Government in the demilitarization was Walter Ceglarek, 56, a German national, who was asked in a December 8, 1965, CID interview if, when he certified the demilitarization of the tank trainers, he had noticed the rangefinders.

(Exhibit 16 is statement of Mr. Ceglarek, dated Dec. 8, 1965.)

Mr. Ceglarek answered:

No, I did not notice the range finders. I only saw scrap. However, it is quite possible that the range finders were hidden underneath the scrap.

Wasn't it his job to look underneath the scrap for just such hidden devices?

To that, Mr. Ceglarek said:

No. Furthermore, we do not have the technical equipment, such as cranes, personnel, etc., at the PDO, Germersheim.

Mr. Ceglarek, who had been employed at the Germersheim depot since 1948, explained how he certifies the demilitarization of war materiel.

He said:

Mr. Herrmann of the PDO telephonically informs me that certain items which have been demilitarized are ready for inspection.

I then proceed to the PDO, usually accompanied by an American soldier, to inspect these items. I am not positive, though, that I took a GI along when I inspected the (two tank) trainers.

Subsequently, Herrmann takes me to the property which has been demilled. I then inspect and determine whether it has been demilled in accordance with TB Ord 412. If this is the case I take all the paperwork to my office and make out a demil certificate.

This certificate authorizes the contractor to take the property out of the depot. I do not have a copy of the contract which prescribes the way parts have to be demilled.

The Herrmann Mr. Ceglarek referred to was Alfred Herrmann, a German national employed at Germersheim since 1951.

Interviewed by the CID on December 8, 1965, Herrmann said he remembered the two tank trainers and the rangefinders. He recalled that the lenses were broken. He stressed that he had no demilitarization responsibilities. He was to let Mr. Ceglarek know when to make his inspection.

Mr. Herrmann noted that because of crowded conditions in the yard the two tank trainers were stored in an open, unsecured areainstead of in a secured, fenced-off region.

(Exhibit 17 is statement of Mr. Herrmann, dated Dec. 8, 1965.)

Mr. Weber was interviewed by the CID on November 16, 1965. He said he helped Teichmann remove the rangefinders from the tank trainers. A firm named Fahnenschreiber tried to sell them to the German army for about 39,000 deutsche marks (about U.S. $10,000), Mr. Weber said, but the Germans rejected the offer and the rangefinders were then stored in his garage.

In other words, Mr. Weber was acting as agent for Mr. Teichmann. He went to a third party to induce him to sell the rangefinders The German army rejected the offer and Mr. Weber took control of the things and returned them to his garage.

(Exhibit 18 is statement of Mr. Weber, dated Nov. 16, 1965; exhibit 18a is letter of firm P. H. Fahnenschreiber and Son, dated Aug. 24, 1965; exhibit 18b is photograph of M-12 rangefinder; and exhibit 18c is photograph of T-41 rangefinder.)

The CID interviewed Mr. Teichmann December 13, 1965. He said he and Mr. Weber removed the two rangefinders during demilitarization of the tank trainers. Mr. Weber was to find a buyer for them.

Mr. Teichmann said he paid for the rangefinders as scrap, transporting the fire control components out of the Germersheim depot in a load of "heavy iron and steel scrap."

Mr. Teichmann said he had bought fire control equipment under the guise of scrap on other occasions. He made that admission to the CID:

Question. On 10 May 1965 you offered a quantity of fire control equipment to the Zeiss company in Oberkochen. When and where did you obtain these items? Answer. I bought this fire control equipment in various lots. I cannot recall any longer when and where I bought these items.

Question. At the time you bought this fire control equipment didn't you know that these items had to be demilled also?

Answer. No, I didn't know this at that time but I think that the U.S. Army should know what property has to be demilitarized. Actually items like this should not be in the lot.

(Exhibit 19 is statement of Mr. Teichmann, dated Dec. 13, 1965.) WO Maxwell C. Payne, who was a CID agent at the time, checked on the sales of scrap he took from the two tank trainers.

