 . 5 0 - 501
07
,902
7 5 . 4 9 5 . 8 3 - MO T O T A L
160.170.OAr-fiL
RESERVE FOR
.00
.00
TOTAL
lOOi 1 7 0 . 8 6 b l , 052.00252.501 5 1 3 3 1 . 14
141 7 7 5 . 5 0 -
146.428.531.018.00227.557.o4
214.0S2.8567.978.00{f|
41.748.86_2fl-LaSLA9..74—
201.919.74-
• i.lWUOO
/ 950.000.0<T>
21.640.00
950.000.00
117.000.00-
CONTINGENCIES
36386
36386
i.aeo.191.00-
BAL f w a 116 06
204
01
36386
117*00Q« Ofi1 1 3 . 6 7 0 . 0 0 - MO T O T A L
954.160.00
. OOr
ACCRUED SELF
•OOy
INSURANCE EXPENSE
36387
36387
36387
36387
119
06
204
01
2SLA Dfi_
530
11
2.424.66
5 . 0 9 5 . 3 4 - MO T O T A L
7.520.00-
359.767.94RESERVE FOR PRODUCT
DEVELOPMENT
36388
36388
36 JSfl
19.436.911.14o64.253.002 9 2 • *JQ7 . A S
GL
TOTAL
BAL FWO
523
11
530
II
B. 7 6 7 . 9 4 2,175.004.000.00
__9.664.23
406.38
11.897.61
*
31.690.0025. 164.23
11.267.31
346.870.3319.766.256.891.0S7.637.00—
J31t>*768*0£
4.731.54
4.302.431.002.103.835.07
BELL HEllCX't i i .'
HCPORT N O .
J202-04S
ptPOHt r n u
.
GENERAL LEDGER
ACCOUNT
TITLE
ACCOUNTS PAYABLE -
JUN
_&CCQJJN
COUE
1975 -
FINAL
0 7 - U - F S
_JPHI O R - J ^ Q M T H R E F E R £ N C £
AMOUNT
J.V* LIST
..CURRENT M O N T H
AMOUNT
002
KG T O T A L
2.024•279*39
33102
2 .267,956.39-
33102
Afltl47tO.3P.fr9-
OL.JUXAL-
YEAR TO DATE
J . V . AMOUNT
67.978.OOg,
-14>«122. 7 5 1 . 3 0 -
423.339.02-
75.974.56185.909.8318o.S44.7S
634.92
320.207.42320.207.42'
CONSIONOM
BAL
331 03
33103
75 . 9 7 4 . S 6 ACCOUNTS PAYABLE - VENDORS
VOUCHERED AND P A I D
/
33104
1 04
33104
33104
3J104
FWD
i l l • 6 5 0 * 4 1 - 301
06
i l l •015*49
633
06
634 . 9
_M 0 _XQTA I
.00
43.S3Q . 4 7 4 .
45•530*474.62—
.00
.CO
31 . 2 7 6 . 4 2 3 . 1 1 -
CL
TOTAL
BAL FwD
204
01
MO T O T A L
GL T O T A L
SUB
TTL
75.339.64.00
»it37>S3 9 . 4 S
" S I . 2 3 T . 5 3 9 . 4b
2S9.d7S.680.68
259,875.660.66to
CO
.00
J3Jut395.2fi9.91-
8
F O U R T H S U B M I S S I O N OF
FROM TEXTRON
PROVIDENCE
M A R C H 2 , 1978
f ^ v ' h v ^ P
t w \ i l W i I,R H O D E
WASHINGTON
1666
DOCUMENTS
K S T R E E T , N. W.
ISLAND
OFFICE
W A S H I N G T O N , D. C . 2 0 0 0 6
March 2, 1978
HAND
DELIVERY
The Honorable William Proxmire
C h a i r m a n , B a n k i n g , Housing and
Urban Affairs Committee
United States Senate
Washington, D. C.
20510
The Honorable Edward W. Brooke
Ranking Minority Member
B a n k i n g , H o u s i n g and
Urban Affairs Committee
United States Senate
Washington, D. C.
20510
Dear Chairman Proxmire and Senator
Brooke:
R e c e n t l y r e p r e s e n t a t i v e s of B e l l H e l i c o p t e r T e x t r o n
r e q u e s t e d of an I r a n i a n l a w y e r i n f o r m a t i o n f r o m the p u b l i c
r e c o r d s of I r a n r e l a t i v e t o t h e a l l e d g e d o w n e r s h i p i n t e r e s t
o f G e n e r a l K h a t e m i in t h e A i r T a x i C o m p a n y . The. I r a n i a n
l a w y e r f i r s t r e p o r t e d v e r b a l l y to B e l l H e l i c o p t e r T e x t r o n
t h a t t h e r e w e r e n o r e f e r e n c e s to G e n e r a l K h a t e m i h a v i n g
o w n e d a n i n t e r e s t in A i r T a x i . S u b s e q u e n t l y , t h e S t a f f
report to the Senate Banking Committee stated that U . S .
Embassy sources had been verbally advised that General
K h a t e m i w a s C h a i r m a n of A i r T a x i b e t w e e n 1957 and 1 9 6 5 .
That information, seemingly at variance with the initial
r e p o r t f r o m t h e I r a n i a n l a w y e r , c a u s e d B e l l to r e - i n q u i r e
of t h a t l a w y e r a b o u t G e n e r a l K h a t e m i ' s r e l a t i o n s h i p of
r e c o r d to A i r T a x i .
T u e s d a y , F e b r u a r y 2 8 , 1 9 7 8 , a f t e r t h e c o n c l u s i o n of
t h e h e a r i n g s and u p o n r e t u r n to T e x t r o n ' s W a s h i n g t o n o f f i c e ,
I was advised that Bell's Iranian lawyer had that day del i v e r e d d o c u m e n t s t o a B e l l r e p r e s e n t a t i v e in Iran w h i c h
m i g h t have a bearing on this issue. W e directed that the
d o c u m e n t s b e b r o u g h t to W a s h i n g t o n f o r t h w i t h a n d t h e y
a r r i v e d in T e x t r o n ' s o f f i c e W e d n e s d a y a f t e r n o o n a t a p p r o x imately 4:30 P . M .
(299)
300
A c o m p l e t e s e t of t h e d o c u m e n t s , w h i c h a r e of t w o
t y p e s , is e n c l o s e d . W h i l e t h e d o c u m e n t s w e r e r e c e i v e d
from the Iranian lawyer used by B e l l , they were not
a c c o m p a n i e d b y a c o v e r i n g or t r a n s m i t t a l l e t t e r f r o m
t h e l a w y e r . T h e i r a u t h o r s h i p and t h e o r i g i n a l p u r p o s e
for w h i c h t h e y w e r e p r e p a r e d a r e u n k n o w n t o u s a n d w e
d o n o t k n o w o f t h e i r a c c u r a c y or c o m p l e t e n e s s . T h e y d o
n o t , h o w e v e r , a p p e a r to a d d or d e t r a c t f r o m the r e c o r d
of t h e h e a r i n g s .
T h e f i r s t s e t of d o c u m e n t s is a s e r i e s of r e p o r t s
providing information about Air T a x i , its corporate
p u r p o s e s , its c a p i t a l i z a t i o n , its s h a r e h o l d e r s a n d / o r
m a n a g e m e n t , its o p e r a t i o n s , capabilities , etc.
These
r e p o r t s p u r p o r t to c o v e r a n u m b e r of y e a r s d u r i n g the
p e r i o d f r o m 1 9 5 8 t o 1 9 7 8 , a l t h o u g h n o t e v e r y y e a r is
c o v e r e d . In a d d i t i o n , s o m e o f t h e s e r e p o r t s a p p e a r t o
b e d r a f t s or m a r k - u p s of e a r l i e r r e p o r t s . T h e p a g e s
of t h e s e r e p o r t s a r r i v e d s e r i a l l y n u m b e r e d f r o m 1 to 4 1 .
T h e r e p o r t of 5 / 1 2 / 7 2 (pages 9 - 12) i n d i c a t e s M e s s r s .
Z a n g a n e h , C h a f i k and E s h o o a r e s h a r e h o l d e r s ; t h i s a p p e a r s
in o t h e r of t h e r e p o r t s t o o . On p a g e s 2 5 , 28 a n d 3 1 , a l l
of w h i c h a p p e a r t o be f r o m a 1965 r e p o r t a n d / o r d r a f t
1965 r e p o r t c o n c e r n i n g A i r T a x i , t h e r e is a r e f e r e n c e to
t h e b e l i e f t h a t " t h e c o m p a n y is s u p p o r t e d m o r a l l y b y
important or influential higher sources."
On p a g e s 37
a n d 3 9 , w h i c h w o u l d a p p e a r to b e r e p o r t s f r o m the 1 9 6 2 1 9 6 3 p e r i o d , t h e r e is r e f e r e n c e to a S a r l a s h k a r K h a t e m i
p r o v i d i n g s o m e t e c h n i c a l s u p p o r t t o A i r T a x i a n d "who h a s
^
p o s s i b l y a n i n d i r e c t i n t e r e s t in t h i s c o n c e r n . "
On p a g e 40
t h e r e is "a r e f e r e n c e to M r . M o h a m e d A m i r K h a t e m i as C h a i r m a n of A i r T a x i . T h i s T a s t TTSp'GTt is' luaxked 1958 and
w o u l d a p p e a r t o be of t h a t v i n t a g e in v i e w of t h e p a g e 40
r e f e r e n c e to M r . Z a n g a n e h a s 2 9 y e a r s o l d and t h e p a g e 4 1
r e f e r e n c e to M r . E s h o o (Issue) as 31 y e a r s o l d (their
r e s p e c t i v e b i r t h d a t e s b e i n g r e f e r r e d to a s 1930 a n d 1 9 2 8
in a n u m b e r of t h e s e r e p o r t s ) .
T h e s e c o n d set of d o c u m e n t s is in t h e F a r s i l a n g u a g e .
These pages were received numbered sequentially 1 to 24.
O n t h e m h a s b e e n t y p e d some n o t i c e , d a t e and r e g i s t r a t i o n i n f o r m a t i o n in E n g l i s h ; t h e r e a r e a p p a r e n t r e f e r e n c e s
to o r d i n a r y a n d e x t r a o r d i n a r y s h a r e h o l d e r m e e t i n g s a n d t o
b o a r d m e e t i n g s ; and e a c h h a s a c r y p t i c E n g l i s h l a n g u a g e
handwritten notation such as "incorporation A . T .
18 A p r i l 1 9 5 8 " ; " E x t . g e n e r a l m e e t i n g S e p t e m b e r 1 2 , 1 9 5 9
w h e r e b y notice given to all shareholders bearer shares and
change to reg shares"; "Ext. general meeting increase
c a p i t a l f r o m 10 M . R to 2'0 M . R " ; e t c .
301
The documents have come into our possession at this
l a s t m i n u t e a n d t h e y a r e b e i n g m a d e a v a i l a b l e to m e m b e r s
of t h e C o m m i t t e e as p r o m p t l y as p o s s i b l e .
Very truly
yours,
Vice President and General
TDS/lc
25-067
O - 78 -
20
Counsel
302
fOtice n ° 1 0 3 9 .
^pt&tiae
d r t o
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A p r . 23/1958
R e
9 ; n ° 6047
date
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30/l/i337
(Apr.
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( J u l y 18, 1963)
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Date : 1 5 / 1 2 / 1 3 4 4
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Extraord. Gen. M .
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Public Announcement No. 1039
Dete April 2 3 , 1958
registration N o . 60^7 - April 1 9 , 1956
Public Notice about the eruption of
Taxi C o m p a n y , Inc.
flir
For the purpose of conducting trmsj-ort ^ r v t c ^ s of t.h* individuals and goods and pertinent operations,
types of activities that pre carried out by
well as all other
airplanes for
U3ing
profit-making purposes such as purchase and s ? l e , lease or rentals of aircrafts and other means of transportations
relating
*.to ;*ai r transport and their o p e r a t i o n , f u r t h e r m o r e , the accer>.trnce and creation of the representative office of the
airlaines,
as well as all types of authorized activities on «i r commerce
such-®s imports and exports and utilization o f foreign car>it°ls
3
an: . investments -when necessary- a cor-u^ny
a
total capital of 6million rials
-.rjech
(200
shares
- 130 untitled shares and 20 titled
n'?Tie).
established with
of
-shires
30,000 rials
in
company's
One third of the titled shares h^vs bean fully paid in
c»sh and the said shares, according to the s t a t e m e n t , are at
the
disposal of the said
company's
directors.
•shares nre in the form of promissory n o t e s .
The remaining
The siadcompany
established effective March 2 1 , 195'^ for
unlimited time
T
period at its location on I4.86 ^erdowsi Avenue, T e h r a n , I r a n .
The company w a s registered on Anril 1 9 , 195? under No. 60^.7 at
the Bureau of Registration for Do-nestic P i r n s .
M r . Mohsumad
A:nir Khatami will be the chairman of the boari of directors and
"*r. Nader Jahanbani will be the vice-chnl rrnrn of the board as
327
well as the men5sing director, and M r . Ahmed Shafigh has been
selected as the permanent m e m b e r .
Mr.
Hos3eln Aazam Zan-
ganeh is the substitute member of the board of directors pnd the
treasurer of the c o m p a n y .
All notes and documents and checka
w i l l be signed by M r , Amir Hossein Aazam Zanganeh jointly w i t h
1
one of the other three members and will bear the c o m p a n y s
M r , Frederick Ishu has been appointed
the company's
seal.
inspector
for a period of one y e a r .
Chief of the 3ureau for the Registration of Do nestle F i r m s ,
Commercial Sign3 and Patents
P-J4.89
Public Announcement
Dcte:
November 2 9 , 1959
Selection of two members for the board of directors and appointm e n t
of the managing director «?nd Inspector, as w e l l »s the
< officers of the Air T«xi Company with signature authority.
The
-.company has 9 6 million-rial capital (one third of which has
been paid and the remaining portion is in the form of promissory
not9
and it has been registered under
ATO,
601+7.
In accordance with the correspondence of October 1 9 , 1959 of
the Air Taxi Company attached to the minutes of the meetings of
the special meeting of the general session held on July 1 9 , 1959»
Messrs. AmirHossein Aazam Zanganeh (substitute member) and Frederick Ishu were elected as
g
permanent members of the board of
directors for the r^m^ning period subject of the Notice N . 1039
328
dated April 2 3 , 1953*
These two individuals will serve in the
absence of M r . Ahmad Shafigh.
Likewise, M r . Hooshang Amini-Rad
w a s elected as the company's inspector - for a One-year term.
Furthermore, in accorda nee with the minute3 of the meeting of
the board of directors dated July 2 0 , 1 9 5 9 , M r . Amir Hossein
Aazam Zanganeh was selected as the board chairman and managing
d i r e c t o r , and M r . Ahmad Shafigh will serve as the vice-chairman.
Signature rights on all papers and documents and checks will be
valid and standing by the signatures of two out of three members
i . e . , M e s s r s . Amir Hossein Aazam Z a n g a n e h , Ahmad Shafigh and
Frederick Tshu.
Chief of the Bureau for the Registration of Domestic
Commercial signs and Patents
w
irms,
P-661+1
•iHHHJ-JHJ"
Public Announcement
W i t h reference to the public notice of Movember 29 published in
:io. U313 of the Official G a z e t t e , according to the resolution
of the special meeting of the general session held on September
1 2 , 1959 of the Air Taxi C o m p a n y , I n c . all stockholders are,
h e r e b y , informed to call at the Company's headouarters located
at N o . 5>00 Ferdovsi Avenue, Teheran within six months from the
publication date of this announcement, in order to convert their
untitled shares to titled shares.
Board of Directors, Air Taxi C o m o a n y , Inc. P-6710
•5HHHHH5-
329
Public A n n o u n c e m e n t N o . 7 9 5 7 , J u l y 2 k , I960
Subject:
C o n v e r s i o n of u n t i t l e d shares to titled shares in
the A i r T a x i C o m p a n y , I n c . r e g i s t e r e d u n d e r Mo. 60)4.7 w i t h a
6 m i l l i o n - r i a l capital (one third paid and the r e m a i n i n g port i o n in p r o m i s s o r y n o t e s ) :
A c c o r d i n g to the c o r r e s p o n d e n c e
N o . 210/10 dated M a y 1 7 , I 9 6 0
o f the A i r T a x i C o m p a n y , I n c . attached to the m i n u t e s -of the
m e e t i n g o f the b o a r d o f d i r e c t o r s held o n April 2 2 , I 9 6 0 , all
u n t i t l e d s h a r e s of the said c o m p a n y have been c o n v e r t e d to
titled
shares.
f o r the Chief of the B u r e a u for the R e g i s t r a t i o n of F i r m s ,
C o m m e r c i a l Signs and P a t e n t s - A l i - A k b a r Akhavan
P-337U
P u b l i c A n n o u n c e m e n t N o , 1 0 6 1 2 , dated S e p t e m b e r 1 8 , i 9 6 0
A n n o u n c e m e n t on the receipt of o n e - h a l f of the p r o m i s s o r y c a p i t a l
at the Air T a x i C o m p a n y , I n c . registered u n d e r N o . 60^7 w i t h a
6 m i l l i o n - r i a l capital (one third p a i d and the r e m a i n i n g p o r t i o n
in p r o m i s s o r y n o t e s ) :
A c c o r d i n g to the c o r r e s p o n d e n c e N o . 33J4/II dated J u l y 2 0 , I 9 6 0
of the A i r Taxi C o m p a n y , I n c . attached to the c o n f i r m a t i o n note
.No. 2 3 7 / 1 1 of July 2 0 , I 9 6 0 of the bo^rd of
d i r e c t o r s
of the
said C o m p a n y , a sum of 2 m i l l i o n rials of the two thirds prom i s s o r y capital of the c o m o a n y has b e e n paid in c a s h b y the
s h a r e h o l d e r s ani is at the disposal of the c o m p a n y ' s
directors.
C h i e f of the Bureau for the R e g i s t r a t i o n of F i r m s , Commerc i a l Signs and P a t e n t s
330
Public Announcement N o . 1 0 3 0 U , dated December 1 6 , 1962
Public Notice on the payment of the promissory capital of the
Air Taxi C o m p a n y , Inc.
In accordance with the correspondence N o . 57/1258 dated September 9 , 1962 of the board of directors of the Air Taxi Comp a n y , I n c . , the sum of 2 million ri*ls balance of the company's
promissory capital has been paid and is at the disposal of the
company's board of directors.
The total sum of the company's
capital has b e e n , consequently, paid in full.
The m a t t e r is being published in the Official Gazzette of the
country and in one of the widely circulated daily papers of
Tehran in accordance with the provisions of the article 200 of
the Trade Act for the information and benefit of the p u b l i c .
Chief of the Bureau for the Registration of Firms and
Industrial Ownership - Mehdi Naraghi
P-6821
4HHHHR5-
Public Notice N o . 1 0 3 0 6 , dated December 1 6 , 1962
-Announcement on the increase of the capital, and selection of
the company directors and signature rights at the Air Taxi Com:.pany, Inc. registered u n d e r N o . 60ij7
According to the correspondence No. 1 U 2 6 , dated November 1 5 ,
.1962 attached to the minutes of the meeting dated October 1 0 ,
1962 of the general session of the Air Tnxi Company's
stockholders,
M e s s r s . Amir Hossein Aazam Zanganeh and Ahm«d Shafigh and Frederick were reelected for a three-year term effective this date
as the Company directors.
Signature rights and other authorities
331
of the board of directors shall be valid as in the p a s t bytwo signatures of the'three signatures of the board m e m b e r s
and the Company's seal.
Actions of the board of directors during
the interim period since the expiration date through this date
are hereby confirmed and effective.
Following the provisions
of the minutes of the meeting of the general session held on
October 1 0 , 1 9 6 2 , the total capital of the said company has been
increased from 6 million rials to 10 million rials (60 percent
paid and lj.0 percent promissory divided into one hundred shares
one hundred thousand rials each share with name and t i t l e . Increased sum of the capital is at the disposal of the company's
directors.
The above m a t t e r is being published in the Official Gazette of
the country and in one of the widely-circulated daily papers of
Tehran in accordance w i t h the provisions of the article 200 of
the Trade Act for the information and benefit of the p u b l i c .
Chief of the Bureau for the Registration of Firms and
Industrials Ownership - ^ehdi Naraghi
P-6822
tHHMHttt
Public Notice N o . 6 / 8 9 0 3 , dated October 2 2 , 1963
Announcement on the receipt of the promissory capital and appointment of the inspector at the Air Taxi C o m p a n y , I n c . regist e r e d under N o . 60?i|
.-According to the correspondence N o . l67/2i|86,dated September 2 ,
1963 attached to the minutes of the meeting of the stockholders
-of the Air Taxi Company held on July 1 7 , 1 9 o 3 , M r . Taghi Khorram
332
was appointed as the company's inspector.
F u r t h e r , according
to the correspondence N o . 16?/2\\\\$ dated August 2 1 9 6 3
of
1
the said c o m p a n y s board of directors, sum of 2 million rials
was additionally paid toward the said company's promissory
capital and place! at the disposal of
directors.
the company's board of
C o n s e q u e n t l y , a total of 8 million rials of the
10 million-rial capital have been p a i d .
The above m a t t e r is being published in the Official Gazette
of the country and in one of the widely-circulated daily papers
of Tehran in accordance w i t h the provisions of the article 200
of the Trade Act for the information and benefit of the p u b l i c .
Chief of the Bureau for the Registration of Firms and
Industrial Ownership - ^ehdi Naraghi
Public Notice N o . 6 / 9 ^ 7 3 ,
dated November 7 , 1963
Notice of changes and amendments in the Air Taxi Company registered under N . SOkl
According to the correspondence No. 167/2587 dated October 1 9 ,
1963 attached to the minutes of the special m e e t i n g of the
general session of the stockholders of the Air Taxi C o m a p n y ,
following changes and amendments have been implemented at the
.,said company:
1 . Article 2 of the charter of the company was provided
*.f)3 follows:
Article 2 -
Company's operation would consist of conduc-
ting air transport of individuals, cargo and postal parcels
333
b o t h within and without the c o u n t r y , as well as e n g a g i n g in
any and all types of aerial activities such as aerial photography and scientific research and reconnaissance
and aerial
public relations and c o m m e r c i a l sctivi'ies and aerial pesticide
spraying conducted by airplanes for commercial and p r o f i t - m a k i n g
purposes.
F u r t h e r m o r e , the company c o u l d engage in p u r c h a s i n g
and s e l l i n g or l e a s i n g and renting and m o r t g a g i n g airplanes
and
all equipments pertinent to aircrafts as w e l l as t h e i r o p e r a t i o n
and pilot training and instruction of aircraft m e c h a n i c s
and
f i n a l l y all types of operations relating to a i r c r a f t s ,
2.
The company's h e a d q u a r t e r s , w h i c h was m o v e d from Fer-
dowsi Avenue (No. 1*86) to the Mehrabad Airport on M a r c h 2 1 , 1 9 6 2 ,
has been approved and accepted by the
are
stockholders,
The above m a t t e r s ^ b e i n g published in the O f f i c i a l
G a z e t t e
0
f
the country and in one of the w i d e l y - c i r c u l a t e d daily papers of
T e h r a n in accordance w i t h the provisions of the article 200 of
the Trade A c t for the information and benefit of the p u b l i c .
Chief of the Bureau for the R e g i s t r a t i o n of F i r m s and
Industrial Ownership - ^ehdi .Naraghi
Q2l|679
P-9017
Public Notice No. 6/1+981 dated June 2i|, 196)4.
A n n o u n c e m e n t on the payment of the promissory c a p i t a l of the
A i r Taxi C o m p a n y , I n c .
A c c o r d i n g to the correspondence N o . 167-2699 dated J a n u a r y 2 0 ,
J.96!J. of the board of directors of the Air Taxi C o m p a n y , I n c . ,
sum of 2 m i l l i o n rials b a l a n c e on the company's
25-067
o
- 78 -
22
promissory
334
capital has been paid and placed at the disposal of the company' s board of directors,! .e. , the total capital of the company consisting of ten million rials has been paid in f u l l .
The above matter is being published in the Official Gazette of
the country and in one of the videly-cireflated daily papers of
Tehran in accordance w i t h the provisions of the article 200 of
the Trade Act for the information and benefit of the p u b l i c .
Chief of the Bureau for the Registration of Firms and
Industrial Ownership
- Mehdi Naraghi
Q29361
P-3519
< H H H HH*
Official Notice N o . 6/l6501 dated March 6 , 1966
According to the correspondence No. l?l/623i|. dated January 2 5 ,
1966 attached to the minutes of the specinl m e e t i n g of the general
session of the shareholders of the Air Taxi C o m p a n y , I n c . held on
December 2 0 , 1 9 6 5 , the company's capital has been increased from
ten million rials to 20 million rials (divided into 200 titled
shares of one h u d r e d thousand ri.nls
e a c h , fifty percent of
-which has been paid fully and the remaining fifty p e r c e n t is
in promissory f o r m .
The said increase in capital has delivered
-.to and placed at the disposal of the company's directors,
above m a t t e r is being recorded and published.
Chief of the Bureau for the Registration of Firms and
Industrial Ownership
Public Notice No. 6/16503
'Official Announcement:
Qhklk^
P-13>|39
dated March 6 , 1966
According to the correspondence No. 17l/561j.2
335
attached to the minutes of the special meeting of the general
session dated February 1 3 , 196$ and the minutes of the regular
meeting of the general session d*ted June 1 5 , 1965 of the stockholders of the Air Taxi Company, Inc. , a copy of the amended
charter containing $1 articles and 33 paragraphs was submitted
and the same revised charter replaced the previous charter.
F u r t h e r , ?4essrs. fihmad Shafigh and Amir Kossein Aazam Zanganeh
and Frederick Ishu have been reelected for a four-year term as
the permanent members of the board of directors effective October
1 0 , 1965.
M r . Amir Hossein Zsnganeh was appointed as the manag-
ing director for the said time period.
All signature rights on
the c h e c k s , drafts and documents and promissory notes of the
company shall be valid having two signatures of the three boar*!
members and bearing the company's seal.
M r . Taghi Khorrsm wr;s
reappointed as the company's inspector for the year 1 9 6 5 .
The above matters are recorded and published.
Chief of the Bureau for the Registration of Firms and
Industrial Ownership
OM7U9
Official Announcement 7o. 6-<<532
P-13UU
dated June 1 5 , 1967
According to the correspondence No. 295-11700 dated January 9 ,
1967 of the Air Taxi C o m p a n y , Inc. attached tc the minutes of
the meetings of the hoard of directors doted December 1 0 , 1 9 6 6 ,
a sum of ten million rials balance of the promissory capitnl of
-;of the company was -naid by the stockholders and placed at the
.disposal of the sompsny's board cf directors.
336
The above m a t t e r has been recorded according to the regulations
and published for the information and benefit of the p u b l i c .
Chief of the Pureau for the Registration of Firms 8nd
Industrial Ownership
Q57U62
Public Announcement No. 6-5523
P-309U
Dated June 1 3 , 1970
Notice of election at the Air Taxi C o m p a n y , Inc.
According to the correspondence No. 259-lll|5 of September 13>
1969 attached to the minutes of the meeting of the said company's
general session held on June 1 0 , 1969 and attended by the company's stockholders, M e s s r s . Amir Hossein Zanganeh and Ahmad
Shafigh and Frederick Ishu were reelected as members of the board
of directors for a period of two years and nine m o n t h s .
M r . Amir
Hossein Zanganeh was appointed as the managing director and
chairman o{ the b o a r d .
All checks and drafts an'? other oromis-
sory notes and papers shsll be valid when si-ned by two of the
1
three board members and bearin- the c o m p a n y s se«l.
M r . Taghi
Khorram was reelected as th? company's inspector for the fiscal
year 1969.
Chief of the Bureau for the Registration of Firms and
Industrial Ownership
Q119U99
Public Announcement No. 6-1U799
P-33UU
dated October 2 7 ,
1970
Notice of increase in the capital, and election of inspector
for the Air Taxi C o m p a n y , Inc. registered und?r No. 601+7
Pursuant to the resolutions by the regular and special meetings
337
of the general session held on July 6 , 1 9 7 C , the following
changes and revisions were made in the above-named company:
1.
The company's capital was increased from 20 m i l l i o n
rials to £0 million rials (divided into $00 titled shares- of
100,000 rials e a c h , all of them fully paid). As acknowledged
by the board of directors, the company's capital was placed at
the disposal of the board of directors.
2.
M r . Taghi K'norram was reelected and appointed as the
company's inspector for the year 1 9 7 0 .
Signatures of registration
of the records was completed on the tventy-fifth day of October
the year of nineteen hundred and seventy.
Chief of the Bureau for the Registration of Firms and
Industrial Ownership
Qlj 10021*
P-8677
Public Announcement M o . 6-l|30 dated April 8 , 1973
Notice of the changes and revisions at the -ir Taxi C o m p a n y , Inc.
registered u n d e r No. 601+7
Pursuant to the resolution at the special meeting of the general
session held on March
1973* the following changes and re-
visions were made at the said company:
1.
The company was changed to special company, I n c . and
it shall be c a l l e d , hereinafter, the Special Air Taxi C o m p a n y ,
Inc.
2.
A new charter containing 70 articles was approved to
replace the previous charter.
3*
v
e s s r s . Ahmad S h a f i g h , &nlr
Hossein Aazam Zanganeh and Frederick Ishu were reelected as members of the board of directors for 9 tvo-year term.
338
M r . Taghi Khorrsm was appointed as the chief inspector
and M r . Taghi Ghorbani was appointed as the substitute
inspecL
tor for one-year t e n e a c h .
5.
The daily newspaper ETTEJ^'AT
was designated and chosen for the publication of notices and
announcemends.
According to the minutes of the meeting of the
board of directors held on March 1 5 , 1 9 7 3 , M r . Amir Hossein
Aazam Zanganeh shall be the chairman of the said board as well
as the managing director, and M r . Frederick Ishu will be the
vice-chairman.
The latter will be also the managing director
for administration and general supervision of the company's
affairs.
The said authorities shall be determined every so
often by the board of directors.
7»
All documents and promis-
sory notes and papers such as checks and drafts and c o n t r a c t s ,
e t c . shall be valid when signed by two of the three board members (or their authorized representatives} -nd bearing the company's seal.
Chief of the Bureau for the Registration of Firms and
Industrial Ownership
Q80l|l53
P-536
•i HHH5-5H5-
Public Announcement Mo. 6-10!«30
dated August 1 1 , 1973
Notice of the changes and revisions made in the Special Air Taxi
C o m p a n y , Inc.
According to the minutes of the meeting of the general session
of the Special air Taxi C o m p a n y , Inc. hold on July 7 , 1 9 7 3 , the
following resolutions were adopted regarding the company's affairs:
1.
The company's balance-sheet for 1972 was approved.
339
2,
M r . Taghi Xhorram **as appointed as the company's chief
inspector, and M r . Mohammad T«;:hi ^horbani was appointed as
the substitute inspector, for a one-year term each. 3 ,
The
daily newspapers STT3LA'AT wes chosen and designated for the
publication of the notices and announcements of the company.
Chief of the Bureau for the Re-:istration of ?irms and
Industrial Ownership
Q795821
P-61^8
•iHHHS-**
Public Announcement Mo, 6-2U99
dated June 2\\, 197U
Notice of changes In the Special Air Taxi Company, Inc. registered under N o , 60lj.7
According to the resolution adopted at the regular meeting of
the general annuel session held on May 2 1 , 197U, the following,
changes vie re made in the said company:
sheet for 1973
w ? s
approved.
2.
1.
The company's balance-
''sssrs. Taghi Khorram and
T
' ohammad Taghi jhorban •••ere respectively chosen as the chief
inspector and .subsitute inspector for a period of one more year,
3.
1
The daily newspaper STTIL* 'T wss chosen and designpted for
the publication of company's notices *nd announcements,
[j.. Ac-
cording to the resolution of the board of directors dated May
2 1 , 19714-* following the resignation o
Zanganeh from his position
n
M r . Amir Hossein Aazam
j the managing director,
Mehdi
.Haji Moniri was appointed as the company's managing director for
the remaining period of the fco®rd members tenure,
M r . Amir Hos-
sein Aazam Zanganeh will be carrying out his duties as the chairman of the board of directors.
Authorities r»nd duties of the
340
new managing director shall consist of administration and general supervision of the company's affairs.
Such duties and
authorities of the new managing director will be determined
every so often by the board members.
Signature rights on all
promissory notes and documents such as c h e c k s , drafts and cont r a c t s , e t c . shall be valid by joint signature.! of two of four
following persons:
M e s s r s . Amir Hossein Aazam Z a n g a n e h , Ahmad
Shafigh, Frederick Ishu (board members) and M r . Mehdi Haji
M o n i r i , the managing director, as well as the company's s e a l .
Chief of the Bureau for the Rerristration of Firms and
Industrial Ownership
Q175886
Public Announcement No. 6-16592
P-U297
dated July 3 1 , 1975
Notice of changes in the Special Air Taxi C o m p a n y , Inc. registered under N o . 60i|7
According to the minutes of the regular meeting of the general
session held on July 7 , 1975> following resolutions were adopted regarding the said company:
1.
The company's
and its profits and losses for the year 1975 were
2.
balance-sheet
anproved.
M e s s r s . A.hmad S h a f i g h , Frederick Ishu and Amir Hossein Aazam
Zanganeh were reelected as the board members for * two-year
term.
M e s s r s . Taghi Khorram and Mohammad Taghi Ghorbani were
elected respectively as the chief inspector and substitute
pector for a o n e - y e a r term.
3»
ins-
The daily newspaper ETTSLA'AT
was chosen and designated for the publication of company's announcements and n o t i c e s .
According to the text of the minutes
341
of the meeting of the board of directors, M r . Amir Hossein
Aazam Zanganeh was selected as the board chairman for a twoyear term; M r . Frederick Ishu was selected a3 the vice-chairman
of the board for the same time p e r i o d , and M r . M e h d i Haji Monirl
was selected a3 the company's managing director for a two-year
term.
All promissory notes and documents of the company shall
be valid when signed by two of the five individuals named b e l o w ,
and bearing the company's seal:
M e s s r s . Amir Hossein Aazam
Z a n g a n e h , Frederick I s h u , Ahmad Sftafigh, Mehdi Haji Moniri and
Mostefa R a b i ' i .
Chief of the Buroau for the Registration of ^irms and
Industrial Ownership
Qi*91+391
P-7991
iHHSMM
Public announcement No. 28633
dated November 1 9 , 1975
Notice of the designation of authorized (illegible
word-transitr.)
at the Special Air Taxi C o m p a n y , Inc., registered under N o . 60l|7
According to the minutes of the meeting of the board of directors
held on August 2 3 , 1975*
all promissory notes nnd documents of
the Special A i r Taxi C o m p a n y , Inc. shall be valid when signed
by one of the following Individuals as \*ell as by M r . Mostafa
Rabi'i and bearing the company's seal:
M e s s r s . Amir Hossein
Aazam Z a n g a n e h , Frederick I s h u , Ahmad Shafigh (members of the
b o a r d , and/or M r . M e h d i Haji Moniri (the managing director).
Chief of the Bureau for the Registration of Firms and
Industrial Ownership
0,875522
^iHHHHJ
P-131+98
342
Public Announcement No. 6-8l±24
dated June 3 , 1976
Notice of election of the managing director at the Special Air
Taxi C o m p a n y , I n c . , registered under N o . 60i|7
According to the minutes of the meeting of the board of directors of the Special Air T a x i . Coipany, Inc. held on M a y 2 9 , 1 9 7 6 ,
M r . M e h d i Haji M o n i r i has resigned from his position as the
m a n a g i n g director of the said c o m p a n y , and M r . Kambiz Dadsetan
w a s elected as the new managing director for the remaining
period of the board's t e r m .
All iuties and functions and autho-
rities of the new managing director shall be exactly the same
as those of his p r e d e c e s s o r .
Chief of the bureau for the Registration of Firms and
Industrial Ownership
Q36L135
Public Announcement N o . 6-23111L
P-l+510
dated August 3 0 , 1976
Notice of the resolutions adopted at the regular m e e t i n g of the
general snnual session of the Special Air T a x i C o m p a n y , I n c . ,
registered under N o . 601*7
A c c o r d i n g to the minutes of the regular meeting of the general
annual session of the above-mentioned company held on June 2 8 ,
1 9 7 6 , the following resolutions were adopted:
1.
.The com-
pany's balance-sheet and its profit and loss for the fiscal year
1 9 7 5 were approved.
2.
M e s s r s . Taghi Khorram and ^ o h a m m a d
T a g h i Crhorbani were elected for one year as the chief inspector
and subsitute inspector, respectively.
3.
The widely-circulated
daily ne vsps-per ZTTZLA'AT was designated and chosen for the pub-
343
lie at ion of notices and announcements r^latin? to the company*
Central Bureau for the Registration of Firms and Industrie!
Ownership
Q12i*6o8
P-10399
Public Announcement N o . 6-26732
dated S e p t e m b e r 2 9 , 1976
Notice of the election of board member and board chairman at
the' Special sir Taxi C o m p a n y , Inc. registered under N o . 60I+7
According
to the minutes of the extraordinary meeting of the
1
general s e s s i o n s regular meeting of the Special A i r Taxi Comr
p a n y , Inc. held on September 11;, 1976, *r. Ali-Asghar Raf'at
was elected and appointed to replace M r . AmirHossein Aazam
Zanganeh as the member and chairman of the company's board of
directors for the remaining period of the board's t e r m .
Central Bureau for the Re sistrat ion of ^irms and Industricl
Ownership
Q127U00
Public Announcement
N o . 6-12353
P-12737
datsd July 9 , 1977
Notice of the resolutions adopted at the regular m e e t i n g of
the general annual session of t'he Special *ir Tayi C o m p a n y , I n c . ,
registered under No. 60U7
According to the minutes df the regular meeting of the general
annual session of the above-mentioned company held on June 3 0 ,
1 9 7 7 , the follcvinT resolutions were adopted:
1.
Messrs.
Kambiz Wadset an, Anocshirvan J«»hanbani nnd Iraj Mobashheri were
elected as board members for s two-year t e r m .
2.
The company's
balance-sheet and its profit and loss were approved for the
344
fiscal year 1 9 7 6 .
3.
M e s s r s . Taghi Khorram and Mohammad Taghi
Ohorbani were elected for a one-year term as the company's
chief inspector and subsitute inspector, respectively.
The
widely-circulated daily newspaper E T T E L M A T was chosen and
designated for the publication of company's notices and announcements.
F u r t h e r , according to the minutes of the meeting of June
2 0 , 1977 of the board of directors,
M r . Kambiz Dadsetan was
elected as the chairman of the board of directors; M r . Anooshlrvan Jahanbani was elected as the managing director and M r . Iraj
M o b a s h h e r as the vice-chairman of the b o a r d ,
All documents and
promissory notes of the corrpany shall be valid when signed by
one of the following individuals and bearing the company's seal:
M r . Kambiz Dadsetan or M r . Mo3taf® Rabi'i together with the
signature of M r . Anoosbirvsn Jahnnbani.
Director ^enerpl of the bureau for the Registration of
Firms and Industrial Ownership
M
Qlli+3lj.3
P-7623
345
CiOXnOJiN'TIAL
A I R
T A X I
COMPANY
(Registered
style:
HAVAPliYMAYI A I R - T A X I
N o r t h Mehrabad
Cable
661967
address:
Telex:
Kl'.AS),
and
Iran
668992
AIRTAXI TEHERAN
Teheran
Branches
SJIERKAT SAHAMI
Airport,
Teheran,
Telephones:
-
2 5 7 5 Answer
Back
*A T a x i
Tn'
or subsidiary o f f i c e s in the provincial
A b a d a n and i n Gonbad K a v o o s , I r a n
towns
of
T h i s i s a p r i v a t e j o i n t s t o c k company w h i c h was r e g i s t e r e d w i t h t h e
C o m p a n i e s ' R e g i s t r a t i o n ' D e p a r t w e n t i n T e h e r a n on 1 9 t h A p r i l 1 9 5 8 f o r an
u n l i m i t e d p e r i o d u n d e r number 6 0 4 7 f o r t h e f o l l o w i n g d e c l a r e d o b j e c t s :
To a r r a n g e p a s s e n g e r / c a r g o / p o s t a l
outside the country;
material
s e r v i c e by a i r
in
Iran
To h a n d l e p h o t o g r a p h i c a l / s c i e n t i f i c / a d v e r t i s i n g / s p r a y i n g
the air;
To p u r c h a s e / t o s e l l / t o p a r t / t o m o r t g a g e p l a n e s
f o r a v i a t i o n and t o o p e r a t e s a m e ;
To t r a i n
pilots
To h a n d l e a l l
and t e c h n i c i a n s
kinds
of
other
for
affairs
and o t h e r
and
affairs
in
requirements
planes;
relative
to
aviation.
