Evening star., 1948-04-26
Senate Report Scores
Two Companies for
Profits in Arab Oil
By Robert S. Allen

1Wo uldJOT OH COMPANIES Will
be severely denounced for large
scale tax avoidance and "un-
considerable" wartime profit
taking in a Senate report that
will be made public this week.
Based on an exhaustive inquiry
by the former Senate War Investi-
eating Committee, the report will
deal with the operations of the
Texas Corp. and the Standard Oil
Co. of California in supplying the
Navy with Saudi-Arabian oil.
Among the chief charges made in
the report are:
That the two oil companies
charged the Navy $105 barrel for
Arabian oil when a price of less than
half that figure would have been a
profitable rate
That through Bahrein, Ltd, a
Canadian subsidiary, the two COM
panies earned s117,oO0,00o without
paying any United States taxes.
That the United States poured
more than 80,000,000 into the Mid
die East in nonrecoverable expendi-
lures to protect privately-owned oil
concessions.
Forrestal Escapes Criticism.
AS a result of bipartisan agree
ment among the members of the
Senate committee, the report con-
tains no criticism of Defense Secre-
tary Forrestal, who was Secretary
of the Navy in 1945 when the "ex-
cessive" prices were paid for the
Arabian oil. Mr.. Forrestal is men
toned in the testimony before the
committee by w. S. Rodgers, board
chairman of Texas Corp, as having
been approached to urge grants to
King Ibn Saud of Saudi-Arabia.
Committee Chairman Brewster
and Senator Pepper, Democrat, of
Florida, ranking minority member,
agreed that Mr.. Forrestal should
not be censured. Senator Brewster
held that there was insufficient
evidence" for that. The report also
makes no mention of loans that
Dillon Read & Co. negotiated for
Arabian American oil companies,
which sold the oil to the Navy. .
Aramco was jointly owned until
1916 by the Texas Corp. and Stand
ard Oil of California. Mr.. Forrestal
was formerly connected with Dillon
Read g. Co.
Expenditures Listed.
In the report Senator Brewster
lists the following United States
expenditures to protect the pri-
vately owned oil concessions in the
Middle East:
Nonrecoverable grants to Britain
to be advanced to di-Arabia,
$51 100000,
Nonrecoverable lend lease to
Saudi Arabia, $18,000,000.
Lend-lease in silver bullion to
Saudi Arabia, SIS 900 900.
Export Import Bank credits, sl0,-
900 900.
Surplus property credits, $2,00o,-
600.
Construction of airport, $4,000 900.
According to the report, Aramco
sought this aid for King Ibn Saud
beginning in April, 1941, when
James A. Moffett was chairman of
Bahrein. Ltd, and the California
Texas Corp, a holding company
Mr.. Moffett made the following pro-
posal to the United States Govern
ment:
Aramco would sell the oil it OBJ
tanned from Saudi-Arabia at 40 cents
barrel. of which Ibn Saud would
receive royalty of % cents barrel.
This would give him an annual rev.
enue of $60Oo,000. The arrangement
was to remain in effect for five years,
during which the United States
would purchase 125 100000 barrels
of fuel oil.
Mr.. Moffett testified before the
Senate committee that under this
plan the total cost of the oil to
Aramco would have been So cents
a barrel so that the company would
have made a profit of 4 cents a
barrel. Mr.. Moffett's order was not
accepted. Instead, the Navy finally
entered into a contract with the two
oil companies at $1.05 a barrel.
Asked by the committee why
Aramco wanted the United States