Teichmann had sold 17 tons of scrap to Alfred Wetzka for 90 deutsche marks a ton or a total of 1,534.86 deutsche marks, or about $400.

CID Agent Payne also found that Teichmann had paid the U.S. Government 135 deutsche marks a ton for the scrap.

Thus, he sold for 45 marks a ton less than he paid originally. Mr. Teichmann entered into that contract for one thing only-fire control equipment. Scrap was his cover.

On December 28, 1965, Mr. Teichmann returned the rangefinders to the custody of the Kaiserslautern PDO.

The rangefinders were offered for sale to the German army, which was said to be in need of fire control equipment for its forces. We do not know if the German army bought them.

(Exhibit 20 is investigator's statement by Agent Payne, dated Jan. 31, 1966.)

The CID's report of February 9, 1966, concluded:

Teichmann did, at U.S. Army Depot Germersheim, Germany, on or about November 1964, breach contract [on tank trainers] by failing to perform the prescribed demilitarization of... two rangefinders.

No action was taken to suspend or debar Mr. Teichmann or his employees from further purchases at the surplus depots. The firm was still on the accredited bidders list the time I checked, about the first of April, 1972.

Chairman MCCLELLAN. What do they have to do to get off the eligible list, to get debarred? Did you find any instances where they

were?

Mr. JOHNSON. This firm, no, sir.

Chairman MCCLELLAN. Any firm.

Mr. JOHNSON. Yes, sir; we have found instances where they have been debarred.

Chairman McCLELLAN. But the debarment was not effective because they were able to bid through agents, is that correct?

Mr. JOHNSON. Yes, sir, through the agent principle.

Chairman MCCLELLAN. I have here pictures which I understand are pictures of those rangefinders that you referred to.

Mr. JOHNSON. Yes, sir, I would like to get those into the record. Chairman MCCLELLAN. That may be received as an exhibit and appropriately numbered

(The photographs referred to were marked "Exhibit No. 91" for reference. One of the photographs follows and the other one may be found in the files of the subcommittee.)

Mr. JOHNSON. The next case we refer to by its location, the Hanau Case.

We investigated two matters at the Hanau property disposal depot at Grossauheim/Main.

First, an inexperienced Army lieutenant ran the Hanau depc. He relied on his German subordinates to manage the yard according to Defense Department regulations.

Second, valuable articles of warfare-undemilitarized rangefinders, for example-were concealed beneath miscellaneous scrap piles.

Third, an inventory adjustment report declared valuable fire control equipment was scrap although no physical damage was performed on it.

A civilian property disposal officer-the lieutenant's predecessor— allowed nondemilitarized fire control equipment to accumulate. He

82-422 0-72-pt. 1- -9

left Hanau without providing for the demilitarization and disposal of the fire control equipment and without briefing his successor, the young lieutenant, about it. Consequently, the equipment, worth more than $800,000 is still unaccounted for.

Principals involved at Hanau were:

Norman Gieseler, American civilian employee, who left Hanau to become contracting officer at Kaiserslautern. As property disposal officer he was the top official of the Hanau depot. Kaiserslautern had control over Hanau for contracting. Mr. Gieseler was promoted in January 1965 to contracting officer for the U.S. Air Force Redistribution and Marketing Center at Mainz-Kastel.

Army First Lieutenant Harold Ellis Massie, Jr., Mr. Gieseler's successor at Hanau.

Helmut Wegfahrt, German national, the property disposal assistant at Hanau and an employee there since 1948.

Annemarie Sauerwein, German national, also property disposal assistant at Hanau.

Ulrich Buerger, German national, representative of arms dealer Ernest Bertram.

Isaac Moradi, Iranian national, owner of Universal Auto Parts, 163 Exterior Street, New York.

From 1963 to 1964, Norman Gieseler allowed at least $839,897 worth of serviceable fire control equipment to accumulate.