T h e i n i t i a l r e g i s t e r e d c a p i t a l o f R i a l s 6 , 0 0 0 , 0 0 0 / - was l a t e r r a i s e d
t o R i a l s 1 0 , 0 0 0 , 0 0 0 / - s u b s e o . u e n t l y i t was i n c r e a s e d t o R i a l s
20,000,000/and t h e r e a f t e r i t was a g a i n r a i s e d t o i t s p r e s e n t amount o f
Rls.50,000,000/d i v i d e d i n t o 5 0 0 nominal s h a r e s o f R i a l s 1 0 0 , 0 0 0 / - each f u l l y p a i d u p .
The p r e s e n t
Kambiz
members o f
the board
of
directors
are:
Dadsetan
..
Chairn^.n
Anooshiravan Jahanbani
..
Managing
Iraj
..
Vice-Chairman
the
firm
Mobasher
All
documents,
any o n e o f
the
seal
of
etc.
Kambiz D a d s e t a n
the
company.
on b e h a l f
of
or Mostafa Rabiyi
Director
should be
with
signed
Anooshiravan
jointly
Jahanbani
by
with
346
A I R
Taghi
T A X I
COMPANY
(Con tel.)
Khorram
Inspector
Mohamad T a g h i
Chorbani
substitute
inspector
Iranian
subjects.
The main a c t i v i t i e s o f A I R TAXI COMPANY a r e d i v i d e d
O p e r a t i o n a , T e c h n i c a l and S a l e s a s a r e d e s c r i b e d b e l o w :
-
into
three
sections,
OPERATIONAL:
A I R TAXI a r e u n d e r t a k i n g a l l k i n d s o f a v i a t i o n a c t i v i t i e s a t t h e r e q u e s t
o f t h e i r p r o s p e c t i v e customers but not l i m i t e d t o the f o l l o w i n g :
a)
G e n e r a l n o n - s c h e d u l e and c h a r t e r f l i g h t s w i t h i n I r a n and t o
neighbouring countries carrying passengers and/or f r e i g h t ;
b)
S i n c e 1 9 6 3 t h e y a r e h a n d l i n g p h o t o g r a p h i c s u r v e y on b e h a l f o f
t h e National Cartographic Centre - a s u b s i d i a r y of the Plan
Organization.
T h e y a r e now e n g a g e d i n s u r v e y i n g and m a p p i n g
the country;
c)
Since 1962 are handling a g r i c u l t u r a l
Ministry of Agriculture;
d)
From 1 9 6 0 t h e y a r e o p e r a t i n g r e g u l a r s c h e d u l e d
b e h a l f o f t h e NATIONAL IRANIAN O I L COMPANY;
e)
From 1 9 6 5 t h e y a r e c a r r y i n g
throughout South I r a n ;
f)
Air
ambulance f l i g h t s
as
out
spraying
scheduled
air
r e q u i r e d by t h e i r
on b e h a l f
flights
mail
of
the
on
deliveries
prospective
customers.
A I R TAXI COMPANY a r e
12 Aero
the
In a d d i t i o n
Government
3
owners
Commenders and
7 Single
of
the
(Department
I.T.A.A.
aircraft
Grand Commander
of:
consisting
LC3s
Engine Piper §
S p a r r o w Commander
aircraft.
and m a i n t a i n o n
consisting of:
behalf
aircraift
Commanders
6 Turbo
Commanders
1 Turbo
Deaver
Piper
2
Cessna
1
DC3
AIR TAXI COMPANY m a i n t a i n ,
approximately
nineteen
t o t h e a b o v e , A I R TAXI COMPANY o p e r a t e
and p r i v a t e c u s t o m e r s s i x t e e n a i r c r a f t
2 Aero
1
of
100 a i r c r a f t
General
(Imperial
of
.overhaul
per year,
Civil
I r a n i a n Army
and o p e r a t e
a total
number
m a i n l y owned b y P r i m e M i n i s t r y ,
Aviation),
Red L i o n
Aviation).
§
Sun O r g a n i z a t i o n
of
D.G.G.A.
and
347
AIR
T A X I
COMPANY
(Con tel.)
AF.RO COMMANDER BH'I'l!ANY DIVISION o f
LYCOMING D i v i s i o n
of
KING RADIO CORP.,
U.S.A.;
Avco C o r p . ,
SUN A I R ELECTRONICS C O R P . ,
CHAMPION SPARK PLUG
Rockwell
Standard,
U.S.A.;
U.S.A.;
U.S.A.;
COMPANY,U.S.A.;
BELL HELICOPTER C O . ,
U.S.A.
T h e y a r e s i t u a t e d i n a m o d e m o f f i c e and e n g i n e e r i n g f a c i l i t y on t h e
N o r t h s i d e o f Mehrabad A i r p o r t , e n t r a n c e b e i n g made b y a p r i v a t e e n t r a n c e
from t h e main Teheran t o K a r a j R o a d .
I n a d d i t i o n a b r a n c h Q f f i c e and m a i n t e n a n c e b a s e i s s i t e d a t A b a d a n
A i r p o r t w i t h t h e n e c e s s a r y h o u s i n g accommodation f o r t h e i r employees t o g e t h e r
w i t h a s e p a r a t e b u i l d i n g f o r . d e s p a t c h and p a s s e n g e r l a u n g e .
The ground o f
t h a t p l a c e measuring 2 4 , 0 0 0 s q . m e t r e s b e l o n g t o t h e Government f o r which t h e y
are paying r e n t a l .
A t t h e i r e x p e n s e t h e y ( A I R TAXI COMPANY) h a v e c o n s t r u c t e d
a l l t h e n e c e s s a r y p r e m i s e s f o r a t h i r t y - y e a r p e r i o d and i t h a s c o s t them a b o u t
Rials S - 9 , 0 0 0 , 0 0 0 / - .
D u r i n g s e a s o n p e r i o d t h e y a l s o m a i n t a i n o f f i c e s and o t h e r n e c e s s a r y
f a c i l i t i e s a t t h e A i r p o r t a s w e l l a s an o f f i c e and h o u s i n g f a c i l i t i e s i n t h e
twon f o r t h e i r e m p l o y e e s .
T h e y a r e now e m p l o y i n g a r o u n d 1 2 0 p e r s o n s i n c l u d i n g f o r e i g n e r s o f
v a r i o u s p r o f e s s i o n s u c h a s an e n g i n e e r , p i l o t s , a s s i s t a n t s , o f f i c e s t a f f ,
technicians, apprentices, menials, etc. in their a c t i v i t i e s .
Bankers:
Bank E t t e b a r a t I r a n
Bank S a d e r a t I r a n , T e h e r a n .
Reputation:
fulfilled
their
(* T r a n s l a t i o n
is
from t h e
one formed f o r
shares
their
and
v e r y g o o d and
commitments
Iranian
commercial
i n which t h e
in
as
far as
it
a favourable
i s .known t h e y h a v e
Commercial Code:
purposes,
responsibility
the
of
capital
the
A private
of
which
shareholders
joint
is
is
far
Teheran, Iran,
26th February
stock
divided
limited
shares).
so
manner.
1978.
company
into
to
348
AIR
T A X I
COMPANY
(Con tel.)
T h e y ( A I R TAXI COMPANY) a r e a l s o h a n d l i n g t e c h n i c a l s c r v i c i n g s a n d
o v c r h a u l i n g s o f . s o m e p r i v a t e l y owned a i r c r a f t b e l o n g i n g t o H . I . M . t h e
S h n h i n s h a h A r y a m e h r , P r i n c e Gholam R e z a P a h l a v i , e t c . w!ien t h e y a r e a s k e d
t o do s o .
TECHNICAL:
S i n c e t h e i n c e p t i o n o f t h i s f i r m , th'ey h a v e c o n c e n t r a t e d on b u i l d i n g
u p an i n d e p e n d e n t e n g i n e e r i n g f a c i l i t y and h a v e s u c c e e d e d t o t h e e x t e n t
t h a t o n l y e n g i n e s a r e now s e n t a b r o a d f o r c o m p l e t e o v e r h a u l .
All other
w o r k - b e i n g c a r r i e d o u t i n I r a n b y t h e C o m p a n y ' s ov.n p e r s o n n e l .
staff
a)
In a d d i t i o n t o major airframe overhaul
are a v a i l a b l e f o r the following:
Radio
installation,
b)
Instrument
c)
Starter,
generator
d)
Magneto,
carburettor,
e)
Sheet
basis
repair
repair are
metal
and
etc.
repair
$
following
of
Post
Ministry
of
Agriculture Aviation
Imperial
Iranian
National
Iranian
and
overhaul;
overhaul;
work.
are their
regular
of
contract
customers:
Telegraphs;
Army A v i a t i o n
Gendarmerie A v i a t i o n
Aviation
and
repair
o u t e i t h e r o n an " a s r e q u i r e d "
engineering assistance.
Ministry
Civil
equipment
and m o d i f i c a t i o n
the
skilled
overhaul;
T e c h n i c a l work i s c a r r i e d
f o r a n y company r e q u i r i n g
Among o t h e r s
and
overhaul;
and e l e c t r i c a l
repair
equipped workshops
Unit;
Unit;
Unit;
Club;
Cartographic
Centre;
Government;
Red L i o n and Sun
Organization;
U.S.Army A v i a t i o n
Unit.
SALES:
In order t o
extent
T A X I COMPANY r e p r e s e n t
sales
Iran
and p a r t s
service
distributors:
the necessary
a complete
on b e h a l f
line
of
service
of
the
to
aviation
following
their
various
products
companies
customers,
and g u a r a n t e e
as
their
AIR
after
exclusive
349
CWFm^TI/iL
A I R
T A X I
COKPAK*
(Sogictered style;
HAYAPKYMAYI AIR-TAXI - SHERKAT SAHAHI KIIAS) ,
North Hehrabad Airport*
Teheran, Iran
CL</c(
Telephones*
66196? A 668992
ar^Ws^
Cable addre ss J <*AIRTAXI .TBKEKAK*
Telex:
Teheran
2575
Answer
Back
*A T a x i
Tn'
Branches or subsidiary o f f i c e s in the provincial
towns of Abadan and in Gonbad Kavoos, Iran
This
is
Companies*
unlimited
To
period
arrange
in
a private
.joint
Registration
under
number
Iran
and
outside
handle
affairs
in
and
To
train
To
handle
the
initial
The
j-Iarsbiz
into
all
and
seal
Taghi
of
was
registered
with
April
for
1958
declared
by
the
an
objects:
air
again
of
capital
raised
shares
the
and
of
beard
to
for
of
Rials
was
to
its
Rials
of
and
other
same}
planesj
affairs
it
planes
operate
relative
to
6,000,000/-
increased
to
was
Rials
present
amount
100,000/-
each
directors
aviation*
of
later
raised
20,000,000/Rials
fully
50,000,000/^
paid
up.
are:
Chairman
-Managing
Director
Vice-Chair
etc.
Dadsetan
or
on
behalf
Kostafa
of
the
Rabiyi
firm
v/ith
should
ce
Anocahiravar.
signed
jointly
Jahar.br.nl
with
by
any
the
cc-cp'any.
Khorraa
Koh.rrnd
other
subsequently
nominal
mortgage
aviation
of
registered
senbers
documents,
the
service
technicians
kinds
Jahanfcani
Kambis
following
material
rent/to
for
Mcbasher
of
the
was
19th
air;
Dadseton
All
cr.e
it
500
present
Ar.ooshiravars
I raj
pilots
10,000,000/-
thereafter
divided
for
on
country;
sell/to
requirements
The
which
Teheran
photographical/scientific/advertising/spraying
To p u r c h a s e / t o
Rials
60^7
the
company
in
passenger/cargo/postal
To
to
stock
Department
Taghi
Inspector
3horbani
2 5 - 0 6 7 O - 78 - 23
substitute
inspector
-
Iranian
subjects.
350
T)io
O^eraiiouHl,
n a c t i v i t . 5 in o f
T o c h i i i c . ' . ' t i^ul
AXH '.iWXL C-.'.:VAKI ovo
v
u i v l J :.r\
b.- - '
fcV-vee
Ci>:»cr*ATior:AL»
A I H TAYT
i\ro
request
lunl.-ix*t«k?.i:~all
of
their
kinds
prospective
vf
aviation
custov.ors
.-.ctivitios
but
not
fit
liaitcd
the
to
tho
following;
a)
G e n e r a l . n o n ~ 3 c h e d u l e and c h a r t e r f l i g h t s w i t h i n I r a n
and t o n e i g h b o u r i n g c o u n t r i e s c a r r y i n g p a s s e n g o r s
and/or
freight;
b)
Since
of
19&3
the
Plan
Since
the
d)
From
Fran
the
handling
19&2
i960
of
19^5
throughout
They
are
photographic
Centre
-
a
survey
on
subsidiary
now e n g a g e d
in
behalf
of
the
surveying
and
country?
are
Ministry
behalf
o)
are
Cartographic
Organisation.
mapping
c)
they
National
handling
of
they
the
they
agricultural
spraying
on
behalf
of
Agriculture;
are
operating
NATIONAL
are
South
carrying
Iran;
regular
IRANIAN
out
OIL
scheduled
flights
on
COMPANY;
scheduled
air
mail
deliveries
351
A I R
T A X I
COMPANY
f)
Air
(Con tel.)
ambulanco
flights
as
required
by
thoir
prospective
customers.
AIR TAXI
COMPANY
12
Aero
7
behalf
o fJ
are
the
owners
Commanders
Single
Engine
In addition to the
of the Government
and
of
nineteen
aircraft
consisting
of*
LC3s
Piper
& Sparrow
Commander
aircraft.
a b o v e , A I R T A X I COMPANY o p e r a t e a n d m a i n t a i n o n
and p r i v a t e c u s t o m e r s s i x t e e n a i r c r a f t
consisting
3
Grand
2
Aero
6
Turbo
Commander
Commanders
aircraft
1
Turbo
Beaver
Commanders
1
Piper
2
Cessna
1
DCJ5
A I R T A X I COMPANY m a i n t a i n , o v e r h a u l a n d o p e r a t e a t o t a l n u m b e r o f
a p p r o x i m a t e l y 1 0 0 a i r c r a f t p e r y e a r , m a i n l y owned b y P r i m e M i n i s t r y ,
D « G » 0 « A » ( D e p a r t m e n t G e n e r a l o f C i v i l A v i a t i o n ) , Red L i o n & Sun O r g a n i z a t i o n
and I . I . A . A .
( I m p e r i a l I r a n i a n Army A v i a t i o n ) .
They
(AIR TAXI
overhaulings
Shahinshah
do
of
some
Aryamehr,
COMPANY)
are
privately
Prince
also
owned
Gholam
handling
aircraft
Reza
technical
belonging
Pahlavi,
etc.
servicings
to
and
H.I.M,the
when
they
are
asked
to
so.
TECHNICALt
Since
up
an
that
being
the
inception
independent
only
engines
carried
In
skilled
out
addition
staff
are
are
in
Iran
by
to
major
installation,
b)
Instrument
c)
Starter,
generator
d)
Magneto,
carburettor,
e)
Sheet
repair
repair
and
abroad
the
for
repair
and
firm,
facility
they
and
for
the
and
have
have
own
overhaul
concentrated
succeeded
complete
Company's
airframe
available
Radio
this
now s e n t
a)
metal
of
engineering
to
overhaul*
on
the
All
building
extent
other
fully
equipped
workshops
following)
overhaul;
overhaul;
electrical
etc*
repair
equipment
and
and m o d i f i c a t i o n
repair
overhaul;
work.
worl
personnel.
and.
overhaul;
and
352
T e c h n i c a l work i s c a r r i o d
f o r any c o - p a n y r e q u i r i n g
b^.ais
Arsong
others
the
following
Ministi*y
of
Posts
Ministry
of
Agriculture
Imperial
Iranian
Gendarmerie
Civil
National
Iranian
are
their
regular
of
contr.Hct
customersi
& .Telegraphs;
Army
Aviation
Aviation
o u t e i t i ' h - r on an " a s r e q u i r e d "
sn^ir.rv^ir.g
assistance.
Aviation
Aviation
Unit;
Unit;
Unit;
Club;
Cartographic
Centre;
Government;
Red L i o n
and
U.S*Arrny
Aviation
Sun
Organization;
Unite
SALESt
I n order t o extend the necessary s e r v i c e to t h e i r v a r i o u s
customers,
A I R T A X I COMPANY r e p r e s e n t a c o m p l e t e l i n e o f a v i a t i o n p r o d u c t s a n d g u a r a n t e e
a f t e r s a l e s and p a r t s s e r v i c e on b e h a l f o f t h e f o l l o w i n g c o m p a n i e s a s t h e i r
e x c l u s i v e ^ran
distributors;
AERO COMMANDER BETHANY
LYCOMING D i v i s i o n
KING
of
RADIO C O R P . ,
DIVISION
Avco
of
Corp.,
Rockwell
Standard,
U.S.A.;
U.S.A.;
U.S.A.;
SUN A I R ELECTRONICS
CORP.,
U.S.A.;
CHAMPION SPARK PLUG COMPANY,
BELL HELICOPTER C O . t
U.S.A.;
U.S.A.
T h e y a r e s i t u a t e d i n a m o d e r n o f f i c e and e n g i n e e r i n g
on t h o N o r t h s i d e o f M e h r a b a d A i r p o r t , e n t r a n c e b e i n g made
e n t r a n c e f r o m t h e m a i n T e h e r a n t o K a r a j Road®
In
Airport
addition
with
with
a
that
place
are
paying
all
the
about
the
separate
measuring
rental.
necessary
Rials
town
and
sq^catres
expense
for
a
maintenance
accommodation
despatch
their
premises
the
their
are
technicians,
period
Airport
and
base
for
passenger
belong
they
to
the
(AIR TAXI
thirty-year
period
is
sited
their
The
Government
COMPANY)
and
at
Abadan
employees
launge.
it
for
have
has
together
ground
of
which,
they
constructed
cost
them
Bonkers:
as
maintain
an
offices
office
and
and
other
housing
necessary
facilities
in
such
as
around
120
an e n g i n e e r ,
menials,
etc.
persons
pilots,
in
their
including
foreigners
assistants,
office
of
staff,
activities.
Bsnk E t t e b a r a t
Iran
Bank S a d e r a t I r a n ,
Teheran.
Reputation:
their
also
well
now e m p l o y i n g
apprentices,
they
as
employees.
professions
fulfilled
2h9000
At
season
at
for
They
various
office
housing
for
8«9,000,000.
During
facilities
the
a branch
necessary
building
facility
by a p r i v a t e
very
t
ood
c'orr.oltracts
rr.d
in
as
n
far
as
it
favourable
is
known
.nenrer.
they
he.ve
so
far
353
•? ;. :: I
va:;•i
r-.iv,-
SHE
It-Si'ih llihraual AiivO'-'- a
Tih-jiv.n, Jiv>u
yol^fcoiwai
c.ibl)
6G1S67*
i M w . i t
Telrix:
Teheran
Srsnchm
or
d«>39?a
2575
Answer
subsidiary
towns o f
Abadan
Back
officio
j»n-J i n
in
which
H'JSiotrstioa
Period
end
•AintAXi
Taxi
fcha
Tn»
provincial
G o n b n d 2fevo<>£»
v/:?a r a g l e t a ? * - !
Xrtvn
v/itli tli5
Ccnpon
on l^fch/Ajtcil 1 9 5 3 for a n unliiiittivl
radar
nur&dr 6 0 ^ 7
to*
fcho
follcvdng'Joo^oo^:
To &rraa£& p a o s ^ n g e p / o u r c o / p o s f c a l n a k o r i a l
I r a n a n d o u t o i d o th-3 c o m - t r y ;
'Xo b a a u l o
sarvico
in
tho
To handl*
In
air*
To * : u r o h s $ s / t o e & l l / t o ror.t/fco n o r t e a s *
r s q v i t c a v n t o f o r e v i c t i o n and t o
train
*>y a i r
photo^aphicra/ttClintiric/A-avortlairi^^av^iiii;
affairs
To
'A
in
pilots
.nil
and
fclnda
technicians
of
ot'vn*
for
p l a n t s and
r>ro:c*;
othsp
pl<md6j
affairs
rol.Vc.lv>)
to
aviation®
T h s i n i t i a l r o g i c s t g r c d c ~ ; . i t a l o f Ttial-n 6 | Q C 0 c C 0 C A w i s l a t o r r u i c a d
t o R i a l s a 0 * C C C f 0 C 0 A • o u b r c q n o n t l y i t was i n c r o o s o d t o I & a l o 2 0 f 0 C 0 9 0 0 0 A
a n d t h a r a a - f t s r i t • wao a g a i n r a i s e d t o i t a p r a a s n t cuoeunt o f R l & l o 5 0 » C O O , O C O A
d i v i d e d i n t o 5 0 0 n o m i n a l o b a r ^ o . o f R i a l 3 1 0 0 0 0 0 0 / - o a c l i f u l l y p a i d up®
The
sharohcldara
cures
$ 0 3 b y As&r Eossain A a a a n Zancanah
25/i b y Fradric Esofc©
of
jkVidU
( j r l t
tha
board
of
diractcrs'eras
Hc^C
fiosaain
„
ACSOB
M w ^ t u ^
Zan&moh
«•
^
^
c
J
^
Chalxtten
J&nad ChafiU
F?d£rle
)
A ' )
1
Eaaho
j. K
K&
y i' h
ad
d T
Ta
ag
gh
h ii
aa
rn
ca
O c c o - —• \ a •
••
Vice-chairman
Gh
ho
o rr b
ba
an
n ii
G
. .•
•
••
Inflaactor
ub
b ss tt ii tt u
u tt e
e
ss u
n ss p
pe
ec
c tt o
o rr
ii n
- ^T
T rr aa n
n ii a
an
a
4
^ H i ^ J I : r l ^ S J
P ^ p a l a n
y a a r l^O?
(1930)*®" jfT'iT tcazvloir a^rT
cMl-lvcn (hlo h
- j o t
oth-33? t h c - a P o r n i A a i i ' n r l i . h u a d F p d n c h ) ^
II,» h v 3
s c h o o l i n g l a S'.rr.n aa-.l i o a l i o l u o p o f a t M p l c « : > f o r
ci
tvYO y o a ' i ' a d u r i n g 1 9 5 2
'tc
v n u in Zurn^
h i t ; cXJt'UiV.ov
!-v.u»
Top a )>orioil
ix-ilaly i n F r a n c e .
sub jec
b\
354
A I u
7 A
T.
VR?
(•: .
A Cor-v-srcisX r l l s t by r-vcres-S.:-:i v/ho h a s r a c o i v a d M..o t.val»vi»is co r-uth
locally*
F r c a about 1 9 5 V 5 5 ha waa alvayo boon •continxil.njj h i e n t u l i o a
i n t i i * f i e l d OA a v i a t i o n and frcia fcbo i n c o p f c i c n o f t h i n
ha J:aa
aX&ayo b o o n . t a k i n g a n a c t i v e p a r t i n t h *
tf^a^^out
o f th-a G&novnl
b u s i n e s s a f f a i r * o f t h i o coapu^y ^and h i 3 e c n s i r c i n X a c t i v i t y htus bo cm
c o a f i n o d t o t h a t con coca* I n f a c k i t i o r u a by h t R a o l f * Apc;vt rC.vc-l
h i o i n v o o t s c n t i n t h i s f i n a ho dooo n e t 'appear t o own raich o t h o r
p o r s c a a X s o n n s o f h i s own.
r/ao b o r a i n 1 9 1 0 » Eo v;<\3 f o r u o r l y tho husband o f
P r l s c o S ' s ' A e h ^ a F P a i a a v i <a © i o t o r o f R i o Xi^ioriaX Eujsxsty tho
ftbahinshah
Arir.uno*ir) • Ho i n a n O H TJndor-SaciNJtru'y o f tho i f . i n i s t r y o f P.ond3 ?<
C d s s u s & c n t i o n a and
f o r a s r X y t h o G-snoral B i r o c t o r o f tho C i v i X A v i a t i m i
( a G o v o n m o n t or/nod © i ^ a n : i « a t i c a ) » Ha was f o r m r l y a n K ^ p t i a n o r i g i n h u t
a f t o r h i e a r r i v a l i a t h i a c o u n t r y ho bacaxno a n a t u r a l i z e d I r a n i a n & u b j s c t «
Ho h a c boon i n I r a n c l n c o about
A p a r t f r c n h i o laboros-fc i n t h i s
f;Lr-a s i n c o about 1 9 5 0 ho h a s boon h a n d l i n g b u n i n o s s u n d o ? d i f f e r e n t a i y l o i u
Ho i s a s h a r e h o l d e r i n , a diroefcor o f d i f f o r o n t l o c a l c o u c o m o i : \ o l i t u i r
E A K \ ETTS3ARAT IHAI? i n w h i c h ho i s tho Chnira-an and H a m e i n g D i r e c t o r . "jja
i s exp-ori-oncod i a a v i a t i o n a n d o h i p p i n g * Ko i s tho owns* o f ir.pcrtar.t
p o r s o n a i insana o f h i s own w i t h a r o p i l l a r a n d a n i m p o r t a n t incoivo •
F r o d r i e Es.?ho vvac b o r n i n 1 9 2 3 , Ea i a m r r i o d a n d h a s c h i l d r e n
( l i i a T S o s S 3 3 5 T o * l a n £ u a g 6 3 o t h a r them A s s y r i a n a n d P a r o i a n : E&£li<£:)»
A p a r t f r c r i - M o i n t a r c o t i n t h i o f i r a ho h a s o t h e r b u o i n o o s a c t i v i t y ar.d
i a n o t t a l c i n g any aefciv-o p a r t i n tho conduct o f t h o conauorcinX o S - r S r s
of t h i s firm.
Tho
main
Operational,
activitioo
Technical
Of
AIR TAXI
and Sales
COM PA NX a r a
a® a r o
described
dividad
into
thr-r^ r>*ctir.;.-<5 f
bolowt
j^KATIONAI.:
AXB TAXI a r o v.a do r t a k i n g a l l k i n d s o f a v i a t i o n a c t i v i t i e s a t t v
iroquQct o f t h e i r p r o s p e c t i v e cuotoci'jrs but not l i i n i t 3 d to
following:
a ) O o n o r a l n o n - a c h o d u l o and o h a r t o r f l i g h t s w i t h i n I f * T f . .
t o n e i g h b o u r i n g c o u n t r i a o c a r r y i n g p a s s e n c ^ r o r^nd/'"
"
. >•
/*»•
b ) S i n c o X9o3 t h a y a r o h a n d l i n g p h o t o g r a p h i c eurroy f-' :
o f tho N a t i o n a l C a r t o r j r a p h i c C o n t r o » a
P l a n O r g a n i s a t i o n * Thoy a r o novi engaged i a
-"
mapping tho c o u n t r y *
c ) S i n c o 1 9 6 2 a r o h a n d l i n g a g r i c u l t u r a l sprayi"<t
o f tho J J i n i s t r y o f A g r i c u l t u r a l
d ) F r o n i 9 6 0 t h o y ^ r a o p e r a t i n g r e g u l a r cchoduV' s
b 3 h a X f o f tho NATIONAL IRANIAIJ O I L C0MP/.1TY>
0) Fron 1 9 6 5 thoy a r o c a r r y i n g out schodiilod n ^
throughout Couth I r a n ?
f ) A i r arabulanca f l i e h t a a a r c q u i r o d by thoU* ^
cuotcaoro*
A I R TAXI COMFAtnr oro tho o-.vaoro o f n i n o t o e n a i r or.-''"
1 2 Aoro Corunandorc and L C 3 3
7 s i n g X c E n g i n o P i p o r & Sparrow C c r m n ^ v
v
*
...ii
'
355
a i a
taxi
(c^nt •!.)
I n a d d i t i o n t o t h a a b o v a . A l l ? T A X I COMPAIT/ © y a r n t ^ r,nd m d n t a i n cix
b e h a l f o f tho Governsant and p r i v a t e c u n t c n o r a c i x t a o n a i r c r a f t conoioiitrtg
c f j
3
Gro.nd C o a r a n n d a r
2
Aoro
6
Turbo
corsnandnrs
1
Turbo
Beaver
n3.rc.raft;
Cosir.andoro
1 Plpo*
2
Cooana
1 3X33
AIR TAXI
of
COMPAK? E c d n f c n i n ,
txpproxiaatoly
D.G.C.A,
3.00 a i r c r a f t
(Baparfcas-nt G e n e r a l
Organization
Thoy
and
I.I.A.A.
(AIR TAXI
andovorfcaulinco
the
Shahinalinh
aro
ackcd
to
of
Civil
are
Frinco
and operate
nainly
Gholaa
Kid
Arny
handling
ownsd
total
muubor
Prino
Lion
rdnietry*
Ct S u a
Aviation)*
technical
aircraft
Rosa
a
or.nod b y
Aviation),
Iranian
also
privately
Arlriiohr,
do
of
(Xnperial
C0MPAITT)
coma
overhaul
por y e a r ,
sorvicin&s
belonging
Pahlavi,
etc*
to
H«I,!7*:
whoa
thsy
s$«
Sinco tho i n c e p t i o n o f t h i s f i r & , they have c o n c e n t r a t e d on
b u i l d i n g up e n i n d e p e n d e n t e n g i n e e r i n g f a c i l i t y and have ^succeeded t o
t h o e x t e n t t h a t o n l y e n g i r a s . a r o now c e n t a b r o a d f o r c e n p l o t o
overhaul*
A l l o t h o r w o r k b e i n g c a r r i e d o u t i n I r a n b y t h e C o m p a n y * e ovm p e r s o n s ! •
In
and
addition
skilled
staff
to
aajor
are
a)
Radio
b)
Xastruaent
c)
Starter,
generator
d)
Magnet1-,
carburettor,
e)
Shoot
basifc
inotallation,
repair
airframe
available
repair
and
xaefcal r e p a i r
ovarhaul
for
and
tho
fully
equipped
workshops
following:
overhaul*
overhaul}
and e l e c t r i c a l
etc.
repair
equipment
and
and m o d i f i c a t i o n
repair
and
overhaul;
overhaul}
work*
T e c h n i c a l work i s c a r r i e d o u t e i t h e r on a a " a o r e q u i r e d * '
f o r any coapaay r e q u i r i n g e n g i n e e r i n g a s c i s t a n c e *
Awong o t h e r s
the
ministry
following
are
of
Pouta &
Ministry
of
Agriculture
Imperial
Iranian
Gsndarnsri^
Civil
Aviation
Unitj
Olubj
ration.-.! Ca: tographio Contra f
Iranian
Government;
Rod L i o n
and
U.3.Arijy
Aviation
regular
Telegraphs;
Aviation
Aviation
Aviation
their
Organisation;
Unit*
Unit;
Unit;
cu3toaarct
of
contract
356
A I R
T A X I
CC\
C • > M
SAV'Sl
l a orrto'r t o o x t ^ / i c l t h o n o c o s - ' j a r y o a r v i e o t o t h o i r v ^ r i c s u a e u s b c ^ . - r ; . ; ,
A l l ? T A X I COi'SCCl viirsvz'jiixt a c o c p l o t o l i n o o f a v i a t i o n p r o G a e l ' s raid
c m r a n t s o a l i t o r :'.nlao a n d p a r t o o o r v i c o on b o h n l f o f t h o
following
cc-^panioa aa c h a i r G ^ c l u s i v o I r a n d5.oti\Lbutoroi
A U K O CCl2h\lVX:il
LYCOMING
DIVISION of Rockwell Standard, U.S.A.J
Pivision
of
Avco
Cerp«,
U.S.A.;
K I ra HA RIO C O K P . , U.S.A.J
F»IU: A I R KLICCXRO^ICS C O R P . , U.S.A.}
CHAUPION
I X U S CO?-IP.OT, U.S.AI
B E L L HELICOPTER C O . , U . S . A .
Thoy
on
aro
tha-Korth
entraaco
In
situated
sido
froa
addition
Abadan A i r p o r t
employoos
lami^o*
tho
a
toother
Tho
(AIR
for
the
of
office
Airport,
to
office
a
have
housing
nsaouring
are
paying
constructed
and i t
hag
cost
bass
for
io
a
tho
prlvato
RLalo
at
thoiv
and
paso-angar
sq.raotreo
A & the.tr
aocossary
about
sited
for
dsopdsh
2*f,000
rental.
all
thw
facility
ciad-3 b y
accomodation
building
placa
thoy
boiag
Road*
and a a i n t o a a n c a
separate
that
v/hich
and englr;o«r:lng
©ntranca
Xaradj
necessary
with
CO.)
period
a codcvn
'foheraii
branch
ground
TAXI
thirty-year
in
Kohrabad
main
with
Government
they
of
tho
belong
to
exponent
pressieaa f o r
a
8-9,000,000*
Daring s o a e o n p o r i o d thoy a l s o E a i n t a i n o f f : i c o s and o t h o r n c c o s s a r y
f a c i l i t i e s a t t h e A i r p o r t a c w e l l a s an o f f i c o a n d h o u s i n g
facilities
i n tha town f o r t h o i r einpleyoos.
Thoy aro
of
various
staff*
nosr e m p l o y i n g
proioscicns
technicians,
Banlcorsi
around 1 2 0
cuch ao
parsons
an o n & l n o e r ,
apprentices,
aanialov
including
pilots,
otc*
in
foroijjnoro
aooiotanta,
thoir
Bank E t t s b a r a t I r a n .
Bank Sad&rat I r a n , T o h s r a n .
I m p u t a t i o n j v e r y good and a s f a r no i t i s known t h e y
f u l f i l l e d t h e i r c o E d t t f m t s i n a s a t i o f a c t o r y zaonnor*
(•*
Tranc-lnticn
cuof
fors3 d
for
charoo
thoir
tuid i n
office
activities.
froa
tha
Iranian
coniraorcial
which
tho
Coi2£orcisil
purposos,
tho
responsibility
Code i
capital
of
tho
of
havo
AKloint
which
lo
shareholders
so
stock
far
company
divided
la
into
limited
shares)•
Teheran,
Iran,
5-12-72.
to
ia
357
co:;K(!v.?;?i at.
A .ill T A X I
CC;ril ,\!Jlf
Iforth Mchrabad
Telephones?
Ca- l c
A l p o r t ,
6619&7
address*
•AIKTAXI
Hxfe^:
or
subsidiary
towns
ThlG
an
is
To- a r r a n g e
Iran
a^ j o i n t
period
Abadan
outside
To handle
the
in
conp.nny
number
offices
find i n
which
60'*7
in
tho
Gonbad
on
the
material
19th
Iran.
with
April
following
service
x
provincial
Kavoos,
v/a3 r o i s t e r e d
for
r
'A
by
the
1953
for
objects:
air
in
country?
the
To p u r c h a s e / t o
pilots
all
air;
s e l l /
requirements
To handle
, „
GWJV
photographical/scientific/advertising/s£>raying
affairs
train
k0257
TKHKi-LMi'
Department ~in Teheran
under
passengcr/car^o/postal
and
To
of
stock
Registration
unlimited
Iran
and
£5" 7 5 *
Branches
. Companies*
Teheran,
663992
to
for
and
rent/
ro
aviation
technicians
kinds
of
other
mortgage
and
to
for
planes
operate
and
other
oacoj
planes;
affairs
relative
to
aviation*
.i.
The i n i t i a l r e g i s t e r c - d c a p i t a l of R i a l s 6 , 0 0 0 , 0 0 0 / - w a s l a t e r
raised
t o R i a l s l O ^ O O . O O O / . s u b s e q u e n t l y i t was i n c r e a s e d t o R i a l s
20,000,000/and t h e r e a f t e r i t was a g a i n r a i s e d t o i t s p r e s e n t aciount o f R i a l s
»000,000/
d i v i d e d i n t o 5 0 0 nominal shares of R i a l s 1 0 0 , 0 0 0 / - each f u l l y paid
up.
The
shareholders
arc:
507'j b y A m i r K o ^ s e i n A a a a a
2 5 > i b y Ahmad G h a f i k
by Fredric
The
xacabers
Anir
of
the
^ossein
board
of
Zanganeh
directors
Aazasa Z a n g a n e h
Ahi.iad C h a f i l e
v/o-of-t he^'-f i r s ^ r ^ e n t i . ^
^eOfbL-. ^f-t^&c^cn^p^iv^
Amir H o s s e i n
is
Aazarn Z a n c ^ n o h
curried
than Persian:
schooling
of
He
in
tv/o y e a r s
Iran
Chairman
..
Inspector
'
u-—""
?< H a n a . ^ i n ^
Director
c
T.Kliorraa
(19J50)*
••
~
Fredric
other
aro:
and
during
and
English
is
19^2
has
and
to
born
French).
a holder
up
was
in
tv/o c h i l d r e n
of
195^
the
(his
I'e
has
a diplcrsa
ho
was
in
-
Iranian
Persian
knov/ledgo
received
for
sane*
Europe
-
year
subjects*
'209
of
1.2.nguagoa
his
secondary
For
1
r.ainlJLr.
rranee.
358
(-.Jor.t M
A S o w ; e r c i a l J ' H o t ' b y p r o f e s s i o n v-lio h a y r e c e i v e . ! h i s t r a i n i n g a s «r.?ch
.locally.
Fro.vi a b o u t 1 V 5 V 5 5 ho h a s a l w a y s b e e n c - . ; : t I n u l r . j h i s s t u d i o . 1
I n t h o i ' i o l d ox a v i a t i o n a n l f r o a t h a i n c e p t i o n o f t ' r i s f i r : - . h e h a s
altf.-sya be-on t a k i n g a n a c t i v e p a r t i n t h o t i a n a ^ c . n c n t o f t h o c & n c r a l
business
o f t h i s c o a ^ a n y a n d h i s cci3;r.orcx:tl a c t i v i t y h a s bejen
confined to that concern.
I n f a c t i t i s run by h i a a s l f f .
h i s 1 T . v o o t ! o u t i n t h i s f i r a h o d o e o n o t a f i p o a r t o ov/n tsiich
p e r s o n a l tnoans o f h i s o w n .
.art f r o a
ether
A h p a d ^ i s C i k v.»as b o r n i n 1 £ 1 0 »
Ho
f o r m e r l y tho husband o f
FriiicejiS Aoliraf i a h l a v i ( a s i r . t o r o f K i u Xtsporial M a j e s t y t h e Shahinuhah
A v i a e - j b r ) • Ho i s a n e:< U n d o r « o c r o fcr y o f t h o
fcinietry
o f Heads &
C o & a u n i c a t i o n s a n d wna f o r ^ r l y t h o G e n e r a l d i r e c t o r o f t h o C i v i l A v i a t i o n
Ho waa f o r n a r l y a n
te^yptitm
o r i g i n hut
( a C o v e r a g e y . t ovmed o r g a n i s a t i o n ) •
a x t c r h i s a r r i v a l i n t h i s c o u n t r y h o became a n a t u r a l i s e d I r a n i a n s u b j e c t .
Ho h a s b e e n i n I r a n s i r . c o a b o u t
A p a r t fr©:3 h i s i n t e r e s t i n t h i s
f i r a ninco
about
he h a 3 boon h a n d l i n g
business
undoz* d i f f e r e n t
stylos.
IIo i s
a shareholder i n , A d i r e c t o r of d i f f e r e n t l o c a l concerns including
& m S A \ U t l i U H i n w h i o h h o i s t h o C h u i r s u m a n d H a n a ^ l n g : > i r o c t o r * Jig
i s e x p e r i e n c e d i n a v i a t i o n and c h i p p i n g *
Ho i s t h o e v n s r o f l a p e r t e n f c .
p e r s o n a l a e & n s oC h i s ouit w i t h a r e g u l a r a n d a n i m p o r t a n t i r . e o v i e .
^ / c
n ^ d r i c . t e ^ was b o r n i n 1 9 2 3 .
