Evening star. [volume] (Washington, D.C.) 1854-1972, 1960-05-01
i. ). PROBING
!Payoff Frauds
InFOreign Aid
BY ROBERT z. CLARK
Star stan Writer


office is uncovering evidence of
fraud on an international scale
which may be adding millions
Of dollars to Americas foreign
aid bill. /
A sample file Of IA cases
prepared by Inspector General
John E. Murphy indicates that
payoffs and 'kickbacks" be-
tween firms involved in the aid
program are at least as, wide
spread as Congress suspected |
when it set up the special office
last year.
Some of the cases cited had
been investigated by the Inter-
national Cooperation Admin
istration before Mr.. Murphy /
took Office. Others have been
developed by his staff over the
last nine months. Some of the
offenses have been prosecuted |
while others are in the active
mVestlgatlon stage.
Disturbing Picture
Together, they provide a.
painful picture of the extent
to which "kumShah." as under
cover payoffs are known in the
Orient, and "bakSheesh," which
has the same meaning in the
Near East, are still f1ourishlng
in this country's foreign aid
operations.
They also show that some |
American business firms are
Willing to go along with the
traditional practice of kick
backs between businessmen and |
government officials in some |
other countries in order to get |
q fat foreign-aid contract.
The biggest kickback in Mr..
Murphy'S list was $93,318. This
was paid by a West Coast firm
to an importer in Laos who had /
ordered five generators under
the foreign aid program. The |
actual cost of the generators
was $21 900; they were billed to
the importer in Laos for STA
3i8, the kickback making up
the difference. This case has
been prosecuted.
In a case still under inquiry
ADMITTED States firm shipped |
$500 worth of medical equip
rnent to Far East country and
billed the importer for $4,000.
The kickback was $500 to the
purchasing firm.
Additional Cases
"A kickback of $2,70O was paid
BY the same firm on another
shipment whose value was only
$3.50. Legal action against the
American company is being
considered.
Some other cases:
sAn American firm sold 1000
tons Of special-type steel to a
Middle East importer for $7O,-
600. collecting in full, but de-
iYering only about 800 tons &C
cording to an investigation still
underway.
"A New York paper manufac-
ttirer overcharged Korean i'm
porters $57 900 on shipments of
neWsprint, submitting false in
voices to the ICA. 1
"A Japanese supplier COM
plained that he was required to
kick back $4,000 on bottling
equipment sold to a Cambodian
firm.
"a 81 million contract for
technical equipment was al
legedly drafted by an employee
for an ICA contractor in such |
a way that only one American
manufacturer could meet the
Specifications. Procurement of |
the material has been postponed |
pending completion Of an in
vestigation.
Il Overpricing Seen
Shipments of machinery by
an American company to a Far
East country have been found
to be greatly overpriced. In
at least one instance the firm
paid a commission to an en-
ploye Of a foreign government
to obtain a contract. Evidence
of other excessive commits
Sions" has been obtained and
criminal prosecution is under
consideration.
Investigation of a $3.50, 900 |
deal for the purchase of coke
from an American supplier by
a Korean importer indicated a
possible kickback arrangement.
The contract was given to an
other supplier after inquiry but
it was decided not to prosecute
because the witnesses are To-
Gated in Korea.
A single piece of machinery
supplied to a Far Eastern coun-
try by a foreign dealer was
overpriced by $4,000.
Shipments of unfit grain
were made by an Americana
supplier to several countries
under the aid program. He
refunded 100000 after an in-4
vestigation. q
A shipment of iron oxide
worth $500 to a Far Eastern
country was invoiced at $4,000;
with a $500 kickback to the
buyer.
Congress separated the in
vestigative arm of the foreign
aid program from ICA after
disclosure last year Of corrupt
practices involving Indo-C China
and other areas in the Far East.
Mr., Murphy's Office is under di-
rect control of the State De-
partment. His Investigations
director is James E. Nugent, a
former FBI agent.