(Exhibit 21 is "Inventory Adjustment Report," dated October 5. 1964.)

Mr. Gieseler went to the Kaiserslautern depot in May or June of 1964. Kaiserslautern was given control over Hanau.

In June or July of 1964, Hanau started providing Kaiserslautern reports on the value of all property on hand.

One early report gave an accounting of fire control equipment accumulated at Hanau.

During August or September of 1964, a man named Groebel from Kaiserslautern called Hanau several times to ask why so much fire control equipment was stored at Hanau.

(Exhibit 22 is "Statement of Mr. Kauffeld," dated December 8, 1965.)

Helmut Wegfahrt and Annemarie Sauerwein prepared an inventory adjustment report on the fire control equipment October 5, 1964. (Exhibit 23 is "Statement of Mrs. Sauerwein," dated September 21, 1965.)

(Exhibit 23a is "Statement of Mrs. Sauerwein," dated December 8, 1965.)

(Exhibit 23b is "Statement of Mr. Wegfahrt," dated December 8, 1965.)

(Exhibit 23c is "Statement of Mr. Viel," dated December 7, 1965.) The report was signed "Lieutenant Massie." He later told the CID that he was on leave from October 3 to October 18, 1964, and could not have signed the document until October 19.

The inventory adjustment report listed $839,897 worth of fire control equipment as 69 short tons of scrap.

The inventory adjustment report was fraudulent. The fire control equipment was not reduced to scrap, but was still serviceable and very much in demand in the weapons market. No evidence indicated that the fire control equipment was destroyed. It has never been accounted for.

Lieutenant Massie became property disposal officer at Hanau in July 1964.

He was inexperienced, with little knowledge of property disposal. He did not know he had inherited a large inventory of fire control equipment.

Massie did not initially order an inventory because he was "told by personnel in the Quartermaster Section" that an inventory was made in May 1964.

In October 1965, Massie was shown the inventory adjustment report which declared the fire equipment scrap. He said the signature appeared to be his but he did not remember signing the document.

He said he did not sign it on October 5, 1964, because from October 3 to October 18, 1964, he was on leave "getting married." He could have signed it, he said, on October 19.

Lieutenant Massie said he had to take the word of his German subordinates and that he did not have time to examine situations and circumstances described by his staff.

Chairman MCCLELLAN. The inventory adjustment report showed the fire control equipment to be 69 short tons of scrap.

Is there any other way to describe or identify that fire control equipment other than by tonnage?

Mr. JOHNSON. Yes, sir. It should have been identified by items and then destroyed.

Chairman MCCLELLAN. How many items were involved?

Mr. JOHNSON. I don't have that figure at hand. I can get the figure. Chairman MCCLELLAN. Anyway, the cost of that equipment was some $839,000?

Mr. JOHNSON. That is right.

Chairman MCCLELLAN. It was sold for junk?

Mr. JOHNSON. No, sir. We don't know what happened to it.

Chairman MCCLELLAN. The inventory was updated and didn't account for it?

Mr. JOHNSON. He was short that.

Chairman MCCLELLAN. You don't know what it was sold for?
Mr. JOHNSON. No, sir.

Chairman MCCLELLAN. But it disappeared?

Mr. JOHNSON. Yes, sir.

Chairman MCCLELLAN. It was either stolen or improperly sold for some other purpose?

Mr. JOHNSON. Yes, sir.

Chairman MCCLELLAN. There is nothing to show it was demilitarized?

Mr. JOHNSON. No, sir.

Chairman MCCLELLAN. Is that pretty valuable to get into the hands of an arms dealer?

Mr. JOHNSON. Yes, sir.

Chairman MCCLELLAN. What was paid normally for 69 tons of scrap?

Mr. JOHNSON. The scrap value at that time was about a hundred marks a ton for heavy steel scrap. 6,900 marks would be the value of scrap if it were actually reduced to scrap and was all heavy steel. I imagine if it got into the hands of an arms dealer, it brought very close