Uo i s c a r r i e d and h a s c h i l d r e n
( h i s knowledge o f ' l a n ^ u a ^ o o o t h e r t h e n A s s y r i a n and J'orsi:mh i > n g l i a b ) *
Apart f r o a h i s i n t e r e s t i n t h i s f i r a he h a s o t h o r b u s i n e s s i . c t i v i t y and
i s not t a k i n g any a c t i v e p a r t i n t h o conduct o f t h e c o s ^ e r c i s l
affair©
o f t h i s f i r a*
tions,
Tho m i n a c t i v i t i e s o f A l f t T A X X C C K P A H ? a r o d i v i d e d i n t o t h r o e
O p e r a t i o n o . l , T e c h n i c a l an:l S a l e s a s a r o d o . ; c r i b e d b o l o r r s
sec-
s&mimh*
;«IH "ZAZl cvro v u ^ o r t a k i r . - - ; a l l k i n d o o f a v i a t i o n
request of thoir prospective cuotoaera but
followingi
a)
General
to
non-schedulo
neighbouring
and c h a r t e r
countries
o c t i v i t i o s at tho
not U n i t e d t o tho
flights
carrying
v;ithin
passengers
Iran
and/or
and
freightf
b)
S i n c e 196.} t h e y a r e h a n d l i n g p h o t o g r a p h i c s u r v e y o a behfJLf
o f tho National Cartographic Centre - a s u b s i d i a r y of tho
Ilan Organisation.
£ h o y a r o noa e n g a g e d i n s u r v e y i n g and
Rapping t h e c o u n t r y j
c)
Sinco 1562 are han-HiDg a g r i c u l t u r a l
of tho liir&ptry o f A g r i c u l t u r e !
d)
Proa 1p50 they are operating r e g u l a r scheduled
b e h a l f o f t h e KATlCIC.h I H A N I A 3 0X1 COHi'Arijfj
e)
FrorA 1<:65 t h e y a r e c a r r y i n g
t h r o u g h o u t S o u t h Ixvui}
f)
Air
ambulance
flights
out
spraying
scheduled
as required
by
thoir
air
on
bohalf
flights
nail
on
deliveries
prosjectivo
oust
359
Alii TAXI COMPANY ar«»/th.* ownors oi nir.e-tosn aircraft c o n s i s t i n g of:
12 Aero C o m m a n d e r s and LC3s
7 Single Kngine Piper % Sparrow '~o~:.-.ander a i r c r a f t .
on
I n a d d i t i o n , t o t h e a b o v e , tiixjc
AIR T A X I C O M P A N Y o p e r a t e and m a i n t a i n
b e h a l f o f t h e G o v e r n m e n t and p r i v a t e c u s t o m e r s s i x t e e n a i r c r a f t c o n s i s t i n g
3
2
6
1
1
Grand Commander a i r c r a f t
A e r o Commanders
T u r b o Commanders
Turbo Beaver
Piper
2 Cessna
1 DC3-
A I K 3PAXI CGM?; ( S£ M a i n t a i n ^ o v e r h a u l a n d e r r a t a a t o t a l numbcxo f a p p r o x i m a t e l y I C O a i r c r a f t p e r r o a r , c a i n l y ov.nad b y i - r i ^ o J l i n i t i t r y ,
2 > . a . C . A . ( D e p a r t m e n t G e n e r a l o f C i v i l A v i a t i o n ) , Ked L i o n & S u n
O r g a n i s a t i o n and
• ( l e p r i a l Iranian Arsy Aviation).
T h e y ( A I R T A X I COMPANY) a r e a l s o h a n d l i n g t e c h n i c a l
Gervicii-co
a n d o v e r h a u l i n g © o f e o o e p r i v a t e l y osnc-d a i r c r a f t b e l o n g i n g t o 1 1 . 1 . 1 W
the? S h a h i n s h a h A r i & n t o h r , P r i n c e G h o l c a U e x a I - a h l a v i , e t c . w h e n t h e y
a r o oJccd t o d o cso.
WXHIHCAM
S i n c e the i n c e p t i o n of t h i o f i r m , they have ccnccntrated on
b u i l d i n g up a n i n d e p e n d e n t e n g i n e e r i n g f a c i l i t y and h a v e s u c c e e d e d t o
t h e e x t e n t t h a t o n l y e n g i n e s a r e now c e n t a b r o a d f o r c c s i p l o t o o v e r h a u l ,
i i l l o t h o r w o r k b e i n g c a r r i c d o u t i n I r a n b y t h o C o r ^ r c n y ' s own p e r s o n n e l .
In addition
to
cajor
airframe
overhaul
fully
equipped
work^hopa
of:
360
AIR TAXI CG:-U\\NX
and
ak i l l e d
(Contd.)
nfcaff
ore
available
a)
Radio
b)
Instrument
c)
Starteri
generator
d)
Magneto,
carburettor,
e)
Sheet
basis
installation,
ropair
metal
repair
and
for
and
etc.
and
overhaul;
equipment
repair
and
modification
T e c h n i c a l work i a c a r r i e d
f o r a n y company r e q u i r i n g
the
following:
overhaul;
and e l e c t r i c a l
repair
Among o t h e r s
tlio
repair
ai*d
overhaul;
overhaul;
work.
o u t e i t h e r on an " is r e q u i r e d "
engineering
assistance.
following
are
their
regular
of
contract
custoaex^as
Ministry of Posts & Telegra2aS?
Ministry of Agriculture Aviation Unit;
I m p e r i a l I r a n i a n Array A v i a t i o n U n i t ;
Gendarmerie A v i a t i o n U n i t ;
C i v i l Aviation Club;
Rational Cartographic
Iranian
Centre;
Government;
Red L i o n a n d Sun O r g a n i z a t i o n ;
U.S.Amy Aviation Unit.
SALKS:
In order to extend tho necessary service to t h e . r various customers,
A I R T A X I COMPANY r e p r e s e n t a c o m p l e t e l i n o o f a v i a t i o n p r o d u c t s a n d
g u a r a n t e e a f t e r s a l e s and p a r t s s e r v i c e on b e h a l f of t h e f o l l o w i n g
companies as t h e i r e x c l u s i v e I r a n d i s t r i b u t o r s :
AERO COMKAKiJSTl BKTKAIfif DXVXSXOtf o f l ^ o c ' a v e l l
IA'CCMIKG D i v i s i o n o f A v c o C o r p . ,
U.S.A.;
KISQ
RADIO C O R P . ,
U.S.A.;
U.S.A.;
SUI? AIR ELECTRONICS CORP.,
cn;d5Piort
Standard,
U.S.A.;
SPARK P L U S C O U P A K Y , U . S . A .
T h e y a r o s i t u a t e d i n a M o d e r n o f f i c e and e n g i n e e r i n g
oh the Worth s i d o o f Mehrabad A i r p o r t , e n t r a n c e b e i n g cade
entrance fro:* tho main Teheran t o Karadj Koad.
In
addition
Abadan A i r p o r t
err-.loyoea
launge.
the
the
town
season
at
tho
for
of
a
placo
they
aro
measuring
paying
it
period
ha3
cost
they
a3
for
as
is
sited
for
despatch
As
their
necessary
maintain
an o f f i c o
Rials
at
their
and
2**,COO c q , m e t r e 3
rental.
tho
them a b o u t
also
well
employees.
all
base
accomodation
building
constructed
Airport
their
and m a i n t e n a n c e
housing
separate
that
which
and
offico
necessary
have
period
During
facilities
in
for
( A IK T A X I C O . )
thirty-year
the
with
Tho gcound
Government
thoy
a branch
with
together
facility
by a p r i v a t e
passenger
bolong
to
expense
^renises
for
a .
£,-9,000,000.
offices
and
and h o u s i n g
other
nsccssary
facilities
361
Ain wrs.t
(coi.u.)
Thoy
of
are
various
stuff*
employing
professions
technician:),
Barkers*
4
iuvo
zo
into
cne
shares
Xiuitod
to
very
good
a
n
fulfilled
forced
1.10 p e r s o n a
nDcr,
apprentice8»
far
ViMr.olatiou
ia
arou:?;l
<wi a n
alalia,
Bank i ' t t e b & r a t
Iran,
Hank S a d o r a t I r a n
Repu t a t i o n :
they
ouch
frot.1 t h e
for
and
their
in
in
o.CCico
e t c o t o r n ^ t o i v
aa
c o x i t i s * ntn
Ix\ani£ui C o s : » v . e r c i a l
the
purposesf
tho
responsibility
in
far", a s
a
Code:
capital
of
the
it
in
kttovra
satisfactory
A
.joint
^tock.
o f * ?;lxich
is
shareholders
eo^a/r^
divided
iu
shares).
of thisy f i r a v/as-^ecently ^raised
^OO-'n'ornttial,.sh'ares\ef
als
,000/-
Teheran,
Iran,
1 2 t h June
activities*
Teheran.
a
thoir
Supplement! The^registe^ed c a p i t a l
to H i a l s 5 9 1 0 0 0 , 6 0 0 / + ' d i ' v i d e d an\o
e a c l / f u l l ^ p a i d uVL"*''
r j / .
forei^iuu'U
t**--*^-***-*?^^
cotf&urciul
fehich
-
including
pilot53,
1972.
362
/V;
K o r t h Jlehrabad A i r p o r t ,
C'
*
?
Teheran,
(Tel.iroc.611067 and 6 5 ; ? 2 ) .
"
Irary'
.
J
C v A C e
"
Branches
of
Thin
in
a
or subsidiary
Abadan and i n
.1 q l n t
"frock
o f i i c c a itf t h e
Gonbad Kn'vooa,
/
vhich
provincial
Iran.
v-.'ac r e < ; i c t e r « d
C o m p a n i e s ' H o j f i n t~r.\ti e i f Do p:i r"t^cirfe i n T p h - n ^ n
an u n l i m i t e d p e r i o d u n d e r n u n b o r 6 0 * *>7
7 ff oo r t h e
with
the
on 1 9 i h A j a - i l 1 9 5 3
follov/inj- o b j e c t s :
T o a r r a n g e p a s s e n g e r / c a r g o / p o s t a l Material service
a i r i n I r a n and o u t s i d e
the/country;
To handle
towng
.for
by
p h o t o c r a p h i c a l / s c i e n t i f i c / a d v e r t i s i 11 - / s p r a y i n 2
a f f a i r s i n the a i r ;
/
To p u r c h a s e / t o n o 1 1 / t o r c p t / t o r o r t s a g e
r e q u i r e m e n t s f o r / a v i a t i o n and to
To t r a i n
pilots
To h a n d l e
all
and
technicians
kinds
of
other
for
and
other
operate s a ~ o j
pianoa|
affairs
relative
to
aviation.
The i n i t i a l r e g i s t e r e d c a p i t a l o f £ i a l 3 6 , € 0 0 , 0 0 0 / - was l a t e r
r a i d e d t o R i a l s 1 0 , 0 0 0 » C C . 6 / - a n d s u b a a o t i e n t l y i t •>••>.a a ; - o i n i n c r e a s e d t o
i t s p r e s e n t anov.nt o f K i a l a 2 0 , 0 0 0 , 0 0 0 / - d i v i d e d i n t o 1 0 0 n o w i n a l s h n r o a
of
Kials
200,000/-
f
~
->x< to -/••
'
b y I t r . A a i r H o s s e i n Aazora
}>y-Kr.Ahnud S h a f i k
25/3/"by K r . F r e d r i c I s s x i o .
/
The x e t . b crrrsj o- f
tho
board
of
dix-ectors
Zar.£aneh
are:
J--r.Ar.iir H o s s e i n Aaaact Z a n g a n e h
llr.Ahr.-id fThafik
- Jlr.Frodric Issue
Mr.T.Khorrara
..
/
/
The shareholders are;
—V
It.
••
Inspector
>!ana£in«;
-
Iranian
Director
subjects.
Mr.Amir Hossein Aasan ^ n ? : : i n c h was born i n the F i r s i a n y e a r 1 J 0 9
(1930).
Ho ; i 3 n n r r i c d a n d h a s t w o c h i l d r e n ( h i s k n o . / l e d ^ a o f
languages
o t h e r than
tarsiant
E n g l i s h and F r e n c h ) .
Ho h a s r e c e i v e d h i s s e c o n d n r y
s c h o o l i n g i n I r a n and i s a h o l d o r o f a d i p l o r . a f o r carte.
Tor a p e r i o d
o f tvfo y e a r s d u r i n g 1 9 5 2 u p t o 1 9 h o
wan i n ~ u r . r o - i r . a i n l y i n F r a n c e ®
A C . , " . ; 3 c r c i a l P i l o t b y p r o f e s s i o n t/ho h a s r e c e i v e d h i s t r a i a i
a s such
l o c a l l y . /From about 1 9 5 V 5 5
a l w a y s boon c o n t i n u i n g h i s s t u d i e s
i n tho f i e l d o f a v i a t i o n and f r o n t h o i n c o ^ t i o n o f t h i s f i r m he h a s a l w a y s
b e e n tal'JLng a n a c t i v o p a r t i n t h o r . n n a c e r . e n t o f t?-.e c e n t r a l b u s i n e s s
a f f a i r s / o f t h i s company a n J h i s o ; > r : : . : o r c . i a l a c t i v i t y h a s b o o n c o n f i n e d t o
th.'.t c o n c e r n .
I n f a c t i t i n r ;n b y h L r . s e ! f •
A
rt f r o n > i s invo^tconV, i n
t.'-.'.o f i r a ho d o s s n o t s p i o a r t o ov;a r.v.ch cth-i-r p o r . - w n r . l
of h i s own.
363
s.t:
r.s.'vz
::\\'.\r.vn:\:r. .\r>- -".xc
(contd,)/
/
i i C t ^ i - H S U a f i l : woa b o r a i n 1 9 1 0 .
He wan
tho husband of
1;x v» f
Pr inc0I3 o
iVhiTuvi ( a u i o t o r o f J!is I m p e r i a l .
t h o ^hrihinohtdi
Ari'xx:hr)•
ifc i s a n e x U n o r - - o c c i ' . > r y o f t h e i ; . i r : i » t r y o f R o a d : ; .?< Cor.:© u n i c : « t i o n s a n d was f o r m e r l y tho
fioncral
D i r e c t o r y'f t h o C i v i l
Aviation
( a Covnrn-ncnt cv.aol o r g a n i c a ti.on)«
2!o w a s f o r r . i o r l y a n K g v p t i a n o r i g i n h u t
a f t e r ! . i c r r r l r a l i n t h i s c o u n t r y ho b ^ c c n o a n a t u r a l i s e d I r a n i a n
u>:bjoct«
-'e h a s boon i n I r a n s i n c o a b o u t
Ap/r-rt f r o r i h i s i i . l o r - ; : : t i n t M . : > f i r .
e i r . e e a b o u t 1 9 p 0 2:c h a s b o o n h a n d l i n g b w s i n e a s u'nd.>r d i f f e r e n t
Ho i s a n h r , r o h o l d e r i n , a d i r e c t o r o f U i f f ' : i * - ; n t l o c a l c o n c e r n s
including
BASK iiTTEBAH.V? ITtfdl i n w h i c h h e i s t h o Choirrnsin a n d M a n a g i n g
Director.
Ho i s e x p e r i e n c e d i n a v i a t i o n a n d s h i p p i n g ,
j i l o i o t h o o-./nor o f
important
Kr.Trgdric
(his
kT.c;;»'loiro
Apart
not
this
Iccus
of
v/a's b o r n
language
frow
his
interest
taking
any
active
in
1923*
other
in
t'.vla
part
in
than
fir.n
tho
ho ; h n a
conduct
fins.
The
sections,
j : Ko
ie
carried
Assyrian
and
and
oth-jr
business
the
co;.r.;erci.il
of
hao
Persiani'
children
Hnglibh)*
activity
and
affairs
is
of
/
cain
activities
Operational,
of
AIH T A X I
Technical
an;i
COJIPAKY a r o
Sales
n;i
divided
aro
into
described
three
belocr:
oresAfficif/xi
A I R TAXI a r o
of their
J
«)
a)
b)
J
c)
tin.lor t a k i n g - a l l L i n d a
prospective custonora
G-cn?r:;l
non-nchedule
neighbouring
Sinco
1>63
d)
tho-
aro
handling
Cartographic
They
now o u t a g e d
aro
Since
1^62
are
of
the
From
Centre
in
handling
1965
they
are
aro
Spiith
J
T
h
e
y
( A ^
TAXI
Each
regard
for
carrying
as
Offico
CCKrAlIT)
P I P E R PA 2 2
?evon
P I PIT. R PA 1 3
the
the
of
tho
©praying
to
on b e h a l f
tho
and t a p p i n g
r.bovo
naturo
regular
out
Plan
of
tho
Organisati
country|
on b e h a l f
of
uchoduled
scheduled
required
and
are
air
tho
o?
tho
flights
on
bohnlf
nail
deliveries
Red
operating
aircraft;
•SUP,"!? CU3*
v.oiO;
their
prospective
Crocs
x
othor
customers;
pnrtioo
Oi-ganiaation).
-
•TRI-PAC^R1
aircraft
tho
by
belonging' to
DAKOTA a i r c r a f t ;
ASRO COMMANDS!*
Tl>roe
of
survey
subsidiary
and
freight!
Iran;
DOUGLAS D C - 3
even
Iran
and/or
CCMPAKY;
( w v
t
a
craTtT^ainly
;er*fi
<
-
agricultural
operating
flighto
;
;
within
photo-raj'hie
surveying
NATIONAL* I R A K I All O I L
throughout
flights
pacsor.gero
at the
request
followingi
Agriculture;
Fron 1 9 ^ 0 'they
of
charter
countries carrying
Kational
Ministry
J
end
of a v i a t i o n a c t i v i t i e s
but not U n i t e d to tho
types
tho
\
following!
- / - -
\k
3
aircraft;
aircraft.
was
required.
selected
with
particular
364
s-r'-K.v?
on
SIAVA^-VIVAI AI;:~V-:-:X
(;
In a d d i t i o n t o tho a b o v e A l a TAXI
b e h a l f o f t h o G o v e r n vent a n d p r i v a t e
nix
A'ino
One
PIPS3
PA
Cno
'.CUPT30
I3:AYr.'\
They
CO!
o;-orate
c:;.-; t e n o r s :
a : m i n i ; ; . i n
c::i:;:AlO:::-xX,
C^Ah'CHH
TA::X
COJJPAKT)
are
also
handling
to clinical
s2rv.icin»;s
a n d o v e r h a u l i n g o f sc-v.e p r i v a t e l y o w n o d a i r c r a f t b e l o n g t o j l . l . H ,
S h a b i n s h a h A r i a r c e h r , P r i r o G h o l a n Hesa 7 a h l a v i , c - t c , when t h e y a r e
a e k e d t o d o r>o#
Since
the
up
inception
an
All
of
independent
extent
that
other
work
In a d d i t i o n
s k i l l e d s t a f f are
t'.in
engines
being
are
they
Hadio
installation,
b)
In:;trunion t
c)
Starter,
generator
d)
Ha^noto,
carburettor,
e)
Sheet
repair
carried
out
r e p a i r ' and
• '
{
and
have
facility
in
concentrated
and
r.ov; s e n t
to najor airfrane
available f c r the
a)
notal
firn,
engineering
only
have
abroad
Iran
by
building
coiv^lote
the
overhaul f u l l y
following;:
on
succeeded
for
Company*;;
equipped
the
to
the
overhaul*
ov.-n
persoawc
workshops
and
overhaul;
overhaul $
and . e l e c t r i c a l
'etc.
repair
equipment
repair
and
modification
ropnir
and-overhaul;
overhaul;
v;orh*
/
T e c h n i c a l work i s c a r r i e d o u t e i t h e r on an " a s
c o n t r a c t b a s i s f o r a n y couT?any r e q u i r i n g c r . ^ i n e ^ r i n ^
f
Aaong
othoro^the
following
Ministry
of
Xn^orial
Iranian
Civil
In
1
and
Sun
after
ccn;-anien
as
ar,j?o co:c:aijd""::.
Aviation
SIDT):AR;F
32?:!a:s*
Centre;
Onit.
exclusive
Division
Avco
service to t h e i r
complete l i n e of
ar.d p i r t s
scrvico
Iran
of
AIRSKAfT o f
on
various
custoners,
a v i a t i o n products and
behalf
of
tho
following
distributorst
nocv.weil
Corp.,
standard,
ti.s.A.;
U.^.A.;
AVIATTCH,
RADTO C O t f P . ,
sales
their
P i v i •-on o f
D3 : t A Y I I X A : 0
KING
Unit;
Unit;
Wait;
/
eunri-ntoe
H.V.YK5R
Aviation
Aviation
customers?
Organization;
order t o extend the necessary
AI5? '17,'XI CO:': ANY r e p r e s e n t a
IA'CCr.IIia
regular
Government;
Lion
/U.S.Arny
ULLJL®
Artey
Avinticn
Cartographic
Iranian
their
Agriculture
Ggndercario
ftod
are
requiredu
of
assistance.
Englandt
Canada
Ltd.,
Cr.nada;
- U . . A . ;
365
- Y.r.'x
."AM\::i
,
v
o
t
e
r
.
-
(
c
w
.
t
.
-
:
.U::t AX-: ET,:.:C.\ IQ:IICS C A T ? . ,
mrci
on
the
u
)
,
H.S.A;;
ccsr-Air/,
if.:?.A.
/
T h o / a r e s i t u a t e d i n a :&odovn o f f i c e f«nd e n g i n e e r i n g
i-k>rth n i . d e o f K o h r a b a d A i r p o r t , e n t r a n c e ' . . b e i n g c : a d e
entrance
frost
the
wain
Teheran
to
facility
by a p r i v n i o
/
Karadj
KoruU
I n a d d i t i o n a b r a n c h o f f . i c o a n d rT.\interiunco bc.no A c s i t e d a t
Abadan A i r p o r t w i t h t h e n e c e s s a r y h o u s i n g a c c o m o d a t i o n f o r t h e i r
e.-iployees t o g e t h e r - ^ i t h a s e p a r a t e b u i l d i n g f o r d e s p a t c h a i d jnuicsnger
lnungo*
The g r o u n d o f t h a t p l a c e weasinririg 2 \ C 0 0 s r j . n e t r c s b e l o n g t o
t h e Govor~:r.ent f o r w : c h t h e y a r e p a y i n g " r e n t a l s .
At t h e i r e x p e n s e t h e y
( A I 3 - T A X I C O . ) h a v e c o n s t r u c t e d a l l t h o . n e c c s r n r y p r e m i s e s f o r n. t h i r t y l
y e a r p e r i o d a n d i t h a s c o * t t h e n a b oC.i'.it
u t .-.
. - .•<
i'xals ?>/ j»OCO,GOO»
/
During s e a s o n p e r i o d they a l s o f u ^ i T i t a i n o f f i c e s and o t h « r n e c e s s r . r y
f a c i l i t i e s a t the A i r p o r t a s w e l l a s an o f f i c o and housing f a c i l i t i e s
in
t h e town f o r t h o i r e m p l o y e e s .
7'
T h e y a r e no-*? o r . - l o y i . n g a b o u t 1 2 0 p o r s o r . s i n c l u d i n g
foreigners
o f v n r i o u o p r o f e s s i o n s « u c h a s sin e n g i n e e r , p i l o t s , c . s s i s t c . n t o ,
office
s t a f f , t e c h n i c i a n s , apnronfcicos't r . e n i a l c f e t c e t e r a , i n t h e i r
activities.
Bankerst
Hank J ' t t e b a r . A t
Bank
They
they
•(•
i s
havo
.
enjoying
are
so
far
Translation
one
.i:jto
forced
sliares
United
to
5upp?.eaontl
i a now
Sadorut
from
their
Iranian
cor/sercinl
T'
and i n
their
0»o
v<£ich
^Tho j r e s o n t
in
Teheran.
/
a/ good r e p u t a t i o n
fulfilled
for
Iran,
Iran,
tho
arid a s
corj-itmnnts
Cosmoreial
purposes,
tho
responsibility
registered
in
far
a
Code:
capital
of
the
as
it
A joint
of V:-ich
/ /
25-067 O - 78 - 24
known
manner*
stock
ccrvvany,
ic~divided*
shareholders
capital
Teheran,
Iran
2 7 t h November
ey/.
is
satisfactory
"
i s
20,000,
19^8.
366
AMENDMENTS_
g) Air Tuxi C o . maintain, overhaul and operate
a total number of approximately 100 aircraft
per year, mainly owned by Prime Ministry,
D.G.C.A. (Department General of Civil Aviation),
R e d Lion & Sun Organization, I.I.A.A. (Imperial
Iranian Army Aviation).
C
A
P
I
T
A
L
:
T h e registered capital of Air Taxi C o . has
recently been increased to Rials 5 0 , 0 0 0 , 0 0 0 . —
367
JL-w, c - J J i
^ L *
EP
-
AEO
EP
-
KDG
EP
-
AAK
EP
-
AEH
EP
-
ABD
EP
-
AEC
EP
-
AEJ
EP
-
AER
EP
-
AMK
EP
-
AHZ
EP
- A IP
EP
-
AAB
YT
EP
-
AAD
TT
EP
-
AHH
EP
-
AGN
\K
EP
-
AGJ
\k
EP
-
AGM
\k
EP
-
AGP
\k
L
EP
-
PSP
EP
-
AGH
EP
-
RLS
EP
-
EP
- AGTF
EP
-
AGS
EP
-
FSS
EP
-
FIA
j JUI
AGU
$
JJ
'-^jvy
j j
Wyjy
JA
J
J
J
...
JUT
JU</
;[£>yjy
i
yjy
EP
-
FIB
j
EP
-
DCA
^
EP
-
GRP
EP
-
AFV,
!
'^yjy
368
K o r t h Mehrabad A i r p o r t , T e h e r a n , I r a n
(Tel.j;os.6l19o7
and 6 8 9 9 2 ) •
Branched o r s u b s i d i a r y o f f i c e r : U t h e
p r o v i n c i a l t o w n s o f A b a d c . n , ^ h i r a z and G o r m a n .
This i s
Registration
p e r i o d under
a j o i n t s t o c k company w h i c h was r e g i s t e r e d w i t h
D e p a r t m e n t i n T o h ' e r a u on 1 9 t h A p r i l 1 9 5 3 f o r a n
number 6 0 ^ 7 f o r t h e f o l l o w i n g o b j e c t s :
the Companies* '
unlinifcod
T o a c t a s f o r w a r d e r s o f p a s s e n g e r s / c a r g o and p o s t a l
m a t e r i a l i n a i r i n I r a n and o u t s i d e t h i s c o u n t r y ;
To h a n d l e p h o t o g r a p h i e a l / s c i 0 n t i f i c / a d v c- r t i s i n g /
s p r a y i n g a f f a i r s i n the a i r J
To p u r e h a n e / t o s e l l / t o r e n t / t o m o r t g a g e p l a n e s
and o t h e r r e q u i r e m e n t s o f a v i a t i o n and t o
o p e r a t e same;
To
t r a i n p i l o t s and t e c h n i c i a n s f o r p l a n e s ;
To h a n d l e a l l k i n d s o f o t h e r a f f a i r s r e l a t i v e
to aviation.
T h e i n i t i a l r e g i s t e r e d c a p i t a l o f R i a l s 6 , 0 0 0 , C O O / - was l a t e r
raised
t o R i a l s 1 0 , 0 0 0 , 0 0 0 / - and s u b s e q u e n t l y i t was a g a i n - i n c r e a s e d t o . . i t s
p r e s e n t amount o f R i a l s 2 0 , 0 0 0 , 0 0 0 / - d i v i d e d i n t o 200 n o m i n a l s h a r e s o f
R i a l s 1 0 0 , 0 0 0 / - e a c h , 50% p a i d up and 5 0 ^ u n d e r t a k e n .
The m a j o r i t y
shareholders
Mr . A m i r H o s s e i n
and m e m b e r s o f
the
boardof
directors
aret
Aazam Z a n g a n e h
Mr.Ahmad S h a f i k
Mr.I-'redric I s s u e ,
Mr.T*Khorraa
••
Managing
Director,
—-—^ee^OfeatoetMY*,
•#
Inspector
-
Iranian
subjects.
A l l d o c u m e n t s , e t c . on b e h a l f o f t h e f i r s s h o u l d ho s i g n e d
jointly
b y a n y tvJO o f M e s s r s . A r / i i r l l o s c o i n A a ^ a a Zanrjanc-h, Ahnaci >ihc\fik o r F r c d r i C
I s s u e w i t h t h o s e a l o f the company.
Kr.ArJ.x- H o s s e i n Aaaaw ftanganeh was b o r n i n 1 3 0 9 ( 1 9 5 0 ) •
He i s
m a r r i e d " " ( h i s ' k n o w l e d g e o f l a n g u a g e s " o t h e r t h a n P e r s i a n ; E n g l i s h and T r e n c h ) .
A p i l o t b y p v o f e s s i o n who was f o r m e r l y p r a c t i s i n g h i s p r o f e s s i o n a s s u c h .
E o h a 3 r e c e i v e d h i s secondary schooling l o c a l l y .
Apart from h i s investment
i n t h i o f i r m h e d o c 3 n o t a p p e a r t o p o s s e s s much o t h e r p e r s o n a l m e a n s o f
h i s own.
M r . A h m a d S h a f i k i s a b o u t 5 5 y e a r s o f a g e , who was f o r m e r l y t h e h u s b a n d
o f P r i n c e s s A a h r a f P a h l a v i ( a s i s t e r o f H i s I m p e r i a l M a j e s t y t h e S h a h ) . Ho
i s a n e x U n d e r - S e c r e t o r y o f t h o M i n i s t r y o f R o a d s & C o m m u n i c a t i o n s and w a s
f o r m e r l y t h e G e n e r a l D i r e c t o r o f t h e C i v i l A v i a t i o n ( a G o v e r n m e n t owned
organization).
Ho wa3 f o r m e r l y a n E g y p t i a n o r i g i n who i 3 now a n a t u r a l i z e d
Iranian subject.
has been i n I r a n f o r about
y e a r s and a p a r t f r o m h i e
i n t e r e s t i n t h i o f i r m s i n c e a b o u t 1 9 5 0 ho has been t r a d i n g m a i n l y i n t h e
n a m e s o f n u m e r o u s o t h e r f i r m s and i 3 a s h a r e h o l d e r i n , a d i r e c t o r o f
d i f f e r e n t l o c a l c o n c e r n s i n c l u d i n g Bank K t t e b a r a t * r a n i n w h i c h h e i s t h o
Chairman.
M r . F r c d r i c I s s u e ( a n A s s y r i a n ) was b o r n i n 19<-3•
He i s now m a r r i e d
and h a s ' t h r e e c h i l d r e n ( h i s k n o w l e d g e o f l a n ^ u a ^ e s o t h e r t h a n A s s y r i a n ,
and P e r s i a n : E n g l i s h ) .
h a s r e c e i v e d h i s primary s c h o o l i n g i n t h i s c o u n t r y
and l a t e r h e w a s away i n A m e r i c a whero ho h a s s t u d i e d e l e c t r o n i c s i n a v i a tion.
Ho r e t u r n e d t o I r a n f r o m A m e r i c a i n a b o u t 1 9 5 0 and s u b s e q u e n t l y w a s
employed a s a r e p a i r e r o f r a d i o s .
L a t e r by t h o f i n a n c i a l support o f an
A m e r i c a n c i t i z e n h i e f i n a n c i a l p o s i t i o n was i m p r o v e d .
Apart from h i s
i n t e r e s t i n t h i s f i r m h e i s t h o p r i n c i p a l p a r t n e r a n d M a n a g e r o f I R A " R0l»h
COMl'AHY L T D . o f 7 5 , A v c n p o ' F o r d o w n i , T e h e r a n ( r l i m i t e d l i a b i l i t y c o m p a n y " "
w h i c h v;as r e g i s t e r e d i n T c h o r a n o n 2 0 t h J u l y 1 9 5 9 w i t h a c a p i t a l o f
Rials
A 'hey a r o
5 , 0 0 0 , 0 0 0 / - o f w h i c h 80;* h a s b e e n p a i d by h i m .
the owners o f a
!
n ^ n r c f w v ^ H n i ; f / . r f . o r v i n t h i n n l « c o f o r nroducinsr t e l c r r a u h i c / a c c o i m t a n c r j
369
:>>IuKXA'i? SAHAKI HAVAi'.T/MAl A i a - T A X I
owner
o f that
Tho
and
a)
concern)»
ilain
activities
i n general
They
thoyare
conduct
PIPER
P. A. 2 2 ,
C-'f7t
some
They
are
from
o f Gli.^iiiCA^
interested
an air-taxi
and
also
I W V . M W . M
i n the
P.A.13,
belong
contract
operating
Teheran
a A l l a! i t
i n matters
service
s e v e n " p i PES
o f v;hich
commission
b)
(-Joatc.)
aa
city
which
heading:
by their
COMIlAllDi'JR:.."
are
a r c a s ir.Oo\i
a t tlio
o f Teheran
s i x"ABHD
t o others
AIR-TA/.I
mentioned
operated
three
o n e "DACOTA"
b y tho a
0:1 a
basis;
such
pianos
t o t h op r o v i n c i a l
on a chartered
towns
o f SiilSAZ
basis
and
f o r flights
AJ3ADAN a n d
return,
journeys;
c)
Onc h a r t e r e d
by
d)
e)
When
occasions
arise,
conditions
places
i n the
They
are
They
also
are
parts
tenance
and
They
v/ell
'part
cians j
they
are
also
importing
their
are
for
apprentices,
a f f a i r s
suitable
other
quantities
and
a modern
technical
from-the
air.
o f
equipments,
f o rt h ec o n d u c t ,
America
and
plane3,
services
Material
from
t o
basis;
o f small
othor
f o ra i rt r a v e l f o r
Teheran
European
organization
servicing
main-
countries.
and
station,
o f f i c e s
etc.
i n
i n Teheran.
employing
professions
and
from
spraying
planes
their
advertisement
passengers
o f patients
on a chartered
planes
maintaining
nor/
accepting
requirements
own
o f their
Airport
undertake
planes;
agricultural
f o rt h e i r
now
Sane
o r movements
operation
are
a t times
the
country
a s garages,
various
also
handling
o f Mehrabad
They
of
they
through
health
spare
as
basis
a i rservice
about
including
etcetera,
ninety
persons
pilots,
including
assistants,
i n their
twenty
office
foreigners
s t a f f ,
techni-
a c t i v i t i e s .
V/hen n e c e s s a r y , tho rcpairing3 o f the engines of their p l a n e a are
handled outside this c o u n t r y .
They
are
"LYCOMING"
acting
foreign
Bankers:
a s agents
Bank
Lttebarat
Bank
Melli
Bank
They
have
insured
employees
with
Eiaeh
Amongst
The
Tho
their
tho
Iranian
Melli
O i l FicHs
plan
their
Oil
Iran,
^-au,
oaderat
regular
national'Iranian
in
f o r Iran
f o r "AERO
COMMANDER"
and f o r
firms.
Chief
planes,
Insurance
and
u
f f i c e ;
Naderi
their
Co.,
important
Company
Office;
Chief
Iran,
Office
business
i n Teheran.
premises
and
their
Teheran.
customers
f o rp a s s e n g e r s ,
include:
cargo,
inspection
natters,
o f t h e country;
Organization
f o ra i r . p h o t o g r a p h y ,
etc.
throughout t h o
country;
Other
Oil
in
Operating
different
Differ-.jnt
other
ENTERPOSE,
_ They
It
WILLIAM
enjoying
influential
higher
(*
Translation
from
one
formed
their
firms
a good
the
the
the
i n exploration
Gulf
o f building
and
exploitation
Area;
contractors
including
etcetera.
reputation.
Company
.
i s supported
morally
jj
b y important
sources.
Iranian
f o r connercial
i n which
engaged
Persian
BROTHERS,
that
and
now
i n the
Important
i s believed
s h a r e s , arid
b.T/.
are
companies
places
fc1
Commercial
purposes,
Code:
A joint
capital
o f which
i s divided
o f t h ofshat'eholders
i s limited
the
responsibility
stock
company
i s
into
t o
sharer?).
ninr rniivprnnir
i
r. r.n\' v
i n r. ri l
ni.nitj
n,r
u r o c i u c : J.U ir
LCiUiTiWlMC/wiiuuiuHui.
370
C O N / I ^ ; : : y n \h
Siu*3:?KAT S.CU.U1
EAVAPUYItAI
ftXR-TAXI,
N o r t h Kel.rabad A i r p o r t , T e h e r a n , I r a n
(Tol.iros.611967
and 6 8 9 9 2 ) .
Branches or s u b s i d i a r y o f f i c e s i n •
the p r o v i n c i a l towns o f Abadan,
Shiraz
and
Gorgan*/
/
This i s
Registration
p e r i o d under
a j o i n t s t o c k conpany which.was r e g i s t e r e d with
D e p a r t m e n t i n " T o t i e r a n on 1 9 t h A u r i l 1 9 5 8 f o r an
nujaber GOky f o r t h e f o l l o w i n g o b j e c t s :
/
the Companies'
unlimited
/
To a c t a s f o r w a r d e r s o f p a s s e n g e r s / c a r g o and p o s t a l m a t e r i a l i n
a i r i n I r a n and o u t s i d e t h i s c o u n t r y ;
To h a n d l e
photographical/scientific/advertising/
spraying a f f a i r s in the a i r j
To p u r c h a s e / t o s e l l / t o r e n t / t o m o r t g a g e p l a n e s
a n d o t h e r r e q u i r e m e n t s ' o f a v i a t i o n and t o o p e r a t e s a m e ;
To t r a i n p i l o t s a n d ' t e c h n i c i a n s f o r p l a n e s ;
To handle a l l kinds o f o t h e r a f f a i r s r e l a t i v e to a v i a t i o n .
/
The i n i t i a l r e g i s t e r e d / c a p i t a l o f R i a l s 6 , 0 0 0 , 0 0 0 / - was l a t e r
r a i s e d t o R i a l s 1 0 , 0 0 0 , 0 0 0 / - and s u b s e q u e n t l y i t was a g a i n i n c r e a s e d t o
i t s p r e s e n t amount of Rial's 2 0 , 0 0 0 , 0 0 0 / - d i v i d e d i n t o 200 nominal s h a r e s
o f R i a l s 1 0 0 , 0 0 0 / - e a c h , ^ > 0 $ » p a i d u p and 50>S u n d e r t a k e n .
„o
The
majority
shareholders
M r . A m i r H o s s e i n . Aazam
Mr.Ahmad Sha'fik,
Mr.Fredric /Issue,
Kh
h oorrrr^dm
a i,
Mr.T.K
..
and
members
Zanganeh
Inspector
of
.»
-
the
board
Maying
Iranian
of
directors
are:
Director,
subjects.
A l l d o c u m e n t s , e t c . on b e h a l f o f t h e f i r m s h o u l d b e s i g n e d
jointly
b y a n y two o f M e s s r s . A m i r H o s s e i n Aazam Z a n g a n e h , A h a a d S h a f i k o r F r e d r i c
I s s u e w i t h t h e s.&al o f t h e company.
M r . A m i r Ho^
'-.n A a z a n Z a n g a n e h was b o r n i n I 3 0 9 ( 1 9 3 0 ) .
lie i s
married ( h i s k'u .
rdge o f l a n g u a g e s o t h e r t h a n P e r s i a n : E n g l i s h a n d
French).
A p i l o t b y p r o f e s s i o n who w a s f o r m e r l y p r a c t i s i n g h i s p r o f e s sion as such/
He h a s r e c e i v e d h i s s e c o n d a r y s c h o o l i n g l o c a l l y .
Apart
f r o m h i e i n v e s t m e n t i n t h i s f i r ^ i h e d o e s n o t a p p e a r t o p o s s e s s much
o t h e r p e r s o n a l means o f h i s ovm.
M r . A h m a d S h a f i k i s a b o u t 5 5 y e a r s o f a g e , who was f o r m e r l y t h e
h u s b a n d o;f P r i n c e s s A s h r a f P a h l a y i ( a s i s t e r o f H i s I m p e r i a l M a j e s t y t h e
Shah),
jje i s a n e x U n d e r - S e c r e t a r y o f t h e M i n i s t r y o f R o a d s & Communicat i o n s a d d v.as f o r m e r l y t h e ( G e n e r a l D i r e c t o r o f t h e C i v i l A v i a t i o n ( a
G o v e r n m e n t owned o r g a n i z a t i o n ) .
He w a s f o r m e r l y a n E g y p t i a n o r i g i n who
i s a naturalized Iranian subject.
He h a s b e e n i n I r a n f o r a b o u t 2 6 y e a r a
and a p a r t f r o m h i s i n t e r e s t i n t h i s f i r m s i n c e a b o u t 1 9 5 0 h e h a s b e e n
t r a d i n g m a i n l y i n t h e n*.ues o f n u m e r o u s o t h e r f i r m s and i 3 a s h a r e h o l d e r i n ,
a d i r e c t o r o f d i f f e r e n t l o c a l c o n c e r n s i n c l u d i n g Bank S t t e b a r a t I r a n i n
whicn he i s t h e C h a i r m a n .
M r . F r e d r i c I s s u e ( a n A s s y r i a n ) was b o r n i n 1 9 2 8 ,
He i s now m a r r i e d
ancf h a s t h r e e c h i l d r e n ( h i s k n o w l e d g e o f l a n g u a g e s o t h e r t h a n A s s y r i a n and
Persian; English) .
He h a s r e c e i v e d h i s p r i a a r y s c h o o l i n g .in t h i s c o u n t r y
Ad ' l a t e r h o w a s away i n Ar.ieri - . w h e r e he h a s s t u d i e d e l e c t r o n i c s * n a v i a
tion>
He r e t u r n e d t o I r a n frora - . . - . e r i c a i n a b o u t 1 9 5 0 and s u b s e q u e n t l y was
employed a s a r e p a i r e r of r a d i o s .
L a t e r b y th.? f i n a n c i a l s u p p o r t o f a n
371
SM-iiXAT
ii.\)l;-MX ] I A V A ^ ; Y ' ; A I
A32-TAXI
/
(Contd.)
A f r i c a n c i t i z e n h i s f i n a n c i a l p o s i t J on was i r . i p r o v «
Apart fro:;; h i s
int e r c u t i n t h i s f i r m h e i a t h e p r i n c i p a l p a r t n e r a . i d I ' a n a g o r o f IkAtf KOT.L
COIi.'AKY L T D . o f 7 5 » A v e n u e F e r d o w s i , T e h o r a a ( a l i m i t e d
liabiliTy""co:n.rany
which T a s " r e g i s t e r e d with the Companies' I i o g i s t i - a t i o n Department i n Tohor . 1
on 2 0 t h J u l y 1 9 5 9 w i t h a c a p i t a l o f R i a l s 5 , 0 0 0 , 0 0 0 / - o f which 8 0 % has be: i
p a i d by h i m .
They a r e t h e owners of a paper corivorting f a c t o r y i n
this
p l a c e f o r p r o d u c i n g t e l e g r a p h i c / a c c o u n t a n c y / t e l . a - - t y p c / g u r a p a p e r s a s w e l l re
paper b a g s .
I t i s s a i d t h a t the p r e s e n t w o r t h , o f t h i s f i r a i s r:cro t h a n
t h a t r e g i s t e r e d and he i s t h e a c k n o w l e d g e d owner o f t h a t
concern)*
below
a)
T h e m a i n a c t i v i t i e s o f SHS2KAT 3 AH AM I IIAVj
I«AVA?i~Y!fAI A I R - T A X I a r e a s
and i n g e n e r a l t h e y a r e i n t e r e s t e d i n / m a t t o r s a s m e n t i o n e d a t t h e
They
conduct
an
air-taxi
service
in
the
city
of
Teheran
by
PIPER P . A . 2 2 , s e v e n PIPER P . A . 1 8 , s i x "AERO COMMANDERS"
C - ^ 7 , some o f v/hich b e l o n g to o t h e r s w h i c h a r e o p e r a t e d
commission and c o n t r a c t b a s i s ;
/
their
throe
o n e "DACOTA"
b y them o n a
i
b)
They a r o o p e r a t i n g a l a o ^ ^ v ? - ^ p l a n e s on
from Teheran, t o t h e p r o v i n c i a l towns
return
journeys;
c)
On c h a r t e r e d
by
air
basis
service
they
through
also
the
at
times
sarr.e
a chartered basie for
flights
o f S K I R A Z a n d A3ADAN a n d
undertake
planes;
advertisement
affaix-s
372
SHiJRKAT SAHAMI
l^VAPEWAI
They
employees
insured their planes,
B i r t o h Me H i I n s u r a n c e
have
with
Amongst
their
regular
The
National Iranian
matters, in the
Tho
Iranian
the
Other
Oil
Oil
Operating
other
ENTERPOSE,
They
are
companies
places
(*
enjoying
into
customers
for
air
now
engaged
Translation
from
formed
shares
to
ey/.
for
and
their
the
and
their
include:
cargo,
photography,
firms
Persian
of
BROTHERS,
a
good
inspection
etc.
throughout
in
Gulf
building
exploration
and
exploitation
Area;
contractors
including
etcetera.
reputation.
R
the
higher1
limited
important
premises
.
influential
one
in
important
WILLIAM
Probably
^•©•b^-stMatift^
is
their business
C o . , .Teheran.
Company f o r p a s s e n g e r s ,
F i e l d s of tho
country;
Organization
different
Different
and
and
(Co.utd*)
country|
Oil
in
Plan
AIR-TAXI
the
Iranian
commercial
in
Company
is
supported
morally
by
important H
sources*
which
shares).
the
B
Connercial
purposes,
the
responsibility
Code:
A
capital
of
of
the
joint
which
stock
corapany
i s " divicfodf
shareholders
is
SHSaKAT
SAlvAHI
North
HAVAPatfMAI
Hehr£lba(1
AIP.-i'AXI,
Airport#
#
This i s
Registration
u n d e r number
To
Teheran.
Irsn
(Tel.Kos.61x967
and 6 3 9 9 2 ) .
Branches
the p r o v i n c i a l towns
'
or
of
subsidiary offices
Abadan, S h i r a z and
a . j o i n t s t o c k company w h i c h was r e g i s t e r e d a i t h
D e p a r t / s e n t i n l~ehoron on 1 9 t h A p r i l 1 9 5 8 f o r an
6.0^7 f o r t h e f o l l o w i n g
objects:
handle
plotographical/scientif
spraying
To
affairs
in
purchase/to
and
other
To
the
ic/advertising/
air;
sell/to
mortgage
rent/to^kyxKiksaafcx
requirecents
operate
of
aviation
and
planes
to
sase;
train
pilots
and
technicians
To h a n d l e a l l k i n d s
to aviation.
of
other
for
fcKltxxKiiXKK&sxjcakBXX
'fhe m a j o r i t y
All
Issue
with
cf
the
schooling
fi
^
of
is
to
seal
of
Hgssftin
knowledge
appear
e t c . . on
Hessrs.Amir
profession
dary
shareholders
documents,
two
Mr.Amir
(his
fully
paid
and
relative
N
was
100
later
raised
s h a r e s of
Rials
up.
members
of
the
board
of
directors
are:
M r . A m i r H o s s e i n Aazam Z a n g a n e h
••
Chairman & Managing D i r e c t o r
Mr.Ahmad S h a f i k
. .
Vice-Chairman,
Mr.Fredric
Issue,
Xx^XgggKsxgxxiOtgSx***
Inspector - Iranian
subjects.
Mr.T.Khorrant
any
now
planes}
affairs
The i n i t i a l r e g i s t e r e d c a p i t a l o f - R i a l s 6 , 0 0 0 , 0 0 0 / t o i t s p r e s e n t amount o f R i a l s 1 0 , 0 0 0 , 0 0 0 / - d i v i d e d i n t o
100,000/each
by
the C o m p a n i e s '
unlimited
porlod
a c t a 3 f o r w a r d e r s o f p a s s e n g e r s / c a r g o end p o s t a l
m a t e r i a l i n a i r i n I r a n and o u t s i d e t h i s
country;
To
. by
in
Gorgan.
of
of
company.
Aoz,?.m
Zanganeh
other
the
Aazam
the
l&nguagos
who w a s
firm
was b o r n
than
should
^anganeh,
In
Apart
much o t h e r
from
his
personal
be
Ahmad
1309
xnvestment
means
of
his
ae°fias
in
signed
Shafik
(1930),
Persian:^r.glish
formerl^1xxj?xIyitlAasSsScE.e
locally.
possess
behalf
Hossein
and
jointly
or
Ho
Fredric
is
this
married
-French).
received
firm
ho
his
A
pll
secon
does
not
own.
Mr.Ahmad S h a f i k i s about ^
y e a r s o f a g e , who w a s f o r m e r l y t h e h u s b a n c
H«
P r i n c e s s 1Aahraf P a h l a v i (a s i s t e r of His I m p e r i a l M a j e s t y the S h a h ) .
a n e x U i y & r - S e c r e t a r y o f t h e M i n i s t r y o f ^ o a d s 2c C o m m u n i c a t i o n s a n d w a s
f o r m e r l y t h e G e n e r a l ^ i r e c t o r o f t h e ^ i v l l A v i a t i o n ( a Government owned
organization).
He w a s f o r m e r l y a n E g y p t i a n o r i g i n who i s n o w a n a t u i y L i z e d
Iranian subject.
B e h a s b e e n i n I r a n f o r a b o u t 26 y e a r s a n d a p a r t f r o m h i
I n t e r e s t i n t h i s f i r m s i n c e about 1 9 5 0 he has been t r a d i n g mainly in the
names o f n u m e r o u s o t h e r f i r m s and i s a s h a r e h o l d e r i n , s e e d .a d i r e c t o r o f
..
different
i n c l u d i n g B a n k E t t e b a r a t I t a n x n whxcTx "he
Chairman.
local concerns*
la t.
374
and
has
three
Persian:
and
children
*ngli
later
he
was
Chi«
11 q
h).
8
ov.ay
h:sa
in
>
r
j » „ . ..
.sc*ivpd°'-- •
A f r i c a
-,0
»;,
" oi •
i
d t o Iran from America in 0 b < - t
0
as a repairer of ra-Uos.
L a t e r b y < ha f i » »
?
c i t i z e n h i s f i n a n c i a l p o s i t i o n was W ^ v ^ '
f i r , he i s t h e
Avenue Fordo**!,- T e h o r , n (a l i m i t e d l i
J
d
e
'
\
\
. °
-
/
* ,
°f
. ^
r t
^
-
" '
A
-
J
1A l c
j
t
n
in
o
y
fcbl,
f
of
this
place
tt
.
C i 5
The
'
a)
for
teroQw:
main
J
They
producing
he
is
the
activities
of
SKfiHKAT SAHAMI
L
conduct
and
T
L
service
PIPER P . A . 2 2
piassaa,
seven
xsdt o n e
"DACOTA"
f«xx
some
A±
a
C- ^ 7 , p i h
They
On x
are
e)
operating
from
return
When
city
to
of
others
such
the
that
six
which
^
concern).
AI3-TAXI
mentioned
Teheran
PIPER P . A . l S ,
to
of
™
by
at
the
their
bead
i n g ^
three
"AERO C O ^ N D S a S "
are
k aaai x
3 yJ: h a
operated
by
*
J
them
basis;
planes
as
on
provincial
aQ£hartered
towns
basis
SHIRAZ
and
for
AEADAN
journeys;
by
basis
air
occasions
places
vr. t h e
or
are
at
the
times
same
accepting
movements
country
handling
also
through
arise,they
conditions
also
t h e y sane
service
health
They are
air*.
also
-
the
k x k k i k h x i: k x x k h x f x r. :t
belong
Teheran
chartered
affairs
d)
which
in
owner
l
HAVAPEYKU
l n
c o m m i s s i o n c o n t r a c t
A
flights
and
of
acknowledged
i n U r e 6 U d
air-taxi
on
c)
.
an
Uxi*iz&x&±x±usx
b)
™
ln
t e l e g r a p h i c / a c c o un t a n c y / t e l e
also
on
xagKismc
of
a
undertaking
advertisement
planes;
passengers
patients
chartered
agricultural
for
from
air
Teheran
travel
to
for
other
basis;
sprayirvr£
services?:
from
the
equipments,
They
parts
and
a
for
-
importing
their
operation*
their
own p l a n e s
of
their
requirements
and
other
planes
of
small
material
from
for
quantities
the
of/spare
conduct,znri
Arr.erica2fx22xxici
and
maintenance
European
countries,
now
They
are^/inaintaining
s u i r xble
f
and
offices
Mehrabad
as
well
Airport
as
in
£
o r
fc£fxxKa¥XKs:i2EX
their
and
are
now
organization
garages,^technical
servicing
station,
stc.
in
part
Teheran.
including
They
a modern
planes,
employing
about
ninety
persons^of
twenty
foreigners
various
professions
XHxifcsrKX-affxKfcsc
including
pilots,
in
activities.
their
assistants,
When n e c e s s a r y ,
handled
outside
They
"LYCOMING"
are
with
have
the
engines
of
apprentices,
their
as
agents
for
Iran
for
planes
" A E R O COMMANDER"
Bank E t t e b a r a t I r a n , C h i e f
Office;
Bank M e l l i I r a n , C h i e f
Office;
Bank S a d e r a t I r a n , N a d e r i O f f i c e
etcet«
are
and
for
in
Teheran.
.
insured
Bimeh M e l l i
of
technicians,
firms.
ua^iGSof
They
repairings
staff,
country.
acting
foreign
Bankers:
fie^eas^
the
this
office
their
Insurance
planes,
Co.,
their
Teheran.
business
premises
and
their
e
c
375
Amongst
i'he
their
regular
and
important
custor.ors
N a t i o n a l I r a n i a n O i l Company f o r p a s s e n g e r s ,
in the O i l F i e l d s of the country;
The I r a n i a n
country;
Other
Plan
Oil
Organization
Operating
exploitation
in
Different
companies
different
other
ENTERPOSE,
for.air
important
WILLIAM
cargo,
photography,
now
places
include:
engaged
in
in
etc.
nutters,
throughout
exploration
the Persian
building
firms
inspection
Gulf
of^/contractors
tho
and
Area;
including
BROTHERS,
etcetera.
They
It
and
(*
is
are
enjoying
believed
influential
Translation
that
higher
from
a
the
good
the
reputation.
Company
is
supported
morally
by
important
sources.
Iranian
Commercial
Teheran,
Code;
A
joint
Iran,
15th
July
1965.
stock'corapany
is'
376
SR3RXA T S All AM I
HAVAPiCYMAl A I R - T A>
yj-r-J.:Mohrabad
y [
•' * ^
J
^
act
as
Tehtrm.
Iran
and 6 8 9 9 2 ) .
(Tel.No3.611967
•
This i s
Registration
under, number
To
Airport,
/
a . j o i n t s t o c k company w h i c h was. r e g i s t e r e d w i t h
D e p a r t n e n t i n T e h e r a n on 1 9 t h A p r i l 1 9 5 3 f o r an
60^7 f o r the f o l l o w i n g
objects:
forwarders
of
' I a'n'd '
passengers/cargo
the Companies*
unlimited
nerii
'
postal
m a t e r i a l i n a i r i n I r a n a n d o u t s i d e t h i s c o u n t r y } -J '
>
.
To h a n d l e p t o t o g r a p h i c a l / s c i e n t i f i c / a d v e r t i s i n g /
{
.
s p r a y i n g a f f a i r s in the air';
. - — ' v ' < » » * * •
• To p u r c h a s e / t o s e l l / t o ^ / r e n t / t o h y p o t h e c a t e p l a n e s
.
and o t h e r r e q u i r e m e n t s o f a v i a t i o n and t o
/ ,
..*
'
. .
'
.
>'
'
*-
1
,
' o p e r a t e same; /
••"
. . . "
'
, J' '
' ''
To t r a i n p i l o t s and t e c h n i c i a n s f o r p l a n e s ; '
..
To h a n d l e a l l k i n d s o f o t h e r a f f a i r s
relative
.
M
•
/
'
1
to
aviation,
'
The i n i t i a l r e g i s t e r e d c a p i t a l o f R i a l s 6 , 0 0 0 , 0 0 0 / - was l a t e r
raised
t o i t s p r e s e n t amount o f , R i a l s 1 0 , 0 0 0 , 0 0 0 / - d i v i d e d i n t o 1 0 0 s h a r e s ' of
Rial,
1 0 0 , 0 0 0 / - e a c h o f w h i c h ^ C a l a i s 8 , 0 0 0 , 0 0 0 / - ) h a s now b e e n p a i d up a n d t J l
j ' * . *
±,
t
'
balance undertaken.
/
'
The
majority
shareholders
and
members
of
the
Mr.Amir Hossein"Aazam Zanganeh" U
Mr*Ahmad S h a f i k
Vice-Chaircan,
;', y
by
,
-
Mr.Fredric
' tfrfttocshang Ainini-RaA . .
A l l dcany two
Issue
seal
M r . A < .. ^ H n s s e i n
to
Chairman
-
possess
of
the
company*
x
Aasam
Z a n j ^ h
was b o r n
much o t l ^ r
personal
of
directors
& «Mana*ir.*
"
orot
3
-
Xr.apoc t or - Tr*at».n
. " . a e n t o , e t c . e n b e h n l f o t tYi«» f l r »
? M e s s r s . A m i r H o s s e i n Aazam ^ a n g w t h ,
witty7.he
app«*'r
Issue,
beard
means
W
Afcn&l
•(
•»-1
-5
^
in
of
130?
his
v
<Cl919>.
Hj
is
f
..
married
own,
•
/
j f c , M . „ a d S h a f i k i s a b o u t - 5 5 y e a r s o f a g e , who w a s f o r m e r l y
the'husban,
O f / P r l l ^ n L s h r a S Pahlavi ( a s i s t e r " of His I m p e r i a l Majesty the
^
* .
U
**
U n o r - S Q C r e t a r y o f t h e M i n i s t r y o f * o a d s 2c C o m m u n i c a t i o n s a n d v a s
-.'nrwri7
tho G e n e r a l E r e c t o r o f t h e c i v i l A v i a t i o n ( a Government owned
aartlon).
Ho w a s f o r m e r l y a n " E g y p t i a n o r i g i n , who i s now a n a t u r l i z e d
Eo h a s b e e n i n I r a n f o r a b o u t 2 5 y e a r s ' a n d a p a r t f r o m h i :
l a t h U f i r m s i n c e about 1 9 5 0 he has been" t r a d i n g m a i n l y i n the
v f r.w»$r©ui> o t h e r f i r m s a n d i s a s h a r e h o l d e r i n a n d a d i r e c t o r o f
l « c * l cone or no*
- :
*
377
' SH3SKAT
SAJIAMI
IIAVAPfiYtfAl A I R - T A X I
(Ccrtd.)
/
Sometime a g o t h e y were i n t e r e s t e d t o s e c u r e the agency f o r
f o r c e r t a i n f o r e i g n f i r m s and t o commence t o i c s p o r t t h e i r g o o d s
G o v e r n m e n t D e p a r t m e n t s and o t h e r s o n a c o m m i s s i o n b a s i ' s .
)
j / f t t f
Bankers*
/
y ' *
For
the
present
operating
an
Reputation:
Translatioft
(*
is
one
into
formed
shares
limited
...
1
this
firm
is
air-taxi
service
good,
the
from
for
and
to
'
/ : <
•
J
the
which
in
line
Iranian
commercial
in
their
in
the
sole
concern
this
of
their
the
its
kind
Commercial
Code1
of
V9
>
v
^
*
of
the
^
^
A joint
capital
responsibility
t
who
activity.
/
W
V
£
^
g
country.
purposes,/the
shares).
of
C
^
-
Bank E t t e b a r a t I r a n ;
/
Bank M e l l i I r a n , C h i e f O f f i c e ;
/
Bank P a r s - , - C h i e f - O f f i c e - in. T e h e r a n *
#
are
:> s
Iran
for
-
which
stock
i«i
shareholders
conpany,
divided
is
N
f
/ V
—
DACOTTA
4
AERO COMMANDERS
"
t
e
l 0 n &
t f
- ' .
From T c - h e r a n
S
In
ca;.;, ;
t 0
HI:UZ
°
lt
X 1
operation
"n.ni.aioh basis.
as
n e £ n M a r i
°
t h e r s
n
»
ABABAN
charter
basis.
as
per
a-.-eer-.ent.
charters.
t
Regular
Mainly
such
have
All
are
chartering
America,
and f r o m European
and h a n d l i n g s a l e s .
for
constructed
- part
employees such as
aviators
tashkilat
including
o f Mehrabad
daftari,
, te
for
va
countries
tassissat
offices,
Port Area
technicians
s e r v i n g through t h i s Sherkat
engine
repairings.
Agent
,
agric
from
SHERXAT TASh'XILAT
90
theh
in
this
equipments
mohajaz
aeroplane
is.
of
place
which 2 0
handled.
and m o d e r n
garage,
are
/
servicing
foreign
Except
tamirat
AERO COMMANDER LY
LYCOMING,
etc.
BK ETTriSIRAN CO
SADSRAT IRAN N A DERI
From H i g h e r s o u r c e s G o v e r o r o t h e r
are
bout H i s . 8 0 / 1 0 0 , O O o . O O o a c t u a l c a p i t a l
sbeing
have.
supported.
.. , , ,
,
^ ^
bldg/pn
station,/
i
378
SH2R/AV
S Ail A MI
KAVA'P&xYIAl A l t f - T A X I
(Cor.-t*. >
> V- :
M r . F r o d r i c I a nn e ( a n A s s y r i a n ) w a s b o r n I n 1 9 2 3 .
He i s now i-r-rri.\-d
a n d h a s t h r e e c h i l d r e n ( h i s k n o w l e d g e o f l a n g u a g e s o t h e r t h a n A s s y r i a n .-<nd
Persian: English),
He h a s r e c e i v e d h i s p r i m a r y s c h o o l i n g i n t h i s c o u n t r y
and l a t e r ha w a s away i n A m e r i c a , w h e r e he h a s s t u d i e d e l e c t r o n i c s i n a v i a t i o n
rotuxmed t o I r a n from A m e r i c a i n a b o u t 1 9 5 0 a n d ^ s u b s e q u e n t l y was e m p l o y e d
as a repairer of radios.
L a t e r b y t h e f i n a n c i a l s u p p o r t o f an A m e r i c a n
A p a r t fro-a h i s i n t e r e s t i n t h i :
c i t i z e n h i s f i n a n c i a l p o s i t i o n was i m p r o v e d .
f i r m h e i s t h e p r i n c i p a l p a r t n e r and M a n a g e r o f /ii?AK ROLL CC.hVJjY L T D . o f 7
Avenue F o r d o w s i , T e h e r < n ( a l i m i t e d l i a b i l i t y company r-hich was r e g i s t e r e d
:
T e h e r a n o n 2 0 t h J u l y 1 9 5 9 w i t h a c a p i t a l o f ^ i s l s 5 , 0 0 0 , 0 0 0 / - o f w h i c h 80,S
has been p a i d by him.
They a r e the owners o f a p a p e r c o n v e r t i n g f a c t o r y i n
t h i s p l a c e f o r p r o d u c i n g t e l e g r a p h i c / a c c o u n t a n c y / t e l e - t y p e / g u r a p a p e r s a s wei:
as paper b a g s .
I t I s s a i d t h a t t h e p r e s e n t ' ' w o r t h o f t h i s f i r m i s more t h a n
that r e g i s t e r e d ) .
f
... <*«-•
T h e m a i n a c t i v i t i e s o f SK.-:iSLVT._SAHA;*I B A V A P £ X £ & I _ A I R - T A X I a r e a s b e l o w
in g e n e r a l they are i n t e r e s t e d in matters as nentioned at the heading:
J&
i
V V;v
a ) T h e y c o n d u c t an a i r - t a x i s e r v i c e i n t h e c i t y o f T e h e r a n b y t h e i r f e w
1
s s w i l l - p l a n e s ( P . A . 2 2 , "TRIPSYSER ' and• " P l P S a v m o d e l s , - t h r e e "AERO
S COMMANDERS" and o n e "DACOTA" C - ^ 7 ) w h i c h t h e y j h a v e p u r c h a s e d
from A m e r i c a ;
,
...
,
.
»
C
*
f)
.
^
L
and
f
b)
' '
*
*
"
.
v ' t ^ ' ••
'
At
t i m e s t h e y a c c e p t p a s s e n g e r s from T e h e r a n 'ta&abhev d e s t i n a t i o n s
in the country such as^jS.au.th^of—Iran~but-so--far-th-y-have*nfoT"
—^oper^t^H suc'h^ir-?egnTar—c6rvice;'
j' y
"
)
c)
At
t i m e s t h e y are undertaking a d v e r t i s e m e n t a f f a i r s by a i r s e r v i c e
w h i c h a r e h a n d l e d by t h e i r above m e n t i o n e d -sjj-^ll p l a n e s ; .
d)
At
times they accept passengers f o r air t r a v e l for health conditions
or movements o f p a t i e n t s from T e h e r a n t o o t h e r p l a c e s i n t h e c o u n t r y
where r j f i ^ J J i e x ^ i x J L i n e s - o p e r a t e .
I N such c a s e s they are c h a r t e r i n g
their planes;
.
.
f
- I
e)
VjazyjS&t
gujpo
f)
They
30~\0p/r±e tho.ir-.few othtfr"""PIPfiR" / p l a n e S / f o r a l o c a l f i r m s
/
( B . . . ; .HAHR- / iiX: USTRiAL C 0 , ) - b n a c h a r t e r e d b a s x s f o V - - s p r a y i n g p u r p o s e s .
dom t h e y o p e r a t e 0 t h e i r ~ p l 5 . n e s . _ f o r
ol?7~etc % when-necessary;
agricultural
spraying
They import t h e i r r e q u i r e m e n t s c f v e r y s m a l l n a t u r e such a s
spare
p a r t s f o r t h e i r p l a n e s and o t h e r m a t e r i a l f o r t h e c o n d u c t o f
their
o p e r a t i o n s f o r the above purposes from
Germany and E n g l a n d *
•
They
employ
therein
servicing
-i—J>
are
>
now l o c a t e d
a
station
» vy r --
in
few p e r s o n s .
for
the
; / >• y ^ '*>
suitable
They
repairing
rented
also
of
offices
maintain
their
in
planes,
in
that
y
;
'
Mehrabad
place
.
A
a
.
£rp
0 r
t
t.
technics
y/-
379
lfov.{&~K<rhra V.-r * - A-iv,-;o su U
I
t<•-Tt
n
m I
c
«Jt
r
3
planes
7
PIPER
6
AERO
1
have
^
'
110
j
^
l
i
as
per
f-.o
^
P,A.l8
COMMANDERS
have
C.-k7
DACOTTA
k
PIPERP.A.22-
,
ASRO COMMANDERS
under
nazar
belonging
From
Teheran
In
Regular
Mainly
such
AIR
to
TAXI
negahdari
others
SHIRAZ
on
a
ABADAN
cas*. , t h e n
are
and
operation
commission
charter
chartering
basis,
basis,
as
agreement.
charters.
,
a^ric
from
Afflei~.'ca,
and
and
handling
from
European
countries
equipments
sales.
SHSRXAT TASH/CILAT
f o r t a s h k i l a t va
t a s s i s s a t mohajaz
have constructed
including o f f i c e s ,
aeroplane
- p a r t of Mehrabad P o r t Area
is.
and modern
garage,
servicing
90
are
All
employees such as
aviators
daftari,
,
te
technicians
s e r v i n g through t h i s Sherkat
engine
repairings.
Agent
for
in
this
of
place
which
20
handled.
statioi
foreign
Except
tarnirat
j
y
AERO COMMANDER LY
LYCOMING,
BK ETTEBIRAN CO
/
etc.
SADKRAT
/
IRAN NADERI
From H i g h e r s o u r c e s G o v e r o r o t h e r
are sbeing
bout R I s . 8 0 / 1 0 0 , 0 0 0 , 0 0 0 actual capital, have.
/
supported.
_ T ^ H MiuLLI
.
bldg/p
'
380
CCSi"'i J K M ' I A L
/ W
'
SHS3XAY-SAHAXI- HAVAP2YMAI
75
(ox
i
/ •
/
/
AIK-'fAXI,
5 0 0 ) , K'niaban F r d o . v s i , T e h e r a n , w i t h
in Teheran, Iran
(Tel.i;o.45-03).
•
T h i s i s a j o i n t s t o c k company w h i c h
A p r i l 1 9 5 3 f o r an u n l i m i t e d perio'd under
objects:
a
Branch
Office
was r e g i s t e r e d i n T e h e r a n on 1 9 t h .
number § 6 ^ 7 f o r t h e f o l l o w i n g
/
/
To o p e r a t e a n a i r t r a v e l s e r v i c e ,
f
To a c t a s f o r w a r d i n g a g e n t s b y a i r and t o u n d e r t a k e o t h e r
activities
/
relative thereto;
To p u r c h a s e , t o s o i l o r t o r e n t p l a n e s ;
/
To u n d e r t a k e o t h e r a i r w a y s e r v i c e s and t o / e s t a b l i s h r e p r e s e n t a t i o n f o r
air trafficj
/
To u n d e r t a k e o t h e r f r e e a i r a c t i v i t i e s r e l a t i v e t o i m p o r t s ,
exports,
and i f n e c ^ e s s a r y t o i n v e s t f o r e i g n c a p i t a l s a c c o r d i n g t o r e g u l a t i o n s ,
etc.
.
/
/'
of
Registered capital:
R i a l s 6 , 0 0 6 , 0 0 0 / - d i v i d e d i n t o 200 nominal
R i a l s 3 0 , 0 0 0 / - e a c h , 2 / 3 r d s p a i d - u p and t h e b a l a n c e u n d e r t a k e n .
The m a j o r i t y
shareholders
and member • o f
the
board
of
shares
directors
are:
Mr.Aftir Hossein Aazaj/Zanganeh
"
Ahmad S h a f i k
/
..
..
Chairman & Managing
Vice-chairman,
Director,
"
"
..
Inspector
subjects".
Frederic
Hooshang
Issue,/
Aaini.?Rad
-
Iranian
/
A l l d o c u m e n t s , e t c . oiy b e h a l f o f t h e f i r m
a n y two o f " M e s s r s . A m i r H o s s e i n Aaaam Z a n g a n e h ,
I s s u e w i t h ' ae s e a l o f t h e company.
^ ^
should be s i g n e d
Ahmad S h a f i g h o r
j o i n t l y by
Frederic
Mr.Amir H o s ^ o i ' . Aa/am Zanganeh i s
years of age ( h i s knowledge of
l a n g u a g e s o ' h e r t h a n P e r s i a n : E n g l i s h and F r e n c h ) .
A p i l o t b y p r o f e s s i o n wh<
has receivf : h i s t r a i n i n g as such i n France.
He h a s a l s o s t u d i e d a d m i n i s t r a t i o n in av/.ation.
H e - r e t u r n e d t o I r a n from Europe i n 1 9 5 ^ and b e f o r e t h e
f o r m a t i o n o f t h i s f i r m was e n g a g e d i n a g r i c u l t u r a l
affairs.
/
Kr.Ahmed S h a f x k i s
y e a r s o f a g e who was f o r m e r l y t h e h u s b a n d o f
P r i n c e s s Ashr&f I-'ahlavi ( a s i s t e r of His I m p e r i a l M a j e s t y the S h a h ) .
He i s
an e x U n d e r - S e c r e t a r y o f t h e M i n i s t r y o f Roads & C o m m u n i c a t i o n s and was
/
f o r m e r l y the G e n e r a l d i r e c t o r o f the C i v i l A v i a t i o n ( a Government o r g a n i z a - /
tion).
A p a r t f r o m h i s i n t e r e s t i n t h i s f i r m he i s a l s o a s h a r e h o l d e r ,
/'
v
d i r e c t o r o r the' chairman of v a r i o u s l o c a l f i r m s i n c l u d i n g :
/ '
S R S R K A T ~ S A H A M / - H A V A P E Y M A I J P A R S • ( P A R S - A I R i V A Y 3 ^ C 0 VLTD.')i
? ir.,MAH L L O Y ^ C O . ,
IR.'-MAK NATIONAL SHIPPING C O . . ,
,
,
• IKkN
. I 0 N A L IKSURAKC3 C O . ,
- 3 ) , } 1 ^
J
SEiRKAT SAtTAMI AMIRAN,
* T
• '
BANK ETiKBARAT I R A N ,
PERSIAN oliIPPING S E R V I C E S ,
IRANIAN -TRAVEL-AGENCY-JIITAM,
VACO LUG* RUBBER INDUSTRIES ( I R A N ) L T D . , e t c .
He h a s / t h e
maintaining
reputation
sound
/
LTD.,
of
being
a hard
relations, with
worker,
certain
j '
'
energetic
influential
and
appears
sources
to
be
locally.
i
I s s u e i s ^.hr y e a r s o f a g e ( h i s k n o w l e d g e o f l a n g u a g e s o t h e r
>;Mr.Frederic
than* A s s y r i a n and P e r s i a n : ' E n g l i s h ) .
He h a s s t u d i e d e l e c t r i c a n d r a d i o
/
a v i a t i o n mechanism i n A m e r i c a .
He r e t u r n e d t o t h i s c o u n t r y f r o m A m e r i c a i n
I a b e u t 1 9 ^ 9 and b e f o r e t h e f o r m a t i o n o f t h i s f i r m ..as e m p l o y e d on a s a l a r y
b a s i s by Mehrabad A i r p o r t of T e h e r a n .
F o r m e r l y h e was a c t i n g a s a r a d i o
r e p a i r e r and i t i s s a i d t h a t t h r o u g h t h e s u p p o r t o f t h e h u s b a n d ( a n A m e r i c a n
^ / c i t i z e n ) o f a s i s t e r o f h i s he h a s i n p r o v e d i n 3 i v i n g
conditions.
The
activities
of
SKERKAT SAHAKI KAVAPEIMAI
AIR-TAXI
are
as
below:
381
SR'£oaAT
SAHAMI
HAVAPEYKAI
AI'1-TAXI
(Contd . )
a)
T h e y c o n d u c t an a i r - t a x i s e r v i c e i n t h e c i t y ' o f T e h e r a n . .. I t i s - s a i d
t h a t t h e y a r e t h e o w n e r s o f f o u r s m a l l p l a r . e s ( p . A . 2 2 " " T R i r i J Y S o . - i " ' .-in
" P I P E R " r o d e l s , t h r e e "AERO C0!!;1A?IDERS" and o n e " D A C O T A " C - h ? ) w h i c h
t h e y have purchased from A m e r i c a ;
b)
Very seldom they
in the country
sttch a r e g u l a r
c)
At
times
which
they
are
a c c e p t p a s s e n g e r s from Teheran f o r o t h e r
destinations
such as South of Iran but so f a r they have not o p e r a t e
service;
./
are
/
undertaking
handled
by
their
advertisement
above
affairs
mentioned
%
small
'
/
by
air
service
planes;
*
d)
Very seldom they accept passengers f o r a i r t r a v e l f o r h e a l t h
conditions
o r movements of p a t i e n t s from Teheran t o o.ther p l a c e s i n the c o u n t r y
w h e r e no o t h e r a i r l i n e s o p e r a t e .
In s u c h / c a s e s they are c h a r t e r i n g
their planes;
/
e)
Very seldom they operate
when n e c e s s a r y .
their
planes
/
for
J
agricultural
purposes,
etc.
f
...
hey import t h e i r
parts for their planes
f o r the above purposes
requirements of v / r y s m a l l nature such as spare
and o t h e r m a t e r i a l f o r t h e c o n d u c t o f t h e i r o p e r a t i c
f r o m A m e r i c a , Germany a n d E n g l a n d . .
T h e y a r e l o c a t e d i n o f f i c e s i n t £ e fox*m o f f o u r rooms' i n the. t h i r d
upper f l o o r o f a b u i l d i n g at 7 5 ( e x / § 0 0 ) , Khiaban Ferdo.ssi, Teheran a
business d i s t r i c t .
T h e y a r e e m p l o y i n g t h e r e i n some c l e r i c a l and m e n i a l
x
staff.
.
bY-ACflt-jtcd
for
for
sf
f
S o m e t i m e a g o t h e y w e r e eTvd-eav-oaxing t o s e c u r e t h e , s a l _ e A p z t e ' - s o n t art i o i
I r a n " o r c e r t a i n f o r e i g n f i r ^ n s and t o commence t o i m p o r t t h e i r g o o d s
<»over. \ent D e p a r t m e n t s and . . o t h e r s on a c o m m i s s i o n b a s i s .
Bankers:
\
\
Bank M e l l i I r a i , C h i e f O f f i c e ;
Bank E t t e b a r a i I r a n ;
Bank P a r s , C h i e f O f f i c e - i n T e h e r a n .
/
t
Fov
operating
?>..:• y
has
the
present
an
this
air-taxi
are
7 ? C i o n
enjoying
firm
service
a'" g o o d
is
in
the
sole
Teheran
reputation
F A C T QJCXJC^
.
concern
with
and
. .
of
their
so
...
far
its
few
kind
small
nothing
who
are
planes.
unfavourable
bo-ii heara r e g a r d i n g t n e l r b u s i n e s s
activities.
In the ooinion of/consulted'• sources^possibly
:
kkxicaxb.kl:3;^X§tftxfeh:acfe/ihey a r e r e c e i v i n g some t e c h n i c a l s u p p o r t f r o m
S a r l a s h k a r K h a t a m i ( a ^ s e n i o r I r a n i a n army o f f i c e r i n t h e I r a n i a n R o y a l
A i r * ' o r c e ) who h a s p o s s i b l y a n i n d i r e c t i n t e r e s t i n t h i s c o n c e r n .
T h e f i r m IRAW^ROLL C O . L T D . ( a l i m i t e d l i a b i l i t y c o m p a n y w h i c h i s
ov/ned m a i n l y b y My*. F r e d e r i c I s s u e ) a r e a l s o l o c a t e d i n t h e s a n e o f f i c e s
a t t h e h e a d i n g a d d r e s s and t h e same e m p l o y e e s a r e a l s o h a n d l i n g t h e
pf t h i s f i r m t o o .
( • T r a n s l a t i o n .itom the ^ r a n i a n Commercial Code:
A j o i n t 3 t o c k company i s
one formed f o r c o m m e r c i a l p u r p o s e s , the c a p i t a l o f which i s d i v i d e d i n t o
s h a r e s , a n d i n w h i c h t h e r e s p o n s i b i l i t y o f t h e s h a r e h o l d .,?s i s l i m i t e d t o
their
shares).
25-067 O - 78 - 25
382
a SiI2-.iKAT S A H A ' i I
HAVAP^'iMAl
Mohrabad
This
April
To
is
1958
a
operate
an
To. a c t
as
air
travel
forwarding
activities
To
stock
Teheran,
which
was
period
under
number
purchase,
To
agents
to
sell
undertake
To
by
air
and
or
other
to
.The
initial
The
registered
amount
each
of
of
majority
other
Mr.Amir Hossein
"
Ahmad S h a f i k
All
any
"
Hooshiang
documents,
two
with
Fredric
of
the
Hes
seal
etc.
the
19th
objects:
/
and
traffic;
to
establish
^
free
air
activities
and
if
according
/
of
Rials
paid
up
and members
into
and
the
the
to
was
100
board
later
has
of
foreign
etc.
shares
bdance
to
invest
regulations,
6,000,000/-
of
relative
necessary,
to
Aazam Z a n g a n e h
..
Chairman
i t
Vice-Chairman,
Amini
on
following
other
exports,
been
Issue,
s.Amir
c-:
planes;
10,000,000/-/clivided
60% has
shareholders
"
undertake
services
for" a i r
capital
Rials
which
to
rent
airway
handle
Teheran
the
/
capitals
present
f?**
/
imports,
its
60't?
thereto;
representation
100,000/-
registered^xn
service;
relative
•
Iran.
company
an u n l i m i t e d
.
v . '
/
AIR-TAXI,
Airport,
joint
for
'
raised
of
directors
& Managing.
to
Rials
been
undertaken.
arex
Director,
/
Rad
..
on b e ^ l l f
Hossein
Inspector
of
Aasam
the
firm
-
Iranian
should
Zanganeh,
be
Ahmad
subjects.
signed
Shafik
jointly
or
Fredric
by
Issue/
V
(s '
compan^.<
M r « A m i r V o s e i n Aazata Z a n g a n e h i s
years of age, married (his knowledge1
of languages
h e r " t h a n ^ P e r s i a n : E n g l i s h and F r e n c h ) .
A p i l o t by p r o f e s s i o n
who w a s f o r m ;
Ly e m p l o y e d a s s u c h .
He h a s r e c e i v e d h i s s e c o n d a r y
schooling
locally.
A p a r t from h i s i n v e s t m e n t i n t h i s f i r m he does not a p p e a r t o p o s s e s s
much o t h e r p e r s o n a l y a e a n s o f h i s own.
M r . A h m a d S h a f i k i s a b o u t 5 0 / 5 5 y e a r s o f a g e who w a s f o r m e r l y t h e h u s b a n d
o f P r i n c e s s ^ A s h r ^ f P a h l a v i ( a s i s t e r ' o f H i s I m p e r i a l M a j e s t y tha S h a h ) .
He
i s an e x U v i e r - S e c r e t a r y o f t h e M i n i s t r y o f Roads & C o m m u n i c a t i o n s and was
f o r m e r l y t h e G e n e r a l D i r e c t o r o f t h e C i v i l A v i a t i o n ( a Government owned
organization) /
H e w a s f o r m e r l y a n E g y p t i a n o r i g i n who i s now a n a t u r a l i s e d
Iranian subject.
lie h a s b e e n i n I r a n f o r a b o u t 2 5 y e a r s and a p a r t f r o m
h i s i n t e r e s t i n t h i s firm s i n c e about 1 9 5 0 be has been trading mainly i n the
names o f numerous o t h e r f i r m s .
Mr.Fredric
nnd ha>s t h r e e
ije h a e
America.
firm
was
was
citizen
his
While
He/returned
f'ne
Issue
to
in
his
as
Assyrian)
was
born
in
1928.
(his
knowledge
of
languages
primary
schooling
in
this
that
Iran
employed
acting
(an
children
received
country
studying
from America
on
a
salary
a radio
financial
in
basis
repairer
position
was
about
electric
1950
later
improved.
by
and
and
by Kehrabad
and
He
other
country
Apart
now
before
in
support
married
Persiant
later
radio
Airport
the
is
than
and
he
aviation
the
from h i s
away
an
in
mechanism.
formation
Teheran.
of
English)
was
of
this
Formerly
American
interest
in
this
383
.5/itfAKl IlAVAI'iriHAI AltV-TAXI
(Contd.)
/
f i r m h e i s el.'so t h o p r i n c i p a l
Khiaban Fcrt-ov/al, Teheran ( a
i n Teheran on 2 0 t h J u l y 1 9 5 9
h a a b e e n p a i d b y h5.n, 15?i b y
owners o f a paper c o n v e r t i n g
The a c t i v i t i e s
of
p a r t n e r o f t h e f i r u Ighil (10LL CO. I..TD., 7 5 ,
l i m i t e d l i a b i l i t y company w h i c h t;ua r e g i s t e r e d
with a c a p i t a l of
fiials
5 , 0 0 0 , 0 0 0 / - o f which
h i e v / i f o , and
by a n o t h e r p a r t y .
They a r e t h o
factory in this place).
SH3BKAT SAUAM1 H A V A P E Y M A I / A I » - T A X I a r e a s
/
a)
below:
T h e y c o n d u c t an a i r - t a x i s e r v i c e i n t h e c i t y o f T e h e r a n b y t h o i r f o u r
s m a l l p l a n e s ( P . A . 2 2 , ••TaiPEysSfi" and " P l P S a "
raodcla,
t h r e e " A 3 ; ; 0 CCI'MAKDERS"
and o n e "DACOTA" C - ^ 7 ) w h i c h t h e y h a v e p u r c h a s e d f r o m A m e r i c a ;
b)
Very seldom t h e y a c c e p t p a s s e n g e r s from Tohoran f o r o t h e r d e s t i n a t i o n s i n
t h e c o u n t r y such a s South of Iran but s o f a r t h e y havo not o p e r a t e d ouch
a regular servico; .
/
c)
At t i m e s t h e y a r e undertaking advertisement a f f a i r s by a i r
. a r e handled by t h e i r above mentioned s m a l l p l a n e s ;
d)
Very eeldom they a c c e p t passengers f o r a i r t r a v e l f o r h e a l t h c o n d i t i o n s
o r movements o f p a t i e n t s f r o m T e h e r a n t o o t h e r p l a c e s i n t h e c o u n t r y w h e r e
no o t h e r a i r l i n e s o p e r a t e . / I n such c a s e s t h e y a r e c h a r t e r i n g t h e i r p l a n e s f
e)
Very seldom they operate t h e i r planes
when n e c e s s a r y ;
^
f)
They a l s o o p e r a t e t h e i r f o u r o t h e r "PIPER"
(BEHSKAIIR I K 0 3 S T 3 I A & C O . ) on a c h a r t e r e d
for
agricultural
service
purposes,
planes for a local
baol3 f o r spraying
which
etc.
firms purposes.
They import t h e i r , r e q u i r e m e n t s of v e r y s n a i l n a t u r e such ao s p a r e p a r t s
t h e i r p i a n o s - a n d o t h e r m a t e r i a l f o r the conduct of t h e i r o p e r a t i o n s f o r the
a b o v e - p u r p o s e s f.^on A m e r i c a , Germany and E n g l a n d .
'
T h e y a r e now l o c a t e d
few persona*
/
i n an o f f i c e
i n Kehrabad
Airport
and e m p l o y t h e r e i n
for
a
S o m e t i m e a g o t h e y were i n t e r e s t e d t o s e c u r e t h e a g e n c y f o r I r a n f o r c e r t a i n
f o r e i g n f i r m s and t o commence t o i m p o r t t h e i r g o o d s f o r Government D e p a r t m e n t s
a n d o t h e r s or. 4 c o m m i s s i o n b a s i s .
Bankers:
/ .
/
Bank M e l l i I r a n , C h i e f O f f i c e ;
Bank E t t e b a r a t * r a n ;
Bank P a r s , C h i e f O f f i c e
in
Teheran.
F o r A h e p r e s e n t t h i s f i r m h e i s t h e s o l e c o n c e r n o f i t s k i n d who a r e
o p e r a t i n g an a i r - t a x i s e r v i c e i n Teheran w i t h t h e i r f e w s n a i l p l a n e s .
p o s s i b l y t h e y a r e r e c e i v i n g some t e c h n i c a l s u p p o r t f r o m S a r l a s h k a r K h a t a m i
( a s e n i o r I r a n i a n army o f f i c e r i n t h e I r a n i a n R o y a l A i r F o r c e ) who h a s p o s s i b l y ars
i n d i r e c t i n t o . j s t i n t h i s concern.
As
far
as i t
can be a s c e r t a i n e d
nothing unfavourable
is
said
about
them.
( * T r a n s l a t i o n f r o m t h e I r a n i a n C o m m e r c i a l Code*
A j o i n t s t o c k company i s o n e f o r a e d f o r commercial p u r p o s e s , the c a p i t a l o f which i s d i v i d e d i n t o " s h a r e s a n d . .
. i n which t h e r e s p o n s i b i l i t y o f the s h a r e h o l d e r s i 3 l i m i t e d t o t h e i r s h a r e s ) .
384
gj^yMi . " i l l JJPJ.ii' ' ( • j . l ^ J . ' i ^
A I
3 . - T A X I ,
Sherkat
Khiatan
Sahami K a v a r - j ' a i
Ferdowsi ^86
Teheran,
w i t h a Branch O f f i c e
Iran.
v
in
Mehrabad,
• '
T h i s i s a j o i n t s t o c k .company w h i c h was r e g i s t e r e d i n T e h e r a n on 1 9 t h
A p r i l 1 9 5 8 f o r a n u n l i m i t e d p e r i o d u n d e r number 6 0 ^ 7 f o r t h e f o l l o w i n g
objects:
To o p e r a t e an a i r t r a v e l s e r v i c e i
To a c t a s f o r w a r d i n g a g e n t s b y a i r and
activities-relative
thereto;
To p u r c h a s e , t o s e l l y i x x s c s x o r t o r e n t
To u n d e r t a k e o t h e r a i r w a y s e r v i c e s and
representations for air t r a f f i c ;
To u n d e r t a k e o t h e r f r e e a i r a c t i v i t i e s
i m p o r t s , e x p o r t s , and i f n e c e s s a r y
c a p i t a l s according to regulations,
to undertake
other
planes}
to establish
1
'
r e l a t i v e to
to invest foreign
etc.
Registered c a p i t a l : Rials 6 , 0 0 0 , 0 0 0 / - divided into 200 shares of Rials
3 0 , 0 0 0 / - e a c h o f w h i c h l 8 0 s h a r e s a r e b e a r e r and t h e r e m a i n i n g 2 0 s h a r e s a r e
nominal, l / 3 r d paid up.
The s h a r e h o l d e r s
,
and members o f
t h e board
of
directors
are:
Kr.Mohamad A m i r X h a t e m i
..
Chaircan,
"
Nader Jahanbani
Vice-Chairman,
• .«
Ahmad S h a f i g h ,
. M ' Amir H o s s e i n Aazam Z a n g a n e h
. . substitute director & treas"
"
Frederic Issue
..
Inspector - Iranian subjects.
A l l d o c u m e n t s , - . e t c . on b e h a l f o f t h e f i r m s h o u l d b e s i g n e d b y K r . . / . s i r
H o s s e i n Jlaz-...m Z a n g a n e h j o i n t l y w i t h a n y cr.e o f t h e e t h e r members o f t h e b o a r d
with the s e a l of the concern.
Kr.Mohamad Astir K h a t e m i i s f o r t y y e a r s o l d , m a r r i e d and f a t h e r o f a
f a m i l y who h a s r e c e i v e d h i s e d u c a t i o n i n I r a n and i n E n g l a n d .
For a b o u t twent;
y e a r s h e Av, e m p l o y e d c o n t i n u o u s l y by- t h e I r a n i a n Government and he i s now a
Commanding O f f i c e r i n I r a n i a n A i r w a y s a s a s e n i o r e m p l o y e e .
K r . N a d e r J^hanban
i s t h i r t y - o n e y e a r s o l d ( h i s knowledge o f l a n g u a g e s o t h e r t h a n P e r s i a n : Englir,
and G e r m a n ) .
A t e s t - p i l o t b y p r o f e s s i o n who h a s r e c e i v e d h i s t r a i n i n g a s - s u c h
i n I r a n , Germany a n d i n E n g l a n d .
S i n c e 1 9 ^ 5 he i s e m p l o y e d c o n t i n u o u s l y b y
t h e I r a n i a n A i r w d y s a s a Government e m p l o y e e .
Kr.Ahmad S h a f i g h i s o f E g y p t i a n
o r i g i n Who h a s e i r . e e become a n a t u r a l i z e d I r a n i a n s u b j e c t .
He i s a b o u t f i f t y two y e a r s o l d . and i s t h e husband o f F r i n c e s s A s h r a f P a h l a v i ( a s i s t e r o f Hi*; Imperial Majesty the Shah).
He i s Sir. e x U n d e r - S e c r e t a r y o f t h e M i n i s t r y o f
Roads & C o m n u n i c a t i o n s . . f o r m e r l y he was a l s o t h e G e r . o r a l D i r e c t o r o f C i v i l
A v i a t i o n ( a "Government o r g a n i z a t i o n ) .
Apart from h i s , i n t e r e s t i n t h i s f i r m
he i s a l s o , a s h a r e h o l d e r and a d i r e c t o r i n o t h e r f i r m s i n c l u d i n g IRANIAN NATIC
SHIPPING C O . L T D . , ( 2 ) IRANIAN NATIONAL INSURANCE CO. ,
( ? ) PARS AIRV/AY3 CO.LTI
( k ) SHERKAT S AH AMI SERVICE F0R00SH3AH KZHRAEAD, ; ( 5 ) SKE5XAT -j AH AMI KESHTIRAJH
( 6 ) SH5RKAT SAKAMI BANK ETTEBARAT IRAN, e t c .
' K r . A s l r H o s s e i n "azam Zangane:
i s twenty-nine y
c a r s o l d ( h i s k n o w l e d g e o f lan?jufi~es o t h e r th ? tti P e r s i a n s E p ^ l *
and F r e n c h ) .
A p i l o t b y p r o f e s s i o n wno h a s r o c e x v & d h i s t r a i l i n g a s s u c h i n
France.
He h a s a l s o s t u d i e d a d m i n i s t r a t i o n i n a v i a t i o n .
He r e t u r n e d t o I r a n
385
f r o m E u r o p e in 195'* a n d b e f o r e the f o r m a t i o n o f t h i s f i r m bJe w a s e n g a g e d i n
agricultural affairs.
?•>. 7 r o ^ e r i c I k - m e i s thirty-o:.'* y c i r s o l d ( h i s •krjOv/V'dge
of languages o t h e r th-n Asoyriun end Persian: E n g l i s h ) . He has studied eiWclric
• :«r.d r a d i o - a v i a t i o n in A m e r i c a . lie r e t u r n e d to t h i s c o u n t r y f r o m A m e r i c a in
a« o u t 19'<9 a n d b e f o r e the- f o r m a t i o n of t h i s f i r m he w a s / e m p l o y e d or. a ual:>.ry
basis by Kehrabad A e r o d r o m e .
T h e a c t i v i t i e s o f S H g R X A T .SA1TAMI H A V A P E Y H A I A I R y t A X I a r e a s b e l o w :
a ) T h e y c o n d u c t a n a i r - t a x i s e r v i c e in the c i t y o f T e h e r a n . T h e y .--^e o w n e r s
of t h r e e s m a l l p l a n e s ( P . A . 2 2 , T R I P E Y S E R and/ P I P E R m o d e l s ) v/vich t h e y ,
h a v e p u r c h a s e d f r o m A m e r i c a . It is r e p o r t e d / t h a t s i n c e t h e i n c e p t i o n
of t h i s f i r m the n u m b e r of t h e i r p a s s e n g e r s / n a v e e x c e e d e d IOJOOO p e r s o n s ;
b)
At
times
the^.ac
£
pt
pfsse
g
gep
f p y
Teheran
the c o u n t r y £ b u t t h x s x s : n o t a r e g u l a r
for
other, destinations
in
service;
c ) They undertake advertisements by aix^ervice/which are*conducted b y
above mentioned threet small planes;
~•
d ) T h e y a c c e p t p a s s e n g e r s ; f o r a i r t r a v e l f o r / h e a l t h condition?-, o r
of p a t i e n t s f r o m T e h e r a n t o o t h e r p l a c e s i n the c o u n t r y ; ."'
their
movements
e ) T h e y at t i m e s o p e r a t e t h e i r p l a n e s for a g r i c u l t u r a l p u r p o s e s e t c " , 1 w h e n
necessary. .
T h e y i m p o r t t h e i r r e q u i r e m e n t s s u c h a s s p a r e p a r t s for'their- p l a n e s
a n d o t h e r r e q u i r e m e n t s - for t h e c o n d u c t of t h e i r o p e r a t i o n s f o r the. a b o v e
purposes from A m e r i c a , Germany and England
T h e y , m a i n t a i n o f f i c e s i n . t h e f o r m of f o u r r o o m s i n t h e t h i r d u p p e r f l o o r
at n u m b e r h S 6 K h i a b a n F e r d o w s i , T e h e r a n - a ' b u s i n e s s d i s t r i c t - and t h e y e m p l o y
•
t h e r e i n a. cle.r ;al s t a f f o f t h r e e p e r s o n s .
T h e y a r e ..onsidering to s e c u r e the s a l e s r e p r e s e n t a t i o n f o r I r a n f o r
c e r t a i n f o r e i g n f i r m s a n d to c o m m e n c e to import" t h e i r g o o d s for G o v e r n m e n t
D e p a r t m e n t s -vnd o t h e r s o n a c o m m i s s i o n b a s i s .
. . .
Bankers:
Bank Melli'Iran, Chief Office;
-
. .
-
... ,
..
B a n k Sttcbarat''-Iran;
'•
J
•' B a n k Par's, C h i e f Office,'-in T e h e r a n . -' - :-'.'.'
'. . .
• A r e c e; n t l y f o r m e d - c o m p a n y a n d the f i r s t - o f ' i t s - k i n d w h o - a r e o p e r a t i n g
an air-taxi service in T e h e r a n .
.
'
. .. . •-'. T h e d i r e c t o r s a n d s h a r e h o l d e r s a r e o f g o o d -reputation land t h e i r a c t i v i t i e s
a p p e a r , to b e c o n d u c t e d i n a c a p a b l e • m a n n e r .
.. . .
(* T r a n s l a t i o n f r o m t h e I r a n i a n C o m m e r c i a l C o d e : - A r t i c l e ' 2 1 : - A j o i n t s t o c k
c o m p a n y isr o n e f o r m e d f o r c o m m e r c i a l p u r p o s e s , the capital- o f .which i s d i v i d e d
i n t o s h a r e s , a n d i n? w h i c h ' t h e " r e s p o n s i b i l i t y o f t h e s h a r e h o l d e r s - i s l i m i t e d to
t h e i r shares).'
. . . . .
.
- .. .
DOCUMENTS SUBMITTED BY ARTHUR YOUNG
SCO.
IN RESPONSE TO FEBRUARY 25, 1978 SUBPOENA
ARTHUR
YOUNG
&
COMPANY
2 7 7 PARK
AVCNUC
N E W Y O R K , N. V. I O O I 7
February 25, 1978
H o n . William E . Proxmire
United States Senate
Washington, D.C.
Re:
Textron
Dear Senator Proxmire:
This letter w i l l confirm a conversation with M r . Doherty
of the Senate Banking C o m m i t t e e Staff this morning with respect to
the documents we are producing pursuant to a subpoena to be doliv^ered to us contemporaneous with the production of those documents
and delivery of this l e t t e r .
The attached d o c u m e n t s were obtained from the Arthur Young .
& Company audit workpapers for 1976 and 1977 with the exception of
several pages relating to a 1971 transaction in Ghana which were
found in the 1971 w o r k p a p e r s . Y/e tiave not reviewed workpapers for
other prior years with respect to these transactions due to the time
limitations imposed on u s and the fact that we believe the attached
papers provide reasonably complete information with respect to the
transactions for which information is r e q u e s t e d .
In a d d i t i o n , we have not reviewed the literally thousands
of workpapers for earlier years to determine whether there are any
transactions of a similar n a t u r e . H o w e v e r , as we explained to the
Banking Committee Staff on the telephone, we have no reason to believe that there are any other transactions of a similar nature which
would be reflected as such in those w o r k p a p e r s .
Needless to s a y , we stand ready to cooperate with the
Senate Banking Committee in its investigation and would be pleased
to assist you in any m a n n e r that may reasonably b e p o s s i b l e .
Very truly y o u r s ,
U d t l f i / z j j / t !
Carl D . Ligglo
General Counsel
(387)
388
G. Wlliarn Miller
Chairman
Textron Inc.
M a y 12,
1977
4 0 W e s t m i n s t e r Street
P r o v i d c n c o . R I. 0 2 9 0 3
401/421-2000
S t a n d a r d s of Conduct
To Division Presidents, Corporate Officers
and C o r p o r a t e D e p a r t m e n t H e a d s :
L a s t D e c e m b e r I a s k e d e a c h k e y e x e c u t i v e to sign a s t a t e m e n t
a s a ' m e a n s of c o n f i r m i n g that t h e r e w e r e no i l l e g a l , i m p r o p e r o r q u e s t i o n a b l e p a y m e n t s a n y w h e r e within the T e x t r o n f a m i l y .
T h i s w a s p a r t of the
e f f o r t to f u l f i l l our r e s p o n s i b i l i t y to s h a r e h o l d e r s and e m p l o y e e s to c o n duct T e x t r o n ' s b u s i n e s s in a c c o r d a n c e with the h i g h e s t s t a n d a r d s of c o n d u c t . A r e v i e w of the s t a t e m e n t s s u b m i t t e d h a s v e r i f i e d that t h e r e h a s
b e e n no d e v i a t i o n f r o m T e x t r o n ' s s t a n d a r d s - - and w e can take p r i d e in
this f a c t .
T h e s i g n i n g of s u c h a s t a t e m e n t w i l l now b e c o m e a n o r m a l p a r t
of T e x t r o n ' s annual a u d i t .
During the c o u r s e of this p r o c e d u r e w e did r e c e i v e i n q u i r i e s
c o n c e r n i n g T e x t r o n ' s p o l i c i e s in m a t t e r s of " o v e r b i l l i n g s " and " a c c o m m o dation p a y m e n t s " ,
I w o u l d l i k e to m a k e it p e r f e c t l y c l e a r that n e i t h e r i s
acceptable.
Overbilling o c c u r s , f o r example, when a foreign distributor
r e q u e s t s a U . S . c o m p a n y to o v e r b i l l it f o r p r o d u c t s with an u n d e r s t a n d i n g
that the a m o u n t o v e r b i l l e d w i l l be a p p l i e d to o r f o r the a c c o u n t of the d i s tributor.
W h i l e it m a y only l e a d to the e s t a b l i s h m e n t of a c r e d i t b a l a n c e
w h i c h can l a t e r be a p p l i e d a g a i n s t s u b s e q u e n t l y p u r c h a s e d p r o d u c t s , o v e r b i l l i n g h a s the p o t e n t i a l f o r a b u s e a s a m e t h o d to e v a d e e x c h a n g e c o n t r o l
restrictions or taxes.
T e x t r o n ' s p o l i c y i s that a l l i n v o i c e s m u s t a c c u r a t e l y
r e f l e c t the t r u e s a l e s p r i c e and t e r m s of s a l e .
S o - c a l l e d " a c c o m m o d a t i o n p a y m e n t s " to o v e r s e a s d e a l e r s , d i s t r i b u t o r s o r r e p r e s e n t a t i v e s i s a n o t h e r a r e a to b e a v o i d e d .
This practice
- - w h e r e a l l o r part of a c o m m i s s i o n o r d i s c o u n t a c t u a l l y e a r n e d i s paid,
at the r e q u e s t of the c u s t o m e r , in a countTy o t h e r than the c o u n t r y in w h i c h
389
the c u s t o m e r i s l o c a t e d , o r to a designated third party, or is retained on
tiie books and l a t e r paid to an individual o f f i c e r , d i r e c t o r o r shareholder
of the c u s t o m e r - - is c o n t r a r y to Textron 1 s policy. Such a c c o m m o d a t i o n
payments can be u s e d a s a method of avoiding taxes o r exchange control
r e s t r i c t i o n s and T e x t r o n will not be a party to t h i s . A l l c o m m i s s i o n paym e n t s or other such payments to a c u s t o m e r must be paid d i r e c t l y and
r e g u l a r l y to such c u s t o m e r in the country in which it is loeated or m u s t
be p e r i o d i c a l l y u s e d to reduce existing accounts r e c e i v a b l e f r o m such
c u s t o m e r , u n l e s s good b u s i n e s s p r a c t i c e ( e . g . , doubtful credit standing
of c u s t o m e r ) dictates that the c u s t o m e r always maintain an a g r e e d upon
credit balance.
C o m m i s s i o n s or discounts earned by a corporate entity
m u s t not be paid to the individual accounts of its o f f i c e r s , d i r e c t o r s or
shareholders.
In those i n s t a n c e s where the c u s t o m e r has multiple, p l a c c s
of b u s i n e s s or multiple o p e r a t i o n s , the payment should be made to the entity ordering the product in the country f r o m which the o r d e r originated.
I g r e a t l y appreciate the attention each of you and your a s s o ciates have given in the past to maintaining high standards. I w i l l continue
to count on y o u r support in the future to be vigilant in meeting our responsibility to i n s u r e that the accounts and r e c o r d s of Textron and a l l its a f f i l i a t e s a r e c o m p l e t e and accurate and that no i l l e g a l , i m p r o p e r o r questionable p a y m e n t s of any kind a r e m a d e or condoned.
Sincerely,
G\VM:ryn
cc:
Directors
Chikara Hiruta
390
described the arrangement as a buy out of the agent's franchise
and also said that tho Company was satisfied that there was
nothing illegal about it. No further action was taken on the
matter; 1 was satisfied that it had been brought to the Committee's
attention and that they would not be surprised if the amount was.
disclosed in the future.
Most of the rest of the meeting was spent reviewing
page-by-page the financial sect:irerrc=r of the annual report (no
significant comments or questions arose during this discussion),
Van Brooklyn's brief discussion of tho reorganization of the
Controller's Department (see attachment) and Alist.air Campbell's
continued discussion concerning the merits of counting pension
fund securities held by banks. After extensive discussion of the
latter point, the matter was remanded to Management to determine
whether'such procedures would be worthwhile even if not done on
an annual basis. The subject of using the internal auditors for
this procedure w a s also proposed.
The next morning I met with the Audit Committee again
at 7:00 a . m . The same participants attended plus Heath Larry.
Most of the meeting was spent discussing the report of the Audit
Committee which Campbell was to present to the Board of Directors
later that d a y . There were no other significant items discussed.
391
G William Miller
Chairman
4 0 W e s t m i n s t e r Street
P r o v i d e n c e . K I. 0 2 9 0 3
401/421-2000
Textron Inc.
D e c e m b e r 27,
1976
To Division Presidents. Corporate Officers
and D e p a r t m e n t H e a d s :
T e x t r o n h a s a l w a y s sought to a s s u r e the h i g h e s t s t a n d a r d s of
conduct throughout the C o m p a n y .
Thanks to your support this m e s s a g e h a s
r e a c h e d a l l e m p l o y e e s and the r e s p o n s i v e attitudes have been e n c o u r a g i n g .
R e c e n t e v e n t s have d i s c l o s e d that m a n y c o m p a n i e s , e i t h e r by
n e g l i g e n c e or d e l i b e r a t e a c t i o n , have p e r m i t t e d v a r i o u s kinds of i l l e g a l o r
i m p r o p e r p a y m e n t s , accounting e n t r i e s or other b u s i n e s s or p o l i t i c a l d e a l i n g s . M a n y c r i m i n a l and c i v i l a c t i o n s have r e s u l t e d , to the g e n e r a l d i s c r e d i t of b u s i n e s s .
A s a r e s u l t , e v e r y c o m p a n y has been c h a r g e d with a
g r e a t e r r e s p o n s i b i l i t y to m a k e s u r e that all its a c t i v i t i e s m e e t the t e s t s of
e t h i c s and law and that t h e r e a r e no i l l e g a l , i m p r o p e r , or q u e s t i o n a b l e
t r a n s a c t i o n s of any kind.
C o r p o r a t e auditing c o m m i t t e e s and independent
anciitors a r e r e q u i r i n g m o r e c o m p r e h e n s i v e r e p r e s e n t a t i o n s f r o m o f f i c e r s
and r e s p o n s i b l e p e r s o n n e l a s to the c o r r e c t n e s s and c o m p l e t e n e s s of a c counts and r e c o r d s and the a b s e n c e of any knowledge of i l l e g a l , i m p r o p e r
or q u e s t i o n a b l e m a t t e r s .
In k e e p i n g with o u r own high s t a n d a r d s , it i s i m p o r t a n t that
T e x t r o n e x e r c i s e due d i l i g e n c e in this r e g a r d .
W e owe it to T e x t r o n s h a r e h o l d e r s and e m p l o y e e s and to o u r s e l v e s in m a n a g e m e n t to c o n f i r m c o m p l i a n c e throughout the c o m p a n y .
A s part of this e f f o r t , in conjunction with the
annual audit by A r t h u r Young 8c C o m p a n y each key e x e c u t i v e w i l l be a s k e d
to sign a copy of the e n c l o s e d s t a t e m e n t .
In the C o r p o r a t e O f f i c e , each principal o f f i c e r and d e p a r t m e n t
head should sign a copy and return it to Ron Van B r o c k l y n , who a s
C o n t r o l l e r w i l l m a k e t h e s e r e c o r d s a v a i l a b l e to the a u d i t o r s .
In each
T e x t r o n D i v i s i o n o r S u b s i d i a r y a s t a t e m e n t should be signed by the
P r e s i d e n t and C o n t r o l l e r (or equivalent o f f i c e r s ) and a l s o by such other k e y
p e r s o n n e l throughout the D i v i s i o n , including its U . S . and n o n - U . S . l o c a tion!'., a s the P r e s i d e n t c o n s i d e r s a p p r o p r i a t e .
B e c a u s e of the nature of
the d i s c l o s u r e , s t a t e m e n t s should be obtained by. those in s a l e s . p u r c h a s i n g .
or
A**-
392
accounting, finance, cash management, contract administration, international operations, public relations or general management who might have
reason to know of m a t t e r s of the type covered.
The President should make
all statements available for examination by Arthur Young and the Corporate
Controller. Arthur Young may a l s o be expected to include language s i m i lar to the statement in the " r e p r e s e n t a t i o n l e t t e r s " which it n o r m a l l y requests f r o m Division P r e s i d e n t s and Controllers in connection with its audit.
While this procedure adds one m o r e routine to our busy schedule, I feel it i s essential to our commitment to excellence in all things.
Your cooperation will be appreciated.
Sincerely,
cc:
Directors
W. F. Slattery
Arthur Young & Co.
Enclosure
393
BeOS
Dell Helicopter T e x t r o n
Division of 1 cxlron Inc.
Post OUice Box 482
Fort Worth. Texas 76101
(817)280-2011
February 14, 1978
M r . R. A. VanBrocklyn
Textron Inc.
P. O . Box 878
Providence, R . I . 02901
Subject:
Dealer Commissions
Dear Ron:
Attached is the additional information which we previously discussed
concerning the Mohammed Bakhsh & Sons Ltd. commission payment.
The amount paid was $ 6 0 , 6 1 2 . 1 4 . This was paid in the dealer's
name to his account in Switzerland. This amount a l s o represents the
total amount of commissions paid to Mohammed Bakhsh & Sons Ltd.
in 1977. The total commissions paid to all customers in 1977 amounted
to $620, 1 2 2 . 3 8 . If I can be of further assistance please advise.
Very truly your
BELL HELICOPTER TEXTRON
E. F. Keglovits, Jr.
Director, Accounting
13:EFK:dl-252
attachment
cc:
Mr. T . R. Treff
R E C E I V E D
FEB 1 7
M
394
Dell HelicopterGZHIE3
SUMMARY OF EXHIBITS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Habib twx * 17
2/23/77
A'dam twx. 595
2/23/77
A'dam twx. 573
2/21/77
A'dam twx. 451
2/09/77
A'dam twx. 450
2/09/77
Habib twx. 9
2/08/77
A'dam twx. 420
2/07/77
Habib Letter
1/2 1/77
Heinze Letter
1/18/77
M . Bakhsh memo
1/18/77
Envelope which contained items 9 and 10.
Attachment to E. F. Keglovits, Jr. Letter Number 252
Dated 2 / 1 4 / 7 8
395
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396
Habib Bank AG Zurich
Postfach 729
8 0 2 2 Zurich /
Switzerland
18th January 1977
Dear Sirs,
Mr, Azhar W a l l Mohamed has authorized me to request you to have his
balances with M r . N l l e s of Bell Helicopter to be transferred to his
account with y o u .
1 e n c l o s e herewith his card with the authorization addressed to M r . N l l e s ,
which please send to M r . N i l e s with instructions to remit.his balance to
his account with y o u .
Please do the needful. Thanking you,
yours .faithfully,
Enclosure
397
10.
DELL HELICOPTER SUPPLY CENTER,
POST 07PICE UOX - 7 5 3 U ,
BUILDING VI2 ,
SCHIPIIOL-EAST,
THE NETHERLANDS. •
ATT.:--MR. R . H . NILES,
GENERAL MANAGER.
. TELEX J
WITH
C 0 M P j l M E N T S
B E L L
I
j
I
T
T - L 2
1 6 3 2 5 .
,
0 2 0
»
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O
.
H E L I C O P T E R
MOHAMMAD BAKHSH & SONS LIMITED
MOHAMMAD BA^HSH b SONS 0LDGS.
23, WEST WHARF ROAD
KARACHI-2 PAKISTAN
2 5 - 0 6 7 O - 78 - 26
-
#
TELEPHONE
-
:
CABLE
201436
:
COKI
P . O .
BOX
&
201645
KARACHI
NO.
TELEX
2
A t 5 3
723
398
H-rBS BateScKCg^tteB'SliOiJ.utJII
Dell Mclicopler T c x l r o n
Divir.ion of I cxlion Inc.
Post OUico Box 402
lOrlWoflh, lox.is /CIOt
(01 7) 200-20 U
February 1, 1978
M r . R. A. Van Brooklyn
Textron Inc.
P. O . Box 878
Providence, R . I . 02901
Subject:
Dealer Commissions
Dear Ron:
Attached is the letter from Tom Brown, our Controller in Amsterdam,
to Don Pantle dated June 2 7 , J977 which we discussed yesterday
afternoon on the phone. Tom will be sending me the additional information which we discussed concerning Mohammed Bakhsh & Sons Ltd.
As soon as we receive this data we will send it on to Textron. If I
can be of further assistance please advise.
Very truly yours
BELL HELICOPTER TEXTRON
K. F. Kcglpvits, Jr.
Director, Accounting
13:EFK:dI-242
a t l a c htn on t
cc:
Mr. T. R. Treff
FEB 0&\978
399
A R T H U R Y O U N G
C O M P A N Y
NLTJEULAND
Dale:
To:
F r o m :
PROVIDENCE OFFICE
2 M r . R . A . Martin
lee: M r . W . F . Slattery, New York
Subject:
A p r
il
12,
19 77
THE HAGUE OFFICE
Jerry A . Luiken
TEXTRON - BELL HELICOPTER
Dear D i c k ,
In response to your letter of March 21, 1977 and my discussion
with Bill Slattery on March 17, set forth below is our understanding
of the discounts - commissions procedure as they relate to the Bell
Helicopter Supply Center - Amsterdam.
The Supply Center purchases most of its inventory from Bell - F t .
Worth at approximately 75% of list price and invoices at 100% of list
price. A 5% European Delivery Surcharge is added (shown separately
on invoices).
The Supply Center sells primarily to dealers with European sales
territories. Some sales are made directly to government agencies.
Bell has written contracts, "Bell Helicopter Company Independent
Representation Ayreement", with its representatives who may also be
dealers. The agreement specifies the country or territory to which
the representative has sales rights. Schedule A to the agreement
provides a listing of helicopters and spare parts to which the representative is entitled to commissions. It also sets forth the compensation to b e paid on sales of helicopters and spare parts. The normal
rate on m o s t spare parts is 20%. Thus for practical purposes, the
Supply Center normally sells at 80% Of list price; In most c a s e s , the
dealer and the contractual representative are the same person or
company.
In fiscal 1976, the Supply Center accrued $ 1,4 million of commissions
and discounts on list price sales of $ 9,6 million (14,7% average
rate). A t November 30, 1976, there were $ 508.000 of commissions
payable.
Depending on individual customer arrangements, the dealers compensatior
is paid in the form of a discount and/or commission,. If the customer
has a discount arrangement, the discount is shown on the face of the
sales invoice. If the customer has a commission arrangement, the commission is not shown on the invoice, but a separate credit invoice is
prepared in the name of the representative, and a separate customer
account is maintained in receivables^or payables. Bell F t . Worth also
will transfer balances to the Supply*Center for it to settle with
customers or official representatives.
400
A n m u n Y O U N O
C O M P A N Y
NI£DI:HLAND
Date:
To:
F r o m :
M r . R.A. Martin
Subject:
-
2
A p r
ii
12,
1977
Jerry A . Luiken
-
Settlement of commission balances nre made based upon customer w i s h e s .
The local controller states that he makes payments as directed by Bell
F t . Worth or by the customer (with concurrance of F t . Worth). Over
half the commission accounts carry the same name and address to which
sales invoices are addressed. In many cases, the representatives
periodically will simply request Bell to apply the commission payable
against the normal accounts receivable balance of the dealer. (This
in fact has the same result as if discounts were given.) In other
c a s e s , Bell will be requested to make payments to the representative
through specified bank accounts.
The following specific items are brought to your attention.
1. Scancopter, one of the Supply Center's larger curtomers, has a
commission arrangement whereby Dermor Agencics L t d . is the
agent (Bermuda address). We were requested not to send a confirmation of the commission payable balance to Scancopter or
Bermor, but to the home address in Norway of the owner (we believe)
of Scancopter. The balance due him at October 31 was $ 142.000 and
$ 75.000 had previously been paid during the y e a r .
2 . AOG Aeroagencies L t d . , Freeport, Bahamas, is the agency for sales
to Autair K e n y a , Autair Zambia, and Tanzania Police Air W i n g .
The commission payable at October 31 was $ 46.000 after payments
of $ 52.000 in July and September and application of $ 29.000
ayainst receivable balance of Autair Zambia. Receivable confirmations w e r e sent to Kenya, Zambia and Tanzania and confirmed;
commission confirmations were sent to Bahamas and confirmed.
3 . W e w e r e requested not to mail confirmation of the commission
payable to Mohamed Bakhsh & Sons, the representative in Pakistan,
though we were able to send than the regular accounts receivable
confirmation which was confirmed. The commission balance payable
at October 31 was $ 61.000.
4. Commissions payable to two Greek representatives - Avionic
(D. Countouris) and Marios Dalleggio totaled $ 97.000. Most sales
in G r e e c e , we were told, are to the Greek Armed Forces.
401
ARTHUR
•
YOUNG
COMPANY
Dalo: February 2 5 , 1977
PROVIDENCE OFFICE
From:
NEW YORK OFFICE
K . A . Martin
W . F . Slattery
cc: S. Hot to
L . Rainey
M . lUzzo
Subjectt
TEXTltON A U D I T COMMITTEE MEETING
February 2 3 - 2 4 , 1977
To:
I met twice with Textron's Audit Committee during their
Management m e e t i n g at Ocean Reef, Florida February 23 and 24.
Present at the first meeting held on Wednesday were
M e s s r s . C a m p b e l l , G e n g r a s , Collinson, Ledbetter, V a n Brooklyn and
M r s . Sisco. The agenda for the meeting is a t t a c h e d .
Joe Collinson explained to the Committee the results of
the program to obtain representation letters from Textron employees
concerning illegal payments as defined in Bill Miller's memo s e n t
to d i v i s i o n a l and corporate m a n a g e m e n t . lie described the arrangements at both Sheaffer Eaton and Talon Switzerland concerning
over billing to customers and subsequent retention of the overbilled portions on Textron books for later disbursement at the
instruction of the customer. He indicated that while there was
no knowledge of illegal payments being m a d e by Textron for the
benefit of T e x t r o n , they were arrangements that Textron did not
wish to be a party to and would be terminating as soon as p o s s i b l e .
Each individual over-billing arrangement was not discussed with the
Committee; h o w e v e r , the possible reasons therefore, e.g., avoidance
of foreign income taxes or currency.regulations by the other
par ties, were clearly m e n t i o n e d . I, also, told the Committee of
the total numbers of Textron employees w h o had been solicited, w h o
had responded and who had yet to r e s p o n d . I also indicated that
should any u n f a v o r a b l e answers be received from the approximately
fifty r e s p o n s e s yet to c o m e , Textron Management would be informed .
of them immediately. The Committee's response to the discussion
w a s one s o m e w h a t of relief that these w e r e the only aberrations
no ted.
Later in the m e e t i n g I w a s asked w h e t h e r I had any
c o n f i d e n t i a l comments to give the Committee. I responded that
w h i l e I had no c o n f i d e n t i a l comments I did wish to bring to the
C o m m i t t e e ' s attention the $2,950,000 payment to Textron's former
a g e n t in Iran over 1973, 1974 and 1975 in connection with T e x t r o n ' s
c o n t r a c t with the Iranian Government for the sale of h e l i c o p t e r s .
I added that w h i l e I had understood .this situation had been discussed either at a previous Audit Committee meeting at which I had
not been present or at a Board of Directors m e e t i n g , I felt that
it was a p p r o p r i a t e that it be discussed while I was present should
there be questions or further action desired of m e . The three
m e m b e r s of the Committee first expressed some surprise and lack of
k n o w l e d g e a b o u t the item; however, Campbell upon reflection stated
that he did recall it being discussed at a Board m e e t i n g . M r s . Sisco
had apparently never heard of the p a y m e n t s . Bill Ledbetter
402
TEXTRON
Statement as to Illegal, Improper
. or Questionable Payments
This statement is furnished in connection with the preparation of the
audit of the accounts of Textron Inc. for 1976.
For the Textron f i s c a l y e a r ended January 1* 1977 and f o r the period
f r o m January 1, 1977 to date, I a m not aware in my Division or unit of, or
e l s e w h e r e in,
Textron of (i) any illegal b r i b e s , kickbacks or other improper
or questionable payments having been made to or for the benefit of any p e r son, corporation o r government f o r the purpose of obtaining special c o n c e s sions or for obtaining other favorable treatment in securing business for the
company; (ii) any company funds or property having been made available,
di-
rectly or indirectly, a s political contributions in the United States or e l s e -
.
where, or that o f f i c e r s or employees w e r e paid or r e i m b u r s e d , directly or
indirectly, for p e r f o r m i n g s e r v i c e s or incurring expenses in political a c t i v ities in the United States or e l s e w h e r e ; and (iii) any company
funds, property,
or transactions which w e r e not reflected or accounted f o r on the books,
ords or financial statements of the company.
(Date)
(Employee signature)
(Employee name and title please print)
(Division, subsidiary or unit of
Textron)
rec-
403
16.59
16325 o c l l n t
5^931 h a b i o c h
••".i':
rc .
1T
cf
r e t . your t e l e x o f
"
. T. ~*7
this
afternoon
we h a v s r e c e i v e d the'.nor.ey ( u s d o l l a r s 6 0 ' 6 1 2 . 1 4
h a b i b bank
"zurich
( Switzerland
)
)
16325 o e l l n l ^
2 ?.1 h a b i b c c'%
l66
+? 54931 +
'1?.;>2
5-»901 h a b i b c h
16325 b e l l n l
oht s u p p l y c e n t e r
2-21-77
.
a t t n : money t r a n s f e r s
msg c 5 7 3 .
dept
on feb 9 t h , 1977
we t r a n s f e r r e d u s d l r s 6 0 . 6 1 2 . 1 4 to y o u r
oank to a c c t no a 6 0 9 i n the name of .-noham.ned o a k h s h and
sons l t d .
so f a r have reed r o c o n f i r m a t i o n from you t h a t
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vizjll "zprszlzia
ycur r e s p o n s e asc.p.
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h.tn. v . d ,
ohsc
zande
54931 h a b i b ch
16325 b e l l n l + + +
404
70 8 5 +
66 4 ? 54981 +
09.27
habib ch
16323 t ^ l l n t
s u b p l y ccrrcer
2-9-77
-sg
c451
we have arranged f o r c a b l e t r a n s f e r of us d l r s 6 0 . 6 1 2 . 1 4 , t o
haoib bank Zurich account n o .
a 609
in f a v o u r of fr.ohamrnad
oakhsh and sons l t d .
we would a p p r e c i a t e h e a r i n g from you as
soon as the coney i s r e c e i v e d by your bank,
thank you.
regards n. m. v. d. zande
a c c t dept .
bhsc
5^981 habib ch
16325 b e l l n l + +
|l34T4""amr o""n I
•ihsc nsg c . . ..
*
ittn.r m r . w . langrendonk arid/or m r . c . h . j . nieuwendijk
pef. : id code: A . W w •
lease arrange for cable-paynent of
.u.s. dollars to habib
ban* a.£., Zurich, p.'o.box 729, zuricn, S w i t z e r l a n d , a c c ^ . n o . a 6 0 9 .
Ln the name of cohaxad bakhsh & sons l t d .
., for goods and.services, from our u^s.dollar account
•
to. 41.10.76.442, valuta
charges for our dutch
uildcr account n o . 4 1 . 1 0 . 7 6 . 4 3 4 .
. . .
,
^ . / , '
ransfcr amount in w o r d s
vtn?ur,ar4s^':nuriareaanQtwelve-14/i0^dollars
e confirm this n s g b y a t t a c h m e n t to the A T R - f o r m .
r.h. niles
. _ gen.mgr.
-bhsc
405
13.59
163213 doLL n l
h a a i o Ch.
message no
9 of
attention nr.
e.2.77
h m v d zanda a c c t
.
r e f e r e n c e your t e l e x no . 0 ^ 2 0 of
7 th. f e o r . 1977
the account nu.-noar of the c l i e n t i s
a 609 s t o p ,
please e f f e c t remittance .
thanks
habio bank ag,
16325 b e l l n l
5^931 h a b i o ch
Zurich
( Switzerland
)
406
I
fci
t
r
a
Habib Bank A.G. Zurich
-
—
K
f
MOMt,CBACM$lR. 23
% JA!S. 1977
P.O.BOX 723
1022 ZURICH (SWITZERLAND)
Mr. R . H . Niles
General Manager
Bell Helicopter Supply Center
P . O . Box 7534
Building 112
Schiphol-East
Netherlands
Zurich, 21st January 1977
9
Dear Sir,
j
~
Please find e n c l o s e d herewith a letter from M r . Helnze and an authorization
from Mr. Azhar W . Mohamed.
Y/o shall thank you to please transfer all balances you may have for Mohamad
Bakhsh & Sons Ltd. or M r . Azhar W . Mohamed to us for the credit of his
account.
W e have authenticated the signature of M r . H e l n z e .
Thanking you,
faithfully,
Enclosure
cy
TftlPMONtS
Of . 4 7 4 0 30
T E l t X : 540*1 HABIB CH
abib Bank A.G. Zurich
m u n i P.O.toi 72> tOJJ Zuiieit (SwittwlMrf)
Nelki/UneU*
-.PO
408
(Irll Hclicopter Supply C c i r t r r
Division of lcxtron Atlantic O . V .
M r . Don C . P o n t i c ,
Manager Revenue Accounting
BEI.L H E L I C O P T E R TEXTRON
P . O . Box 4 82
,
L 2£t_Worth^_Tcxnsi_76101x_USA
U.S.A.
Por.t Olficc 0 o * 7534
Huild.nf] 11?
Sthiphol -Las!. The Netherlands
Phone O.'O 45SM50
Tolox 16325
June 2 7 t h , 1977
TEB:hmz
Subject: Standards of Conduct
Dear D o n ,
As discussed over the telephone, I am sending
a summary of our past and current policies related to
customer compensations as defined in the respective
dealer and operator agreements. I have summarized only,
these customers with which we are currently d e a l i n g .
If you require additional information, please
let me k n o w .
Best R e g a r d s ,
BELL H E L I C O P T E R Supply C e n t e r
Tom F . Brown III
Controller
End.
409
.Customer:
Ilocation:
oca t i on:
Compensation:
AHKLAG
nf ;jiuin
lb»
The customer receives a 15?. discount of list price on tho
invoice when purchasing direct from Amsterdam.
The customer receives a 157. commission on sales to Brussels
Airways. This is accrucd to his commission' account.
Direct pavement of commissions would be made to A B E L A G , Belgium.
Customer:
Location:
Compensation:
A . O . G . Aeroagencies Ltd.
Bahamas
20%
The customer receives a 20% commission, on sales to A u t a i r
Zambia, Kenya and Tanzania Police Air W i n g . These are accrued
to their commission account.
Direct payments have been made upon written request to the
following locations:
1 . A.O.G. - F r e e p o r t , Bahamas.
2 . M r . Frederick Wilcox - H u r s t , T e x a s .
3 . Autair Zambia - Zambia.
\1
Customer:
Location:
Compensation:
Aerogulf Sales C o .
Dubai t U . A . E .
20%
The customer receives a 20% commission on sales to Oman P . A . W . ,
Oman R / F , and Aerogulf ., i.e. in the territory of the U . A . E . .
These are accrued to their commission account.
Commissions are regularly applied to tho Aerogulf open account.
Direct payments have been made-to A e r o g u l f , Dubai upon written
request.
Customer:
Location:
Compensation:
AVIONIC
Greece
20%
The customer receives a 5% discount of list price on the invoice
A commission of 15% is accrued to A v i o n i c ' s , commission a c c o u n t .
Commissions are regularly applied to the customers open a c c o u n t .
To the best of my knowledge we have never paid commissions
dircctly to the customer.
Customer:
Location:
Compensation:
Bermor Agencies L t d .
Bermuda
20%
Tho customer receives a 20% commission on the sale of spare
parts into N o r w a y , (Ilelikopter Service and Scancopter) , commissions are accrued to their commission account.
Commission Payments have been paid to Bermor Agencies L t d . , in
Bermuda upon written request. We have received correspondance
indicating there should be no reference to M r . M . ifanke on
commission statements or payments to Bermuda. All statements
and payments are directed to M r . Frank M u t c h , Secretary Bermor
Agencics L t d . .
- MORE -
410
.Customer:
Location:
Compensation!
BRAVO c Filhoa
Portugal & Mozambique
201
The customer receives a 201 commission on the sale of spare
parts into Portugal.
These arc accrued to their commission account.
pirect payments have been made to Bravo in Portugal upon
written request.
Commissions are also applied to the open account when so instruct
by the customer.
Mozambique is embargoed.
Customer:
Location:
Compensation:
C . S . E . (Aircraft Services) Ltd.
United Kingdom/Ireland
20%
The customer receives a 20% discount of list price on the
invoice.
The customer receives a 5% commission on the sale of spare parts
to Bristow Helicopters, which is accrued to their commission
account.
Commissions are periodically applied to the open a c c o u n t . I w a s
unable to recall or locate a cash payment to C . S . E . .
Customer:
Location:
Compensation:
Marios Dalleggio
Greece
15%
The customer receives a 5.5% discount of list price on the
invoice. The customer receives-a 9.5% commission which is
accrued to their commission account.
Commissions have been applied to the.open account. I am unable
to recall a cash payment to them.
Customer:
Location:
Compensation:
Ing. Hans Drescher
Austria
10%
The customer receives a 10% commission on the sale of spare
parts into A u s t r i a , which is accrued to his commission account.
Commissions arc normally applied to his open a c c o u n t . I am unable
to recall a cash payment to h i m .
Customer:
Location:
Compensation:
Elding Trading C o .
Iceland
10%
The customer receives a 10% commission on the sale of spare
parts into Iceland, which are accrued to his commission account.
W e have not had any business from Elding in over two year.,.
Cuntomcr:
location:
Compensation:
IBERISA
Spain
10%
The customer receives a 10% commission on the sale of spare
parts into S p a i n , which is '.accrued . to their commission account.
We have made commission payments to Iberisa, S p a i n . Commissions
arc also regularly applied to their open a c c o u n t .
411
v.ui*Comer.:
; Location:
Compensation:
Panturk Ticaret L t d .
Ty'^cy
12\,
The customer receives a 12% commir.r.ion on the sale of spare
parts into Turkey, which in accrued t.o their commission" account.
We have made commission payments? to Panturk, T u r k e y . K c have
seldom been instructed to apply commissions to their open .
account.
Customer:
Location:
Compensation:
Mohammed Bakhsh & Sons L t d .
Pakistan
20%
The customer receives a 20% -commission on the sale of spare
parts into Pakistan, which is accrued to their commission
account.
\
We have made one payment to the customer into Switzerland.
This was a result of repeated insistance on the part of tho
customer and a number of phone calls received from Switzerland.
We have a signed confirmation of instructions from the c u s t o m e r ,
initiating the transaction. Presumably this was a one shot
deal and will not be repeated under any circumstances. The
customer continues to be a source of problems in the area of
obtaining valid letters of credit and/or hard c a s h . We are
presently holding all shipments untill such time as proper
credit facilities have been arranged.
The following customers receive a discount of list price on the sale
of spare parts into their respective areas:
Customer
Location
.
Compensation
Astra Aircraft C o r p .
Agusta
Bristow
South Africa
Italy.
England
20%
20%
15%
Fenwick Aviation
Motorflug GmbH
Ostermans Aero AB
France
Germany
Sweden
20%
20%
20%
During the later part of 1976, we observed that our invoices for
Fenwick Aviation and Panturk Ticaret did not conform to Textron
policy, which is that all invoices must accurately reflect the true
sales price and terms of s a l e .
Fenwick instructed B.H.S.C. to discount the unit prices on the
invoice by their allowed percentage of discount. The discount was not
to be shown as a separate line item. Thisa was apparently agreed to
verbally by M r . C . O c x m a n n .
Panturk instructed B.H.S.C. to discount tho unit prices on -he •
invoice by 3%. this was agreed to by M r . D.R. Pitt. Both practices
were discontinued at the beginning of this y e a r .
- MORE -
412
ARTHUR YOUNG &
COMPANY
To; FILES
cc:
See distribution list
Daie, January 3 1 , 1978
From: FORT WORTH OFFICE
David L . Alexander
AY-CONFIDENTIAL
BELL HELICOPTER TEXTRON
AMSTERDAM SUPPLY CENTER
Subjects
On 1/30/78, I received a TWX from Bob Selder
(AY-The Hague). A copy of such TWX is enclosed.
After discussing the TWX with Cecil Smith (AY- Fort
Worth), decision wa& made to call Ed Keglovits, Director of
Accounting at BUT, and inquire if he had knowledge of the
situations commented on in the TWX.
Keglovits commented he was unaware of the sitxiation
or June, 1977 letter discussed in the T W X . Ed requested us
to provide an exact date and addressee in order to pursue the
matter.
The above information was discussed with Dick Martin
and Mike Rizzo on 1/30/78. Dick said he had received a copy of
the TWX and would call Selder and obtain the information
requested by Keglovits in the preceding paragraph. Dick called
back later and disclosed the letter referenced in the TWX was
addressed to either Don Pantle or Gene Prater and said the
"Accommodation Payment" related to Bell's dealer in Pakistan,.
Mohammed Bakish. This information was given to Keglovits.
On 1/31/78, Keglovits called and disclosed the
following information:
' 1.
2.
The letter was from Tom Brown, BIIT-Amsterdam
Chief Accountant, to Don Pantle, BHT Manager
of Revenue Accounting. Date of letter was
6/27/77.
$60,000 was paid to Bakish and Son (the entity
on their dealer agreement) to a Switzerland b a n k .
All other payments were sent to Pakistan. Bakish
had requested accommodation payments previously
but none were made. Bakish provided Bell with
a signed confirmation letter of instruction
regarding the payment.
413
3.
In 1 9 7 6 , invoices to Finwick A v i a t i o n , a French
c o m p a n y , and Panturk C o m p a n y , a T u r k i s h company
w e r e p r e p a r e d using list pricos net of d i s c o u n t s .
A l t h o u g h the total net invoice amount w o u l d b e
u n c h a n g e d , the list prices per unit b e f o r e
d i s c o u n t were not s h o w n . This w a s approved by
M r . Oxman with respect to Finwick and M r . Pitt
w i t h respect to P a n t u r k . Oxman and Pitt held
the Branch Manager position at BHT-Amsterdam
d u r i n g p o r t i o n s of 1 9 7 6 .
4.
In K e g l o v i t s ' o p i n i o n , other items noted in the
letter w e r e in accordance with G . W . M i l l e r ' s
" S t a n d a r d s of Conduct" memo of M a y . 1 2 , 1 9 7 7 .
Brown told Keglovits no other letters regarding
t h i s situation e x i s t e d .
5.
The above comments discussed with Cecil Smith and
Dick Martin on 1 / 3 1 / 7 8 . Dick disclosed situation had been
discussed at T e x t r o n , Inc.
Also e n c l o s e d is a copy of a "Form Letter" B H T sent
to all dealers regarding compliance with Textron p o l i c y .
DLA:ph
Enclosures
Distribution:
R.
M7.
A.
C.
C.
A.
F.
P.
E.
F.
25-067
Martin
Slattery
Stephens
Smith
Stephenson
O - 78 -
27
414
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IK R E S P O N S E T O T-VTR.O\*' -VAY
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-.*ORT4
DISCUSSION
OF
C0<VLSSI0\'
ARRAVIEY
A-JP V J E V T L Y T H E S')->->I.Y C E N T E R A D E • A C C o V S V O O A T I ov i J - w ^ ' ^ v r s • A S
H E - 1R N E D AN'D ft'.^O rxv/OTCEs T O S E V E R A L G I I S T O I E R S D I P \ o r REC-LECI*
TR'
S A L E S PRICE; Q.-YN T E R ^ S O ^ ' S A L E .
REIARDS .
R. WELDER
AY
THE
V M 9 1
a
HAllJi*:
YO'JNP
ARTHYO'J^l
O-LorWh
N'f,
PPVD
415
To David A l e x a n d e r
Fort Worth
Re:
From R . Seldor
The Hague"
Bell H e l i c o p t e r
P l e a s e relate the following message to Alexander at
AY F t . Worth re your January 11 telex, page 9 of the audit
plan and item 6 of our January 10, 1978 top m e m o .
f
L o c a l controller informs us that in response to T e x t r o n s
May 1 2 , 1977 standards of conduct memo he sent, to Bell Fort
Worth m a n a g e m e n t in J u n e , 1 9 7 7 , a detailed discussion of
commission a r r a n g e m e n t .
A p p a r e n t l y the supply center made "accomodation
payments" as defined and also invoices to several customers
did not reflect the true sales price and terms of s a l e .
Regards,
R . Selder
416
Oe3S M e l i c o i p l c r h i
Dell Helicoptcr T e x t r o n
D i v i s i o n ol lextron Inc.
»1X°)T1
Post Olficc Box 402
fort Worth, lexas 76101
(017) 200-2011
Telex: 75-0229
26 A u g u s t 1 9 7 7
Fl-CPG:mll-104
Gentlemen:
A recently published Textron policy sets forth conditions
u n d e r w h i c h B e l l H e l i c o p t e r Te:£tron (BUT) c a n t r a n s f e r i n a
timely and b u s i n e s s l i k e m a n n e r the funds earned by and
credited to the a c c o u n t s of I n d e p e n d e n t R e p r e s e n t a t i v e s .
To implement this policy the following procedures are established to b e c o m e e f f e c t i v e a s soon a s p r a c t i c a b l e , b u t n o
later than September 1 5 t h .
1) E a r n e d c o m m i s s i o n s o r d i s c o u n t s w i l l b e p r o m p t l y p a i d
o r c r e d i t e d t o t h e a c c o u n t of t h e I n d e p e n d e n t R e p r e s e n t a t i v e w h e n t h e y b e c o m e d u e a n d paycible.
2) P a y m e n t w i l l b e m a d e t o t h e i n d i v i d u a l o r c o m p a n y n a m e d
as the c o n t r a c t i n g party in t h e c u r r e n t BHT I n d e p e n d e n t
Representative Agreement.
3) P a y m e n t w i l l b e m a d e b y B H T c h e c k , b a n k t r a n s f e r , o r
any other accepted m e t h o d of p a y m e n t consistent w i t h
sound"business practices.
4) P a y m e n t w i l l b e m a d e t o t h e a d d r e s s d e s i g n a t e d i n
Clause 9 of the BHT Independent Representative Agreem e n t o r d e p o s i t e d i n t h e b a n k a c c o u n t in t h e c o u n t r y
d e s i g n a t e d in C l a u s e 9 , a f t e r B H T v e r i f i c a t i o n t h a t t h e
a c c o u n t i s in t h e s a m e n a m e a s t h a t s h o w n a s t h e c o n tracting p a r t y in the c u r r e n t B H T I n d e p e n d e n t R e p r e s e n tative Agreement.
5) P a y m e n t b y c h e c k c a n b e m a d e a t B H T , F o r t W o r t h , Texas
to an a u t h o r i z e d o f f i c i a l of the R e p r e s e n t a t i v e .
The
check will be payable to the contracting party shown on
the c u r r e n t BHT Independent Representative A g r e e m e n t .
417
llcll H c U c o p t o r D Z n i H 2
26 August 1977
Fl-CPG:mll-104
Page 2
If y o u r c u r r c n t m e t h o d o f r e c e i v i n g p a y m e n t o f e a r n e d c o m p e n s a t i o n , from B H T is n o t in a c c o r d a n c e w i t h t h e f o r e g o i n g
procedures, please contact the undersigned to make the
necessary arrangements to conform to these ^procedures.
Sincerely, '
BELL HELICOPTER
TEXTRON
Courtland P . Gray
M a n a g e r of A d m i n i s t r a t i o n
International Marketing
418
A R T H U R
Y O U N G
&
C O M P A N Y
NIZDERLAND
Date: April 12, 1977
From: j e r r y A. Luiken
M r . R . A . Martin
Subject:
-
3
-
While the rate of discounts and/or commissions is fairly uniform
for most customers a n d , therefore, appear to be normal business
transactions, w e do not know the extent to w h i c h , if any, .Bell's
representatives or dealers may be using arrangements to violate
laws or avoid income taxes in their particular countries or the
ramifications, if a n y , this may have on the Center or B e l l . A l s o , we
do not know whether any of the individuals or companies are connected
with any government or government-connected a g e n c y .
Since w e did not receive distribution of the correspondence attached
to your March 21 letter, we did not perform any of the procedures
contained therein or include in the client representation letter
the draft representation paragraph required. A l s o , you should be aware
that Doug P i t t , the local general manager, transferred to Forth Worth
shortly before Christmas a n d , we understand, has since left B e l l . I
doubt whether the new general manager would sign any representation
relating to November 30, 1976.
Regards,
419
ARTHUR YOUNG
"OMPANY
To: THE HAGUE OFFICE
Jerry Luiken
cc: W. F. Slattery
A . P. Stephens
Subject;
C. E. Smith
Dale: March 21, 1977
from: PRO VIDENCE OFFICE
Richard A. Martin
TEXTRON
Dear Jerry:
At Bill Slattery's request I ara enclosing correspondence
related to Illegal, improper or questionable payments which was
distributed to the U.S. offices working on domestic divisions and
to overseas operations which did not have a divisional counterpart
here in the States. .
.
I spoke with Mike Rizzo and he has answers to substantially all of the questions covered in Bob Selder's telex of
February 2nd. Responses will be sent to you shortly so that you
can finalize the 1976 accounts and send us a draft of the statutory
report.
Best regards,
R. A. M.
RAM/pc
Enclosure
420
TEXTRON
Statement as to Illegal. Improper
or Questionable Payments
This statement i s furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. for 1977.
For the Textrou fiscal year ended December 31, 1977,(or November 30,
1977, in the case of certain consolidated international operations) and for the
*
period from the end of the fiscal year to the current date, I am not aware in
my Division or unit of* or elsewhere in, Textron of (i) any illegal bribes, "kickbacks or other improper or questionable payments having been made to or for
the benefit of any person, corporation or government for the purpose of obtaining special concessions or for obtaining other favorable treatment in s e curing business for the company; (ii) any company funds or property having
been made available, directly or indirectly, as political contributions in the
United States or elsewhere, or that officers or employees were paid or reimbursed, directly or indirectly, for performing services or. incurring expenses
in political activities in the United States or elsewhere; and (iii) any company
funds, property, or transactions which were not reflected or accounted for ocl
the books, records or financial statements of the company.
p
Date / j
"
^ ^ t ^ ^
:.<*>(
^ /
C - H Ar. -
1
/ .
' r
"'j'
~ ' ' Ti\r>; f> V r O
please print)
ft
'
I. P r
(Employee name and title -
A^UU-i^i r ^ ^ p f ^ y f
^
(Employee signature)
(Division, subsidiary or unit
of Textron)
fee
SIO
*
421
.'A-RTHUR Y O U N G
NEW Y O R K
To:
MR.
cc:
AJMPAN.Y
OFFICE
HARTFORD
FAFNIR
Dear
Please
DIVISION
to
find
unusual
enclosed
payments
Rouilleaux's
payment
Baghdad,
made
by
LeDosseur
has
former
the
statement
Beeckman
manager
the
at
TEXTRON
1973
OFFICE
GLADSTEIN
INC.
remaining
two
been
has
the
Roulements
payments
in
I
allocation
Fafnir
that
Germany.
of
the
am
LeDosseur*s
acting
manager
for
stated
of
aware
also
Fafnir
between
as
addendum
(France)
Wulzlager
was
is
payment
enclosing
France.
c a l l
if
of
relating
to
a
The
in
with
their
to
agent
in
you
have
August.
no
exceptions.
signing
in
his
at
Fafnir
schedule
have
not
capacity
of
Franco
unusual
changed,
corrected.
any
questions.
regards,
(r.
GSG/cmp
signed
However,
only
Best
Enclosures
(Germany)
LeDosseur
France.
revised
been
incorrect.
Wulzlagor
in
headquartered
totals
has
is
Fafnir
terminated
LeDosseur
years
statement
manager
was
LeDosseui*
unusual
Please
statements
Fafnir.
statement
Fafnir
Technically
'It
OF
S.
13,
Iraq.
since
is
GARY
February
B i l l :
relating
the
/JS
VaJ?.»o:
WILLIAM F . SLATTERY
J.
L. Rogers Hartford
R. A. Martin Providence
Subiecl:
the
••
W
7
-
but
the
as
and
422
A
r v r -i -
7
l
37 Booth Street
New Britain, CT 06050
203/225-5151
Robert P. Bcockman
Vice President—Administration
Fafnir Bearing Division of Textron Inc.
F e b r u a r y 9, 1978
M r . Gary Gladstein
Arthur Young & Company
60 Washington Street
Hartford, CT. 06106
Dear Gary:
As discussed in our recent telephone conversation, enclosed
please find:
(1)
copy of the Questionable Payments Statement,
Fafnir Germany
(2)
copies of the Statement, Addendum and Rouilleaux
letter from Fafnir France.
Very truly yours
AK
Enclosures
423
TEXTRON
Statement as to I l l e g a l , Improper
o r Questionable Payments
This statement i s furnished in connection with the preparation of
audit of the consolidated accounts of Textron Inc.
For the Textron f i s c a l year ended December 3 1 ,
the
f o r 1977.
1977 ( o r November 3 0 ,
1 9 7 7 , in the case of certain c o n s o l i d a t e d i n t e r n a t i o n a l
operations)
and f o r the period from the end of the f i s c a l year t o the current d a t e ,
I am not aware in rny Division o r u n i t o f , or elsewhere i n , Textron o f '
(i)
any i l l e g a l
b r i b e s , kickbacks or other improper o r
questionable
payments having been made to or f o r the b e n e f i t of any person,
ation or government f o r the purpose of obtaining s p e c i a l
corpor-
concessions
or f o r obtaining other f a v o r a b l e treatment in securing business
the company;
available,
(ii)
for
any company funds 'or property having been made
d i r e c t l y or i n d i r e c t l y ,
as p o l i t i c a l
contributions
in the
United S t a t e s or elsewhere, o r t h a t o f f i c e r s or employees were paid o r
reimbursed,
d i r e c t l y or i n d i r e c t l y ,
incurring expenses in p o l i t i c a l
elsewhere;
and ( i i i )
f o r performing s e r v i c e s
activities
or
in the United S t a t e s or
any company f u n d s , property, o r t r a n s a c t i o n s which
were not r e f l e c t e d o r accounted f o r on the books, records o r f i n a n c i a l
statements of
the company.
(Employee s i g n a t u r e )
J. Le Dosseur
Manager.
(Employee name and
please p r i n t )
title-
F a f n i r Walzlager
Division of Textron
G.M.B.II.
Atlantic
( D i v i s i o n , s u b s i d i a r y or u n i t
of Textron).
424
tu^twiii^im u ^
l.r.l. au capital de 1 000000 F
T E X T R O N ATLANJC
Zone <Tactivit*s du Pont Yblon
f. run Joan Pc»rin
93150 LE BLANC-MESNIL - FRANCE
r
T « . : 931-AO-74
Telex : 690570 TEXTRON
VIRAf.:
NlWf.:
Mr. F.B. Oddie,
Marketing Director,
Fafnir Bearing Division of T e x t r o n L t d .
Wolverhampton
England.
L
GR/SJB
I
LE BLANC-MESNIL le
16 January 1978,
Dear B r i a n ,
During the period 1972 through 1977 the only case where w e paid
commissions to an a g e n t outside o f his country w a s on o u r business
with General A u t o m o b i l e of B a g h d a d , Iraq.
1.
Name o f agent:
2.
Commissions paid:
1976
1977
3.
M r . Nahdir'Mustafa, B a g h d a d , Iraq.
J
Fr.
Fes.
654,757.00
Fr. Fes.
386,217.00
of
9jo
Mo
/,OYo
97J
A m o u n t o f business done:
1976
Fr. Fes.
4,020,582.00
1977
Fr. Fes.
2,802,814,00
<rc%c/o3
B e s t regards
G . ROUILLEAUX
Manager.
«.c.P()Nfo> ir 7'i a jio — n* t.'irt'' •
.>kj: . n _ DAHOUE BNP 64, a*. «J.I I.I «:
.. t..
425
TEXTRON
Statement as to I l l e g a l , Improper
o r Questionable Payments
This statement i s furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. f o r 1977.
For the Textron f i s c a l year ended December 31, 1977 (or November 30,
1977, in the case of certain consolidated international
operations)
and f o r the period from the end of the f i s c a l year to the current date,
I am not aware in my Division or unit o f , or elsewhere in, Textron of
( i ) any i l l e g a l bribes, kickbacks or other improper or questionable
payments having been
made to or f o r the benefit of any person, corpor-
ation or government f o r the purpose of obtaining special
concessions
or for obtaining other favorable treatment in securing business f o r
the company;
( i i ) any company funds or property having been made
available, directly or indirectly, as p o l i t i c a l
contributions in the
United States or elsewhere, or that o f f i c e r s or employees were paid or
reimbursed, d i r e c t l y or i n d i r e c t l y ,
incurring expenses in p o l i t i c a l
elsewhere;
f o r performing services or
a c t i v i t i e s in the United States or
and ( i i i ) any company funds, property, or transactions which
were not reflected or accounted f o r on the books, records or financial
statements of the company.
Date
6 . Rouilleaux.
Manager
(Employee name and t i t l e please print)
Fafnir Roulements
Division of Toxtron S.A.R.L.
(Division, subsidiary or
unit of Textron)
426
$1,039,000.
A l l such pay mo til's Live ceased.
Gerd Drooff
indicated that the l o s s of business has been minimal.
He
only know of one d i s t r i b u t o r in Peru who has- stopped doing
business with Fa.tn.ir as a r e s u l t of the termination of the
questionable payments.
I discussed with management the procedures used
to assure that, a l l such unusual payments were included on
the l i s t .
The procedures required reviewing l i s t s of a l l
export commissions paid during 1972 - .1977 and requesting
i n t e r n a t i o n a l s a l e s personnel to i d e n t i f y the d i s t r i b u t o r s
receiving unusual payments.
Some d i f f i c u l t y was encountered
in determining the amounts involved f o r 1972 - 1974 since
there has been turnover of s a l e s personnel.
The t a s k of i d e n t i f y i n g a l l unusual payments
rested with s a l e s personnel.
The importance of t h i s task
was stressed to a l l involved s a l e s personnel and management
b e l i e v e s a l l s a l e s personnel were candid in i d e n t i f y i n g the
involved d i s t r i b u t o r s .
•
s
There were no unusual payments at F a f n i r Canada,
F a f n i r Mexico or F a f n i r Germany. / T h e g e n e r a l manager
r e s p o n s i b l e f o r each of these l o c a t i o n s has c e r t i f i e d in a
statement that there were no unusual payments at h i s l o c a tion.
Procedures t o Cease Future Payments
I inquired of management of procedures taken to
assure that a l l such payments have ceased.
The foil-owing
procedures have been imrjlemented to prevent payments from
Fafnir U.S.;
Accommodation payments - A new accounting b u l l e t i n
has been i s s u e d concerning the computation and
payment of f o r e i g n representative commissions.
A
copy of the b u l l e t i n i s e n c l o s e d .
Important
internal control f e a t u r e s of the new procedures
require that accounts payable mail out the commission checks d i r e c t l y and the address of the d i s t r i b u t o r i s printed on the check by the computer.
The address in a l l cases i s the country in which
the d i s t r i b u t o r ' s main p l a c e of b u s i n e s s i s
located.
A l l checks are mailed only t o the
address appearing on the checks.
427
• O v c r b i l l i n g s - A l l international s a l e s personnel
have been n o t i f i e d that o v e r b i l l i n g s to d i s t r i butors when they buy on their own account arc n6
longer permitted.
A l l d i s t r i b u t o r s must be
c l a s s i f i e d i n t o one of t h r e e - c a t e g o r i e s f o r
pricing purx^oses which i s approved by the i n t e r n a t i o n a l s a l e s manager.
Overseas l o c a t i o n s of Fafnir have a l l been n o t i f i e d that the o v e r b i l l i n g s and accomodation' payments must
cease.
U.S. personnel have been assured by the l o c a t i o n s
that the payments have ceased, but did not know the d e t a i l s
on the new p r o c e d u r e s implemented in t h o s e l o c a t i o n s .
Standards of Conduct Statement
• The l i s t of employees required t o sign statements
of conduct concerning i l l e g a l , improper or q u e s t i o n a b l e
payments was reviewed with Beeckman.
The procedures l i s t e d
in the Textron Master Audit Plan, page 13, were performed.
Fafnir management personnel, who were aware of the
unusual payments have included an addendum to t h e i r s t a t e ments.
Copies of the statements are attached.
Management
personnel including the addendum are:
S — f ) ^
.Fafnir U . S .
T. E. Sherer
E. DeCaulp
R. P. Beeckman
H. W. Deuteh
L. c. A f f e l d e r
G. Drooff
- ' President
- A s s i s t a n t to the President and
Division General Counsel
V. P. Administration
V. P. International Operations
Controller
International Sales Manager
F a f n i r U.K.
L. de Jung
L. P. Robertson
F. B. Oddie
-
Managing Director
Financial Director
Marketing Director
-
General Manager
F a f n i r Hexico
J. R. Bonilla
428
In a d d i t i o n , two statement 1 :; from F a f n i r France
have not been r e c e i v e d .
I t i s e x noc U:d that they w i l l
include the addendum.
They are from J. LeDosseur and G.
Kouilleaux.
*
*
*
If you have any questions,
Enclosures:
*
please
>;:
call.
\U F. S l a t t e r y only
R. P. Beeckman's January .18, 1978 memo
F a f n i r Accounting B u l l e t i n - Computation and
Payment of Foreign Representative Commissions
Employees Statements with Addendum
429
g/fein, CT.
Fafnir Bearing Division of Textron Inc
Date: January 18, 1978
Attention: R. A. Van Brooklyn - Providence
Subject:
Questionable Payments
cc:
T. E. Sherer, H. W . Deutsch, W . E. De Caulp, L. C. Affelder, J. S. Canzi
In accordance with our previous discussions, attached are details
for Fafhirs U. S . , -U. K. and France of overbilling and accommodation payments for Fiscal Years 1972 through 1977 as defined in
G. W . Miller's letter of May 12, 1977 on the subject of Standard of
Conduct. No other units of Fafnir have had payments of this nature
during Fiscal Years 1972 through 1977. Furthermore, these
practices were long-standing and payments ceased prior to the end
of Fiscal Year 1977.
Attachments are labelled by unit as follows:
Unit
Attachment
U. S.
A
U. K.
B
France
R. P. Beeckman
RPB:ak
atts.
25-067
O - 78 -
28
430
w
CI
A
•Fotnir bearing Division ol Toxlron Inc
Date:
Attention:
H. W. Deutsch
Subject:
Questionable Payments
January 16, 1978
In response to your request, we have tabulated on the attached
payments deposited to agents, distributors, or those accounts in
banks in countries other than the countries in which their business
is located or to distributors who bought products on their own account. The tabulation covers the years 1972 through 1977 showing
both the amount of payment and the amount of business done with
the payee in each period. .
Please also note that the following changes have been made from
the report submitted on December 2, 1977:
Reported
12-2-77
Revised
1975
$71,681
$84,780
1976
$142,583
$142,543
i'.
• *
Y
^
tanGe^d Drooff
GD:jmr
Attach.
Change
Explanation
$13,099
Added W. Santiago, Brazil
$
• Reduced Mustafa, Iraq
from $34, 343 to $34, 303.
(40)
%cL
.iiCijS&yiX o r IV-SOAL. IMPROPER OROUESTIONAOLS PAVMSNtS • T At KIR U. 5,
_jRounded.t© Ji«*te»tjiolUii
00
%MS-tooC
fkefiM trj> ' 6y
fiteu*«
« L^i
432
»- A
Fnfnir Bearing Division of Textron Ltd.
Wolverhampton W V 2 '•NT.
lr bxl Li U l i m i l L S i i i j
From:
Dale:
to:
Location:
Subject:
L . DE JONG
16th December, 1977
MR. H. W. DEUTSCH
NEK BRITAIN '
QUESTIONABLE PAYMENTS
In response to your letter o f December 7 , information requested is shown
on schedules attached.
Schedule 1 deals v/ith the amounts o f commissions actually paid in the years
1972 through 1977, either by cheque o r cash to the Agent. As you were
advised there are still balances unpaid on the Over Billings Agents accounts
for transactions prior to July 1977, held pending settlement of their account
for.the goods supplied. These balances will be discharged in the proper . .
manner in 1978. as per schedule 111.
Schedule 11 shows under the four commission agents,the amount o f business on
which commission has been p a i d , v/ith the exception of RIHA who purchases the
bulk of the sales shown against Italy for his own account, on which no
commissions have been earned.
Att:
CKMISSION EARNED
NAME
COUNTRY ;
D.A. & U.S. LOY
Guyana
Rlr'A S.R.L.
Italy
NADHIR ISMAIL MUSTAFA
Iraq
JAKAL BASAYAN
Iran
OVER "3ILLIKGS
. 66.25
Fiscal 73
£
579.95
54.63
221.60
• 2006.02
2592.62
Fiscal 74
£
Fiscal 75
^
264.14
Fiscal 76
909.61
£
Fiscal 77
£
322.OC
920.41
775.CC
52.70
21449.64
43738.97
27822.OC
10000.00
22127.76
6291.OC
'
SALFAVEL S.A.
Chile
K. G. VASILIADIS
'
Greece
S.A. BRASILERIA DE ROLAMENTOS E MANCIAS BRM
Brazil
M/S THYE GUAM HIN SDN BHD
Malaysia
\.
FATHALLAH G. KASPAR
2KATIA CO.
'
"
4678.47
•
SHERKAT:IRAN LUCID DE MASSOULIATE KAHDOUD
Iran
Iran
ELKON BROTHERS LTD •
4741.60
6599.CO
9267.81
1316.92
•3017.44
339.90
1000.00
.
58.20
90.46
3255.00
17.20
. .
600.00
102.88
231.25 **
Sudan*
286.25 **
' <J3jrt.li.
3
'
Jtr~])cM.t^.%
l&^OC
599.00
Israel
r
/
1115.57
Kenya
VALI KHANI
T ' W *
6877.51
879.70
55.27
Bahrain '
KKARTO'JM AUTO PARTS SUPPLIERS LTD
58.42
2418.63
* Syria
•
AGRIQUIP AGENCIES E.A. LTD
Paid in Cash
Fiscal 72
£
_U>, si*).
Jrf
a .1
i c q / .
$Z'- W''
H.mM
//a
CO
CO
434
.ARTHUR
-
To:
NEW
YOUNG
YORK
OFFICE
COMPANY
WILLIAM F. SLATTERY .
cc: J. L. Rogers ~ Hartford
R. A. M a r t i n - Providence
3. A. Botte - New York
Subject;
Dais.: January 26, 197£
From-
HARTFORD
OFFICE
GA^Y S. GL-U)STEJ;-J
. FAFNIR DIVISrOs? 0? 'WST'lOX ISC. - itf.'fJSUAL PAYMl\NT3
Dear Bill:.
•As requested in your memo of December 19, 1977,
I m e t with Bob Beeckman - Vice President, Gerd D r o o f f International Sales Manager, and Lew Af£e.lder - Controller,
to ^become familiar with the circumstances. and .details .
surrounding Fafnir's; unusual payments.
The. following
^represent the more significant items noted in my discussions
-with, management.
Background
Setvorai members of. Fafnir mana&ment had been, aware
of ^these ."overbillings" and "accommodation payments", but
did not believe the payments fell '..Into the classification of
questionable paymentsPayments of this nature were longstanding and an "off-the-cuff" estimate is that they may
date back as far as 20 years.
•
'
v
• C
G.; William Miller's memo of May 12, 1977 made it
clear that Textron considered payments of this nature to be
questionable payments and Fafnir notified Textron that they
c
had some "overbillings" and "accommodation, payments". * Ron
Van Brocklyn requested an analysis bo made of all such payments f r s 1 9 7 5 , 1976 and 1977. This was don': in Beeckman's
December 2 and December 5 , 1977 memos to Van Brocklyn which
y o u have s e e n . Subsequently, Van Brocklyn requested a
further
analysis of all such payments and total volume of
b u s i n e s s done with the specific distributors for fiscal
years 1972 — 1977. Beeckman sent a memo to Van Brocklyn on January IS, 1978 with the details. A copy of the memo is s?
enclosed*
O /
On January 23, 1973, Van Broclclyn called Beeckman
to request all the available details surrounding the payments discussed in the January IS, 1978 memo. Van Brocklyn
also indicated that, based on the information received to
date, these payments should be classified as -"unusual " and
not questionable payments.
The client is presently preparing the additional information.
Mjjjyiitude of Payments 1972 - .1977
For fiscal years 1972 - 1977, Fafnir's consolidated volume of business involving the questionable payments
was approximately $14,480,000 with questionable payments of
6
Lec
:
.•.Mi SSI ON EARNED
•
NAME
.,
A. & M.S. LOY
:;-!A S.R.L.
Italy
.DHIR ISMAIL MUSTAFA
Iraq
•
Fiscal 72 ' Fiscal 73
• COUNTRY
Guyana
.ML BABAYAN
• sChtbuv.
uu^iAcii L>Ui\t£
.
Iran
f
3128
^
7600
2900 •
-
'
•
Fiscal 76
10261
£
Fiscal 77
8078
32100
5400
68000
178757
181941
135774
76120
103450
115260
21157
10285
48385
51500
-
34450
f
4777
-
14170
fiscal 75
Fiscal 74
f
3288
100430
ZR BILLINGS
LFAVEL S.A.
G. VASILIADIS
Chile
18987
Greece
.22048
12576
11748
45730
60770
-72434
'86707
A. BRASILERIA DE ROLAMENTOS E MANCIAS BRM Brazil
5 THYE GUAN HIN SDN BHD
.
Malaysia
THALLAH G. KASPAR
;TIA
•Syria
Bahrain
co.
.
7318 .
7657
22296
Kenya
-
Iran
-
;
'
-
•
.11999
-
195
IRKAT IRAN LUCID DE MASSOULIATE MAHDOUD
472
79945
-
-
11 QUIP AGENCIES E.A. LTD
*
.*
-
260 -•
6545
10630 •
'
'
1158
5477
Israel
25617
23000
27680
;• 29535
Sudan
2771
7944
7083
5269
.1 KHAN I
Iran "
2058;
'
uxvn
7Vr/vs
fr't*
I rs-"' ^y-.
iVW*
-
-
2472
RTOUM AUTO PARTS SUPPLIERS LTD
'
.
884
'.CN BROTHERS LTD
-
66585
•
121457
-
543.-
423
3788;
40403
114041'.
13288.
21536
-
•
-
-
31577
45702
-
17411 £
#7,WW*
mVYiYY
&X&9, TO
'jO/o,;^.
436
FAFNIR - FRANCE
Schedule of Questionable Payments
(Fiscal Years 1972 - 1977)
(In French Francs)
Name &c Address
of Agent
Nahdir Mustafa
Baghdad, Iraq
Fiscal Years
1976
1972-1975
NONE
1977
Business
Done
Commission
Payment
FF 968, 903
FF 120, 713
*loo * >13, 70>;v
Business.
.Done
Commissic
Payment
FF5, 854, 493 FF920.26
fJ .iV>C>p f.Zat,, oir.x
The above represents commission payments deposited to agent's account in bank of.
country other than in country in which agent's business is located.
Source:
Memo to
George Rouilleaux from L. de Jong
dated January 5, 1978
RPB 1/17/7S
7
437
A
C
C
O
U
N
T
I
N
G
B U L L E T I N
NO:
DATE
SUBJECT:
7 8 - 1
January"
C O M P U T A T I O N A N D P A Y M E N T OF FOREIGN R E P R E S E N T A T I V E
6 ,
1978
COMMISSIONS
•PURPOSE:
T o e s t a b l i s h p o l i c y and p r o c e d u r e s for the p a y m e n t of
c o m m i s s i o n s to F a f n i r ' s foreign r e p r e s e n t a t i v e s .
SCOPE:
T h i s p r o c e d u r e w i l l b e u s e d to c o m p u t e c o m m i s s i o n s on
a l l i n t e r n a t i o n a l i n v o i c e s and to p r o c e s s p a y m e n t to
the appropriate representative.
D I S T R I B U T I ON
~
A , 3 , G
0..
w s n. texironl
'
CtflVf R O L L E R
438
Accounting Eulletin N o . 78-1
January
6, 197ft
TABLE OF CONTENTS
p^GE NO.
POLICY AND RESPONSIBILITIES
1
PROCEDURES
1
2,.1 PREPARATION OF THE COMMISSION COPY
1
2.1.1 INVOICING DEPARTMENT
2.1.2 INTERNATIONAL SALES
2.1.3 ACCOUNTS RECEIVABLE
2,.2 PAYflENT
1
2
2
2
2.2.1 ACCOUNTS RECEIVABLE
2 .2.2 INVOICING DEPARTMENT
2.2.3 ACCOUNTS PAYABLE
2
3
3
2..3 MONTH END
4
2.3.1
2.3.2
2,3.3
2.3.4
4
4
4
4
ACCOUNTS PAYABLE
INVOICING
INTERNATIONAL SALES
ACCOUNTS. PAYABLE
2,.4 MONTHLY ACCRUAL
4
2,.5 MAINTENANCE
5
REQUIREMENTS
2.5.1 REP RESENTATIVE COMMISSION MASTER LIST
5
REPRESENTATIVE COMMISSION MASTET? LIST
5
PART I COUNTRIES COVERED BY REPRESENTATIVE
AGREEMENTS
5
PART II REPRESENTATIVE ADDRESSES & SPECIAL INSTR.
6
439
No.
78-1
Date January
6,1978
Page 1 oflO.
POLICY AND RESPONSIBILITIES:
The Vice-President of International Operations is responsible
for establishing commission aareements with foreign representatives.
The Controller is responsible for calculating and paying foreign
representative commissions in accordance with the agreements.
f
Payment: Commissions will be computed on Fafnir s net invoice
price to the customer less any special overseas packing and
any transportation cost included in the invoice price, and less
any trade and cash discounts shown on the invoice and allowed
to and taken by the customer, and less any credits issued to
the customer.
The commission will be due and payable within the calendar
month following receipt of payment in full by Fafnir from
the customer.
PROCEDURES:
2 . 1
PREPARATION
OF
THE
COMMISSION
COPY
The following steps will be taken to establish the
commission copy.
2 . 1 . 1
INVOICING
DEPARTMENT
After preparino the International invoice for '
mailing, copies of each invoice will be sent to
the International Sales Department. One of these
copies will be stamped with the 'Commission Copy'
stamp and annotated as follows:
1. The representative's name is written in the top
block. If no commission is due, the word 'None'
will be entered.
2 . The commission percentage is entered in the
lower block, if applicable.
Note:
A specific amount in lieu of the percentage
may be used.
3. The coniriission copy is logged into the commissions
register, (invoice date, amount, number, representative, 6 commission %).
4. After the commission copy has been logged, both
copies are forwarded to International Sales.
440
No.
78-1
Date January
6 , 19
Page 2 of 10
2.1.2 INTERNATIONAL SALES
Upon receipt of the two copies, the unstamped copy
is filed for internal use.
The commission copy is logged in the.international
copy of the commissions register. The assignment
of representative and the applicable percentage is
checked against accounting's copy of the representative commission master list. Any discrepancies will
be brought immediately to the attention of Invoicing.
After the commission copy has been logged and checked,
it will be initialed by the individual in charge of
commission control and will be forwarded to Accounts
Receivable.
2.1.3 ACCOUNTS RECEIVABLE
The commission copy is filed in Accounts Receivable
awaiting payment of the invoice.
.2 PAYMENT
2.2.1 ACCOUNTS RECEIVABLE
When payment of an international invoice is received,
one of the following steps is taken: .
1 . Payment of invoice in full, when full payment of
the invoice is received, the commission copy is
annotated 'Paid' 'Date' 'Initials' by the clerk
who posts the receipt.
2 . Credit memos deducted by the customer. When the
customer deducts a credit with his remittance, the
commission copy is annotated, 'Deducted' 'Date'
'Initials' by the clerk posting receipts. This
will be deducted by the commissions clerk in
figuring the material value of the invoice.
3 . Freight invoices (F&G Billings). These invoices
do not receive a commission and are not sent to
the commissions clerk.
4 . Short payments. When the customer does not pay
the invoice in full, the invoice is held. If
payment is completed, the procedure in step 1 is
followed.
If the remainder is subsequently written off, the
amount written off is deducted and the amount
actually paid is noted. Commission is computed
on the amount paid by the customer.
441
N o . 78-1
Date January
Page
3 of
G, 19 7 i
10
2.2.2 INVOICING DEPARTMENT
Upon receipt of the completed commission copy,
the
1
'Date Invoice Paid' and 'Date Commission Paid blocks
are filled in on the commission register. If a
commission is payable on the invoice, a copy is made
for the file of paid invoices which is maintained in .
Invoicing until month end.
The commission is computed using the commission percentage times the total value of merchandise.
The following steps will be .taken by the commission
clerk in preparing the commission copy:
1 . Stamp the commission copy with the in stamp.
2 . The commission amount is entered on the bottom
of the invoice and underlined.
3. Assign the vendor number, (see the representative
commission master list for current vendor numbers)„
4 . Assign the payment date. The payment date is always
the 2nd Friday after the end of the Textron m o n t h .
5 . Place a #2 beside the invoice number on the commission
copy. This will be used by Accounts Payable to code
the commission for payment.
6 . Check payment approved block and initial.
7 . Enter '36 3-33' in the account number b l o c k .
8. Make a copy of the completed commission copy and
file it with the paid invoices, on which no commission
is due, until month e n d .
9 . Forward the completed commission copy to Accounts
Payable.
2.2.3 ACCOUNTS PAYABLE
Upon receipt of the.commission copy, Accounts Payable
will recompute the commission and input the copy for
payment. The computer will- automatically produce a
check with a listing of the invoice numbers and commission
amounts on the remittance advice.
If any errors are noted by Accounts Payable, the
commission copy will be returned to the commission clerk
in the Invoicing Department for correction.
442
No.
70.1
Date
January
Page
4 of 10.
6, 197
2.3 MONTH END
At month end the following steps will be taken.
2.3.1 ACCOUNTS PAYABLE
1 . Forward the check copy and supporting 'mmwiggiAn <
cop ie s^ to. Internati pnalJ5.aJ.es /_.and_r_e.t.ciijj_the
original for,control.
2 . Total the amounts paid to all representatives for
the month.
3. Forward a copy of the Accounts Payable voucher
register (Account N r . 363-33 International Sales),
2.3.2 INVOICING
1 . Forward the file of commission copies on which
payment was received, to International Sales.
2 . Total all commission amounts to be paid at month
end and check against the total dollar amount of
commission on the checks that were prepared by
Accounts Payable.
• 2.3.3 INTERNATIONAL SALES
1 . Review the commission copies and payments.
2 . Retain the commission copies from Invoicing for
updating of the commission register and for preparation of the payment report.
3 . Initial the check copy, return it _andthe-_s.upp.or.tina
' commission ' c o p i e s _ t o A c co.unts „_.P ay able.
2.3.4 ACCOUNTS PAYABLE
Upon return of the check copy/ mail J^he_check and
remittance^ advice in accord an ce.j^'TtH.. tKe~spe.cial*
instructions^ from the representative commission
master list, and file the check copy with Jthe^commission "copies""* at ta'ched
2.4 MONTHLY ACCRUAL
Account Number 36 3-33 'Accrued Foreiqn Representatives
Commissions' is charged with actual commissions.
The amount to be accrued is determined on an annual basis
by International Sales and General Accountinq.
The accrual is used by General Accounting for preparation
of the profit plan.
443
No .
Date
7ff — 1
January
5 o f 10
Page
T h e a c c r u a l is b o o k e d to s e l l i n g
Accounting.
T h e a c c r u a l is r e v i e w e d w i t h
General A c c o u n t i n g .
2.5 MAINTENANCE
expense monthly
International
by
f,. 197
General
Sales quarterly
by
REQUIREMENTS
T h e f o l l o w i n g m a i n t e n a n c e r e q u i r e m e n t s are e s s e n t i a l to t h e
c o r r e c t p a y m e n t o f c o m m i s s i o n s to o u r f o r e i g n r e p r e s e n t a t i v e s .
2.5:1
REPRESENTATIVE
COMMISSION
MASTER
LIST
I n t e r n a t i o n a l S a l e s is r e s p o n s i b l e f o r u p d a t i n g t h e l i s t
on an a n n u a l b a s i s w i t h i n t e r i m u p d a t e s in w r i t i n g .
Inform
I n v o i c i n g o f a n y d e v i a t i o n s in w r i t i n g , and A c c o u n t s P a y a b l e
o f a n y a d d r e s s c h a n g e s in w r i t i n g as r e q u i r e d .
A c c o u n t s P a y a b l e w i l l i s s u e v e n d o r n u m b e r s on n e w
a t i v e s a n d i n f o r m I n v o i c i n g o f t h e s e in w r i t i n g .
represent-
3 . REPRESENTATIVE COMMISSION MASTER LIST
•
PART I C O U N T R I E S
C O V E R E D BY R g P f t g S E N T A T I V E
AGREEMENTS
NOTE:
If a c o u n t r y is n o t l i s t e d in t h i s s e c t i o n o f t h e r e p r e s e n t a t i v e
c o m m i s s i o n m a s t e r l i s t , t h e r e is no r e p r e s e n t a t i v e a g r e e m e n t
covering that country.
REPRESENTATIVE
COUNTRY
Argentina
Brazil
Chile
Colombia
Dominican
Ecuador
Rep.
Hong Kong
India
Indones i a
Iran
Israel
Italy
Japan
COMMISSION
Eduardo P. Michans
10%
BRM S . A . (Except BRM invoices)
10%
S a l f a v e l , S . A . (Except Salfavel
10%
invoices)
Quinteros Limitada
10%
Rafael Benitez Carrillo
10%
A l m a c e n de R u l i m a n e s ( E x c e p t Alma10%
cen de R u l i m a n e s , A n g l o E c u a t o r i a n a ,
and Industrias s a l e s )
M u l l e r and P h i p p s
10%
M u l l e r a n d P h i p p s (An a d d i t i o n a l
5%
5% c o m m i s s i o n is p a i d to M & P - I n d i a
by t h e c u s t o m e r . )
Muller and Phipps
10%
J. Babayan
10%
Attias Agencies
5%
R.I.M.A., S.R.L. (Except R.I.M.A.
10%
invoices)
M u l l e r a n d P h i p p s ( E x c e p t NTN
10%
invoices)
444
No.
Date
Page
COUNTRY
Peru
Phi 1 1 p p i n e s
Portugal
Si n g a p o r e
Taiwan
Thai 1 and
Turkey
Uruguay
Yugoslavi a
Zaire
PART
II R E P R E S E N T A T I V E
Vendor Name:
Mail
Check
COMMISSION
REPRESENTATIVE
M u l l e r and Phipps
M u l l e r and Phipps
M u l l e r and Phipps
Maquinaria Ludeca S . A . (Except
Maquinaria Ludeca invoices)
Franz K. Schmid
Muller and Phipps
Daun L i m i t a d a (Tap invoices o n l y
5%)
M u l l e r and Phipps
M u l l e r and P h i p p s
M u l l e r and Phipps
Burla Biradeler
M a y f e r S . A . ( B e c a w S . A . and I s a v
F. Hernandez invoices only)
Ougohemija Representatives
B u r e a u T e c h n i q u e BIA
Korea
Macao
Maiaysi a
Ni c a r a g u a
Eduardo
ADDRESSED AND SPECIAL
P. Michans
10%
10%
10%
10%
10%
10%
5%
10%
10%
10%
5%
10%
10%
10%
INSTRUCTIONS
Vendor Number:
To:
Eduardo P. Michans
Carlos Pellegrini 173
Buenos A i r e s , Argentina
Vendor Name:
Vendor Number:
Mail
Check
Almacen
de R u l i m a n e s S a l v a t i e r r a
03580
To:
A l m a c e n de R u l i m a n e s
Casilla 5798
Guayaqui1
Ecuador
Salvatierra
S.A.
S.A.
62740
78-1
J a n u a r y 6,
6 o f 10
197
445
No.
REPRESENTATIVE
Vendor
Mail
COMMISSION
Name:
Check
Attias
Vendor Name:
Check
Agencies
LIST
Limited
Date
January
Page
7 of
(con't.)
Vendor
Number:
08105
Vendor
Number:
11250
To:
Attias Agencies
P . O . Box 1910
Tel A v i v
Israel
Mail
MASTER
78-1
Limited
Jamal
Babayan .
To:
Jamal Babayan
P . O . Box 253
T e h e r a n , Iran
Vendor Name:
BRM S/A
Mail Check to:
BRM S/A
CAIXA Postal 20.610
Sao Paulo - SP-CEP .01000
Brazil
Vendor Name:
Bula Biraderler Ve SSI
Vendor Number:
16985
Mail Check To:
Burla Birderler v e SSI
Karakoy Hezaren Caddessi 61-63
P . O . Box 283, Karakoy
Istanbul, Turkey
25-067
O - 78 - 29
Vendor Number:
15670
.6,1978
10
446
No.
Date
78-1
January
Page
REPRESENTATIVE
COMMISSION
Vendor Name;
Rafael
Vendor Number:
Mail
Check
MASTER
Benitez
LIST
Carrillo
(con't.)
Inc.
19296
To:
Rafael Benitez Carrillo I n c .
P . O . Box 4 2 6
San J u a n , Puerto Rico 0 0 9 3 6
Vendor Name:
Daun Limitada
Vendor Number:
Mail Check To:
Daun Limitada
Rua Dos Fanqueiros 2620
Lisboa 2
Portugal
Vendor Name: " Jugohemija Representatives
Vendor Number:
54240
Mail Check To:
Jugohemija Representatives
Department Standard
General Zdanova
Belgrade, Yugoslavia
28425
6
8 of 1
447
No.
REPRESENTATIVE
COMMISSION
Vendor Name:
Mail
Check
Maquinaria
Vendor Name:
Check
Ludeca S.A.
Vendor Number:
61231
Vendor Number:
61688
To:
Vendor Name:
Muller and Phipps
International
65285
To:
M u l l e r and Phipps International
640 S a c r a m e n t o Street
P . O . Box 3994
San F r a n c i s c o , C a l i f o r n i a 94119
Special
Corp.
Instructions:
Copy of invoices
9
S.A.
Mayfer S.A.
Vendor Number:
Check
January
(con't.)
Mayfer S.A.
Yaguaron 1441
Montevideo
Uruguay
Mail
Date
Page
To:
Maquinaria Ludeca
A p a r t a d o 861
Managua
Nicaragua
Mail
MASTER LIST
7 3-1
to a c c o m p a n y
statement.
Corp.
f
0
6,
1C
448
NO.
78-1
Date
January
Page
10 o f
I . M U S T A F A & N T N T 0 Y 0 B E A R I N G T R A D I N G A R E NO L O N G E R
t h e r e f o r e c o m m i s s i o n s are no l o n g e r p a i d .
AGENTS » and
REPRESENTATIVE COMMISION MASTER LIST (con't.)
Vendor Name:
Quinteros Limitada
Vendor Number:
77215
Mail Check To:
Quinteros Limitada
Apartado Aereo N o . 4308
Bogota
Colombia
Special Instructions:
A copy of all payments must be sent to:
M r . Hernando Quinteros.
Transversal 3 N o . 84-35
Bogota, Colombia
Vendor Name:
Salfavel, S . A .
Vendor Number:
81455
Vendor Number:
77531
Mail Check To:
Salfavel, S . A .
Avenida Ejercito 62
Santiago/ Chile
ATTN:
M r . Manuel Velasco W .
Manager
Vendor Name:
R.I.M.A., S.R.L.
Mail Check To:
R.I.M.A., S.R.L.
Piazza Firenze 15
26149 Milano
Italy
6,
10
19
449
T E X T R O N INC.
M A S T E R AUDIT PLAN - D O M E S T I C
D e c e m b e r 3 1 , 1977
P a g e 13
.j
_
,
. .....
/
r
"
:
Review of R e p l a c e m e n t -Qxfst D a t a /
p
f
fsik
T e x t r o n has requested divisional personnel to compute
r e p l a c e m e n t cost data in o r d e r ico comply with d i s c l o s u r e s required
in its Form 10-K and Annual Report to S h a r e h o l d e r s . Last year all
r e p l a c e m e n t cost i n f o r m a t i o n p a s reviewed by AY Providence for
reasonableness.
In o r d e r to qomply with _the p £ o y i s i o n s _ o f Statem e n t on A u d i t i n g S t a n d a r d s No jf' "187" r e p l a c e m e n t cost' data"" re la'ting
to fixed""a"ssets""wi'l 1" be""rev'fpe'd ~by;~~l oca'l~-AY- ;represent_ati_ves
P r o c e d u r e s outlined in" S A S - 1 8 shouid^be^^referred" to and" applied
in the r e v i e w .
|
'
H o u r s spent on p e r f o r m i n g the review of replacement cost
d a t a s h o u l d _ b e charged^Jto_code 5 O O I - 7 9 7 0 0 - 0 1 9 and not to the divis i o n a l "code" sTnd^fiJ^^
JLvision.
In many
c a s e s , t h e r e v i e w s h o u l d jjbe c o m p l e t e d i n ^ l e s s t h a n 4 h o u r s .
R e p l a c e m e n t c o s t /jtiata for inventory will be reviewed in
P r o v i d e n c e by r e p r e s e n t a t i v e s of AY P r o v i d e n c e .
data
F i n d i n g s and c o n c l u s i o n s relative to replacement cost
s h o u l d be included a s a separate section in your top m e m o .
I l l e g a l , i m p r o p e r or q u e s t i o n a b l e
transactions
SAS #17 entitled "Illegal A c t s by Clients" w a s issued in
J a n u a r y 1977 and p r o v i d e s g u i d a n c e for an auditor when client acts
t h a t a p p e a r to him to b e illegal come to his attention during an
t:;amination of f i n a n c i a l . s t a t e m e n t s .
2he s t a t e m e n t d o e s n o t
p r o v i d e for any a d d i t i o n a l p r o c e d u r e s to be employed in conducting
a n e x a m i n a t i o n in a c c o r d a n c e w i t h g e n e r a l l y a c c e p t e d a u d i t i n g
s t a n d a r d s . H o w e v e r , again this y e a r , Textron will circularize its
k e y e x e c u t i v e s to e n s u r e that there are no i l l e g a l , improper or
q u e s t i o n a b l e t r a n s a c t i o n s of any k i n d . We have been requested to
f o r m a l l y r e p o r t to T e x t r o n ' s A u d i t C o m m i t t e e the r e s u l t s of this
endeavor.
We_ e x p e c t t h a t G . W i 1 l i a m .Mi l.ler„.wil'l . be...sending a
letter requesting such a survey to Division P r e s i d e n t s . A copy of
t h a t letter will be forwarded to you when it is a v a i l a b l e .
The
f o l l o w i n g p r o c e d u r e s s h o u l d b e u t i l i z e d in r e v i e w i n g i l l e g a l
p a y m e n t s letters:
1. Obtain list of all p e r s o n s asked to sign the Statem e n t as to I l l e g a l , Improper or Questionable P a y m e n t s .
2 . Evaluate the list a s to its i n c l u s i v e n e s s of persons
( U . S . and n o n - U . S . e n t i t i e s and o p e r a t i o n s ) in accorda n c e with the c o v e r a g e described in G» William Miller's
letter.
f/W
/Ji / ^ h
450
TEXTRON
Ix\C.
MASTER AUDIT PLAN - DOMESTIC
December 31, 1.977
Page 14
3.
Send a copy of the list to W . F . Slattery. in New / . f
York and R. A . Martin in Providence. Also advise us of
a n y o n e and their f u n c t i o n who you b e l i e v e should b e
added to the list and whom the Division President deemed /? 7
not appropriate after your reading of the list. Q )
^
4 . Examine each signed Statement obtained by the Divis i o n President.
Please send a copy of any Statement
which notes exception or has any change in language to
W . F . Slattery and R . A. Martin. You will then receive/?
i n s t r u c t i o n s as to a n y f u r t h e r f o l l o w - o n p r o c e d u r e . ^ '
5.
Include the following
representation letter.
paragraph
in the
Division's
DRAFT PARAGRAPH FOR INCLUSION IN REPRESENTATION LETTERS
" B a s e d on r e s p o n s e s r e c e i v e d from o f f i c e r s and f r o m \
other persons who have an understanding and a knowledge of busi= \
n e s s a c t i v i t i e s w i t h i n o u r o p e r a t i o n and b a s e d on my p e r s o n a l J
knowledge, for the fiscal year ended December 31, 1977 and \for the /
period from December 31," 1977 to date, we are not aware of (i) any
i l l e g a l b r i b e s , k i c k b a c k s or o t h e r i m p r o p e r or q u e s t i o n a b l e A
payments having been made to or for the benefit of any person, f y '
corporation or government for the purpose of obtaining special j
concessions or for obtaining other favorable treatment in securing !
b u s i n e s s for the c o m p a n y ; (ii) any c o m p a n y f u n d s or p r o p e r t y \
having been made available, directly or indirectly, as political » *
contributions in the United States or elsewhere, or that officers \
or e m p l o y e e s w e r e p a i d or .reimbursed, d i r e c t l y or i n d i r e c t l y , ^
for performing services or incurring expenses in political activi= j
t i e s in the U n i t e d S t a t e s or e l s e w h e r e ; and ( i i i ) any c o m p a n y {
f u n d s , p r o p e r t y , o r t r a n s a c t i o n s w h i c h w e r e not r e f l e c t e d o r ;
accounted for on the b o o k s , records or financial statements of the /
company."
(Or,
-
,
/ • /Z-l-1.'
>•
451
FAFNIR - FISCAL YEAR 1977
LIST OF EMPLOYEES SIGNING STATEMENT
AS TO ILLEGAL, IMPROPER, OR QUESTIONABLE PAYMENTS
(Per G. W . Miller Letter of November 1, 1977)
£
Name
l.
2.
3. •
4. 0
5. »
6. •
7. »
8. •
9. •
10. •
11. •
12. *
13. •
f
14.
15.
16.
/
17.
1
18.
19.
20.
21.
H.
H.
if? A .
^ R.
sff W .
If R.
& H.
H.
,tr F.
W.
iM L.
>
f it G,
.
5
•er
Sherer v /
Brodsky A
Frisbie"^
Cooper \
Toppin
De Caulp y
Beeckman V
Deutsch V
Van Dorn *
Fitch
Lee
C.
AffelderV
•
t.-cty
./
c
Y
^
U. S. '
Drooff Y*
de Jong V
P. Robertson"*/
Wall
^
Oddie Y
King
M' J. Le Dosseur
G. Rouilleaux^
22.
L.
J.
B.
V.
Location
E.
M.
S.
A.
M.
E.
P.
W.
B.
K.
W.
U. K.
France
I.
J. Bonilla
Mexico
G. R. Porter
Canada
•"
/ *
• /*• , ,
,
TES '
/
1/3/78
/
,
/
. , . ,
/ V /
f)
452
TEX YRON
Statement as to Illegal, Improper
or Questionable Payments
This statement is furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. f o r 1977.
F o r the Textron f i s c a l year ended D e c e m b e r 31, 1977,(or November 30,
1977, in the case of certain consolidated international operations) and f o r the
period f r o m the end of the f i s c a l year to the current date, I am not aware in
bnck* or olhtvr improper or questionable payments having been made to or for
tlitf
Imnnfil
I»l rj n y
(in m i n i ,
t i n jn»rrtl l«»ii o r
g o v « ruinnitl
lor
llm
jmrpoHn
of
ob-
taining special concessions or f o r obtaining other favorable treatment in s e curing business f o r the company; (ii) any company funds or property having
been m a d e available, directly or indirectly, as political contributions in the
United States or elsewhere, or that o f f i c e r s or e m p l o y e e s were paid or r e i m bursed, directly or indirectly, for performing s e r v i c e s or incurring expenses
in political activities in the United States or e l s e w h e r e ; and (iii) any company
funds, property, or transactions which were not reflected o r accounted for on
the books,
r e c o r d s or financial statements of the company.
, /yZ3
/-ys'
*
iV n
Date
L Lit'I/*
( F m n l n v p o signature)
'' (Employee
(Employee name and title please' print)
/'/V-A //>' n^lJC. (N'G .h i YiS/C AJ
(Division, subsidiary or unit
of Textron)
453
TEX YRON
S t a t e m e n t as to I l l e g a l , I m p r o p e r
or Questionable Payments
Addendum
In the p a s t , s o m e c o m m i s s i o n p a y m e n t s h a v e b e e n d e p o s i t e d
to a g e n t s ' , d i s t r i b u t o r s ' , o r their p r i n c i p a l s ' a c c o u n t s in banks
in c o u n t r i e s other than the c o u n t r i e s in w h i c h their b u s i n e s s i s
located.
On o c c a s i o n s , c o m m i s s i o n s h a v e b e e n paid to d i s t r i b u t o r s w h o bought p r o d u c t s f o r their own a c c o u n t . No other
p a y m e n t s of a s i m i l a r n a t u r e h a v e been m a d e .
T h e s e p r a c t i c e s have been d i s c o n t i n u e d . A l l such p a y m e n t s
a r e n o w p a i d b y c h e c k d r a w n to the o r d e r of the b u s i n e s s entity
i n v o l v e d and m a i l e d to their p l a c e of b u s i n e s s in the c o u n t r y in
which they a r e located.
S e e m e m o of January 1 8 , 1 9 7 8 , f r o m R . P . B e e c k m a n to
R . A . V a n B r o o k l y n on this s u b j e c t f o r d e t a i l s .
\
(Employee signature)
( E m p l o y e e n a m e and t i t l e p l e a s e print)
bw/'csiok)
( D i v i s i o n , s u b s i d i a r y or
unit of T e x t r o n )
454
TEX YRON
Statement as to Illegal, Improper
or Questionable Payments
This statement is furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. for 1977.
For the Textron fiscal year ended December 31, .1977,(or November 30,
1977, in the case of certain consolidated international operations) and for the
period from the end of the fiscal year to the current date, I am not aware in
my Division or unit of, or elsewhere in, Textron of (i) any illegal bribes, kickbacks or other improper or questionable payments having been made to, or for
the benefit of any person, corporation or government for the purpose of obtaining special concessions or for obtaining other favorable treatment in securing business for the company; (ii) any company funds or property having
been made available, directly or indirectly, as political contributions in the
United States or elsewhere, or that officers or employees were paid or reimbursed, directly or indirectly, for performing services or incurring expenses
in political activities in the United States or elsewhere; and (iii) any company
funds, property, or transactions which were not reflected or accounted for on
the books, records or financial statements of the company.
(Employee name and title -
(Division, subsidiary or unit
of Textron)
455
TEX YRON
Statement as to Illegal, Improper
or Questionable Payments
Addendum
In the past, some commission payments have been deposited
to agents', distributors', or their principals' accounts in banks
in countries other than the countries in which their business is
located. On occasions, c o m m i s s i o n s have been paid to d i s t r i butors who bought products for their own account. No other
payments of a similar nature have been m a d e .
These practices have been discontinued. A l l such payments
are now paid by check drawn to the order of the business entity
involved and mailed to their place of business in the country in
which they are located.
See m e m o of January 18, 1978, f r o m R. P. Beeckman to
R. A. Van Brocklyn on this subject for details.
Date
(Employee signa€ure)
W- £
ftg
(Employee name and title-
(Division, subsidiary or
unit'of Textron)
456
T E X YRON
Statement as to Illegal, Improper
or Questionable Payments
This statement is furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. for 1977.
For the Textron f i s c a l year ended D e c e m b e r 31,
1977,(or November 30,
1977, in the case of certain consolidated international operations) and f o r the
period f r o m the end of the f i s c a l year to the current date, I a m not aware in
m y Division or unit of, or elsewhere in, Textron of (i) any illegal b r i b e s ,
kick-
backs or other improper or questionable payments having been made to or f o r
the benefit of any person, corporation or government for the purpose of obtaining special concessions or f o r obtaining other favorable treatment in s e curing business f o r the company; (ii) any company funds or property having
been made available, directly or indirectly, as political contributions in the
United States o r e l s e w h e r e , or that officers or employees were paid or r e i m bursed, directly or indirectly, for performing s e r v i c e s or incurring expenses
in political activities in the United States or elsewhere; and (iii) any company
funds, property, o r transactions which were not reflected or accounted for or.
the books, r e c o r d s or financial statements of the company.
(Employee signature)
intio
)?- P
V-PAUvrt«+;
(Employee name and title please print)
(Division, subsidiary or unit
of Textron)
457
TEX YRON
S t a t e m e n t as to I l l e g a l , I m p r o p e r
or Questionable Payments
Addendum
In the p a s t , s o m e c o m m i s s i o n p a y m e n t s h a v e b e e n d e p o s i t e d
to a g e n t s ' , d i s t r i b u t o r s ' , o r their p r i n c i p a l s ' a c c o u n t s in bank*
in c o u n t r i e s o t h e r than the c o u n t r i e s in which their b u s i n e s s i s
located.
On o c c a s i o n s , c o m m i s s i o n s h a v e b^en paid to d i s t r i butors who bought p r o d u c t s f o r their own account. No o t h e r
p a y m e n t s of a s i m i l a r n a t u r e h a v e been m a d e .
T h e s e p r a c t i c e s h a v e been discontinued. A l l such p a y m e n t s
a r e now paid b y c h e c k d r a w n to the o r d e r of the b u s i n e s s entity
involved and m a i l e d to their p l a c e of b u s i n e s s in the c o u n t r y in
which they a r e l o c a t e d .
See m e m o of January 1 8 , 1 9 ? 8 , f r o m R . P. B e e c k m a n to
R. A . V a n B r o c k l y n on this s u b j e c t f o r d e t a i l s .
S b r v .
^
2 ?
)<jl<2
( E m p l o y e e signature)
Date
ff
ft
t/. f -
M
( E m p l o y e e n a m e and t i t l e p l e a s e print)
(Division, s u b s i d i a r y or
unit of T e x t r o n )
W
i
W
.
o
n
458
T E X YRON
Statement as to Illegal, I m p r o p e r
o r Questionable P a y m e n t s
This statement is furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. for 1977.
F o r the Textron fiscal year ended D e c e m b e r 31, 1977>(or N o v e m b e r 30,
1 9 7 7 , in the case of certain consolidated international .operations) a n d for the
period f r o m the end of the fiscal year to the current date, I a m not a w a r e in
m y Division or unit of, or elsewhere in, Textron of (i) a n y illegal bribes, kickb a c k s o r other i m p r o p e r o r questionable p a y m e n t s having b e e n m a d e to or for
the benefit of a n y p e r s o n , corporation or g o v e r n m e n t for the p u r p o s e of obtaining special concessions o r for obtaining other favorable treatment in securing business for the c o m p a n y ; (ii) a n y c o m p a n y funds or property having
b e e n m a d e available, directly or indirectly, a s political contributions in the
U n i t e d States o r e l s e w h e r e , o r that officers or e m p l o y e e s w e r e paid or r e i m b u r s e d , directly or indirectly, for p e r f o r m i n g services or incurring e x p e n s e s
in political activities in the United States or elsewhere; and (iii) a n y c o m p a n y
funds, property, o r transactions w h i c h w e r e not reflected or accounted for on
the b o o k s , records or financial statements of the c o m p a n y .
January 1Qf IQ7R
Date
( E m p l o y e e signature)
H . W . D c u t s c h . V . P. Tnt'1
finnq
( E m p l o y e e name and title p l e a s e print)
F A F N I R BEAKTNr,
(Division, subsidiary or unit
of Textron)
459
TEX YRON
S t a t e m e n t as to I l l e g a l , I m p r o p e r
or Questionable Payments
Addendum
In the p a s t , s o m e c o m m i s s i o n p a y m e n t s have b e e n d e p o s i t e d
to a g e n t s ' , d i s t r i b u t o r s 1 , o r their p r i n c i p a l s ' a c c o u n t s in banks
in c o u n t r i e s o t h e r than the c o u n t r i e s in which their b u s i n e s s i s
located.
On o c c a s i o n s , c o m m i s s i o n s h a v » been paid to d i s t r i b u t o r s who bought p r o d u c t s f o r their own account. No o t h e r
p a y m e n t s of a s i m i l a r n a t u r e h a v e b e e n m a d e .
T h e s e p r a c t i c e s h a v e been d i s c o n t i n u e d . A l l such p a y m e n t s
a r e n o w paid b y c h e c k d r a w n to the o r d e r of the b u s i n e s s entity
i n v o l v e d and m a i l e d to their p l a c e of b u s i n e s s in the c o u n t r y in
which they a r e l o c a t e d .
See m e m o of January 1 8 , 1 9 7 8 , f r o m R . P. B e e c k m a n to
R . A . V a n B r o o k l y n on this s u b j e c t f o r d e t a i l s .
January 1 9 ,
Date
1978
H . W . D e u t s c h . V . P . Int'l O p e r s
( E m p l o y e e n a m e and t i t l e p l e a s e print)
FAFNIR BEARING
( D i v i s i o n , s u b s i d i a r y or
unit* of T e x t r o n )
460
T E X YRON
Statement as to Illegal, Improper
or Questionable Payments
This statement is furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. for 1977.
F o r the Textron f i s c a l year ended D e c e m b e r 31,
1977,(or November 30,
1977, in the case of certain consolidated international operations) and f o r the
period f r o m the end of the f i s c a l year to the current date, I am not aware in
m y Division or unit of, or elsewhere in, Textron of (i) any illegal bribes, kickbacks o r other improper or questionable payments having been made to or for
the benefit of any person, corporation or government for.the purpose of obtaining special concessions or f o r obtaining other favorable treatment in s e curing business f o r the company; (ii) any company funds or property having
been m a d e available, directly or indirectly, as political contributions in the
United States o r elsewhere, or that o f f i c e r s or employees were paid or r e i m bursed, directly or indirectly, for performing s e r v i c e s or incurring expenses
in political activities in the United States or elsewhere; and (iii) any company
funds, property, or transactions which were not reflected or accounted for on
the books, r e c o r d s or financial statements of the company.
Date
(Employed signature)
L
C
,^-FFBuDcij
;
&C
fi/TRoller
(Employee name and title please print)
F ft Fn
/ / j
(Division, subsidiary or unit
of Textron)
461
TEX YRON
S t a t e m e n t as to I l l e g a l , I m p r o p e r
or Questionable Payments
Addendum
In the p a s t , s o m e c o m m i s s i o n p a y m e n t s h a v e b e e n d e p o s i t e d
to a g e n t s ' , d i s t r i b u t o r s ' , o r their p r i n c i p a l s ' accounts in banks
in c o u n t r i e s other than the c o u n t r i e s in w h i c h their b u s i n e s s i s
located.
On o c c a s i o n s , c o m m i s s i o n s have^been paid to d i s t r i - '
b u t o r s who bought p r o d u c t s f o r their own a c c o u n t . No other
p a y m e n t s of a s i m i l a r n a t u r e h a v e b e e n m a d e .
T h e s e p r a c t i c e s have been d i s c o n t i n u e d . A l l such p a y m e n t s
a r e n o w p a i d b y c h e c k d r a w n to the o r d e r of the b u s i n e s s entity
i n v o l v e d and m a i l e d to their p l a c e of b u s i n e s s in the country in
which.they are located.
S e e m e m o of January 1 8 , 1 9 7 8 , f r o m R . P. B e e c k m a n to
.R. A . V a n B r o c k l y n on this s u b j e c t f o r d e t a i l s .
Date
(Employee'signature)
L
£
ftFFet-oeti
.
Cevrpace^
( E m p l o y e e n a m e and t i t l e p l e a s e print)
F,f-rN
( D i v i s i o n , s u b s i d i a r y or
unit of T e x t r o n )
25-067
O - 78 -
30
462
T E X YRON
Statement as to Illegal, Improper
or Questionable Payments
This statement is furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. for 1977.
F o r the Textron f i s c a l year ended D e c e m b e r 31, 1977,(or November 30,
1977, in the case of certain consolidated international operations) and for the
period f r o m the end of the f i s c a l year to the current date, I am not aware in
m y Division or unit of, or elsewhere in, Textron of (i) any illegal bribes, kickbacks or other improper or questionable payments having been made to or for
the benefit of any person, corporation or government for the purpose of obtaining special c o n c e s s i o n s or f o r obtaining other favorable treatment in s e curing business f o r the company; (ii) any company funds or property having
been m a d e available, directly or indirectly, as political contributions in the
United States o r e l s e w h e r e , or that o f f i c e r s or employees were paid or r e i m bursed, directly or indirectly, for performing s e r v i c e s or incurring expenses
in political activities in the United States or elsewhere; and (iii) any company,
funds, property, o r transactions which were not reflected or accounted for on
the books,
r e c o r d s or financial statements of the company.
it-mf
Date
All
Kwl-I
(Employee sigrta'ture)
J
Gl Rr>
.jliT-.H-Ov.^'U Sr t j.lilK .
(Employee name and title please print)
1 w v fv i
(Division, subsidiary or unit
of Textron)
463
TEX YRON
S t a t e m e n t a s to I l l e g a l ,
Improper
or Questionable Payments
Addendum
In the p a s t , s o m e c o m m i s s i o n p a y m e n t s h a v e b e e n d e p o s i t e d
to a g e n t s 1 , d i s t r i b u t o r s ' , o r t h e i r p r i n c i p a l s ' a c c o u n t s in banks
in c o u n t r i e s o t h e r than the c o u n t r i e s in w h i c h their b u s i n e s s i s
located.
On o c c a s i o n s , c o m m i s s i o n s . h a v e b e e n p a i d to d i s t r i b u t o r s w h o bought p r o d u c t s f o r t h e i r own a c c o u n t . N o o t h e r
p a y m e n t s of a s i m i l a r n a t u r e h a v e b e e n m a d e .
T h e s e p r a c t i c e s h a v e b e e n d i s c o n t i n u e d . ' A l l such p a y m e n t s
a r e n o w p a i d b y c h e c k d r a w n to the o r d e r of the b u s i n e s s entity
i n v o l v e d and m a i l e d to their p l a c e of b u s i n e s s in the c o u n t r y in
w h i c h they a r e l o c a t e d .
See m e m o of January 16,
1978 f r o m G . D r o o f f to H . W .
Deutsch
for details.
j
Date
( E m p l o y e e signature)
PHf.trr . iWfrR vnr.'e .uru ^nirv
( E m p l o y e e n a m e and t i t l e - '
p l e a s e print)
r n r f i ' i K
(Division,
' 5 i R R t V - \
s u b s i d i a r y or
unit of T e x t r o n )
464
TEXTRON
Statement as to I l l e g a l , Improper
or Questionable Payments
Addendum
In the past, some commission payments have been deposited to agents'
d i s t r i b u t o r s ' , o r t h e i r p r i n c i p a l s ' accounts in banks in countries
other than the countries in which t h e i r business i s l o c a t e d . On
o c c a s i o n s , commissions have been paid to d i s t r i b u t o r s who bought
products f o r t h e i r own account. No other payments of a similar nature
have been made.
These practices have been discontinued. All such payments are now
paid by check drawn to the order of the business e n t i t y involved
and mailed to t h e i r place o f business in the country in which they
are l o c a t e d .
See l e t t e r from L. de Jong to H.W. Dei
16 December 1977.
5 January 1978.
Date
(Employee Signature)
L. de Jong.
Managing Director
(Employee name and t i t l e please print)
Fafnir Bearing
Di vis ion of Textron Limi ted.
( D i v i s i o n , subsidiary or
unit of Textron)
465
TEXTRON
Statement as to I l l e g a l , Improper
or Questionable Payments
This statement i s furnished in connection with the preparation of the
audit o f the consolidated accounts of Textron Inc. f o r 1977.
For the Textron f i s c a l year ended December 31, 1977 ( o r November 30,
1977, in the case of certain consolidated international
operations)
and f o r the period from the end of t h e ' f i s c a l year to the current date,
I am not aware in my Division or unit o f , or elsewhere i n , Textron o f
( i ) any i l l e g a l b r i b e s , kickbacks or other improper or questionable
payments having been made to or f o r the b e n e f i t o f any person, corporation or government f o r the purpose o f obtaining special
concessions
or f o r obtaining other favorable treatment in securing business f o r
the company;
( i i ) any company funds or property having been made
a v a i l a b l e , d i r e c t l y or i n d i r e c t l y , as p o l i t i c a l contributions in the
United States or elsewhere, or that o f f i c e r s or employees were paid or
reimbursed, d i r e c t l y or i n d i r e c t l y , f o r performing services or
incurring expenses in p o l i t i c a l a c t i v i t i e s in the United States or
elsewhere; and ( i i i ) any company funds, property, or transactions which
were not r e f l e c t e d or accounted f o r on the books, records or financial
statements o f the company.
5 January 1978.
Date
(Employee signature)
L.P. Robertson.
Financial Director.
(Employee name and t i t l e please print)
Fafnir Bearing
Division of Textron Limited.
(Division, subsidiary or unit
of Textron)
466
TEX YRON
Statement as to I l l e g a l , Improper
o r Questionable Payments
Addendum
In the p a s t , some commission payments have been deposited to agents'
d i s t r i b u t o r s ' , o r t h e i r p r i n c i p a l s ' accounts in banks in c o u n t r i e s
o t h e r than the c o u n t r i e s in which t h e i r business i s l o c a t e d . On
o c c a s i o n s , commissions have been paid to d i s t r i b u t o r s who bought
products f o r t h e i r own account. No o t h e r payments o f a s i m i l a r nature
have been made.
These p r a c t i c e s have been d i s c o n t i n u e d . All such payments are now
paid by check drawn to the o r d e r o f the b u s i n e s s e n t i t y involved
and mailed to t h e i r p l a c e o f business in the country in which they
are l o c a t e d .
See l e t t e r from L. de Jong to H.W. Deutsch on t h i s s u b j e c t dated
16 December 1977.
5 January 1978.
Date
(Employee signature)
L . P . Robertson
Financial D i r e c t o r
Fafnir Bearing
D i v i s i o n o f Textron Limited.
(Division, subsidiary or
unit o f Textron)
467
TEX YRON
Statement as to I l l e g a l , Improper
or Questionable Payments
This statement i s furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. f o r 1977.
For the Textron f i s c a l year ended December 31, 1977 ( o r November 30,
1977, in the case of certain consolidated international
operations)
and f o r the period from the end of the "fiscal year to the current date,
I am not aware in my Division or unit o f , or elsewhere i n , Textron of
( i ) any i l l e g a l b r i b e s , kickbacks or other improper or questionable
payments having been made to or f o r the b e n e f i t of any person, corporation or government f o r the purpose o f obtaining special
concessions
or f o r obtaining other favorable treatment in securing business f o r
the company;
( i i ) any company funds or property having been made
a v a i l a b l e , d i r e c t l y or i n d i r e c t l y , as p o l i t i c a l contributions in the
United States o r elsewhere, or that o f f i c e r s or employees were paid or
reimbursed, d i r e c t l y or i n d i r e c t l y , f o r performing services or
incurring expenses in p o l i t i c a l - a c t i v i t i e s in the United States or
elsewhere; and ( i i i ) any company funds, property, or transactions which
were not r e f l e c t e d or accounted f o r on the books, records or financial
statements o f the company.
5 January 1978.
Date
(Employee signature)
F.B. Oddie.
Marketing Director.
(Employee name and titleplease print)
Fafnir Bearing
Division of Textron Limited.
(Division, subsidiary or unit
of Textron)
468
TEX YRON
Statement as t o I l l e g a l , Improper
o r Q u e s t i o n a b l e Payments
Addendum
In the p a s t , some commission payments have been d e p o s i t e d t o agents
d i s t r i b u t o r s ' , o r t h e i r p r i n c i p a l s ' a c c o u n t s in banks in c o u n t r i e s
o t h e r than t h e c o u n t r i e s i n which t h e i r b u s i n e s s i s l o c a t e d .
On
o c c a s i o n s , commissions have been p a i d t o d i s t r i b u t o r s who bought
p r o d u c t s f o r t h e i r own a c c o u n t .
No o t h e r payments o f a s i m i l a r nature
have been made.
These p r a c t i c e s have been d i s c o n t i n u e d .
A l l such payments a r e now
p a i d by check drawn t o t h e o r d e r o f the b u s i n e s s e n t i t y i n v o l v e d
and m a i l e d t o t h e i r p l a c e o f b u s i n e s s in the c o u n t r y i n which they
are l o c a t e d .
See l e t t e r f r o m L. de Jong t o H.W. Deutsch on t h i s s u b j e c t
16 December 1977.
dated
5 January 1978
Date
(Employee
signature)
F . B . Oddie
Marketing D i r e c t o r
F a f n i r Bearing
D i v i s i o n o f Textron
(Division, subsidiary
unit o f Textron)
Limited.
or
469
T E X YRON
Statement as to Illegal, I m p r o p e r
o r Questionable P a y m e n t s
This statement is furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. for 1977.
F o r the Textron fiscal year ended D e c e m b e r 31, 1977,(or N o v e m b e r 30,
1977, in the case of certain consolidated international operations) and for the
period f r o m the end of the fiscal year to the current date, I a m not a w a r e in
m y Division or unit ox, or elsewhere in, Textron of (i) a n y illegal bribes, kickbacks or other i m p r o p e r or questionable p a y m e n t s having been m a d e to or for
the benefit of any person., corporation or g o v e r n m e n t for the purpose of obtaining special concessions or for obtaining other favorable treatment in securing business for the c o m p a n y ; (ii) any c o m p a n y funds or property having
b e e n m a d e available, directly or indirectly, as political contributions in the
United States o r elsewhere, or that officers or e m p l o y e e s w e r e paid or reimb u r s e d , directly or indirectly, for performing services or incurring expenses
in political activities in the United StateB or elsewhere; and (iii) any c o m p a n y
funds, property, or transactions w h i c h w e r e not reflected or accounted for on
the b o o k s , records or financial statements of the c o m p a n y .
December 2 3 , 1977
Date
' ( E m p l o y e e signature)
Joaquin R . Bonilla.- General M a n a g e r .
( E m p l o y e e n a m e and title please print)
FAFNIR-MEXICO Division
(Division, subsidiary or unit
of Textron)
470
TEX YRON
S t a t e m e n t a s to I l l e g a l ,
or Questionable
Improper
Payments
Addendum
In the p a s t , s o m e c o m m i s s i o n p a y m e n t s h a v e been deposited
to a g e n t s ' , d i s t r i b u t o r s ' , o r their p r i n c i p a l s ' accounts in banks
in c o u n t r i e s other than the c o u n t r i e s in which their b u s i n e s s i s
located.
On o c c a s i o n s , c o m m i s s i o n s h a v e b e e n paid to d i s t r i b u t o r s who bought p r o d u c t s f o r their own a c c o u n t . N o other
p a y m e n t s of a s i m i l a r n a t u r e h a v e been m a d e .
T h e s e p r a c t i c e s have been discontinued. A l l such p a y m e n t s
a r e now paid b y c h e c k d r a w n to the o r d e r of the b u s i n e s s entity
i n v o l v e d and m a i l e d to their p l a c e of b u s i n e s s in the country in
w h i c h they a r e l o c a t e d .
" NO SUCH COMMISSION PAYMENTS HAVE BEEN MADE BY
December
FAFNIR-MEXICO.
23,1977
Date
Joaquin R. Bonilla.- General
( E m p l o y e e n a m e and t i t l e p l e a s e print)
FAFNIR-MEXICO
(Division,
Division.
s u b s i d i a r y or
unit of T e x t r o n )
Manager.
471
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473
ARTHUR
M PANY
L'die:
To: IIARTFOR
James L
cc: S. A . Botte, New York
R. A . Martin, Providence
Subjocf:
December
19,
1977
From: NEW YORK OFFICE
William F . Slattery
FAFNIR - QUESTIONABLE PAYMENTS
Dear Jim:
As we discussed this morning, I am enclosing copies of
correspondence forwarded to me from Textron relating to payments
which the Fafnir division believes are questionable.
Ron Van Brooklyn, Textron's Controller, has asked us to
become knowledgeable about the circumstances and details of these
payments. I will attempt to get him to define the scope of what
he wishes us to do in more detail and will talk with you when
that is done.
Best regards
Enclosures
474
m s M n m
Mew
3 i M m ,
CT.
Fafnir Bearing Division ol Textroin Inc.
Attention:
R. A. Van Brocklyn - Providence
Subject.
Questionable Payments - Fafnir Europe
v
r
Jherer, H. W. Deutsch,
T. E. Sherer,
L. C. ^ffeUjfer, J. S. Canzio
Date:
yr
December 5, 1977
a P ' / L
O
C. T. Roelke - Providence
Following up on my letter of December 2, 1977, we have now received information
relative to questionable payments made during Fiscal Year 1977 by our European
operations. This data by country is as follows:
Name
Amount
Explanation
A . f Fafnir UK
:athallang
Kaspar
f
3,25.5.
(1)
1,894
(1)
27, 822
. (2)
Rima
Italy
775
(2)
D. A. & W . S . Loy
322
(1)
K. Vasiliadis
. Greece
6,599
(1)
BRM
Brazil
1,000
(1)
Babayan
Iran
6,291
(2)
Syria
Salfavel
Chile
Nahdir Mustafa
Iraq
British Guyana
RECEIVED
DEC 0 " 1977
475
R. A.
Van Brooklyn - P
i-^ence
Name
Amount
1977
Explanation
299
(1)
Sherrate Iran Lucid
Iran
600
(1)
f 48, 857
--
£
Fafnir France
Nahdir Mustafa
Iraq
C.
December 5,
Agriquip
Kenya
TOTAL
B.
2.
f f 9 2 0 , 259 &
-
(2)
Z / S-g, 6 r 3
2. 0
Fafnir G e r m a n y
6
/
NONE
Explanation
(1)
Payments to distributors who bought products on their own account.
(2)
C o m m i s s i o n payments deposited to agents', distributors', or their
owners' accounts in banks in countries other than the countries in
which their business is located.
NOTE:
A l l such payments have c e a s e d .
A 3 d i s c u s s e d earliei; we will be amplifying the above l i s t for s i m i l a r details for
F i s c a l Y e a r s 1975 and 1976. This l i s t will be sent to m e by D e c e m b e r 23, 1977
and I will forward it to you i m m e d i a t e l y .
P l e a s e call m c if you have any questions.
R. P .
RPD:ak
Beeckman
476
iFAFmyg
E S 3 S 3 M
Fafnir Bearing Division of Texiron Inc.
Attention:
Subject:
R. A . Van Brooklyn - Provide
Questionable Payments
cc 4- att. :
T.
H*
L.
J.
E.
W.
C.
S.
Sherer
Deutsch
Affelder
Canzio
U '
^
Per yesterday's phone conversation,
A.
B.
A copy of each internal mem*
since May 12, 1977:
1.
November 29,
1977
2.
November 18,
1977
List of questionable paynv*^*
years:
Name
Jamal Babayan
Teheran, Iran
Y T D
$
Bureau Technique " B I A " S p r l .
Republic of Zaire
C. A . B r g s . De Venezuela
Caracas, Venezuela
Fag Peruana
Lima, Peru
I.
Mustafa
Baghdad, Iraq
U
4.3V
1
-
477
Name
Quintcros Ltdn.
Bogota, Colombia
Sal fa vel S. A.
Santiago, Chile
Totals
Calendar Year
1976
$
4 8 , 4 7 8 . 17
Y T D 1977
$
20, 762. 71
2 , 6 3 8 . 61
$
$
3,554.78
57,418.94
$
142, 5 8 2 . 7 2
1975
2 5 , 5 0 6 . 09
748. 24
$
71,681.22
The above represent commission payments deposited to agents', distributors',
or their owners' accounts in banks in countries oilier than the countries in which
their business is located, or to distributors who bought products on their own
account. A l l such payments have ceased.
Fafnir Europe was contacted by telex yesterday for a s i m i l a r listing of payments
A s of today an answer has not arrived, so we are Rending what we do have available now. A s soon as we have the data f r o m Europe.we will immediately pass it
along.
P l e a s e contact m e if you have any questions.
R. P.
RPB:ak
Attachments
25-067
O - 78 -
31
Deeckman
478
•'lease let me
frpm you.
have a s i m i l a p -slf^fe-icnt
Attention:I: Len die Jong
Subject:
Wolverhampton
QUESTIONABLE PAYMENTS
M e w c ' ^ i t a c n , 0"«'
Date:
cc:
November 18, 1977
Gerd Drooff
Dear Len:
You have a copy of the "Statement as to Illegal, Improper or Questionable
Payments" which we all had to sign early this year for the audit procedure
for 1976. We anticipate that similar signed statements will be required
for 1977.
You also have a copy of Bill Miller's letter of May 12, 1977 under the
subject of "Standards of Conduct". This further defines what type of
payments are and are not permissible. If the auditing statement is
similar to last y e a r ' s , we will have to amend it to cover some of the
practices discontinued in response to Bill Miller's May 12th letter.
Therefore, we will probably have the following statement included:
In the past, some commission payments have been deposited
to agents', distributors', or their principals' accounts in banks
in countries other than the countries in which their business
is located. On occasions, commissions have been paid to
distributors who bought products for ilicir own account. No
other payments of a similar nature have been made.
TTiese practices have been discontinued. • All such payments
are now paid by check drawn to the order of the business entity
involved and mailed to their place of business in "the country
in which they are located.
Please review last year's statement and the above amendment with
all people involved with such things at Fafnir U. K . , France, and
Germany. . Then write to me that you have discussed this with these
people and that we will be able to sign these statements, assuming
that this is the case.
Please have this response mailed to me by the end of 1977.
HWD:jmr
479
November 2 9 ,
H. W .
TO:
F R O M : '—• R . P SUBJECT:
Illegal,
1977
Deutoch
Beeckman
I m p r o p e r o r Questionable P a y m e n t s
"We a r e in r e c e i p t of a m e m o dated N o v e m b e r 1, 1977 f r o m G. W . M i l l e r
r e q u e s t i n g execution of a statement (see A t t a c h m e n t A ) f o r F i s c a l Y e a r
1 9 7 7 . C o n v e r s a t i o n with R . A . Van Brooklyn has a l s o c o n f i r m e d that the
M a y 12, 1 9 7 7 l e t t e r f r o m G . W . M i l l e r on Standards of Conduct is i n c o r porated within the m e a n i n g of this y e a r ' s s t a t e m e n t . A t t a c h m e n t B is the
a g r e e d upon addendum which should a l s o be executed by all a p p r o p r i a t e
p e r s o n n e l and stapled to the b a s i c statement. P l e a s e have all e m p l o y e e s ,
p e r a l i s t you should c l e a r with T . E . S h e r e r , execute the appropriate
s t a t e m e n t and r e t u r n the o r i g i n a l to m e by D e c e m b e r 2 3 , 1977 (for F i s c a l
Y e a r N o v e m b e r 3 0 s u b s i d i a r i e s ) and January 6 , 1978 f o r Canada.
A l s , o , . p e r R . A . V a n B r o o k l y n ' s instructions, a tabulation m u s t b e p r e p a r e d f o r e a c h s u b s i d i a r y having questionable payments f o r s u b m i t t a l to
m e by D e c e m b e r 23, 1977.
This l i s t should show: the Dames of the agents
i n v o l v e d , amounts paid (in l o c a l currency), nature of p a y m e n t s , and w h e r e
paid, f o r the l a s t t h r e e (3) f i s c a l y e a r s ( 1 9 7 5 , 1976 and 1 9 7 7 ) . T h i s tabulation w i l l be sent to R . A . Van Brooklyn by m e f o r r e v i e w with A r t h u r Young
and the T e x t r o n B o a r d of D i r e c t o r s ' Audit C o m m i t t e e .
P l e a s e s e e m e if you h a v e any questions.
RPB:ak
Attachments
oc:
T. E. Sherer
W . E. DeCaulp
L. C. Affelder
480
ATlAciiMEt
TEXIKON
Statement as to llleg«il. I m p r o p e r
o r Questionable P a y m e n t s
This statement i s furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. f o r 1 9 7 7 .
F o r the Textron f i s c a l y e a r ended D e c e m b e r 3 1 , 1977#(or N o v e m b e r 3 0 ,
1 9 7 7 , in the c a s e of certain consolidated international operations) and f o r the
p e r i o d f r o m the end of the f i s c a l y e a r to the cur rent date, I a m not a w a r e in
m y D i v i s i o n o r unit o f ; o r e l s e w h e r e in, Textron, of (i) any illegal b r i b e s ,
kick"
b a c k s o r other i m p r o p e r o r questionable payments having been m a d e to o r f o r
the benefit of any p e r s o n , c o r p o r a t i o n or government f o r the purpose of o b taining special c o n c e s s i o n s o r f o r obtaining other f a v o r a b l e treatment in s e curing b u s i n e s s f o r the company; (ii) any company funds o r property h a v i n g
b e e n m a d e a v a i l a b l e , d i r e c t l y o r indirectly, a s political contributions in the
U n i t e d States o r e l s e w h e r e , o r that o f f i c e r s or e m p l o y e e s w e r e paid o r r e i m b u r s e d , d i r e c t l y o r i n d i r e c t l y , f o r p e r f o r m i n g s e r v i c e s or incurring e x p e n s e s
in p o l i t i c a l a c t i v i t i e s in the United States or e l s e w h e r e ; and (iii) any c o m p a n y
f u n d s , p r o p e r t y , o r t r a n s a c t i o n s which w e r e not reflected or accounted f o r on
the b o o k s ,
r e c o r d s o r financial statements of the company.
Date
( E m p l o y e e signature)
( E m p l o y e e name and title p l e a s e print)
(Division, subsidiary or unit
of Textron)
481
ATTACHMENT
TEXTRON
S t a t e m e n t a s to I l l e g a l ,
or Questionable
Improper
Payments
Addendum
In the p a s t , s o m e c o m m i s s i o n p a y m e n t s h a v e b e e n d e p o s i t e d
to a g e n t s 1 , d i s t r i b u t o r s 1 , o r t h e i r p r i n c i p a l s 1 a c c o u n t s in banks
in c o u n t r i e s o t h e r than the c o u n t r i e s in w h i c h t h e i r b u s i n e s s i s
located.
On o c c a s i o n s , c o m m i s s i o n s h a v e b e e n paid to d i s t r i b u t o r s who bought p r o d u c t s f o r their own a c c o u n t . N o o t h e r
p a y m e n t s of a s i m i l a r n a t u r e h a v e been mswde.
T h e s e p r a c t i c e s h a v e b e e n d i s c o n t i n u e d . " A l l such p a y m e n t s
a r e n o w p a i d b y c h e c k d r a w n to the o r d e r of the b u s i n e s s entity
i n v o l v e d and m a i l e d to t h e i r p l a c e of b u s i n e s s in the c o u n t r y in
which they a r e l o c a t e d .
Date
(Employee signature)
( E m p l o y e e n a m e and t i t l e p l e a s e print)
(Division,
s u b s i d i a r y or
unit of T e x t r o n )
D
482
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484
ARTHUR
YOUNG
&
^ M P A N Y
M
To: HARTFORD OFFICE^ U / ^ X
James L. Rogers
U
cc: S. A . Botte, New York
R. A . Martin, Providence
Subjod:
C/dte-. D e c e m b e r 1 9 ,
1977
From: NEW YORK' OFFICE
William F . Slattery
FAFNIR - QUESTIONABLE PAYMENTS
Dear Jim:
As we discussed this morning, I am enclosing copies of
correspondence forwarded to me from Textron relating to payments
which the Fafnir division believes are questionable.
Ron Van Brocklyn, Textron's Controller, has asked us to
become knowledgeable about the circumstances and details of these
payments. I will attempt to get him to define the scope of what
he wishes us to do in more detail and will talk with you when
that is done.
Best regards
Enclosures
485
ras^m!
N
e
w
B i . H i n ,
C T .
Fafnir Bearing Division of Textron Inc.
Attention:
R. A . Van Brocklyn - Providence
Subject:
Questionable Payments - Fafnir Europe
cc:
T. E. Sherer, H. W . Deutsch,
L. C. A f f e l d e r , J. S. Canzio
Date:
v P £VY/
December 5,
1977
A,^
C^
r/V\y
\\
W
v M
C. T . Roelke - Providence
^
^
Following up on my letter of December 2, 1977, we have now received information
relative to questionable payments made during Fiscal Year 1977 by our European
operations. This data by country is as follows:
Amount
A./
Explanation
Fafnir UK
TTathallang Kaspar
Syria
3,255.
(1)
1,894
(1)
27, 822
(2)
Rima
Italy
775
(2)
D. A . & W . S . Loy
British Guyana
322
(1)
K . Vasiliadis
. Greece
6, 599
(1)
BRM
Brazil
1,000
(1)
Babayan
Iran
6,291
(2)
Salfavel
Chile
Nahdir Mustafa
Iraq
f
RECEIVED
DEC 0 '1977
486
Name
299
(1)
Sherrate Iran Lucid
Iran
600
(1)
f 48, 857
> -- e f ^ t £
Fafnir France
Nahdir Mustafa
Iraq
C.
Explanation
Agriquip
Kenya
TOTAL
B.
Amount
Fafnir Germany
ff 920, 259 &
=
(2)
Pl£>±Ll.
0 6/
NONE
Explanation
(1)
Payments to distributors who bought products on their own account.
(2)
Commission payments deposited to agents', distributors', or their
owners' accounts in banks in countries other than the countries in
which their business is located.
NOTE:
All such payments have ceased.
As discussed earliei; we will be amplifying the above list for similar details for
Fiscal Years 1975 and 1976. This list will be sent to me by December 23, 1977
and I will forward it to you immediately.
Please call me if you have any questions.
R. P. Beeckman
RPB:.ik
487
S
Mew B ( M n ,
Fafnir Searing Division of Textron Inc.
Attention:
R. A. Van Brooklyn - Providence
Sub'ect:
Questionable Payments
cc+att.s
^
T. E. Sherer
L Date: Decembe^2, 1977
^
^
Per yesterday's phone conversation, attached are:
A.
B.
V
^
O ^ T ^ifr. /
.
CT.
'
(
^ J ^
ft/
/
^
' lA^V
(M
^
Xjf
v
A copy of each internal memo relative to the subject written \
since May 12, 1977:
\f
v
,
V
/ y ft
y o\V
'w
\ >
^
.
1.
November 29, 1977
-
RPB to HWD - Subject "Illegal, Improper, or Questionable Payments"
2.
November 18, 1977
-
HWD to Len de Jong ~ Subject "Questionable Payments"
List of questionable payments made by FafniifU. S^during last three (3)
years:
Name
Jamal Babayan
Teheran, Iran
YTD 1977
$
4,333.77
Fag Peruana
Lima, Peru
I. Mustafa
Baghdad, Iraq
$
1975
7,029.97
688.63
114.90
28, 145.28
35,535.36
24,886.09
1,484.51
4, 677. 25
2,305. 11
54. 06
34, 343.07
11,090.82 ,
Bureau Technique " B I A " Sprl.
Republic of Zaire
C. A. Brgs. De Venezuela
Caracas, Venezuela
Calendar Year .
1976
$
15,305.46
RECEIVED
• DEC 0
• 1977
"h
488
Name
Quinteros Ltd a.
Bogota, Colombia
SalfavelS.A.
Santiago, Chile
Totals
Calendar Year
1976
$
48,478. 17
YTD 1977
$ 20,762.71
2,638. 61
$
$
3,554.78
57,418.94
$
142,582.72
1975
25,506.09
748.24
$
71,681.22
The above represent commission payments deposited to agents', distributors',
or their owners' accounts in banks in countries other than the countries in which
their business is located, or to distributors who bought products on their own
account. All such payments have ceased.
Fafnir Europe was contacted by telex yesterday for a similar listing of payments.
As of today an answer has not arrived, so we are se#nding what we do have available now. As soon as we have the data from Europe we will immediately pass it
along.
Please contact me if you have any questions.
R. P. Beeckman
RPB.-ak
Attachments
489
> W c
Icl'inu have a
A
,r>you'
Attention:
Len de Jong
Subject:
- U ^ — "
ju.bf
Wolverhampton
QUESTIONABLE P A Y M E N T S
^
f
e
i
n
,
C
T
=
Date:
cc:
.
November 18, 1977
Gerd Drooff
Dear Len:
You have a copy of the "Statement as to Illegal, Improper or Questionable
Payments" which we all had to sign early this year for the audit_procedur
for 1976. We anticipate that similar signed statements will be required
for 1977.
You also have a copy of Bill Miller's letter of May 12, 1977 under the
subject of "Standards of Conduct". This further defines what type of
payments are and are not permissible. ]f the auditing statement is
similar to last y e a r ' s , we will have to amend it to cover some of the
practices discontinued in response to Bill M i l l e r ' s May 12th letter.
Therefore, we will probably have the following statement included:
In the past, some commission payments have been deposited
to agents', distributors', or their principals' accounts in banks
in countries other than the countries in which their business
is located. On occasions, commissions have been paid to
distributors who bought products for Iheir own account. No
other payments of a similar nature have been made.
These practices have been discontinued. • A l l such payments
are now paid by check drawn to the order of the business entity
involved and mailed to their place of business in the country
in which they are located.
Please review last y e a r ' s statement and the above amendment with
all people involved with such things at Fafnir U. K. , France, and
Germany. Then write to m e that you have discussed this with these
people and that w e will be able to sign these statements, assuming
that this is the c a s e .
Please have this response mailed to me by the end of 1977.
Be^Kregards,
H. W . Deutsch
HWD:jmr
490
iSovember 29,
TO;
H .
1977
3>jeaafcR<ch
FROM:
SUBJECT:
Illegal
I m p r o p e r or Questionable
W e a r e in rcceipfi
mraemo d a t e d N o v e m b e r
r e q u e s t i n g execuHfesMU © f a
1977.
1,
1977 from G. W .
Miller
statement (see Attachment A ) for F i s c a l
Conversafera with R. A .
M a y 12,
Payments
Year
V a n B r o c k l y n h a s a l s o c o n f i r m e d t h a t the
1 9 7 7 l e t t e r f r o m G . "W. M i l l e r on S t a n d a r d s of C o n d u c t i s
p o r a t e d w i t h i n th® innneaning of this y e a r ' s s t a t e m e n t .
incor-
A t t a c h m e n t B i s the
a g r e e d upon addeatarufojcraa w h i c h s h o u l d a l s o b e e x e c u t e d b y a l l a p p r o p r i a t e
p e r s o n n e l and s t a p l e d to the b a s i c s t a t e m e n t .
P l e a s e have all
p e r a l i s t y o u shwald c l e a r w i t h T .
e x e c u t e the a p p r o p r i a t e
E. Sherer,
s t a t e m e n t and refcnxia t h e o r i g i n a l to m e b y D e c e m b e r 2 3 ,
Y e a r N o v e m b e r 38) s u b s i d i a r i e s ) and J a n u a r y 6 ,
Also,
per R.
A . "Van B r o c k l y n ! s i n s t r u c t i o n s ,
employees,
1977 (for
Fiscal
1978 for Canada.
a tabulation m u s t be
pre-
p a r e d f o r e a c h s u b s i d i a r y h a v i n g q u e s t i o n a b l e p a y m e n t s f o r s u b m i t t a l to
m e by D e c e m b e r Z3#
involved,
paid,
1977.
T h i s l i s t should show:
a m o u n t s p a i d (in l o c a l c u r r e n c y ) ,
the n a m e s of the a g e n t s
n a t u r e of p a y m e n t s ,
f o r the l a s t t h r e e ( 3 ) f i s c a l y e a r s ( 1 9 7 5 ,
1 9 7 6 and 1 9 7 7 ) .
and w h e r e
This
tion w i l l b e s e n t Sfco H . A . . V a n B r o c k l y n by m e f o r r e v i e w -with A r t h u r
and the T e x t r o n B o a r d of D i r e c t o r s ' Audit
P l e a s e s e e m e if y o u h a v e a n y q u e s t i o n s .
RPBrak
Attachments
c-c:
T.
E.
"VV. E .
L.
C.
Sheirear
DeCoi&slp
AliMailcar
Committee.
tabulaYoung
491
AIIACHMI:I
TEX YRON
Statement as to Illegal, Improper
or Questionable Payments
This statement ia furnished in connection with the preparation of the
audit of the consolidated accounts of Textron Inc. for 1977.
For the Textron fiscal year ended December 31, 1977,(or November 30,
1977, in the case of certain consolidated international operations) and f o r the
period f r o m the end of the fiscal year to the current date, I am not aware in
my Division or unit of; or elsewhere in, Textron of (i) any illegal bribes, kickbacks or other improper or questionable payments having been made to or for
the benefit of any person, corporation or government for the purpose of obtaining special concessions or for obtaining other favorable treatment in s e curing business for the company; (ii) any company funds or property having
been made available, directly or indirectly, as political contributions in the'
United States or elsewhere, or that officers or employees were paid or r e i m bursed, directly or indirectly, for performing services or incurring expenses
ia political activities in the United States or elsewhere; and (iii) any company
funds, property, or transactions which were not reflectetl or accountcd f o r on
the books, records or financial statements of the company.
(Employee signature)
(Employee name and title •
please print)
(Divioion, subsidiary o r unit
of T e x t r o n )
492
ATTACHMENT
TEXTRON
S t a t e m e n t a s to I l l e g a l ,
Improper
or Questionable Payments
Addendum
In the p a s t , s o m e c o m m i s s i o n p a y m e n t s h a v e b e e n d e p o s i t e d
to a g e n t s 1 , d i s t r i b u t o r s ' , o r t h e i r p r i n c i p a l s ' a c c o u n t s in banks
in c o u n t r i e s o t h e r than the c o u n t r i e s in w h i c h t h e i r b u s i n e s s i s
located.
On o c c a s i o n s , c o m m i s s i o n s h a v e b e e n paid to d i s t r i b u t o r s who bought p r o d u c t s f o r their own a c c o u n t . N o o t h e r
p a y m e n t s of a s i m i l a r n a t u r e h a v e been m a d ^ .
T h e s e p r a c t i c e s have been discontinued. ' A l l sucn payments
a r e n o w p a i d b y c h e c k d r a w n to the. o r d e r of the b u s i n e s s entity
i n v o l v e d and m a i l e d to t h e i r p l a c e of b u n i n e s s in the c o u n t r y in
w h i c h they* a r e l o c a t e d .
Date
(Employee signature)
( E m p l o y e e n a m e and t i t l e p l e a s e print)
(Division,
s u b s i d i a r y or
unit of T e x t r o n )
D
493
IK A IF l?,i y K L n M M i j
F n f n i r B e a r i n g D i v i s i o n of T e x t r o n I n c .
3 7 B o o t h Street
Mow Hritc'iin. C I 0 6 0 5 0
203/225-5151
January 23,
1978
Arthur Young & Company
60 Washington Street
Hartford, C T 06106
Gentlemen:
I have r e a d the l e t t e r of representation dated January 23, 197S a d d r e s s e d
to you f r o m M r . Robert P . B e e c k m a n and M r . Lewis C. A f f e l d e r in c o n nection with your examination of the financial statements of F a f n i r B e a r i n g
D i v i s i o n of T e x t r o n Inc. at D e c e m b e r 31, 1977 and for the y e a r then ended.
I r e c o g n i z e that m a n a g e m e n t has the p r i m a r y responsibility for the financia
statements and that obtaining management representations concerning the
i n f o r m a t i o n contained in that l e t t e r is a significant p r o c e d u r e in enabling
you to f o r m an opinion on the financial statements of Falnir Bearing D i v i s i o
of T e x t r o n Inc. In connection therewith, I make the following representation
which a r e true to the b e s t of m y knowledge and belief.
I have no r e a s o n to b e l i e v e that the information contained in the l e t t e r r e f e r
to above is not c o r r e c t .
No events o r transactions have o c c u r r e d since D e c e m b e r 31, 1977 o r a r e
pending or in p r o s p e c t , which would have a m a t e r i a l effect upon the financie
statements at that date or which a r e of such significance in relation to the
C o m p a n y ' s a f f a i r s as to require mention in the notes to the financial s t a t e m e n t s in o r d e r to m a k e them not misleading as to the financial position,
r e s u l t s of operations or changes in financial position of the Company. In
addition, I know of no event since D e c e m b e r 31, 1977 which, although not
affecting such financial statements, has caused any m a t e r i a l change, a d v e r
or o t h e r w i s e , in the financial position or r e s u l t s of operzitions of the Comp?
B a s e d on r e s p o n s e s r e c e i v e d f r o m o f f i c e r s and f r o m other p e r s o n s who hav
an understanding and knowledge of b u s i n e s s activities within our operation
and b a s e d on m y p e r s o n a l knowledge, for the f i s c a l y e a r ended D e c e m b e r 3
1977 and for the p e r i o d f r o m D e c e m b e r 31, 1977 to date, w e a r e not a w a r e
2 5 - 0 6 7 O - 78 - 32
494
of fit i-.i:V illegal b r i b e s , kickbacks or oilier improper or questionable
. nts having been m a d e to or for the benefit of any person, c o r p o ration or government f o r the purpose of obtaining special c o n c e s s i o n s
or for obtaining other f a v o r a b l e treatment in securing b u s i n e s s f o r the
Company; (ii) any Company funds or property having been m a d e a v a i l able, directly or indirectly, as political contributions in the United States
or e l s e w h e r e , o r that o f f i c e r s or employees w e r e paid o r r e i m b u r s e d ,
directly or indirectly, f o r p e r f o r m i n g s e r v i c e s or incurring expenses in
political activities in the United States or elsewhere; and (iii) any C o m p a n y
funds, p r o p e r t y , o r transactions which w e r e not r e f l e c t e d or accounted
f o r on the b o o k s , r e c o r d s o r financial statements of the Company except
the following:
See R. P . B e e c k m a n m e m o of January 18, 1978 to M r .
concerning questionable p a y m e n t s .
R. A . Van Brooklyn
Y o u r s v e r y truly,
f/Wki^S
T . E. S h e r e r ,
Division P r e s i d e n t
495
Fafnir B e a r i n g D i v i s i o n of T e x t r o n Inc.
3 7 B o o t h Street
" Now Britain. CT 0 6 0 5 0
203/225-5151
January 2 3 , 1978
Arthur Young & Company
60 Washington Street
Hartford, C T 06106
Gentlemen:
In connection with your examination of the financial statements of the
F a f n i r Bearing Division of T e x t r o n Inc. at D e c e m b e r 31, 1977 and
f o r the y e a r then ended, we r e c o g n i z e that obtaining representations
f r o m us concerning the information contained in this letter is a s i g n i ficant p r o c e d u r e in enabling you to f o r m an opinion on the financial
s t a t e m e n t s , and accordingly, w e make the following representations
which a r e true to the b e s t of our knowledge and b e l i e f .
GENERAL:
W e r e c o g n i z e that, as m e m b e r s of management of the Company, we
a r e r e s p o n s i b l e f o r the f a i r presentation of the Fafnir Bearing f i n i n cial statements of financial position, r e s u l t s of operations and changes
in financial position in c o n f o r m i t y with generally accepted accounting
p r i n c i p l e s applied on a b a s i s consistent with that of the preceding y e a r .
W e have m a d e available to your representatives all financial r e c o r d s
and related data.
T h e r e a r e no m a t e r i a l transactions that have not been p r o p e r l y recorded
in the accounting r e c o r d s underlying* the financial statements.
Attached hereto is a
and a s u m m a r y of
m a j o r transactions or s e r v i c e s with such p a r t r t e ^ f o ^ h e year ended
D e c e m b e r 31, 1977. The only related party tran
496
T h e r e have b e e n no v i o l a t i o n s or p o s s i b l e violations of laws or
r e g u l a t i o n s in any j u r i s d i c t i o n w h o s e e f f e c t s should be c o n s i d e r e d
f o r d i s c l o s u r e in the f i n a n c i a l s t a t e m e n t s or as a b a s i s f o r r e c o r d ing a l o s s c o n t i n g e n c y .
T h e r e h a v e b e e n no c o m m u n i c a t i o n s f r o m r e g u l a t o r y a g e n c i c s o r
g o v e r n m e n t r e p r e s e n t a t i v e s c o n c e r n i n g i n v e s t i g a t i o n s or a l l e g a t i o n s
of n o n - c o m p l i a n c e with l a w s o r r e g u l a t i o n s in any j u r i s d i c t i o n , o r
d e f i c i e n c i e s in f i n a n c i a l r e p o r t i n g p r a c t i c e s .
T h e r e a r e n o o t
@FedFRASER