Senator SAXBE. You don't try to designate where it goes? Suppose they sell a truckload of field jackets, you don't care where they go? Mr. BELIEU. Not if they are legitimate purchasers. Senator SAXBE. The same way if it is classified as junk? Mr. BELIEU. There is the key to it, I think. Military hardware, according to law, which is broad, is supposed to be sold only to those nations who meet our foreign policy. It is a good system except I don't know how a captain of a disposal yard is going to know what our foreign policy is. I have a hard time knowing what it is here. But the thing is that it should be demilled. Anyway, if it is not militarily operational hardware at the end of its cycle, you don't care who you sell it to. Senator SAXBE. That equipment sold for military usage is not what we are talking about here." Mr. BELIEU. No, I don't think it is. It does have an impact on it. We sell tanks under the foreign assistance program in line with the Foreign Military Sales Act. If it is not a tank in our current inventory we do not stock normal spare parts; the American Army does not use them any more. Therefore the foreign country has to get them where they can. That is where the pressure is on these vards if we happen to have something going through them. It could be anything that some guy does not think should be demilled, like a cylinder. But it would be of value to you as a foreign nation who had an inventory of a hundred or thousand old tanks that many of us have forgotten about. That has happened. I am sure. Senator SAXBE. The 500 trucks that we sold to Pakistan, for instance-weapons carriers and personnel carriers, which were obsolete items for us, of course, were military items for them. We are not talking about those kinds of sales. What we are talking about is material that is declared either worthless to us or worthless to anybody else from a military standpoint or is so sensitive that we don't want to get into anybody else's hands. That is what winds up, supposedly demilled, and that is what we are talking about in this investigationthat this demilitarization did not take place, or that it took place in such a way that it was ineffective. The reason it did not take place is because there was hanky-panky in the junkyard. Mr. BELIEU. Or human error. Either one of them would have the same result. Senator SAXBE. Or gross negligence. Mr. CONSTANDY. I think as we go through these hearings we will find that for some of the equipment we will be surprised as to its quality. Some of it is first-rate, operable equipment before demilitarization is supposed to take place on it. In fact, some of it is new equipment. It may be outmoded as to our own inventory but it is well within the standards of most of the rest of the world. Mr. BELIEU. There are types of equipment well bevond the military hardware we are discussing. There could be things such as this (a drinking glass) that armies use. One of the things I have an apprehension about, but I can't prove, we depend now on machines to do our computing for us. Chairman MCCLELLAN. Very well. Is there anything further? Thank you very much, Mr. Secretary. You may be excused with the thanks of the committee for your cooperation. Call the next witness. Mr. CONSTANDY. Warrant Officers James Johnson, Thomas Graham, and Henry Naumann. Chairman MCCLELLAN. Do each of you solemnly swear that the evidence you are about to give before this Senate subcommittee will be the truth, the whole truth and nothing but the truth, so help you God? Mr. JOHNSON. I do. Mr. GRAHAM. I do. Mr. NAUMANN. I do. Chairman MCCLELLAN. Gentlemen, be seated. TESTIMONY OF JAMES ROBERT JOHNSON, THOMAS EDWARD GRAHAM, AND HENRY NAUMANN Chairman MCCLELLAN. Mr. Johnson, Mr. Thomas Graham and Mr. Naumann. Gentlemen, will you each identify yourself for the record and give us a brief summary of your present position, occupation and responsibilities. Mr. Johnson. Mr. JOHNSON. Mr. Chairman, I am James Robert Johnson, Chief Warrant Officer in the U.S. Army. Chairman MCCLELLAN, Chief what? Mr. JOHNSON. Warrant officer. Chairman MCCLELLAN. How long have you been in the service? Mr. JOHNSON. Nearly 27 years. Chairman MCCLELLAN. How long have you been a warrant officer? Mr. JOHNSON. Twelve years. Chairman MCCLELLAN. Mr. Graham. Mr. GRAHAM. Mr. Chairman, I am Chief Warrant Officer Thomas Edward Graham. I am in the Mannheim Field Offices, Second CID Region. Chairman MCCLELLAN. How long have you been in the service? Mr. GRAHAM. Twenty-six years. Chairman MCCLELLAN. How long have you been a warrant officer? Mr. GRAHAM. Nine years. Chairman MCCLELLAN. How long? Mr. GRAHAM. Nine years. Chairman MCCLELLAN. Mr. Naumann. Mr. NAUMANN. I am Chief Warrant Officer Henry Naumann. I am presently assigned to the CID Command in Europe, Heidelberg, Germany. Chairman MCCLELLAN. How long have you been in that assignment? Mr. NAUMANN. I have been in the Army 16 years. Chairman MCCLELLAN. You have been in the Army 16 years. How long have you been in your present assignment? Mr. NAUMANN. Present assignment, 6 years. Chairman McCLELLAN. I forgot to ask you, Mr. Johnson, how long have you been in your present assignment? Mr. JOHNSON. I have been assigned by the CID to work with the committee since March. I have been in my present assignment since January 1969. Chairman MCCLELLAN. 1969. Mr. JOHNSON. Yes, sir. Chairman MCCLELLAN. Where is that assignment? Mr. JOHNSON. In Heidelberg, Germany. Chairman MCCLELLAN. Yours, Mr. Graham? Mr. GRAHAM. I have been in Germany at Mannheim for the last 11 months. Chairman MCCLELLAN. Mr. Johnson, I understand you have a brief statement or request you wish to make. Mr. JOHNSON. Mr. Chairman, we have prepared statements which are 54 pages in length. Chairman MCCLELLAN. That means that three of you are participating in this one prepared statement. Mr. JOHNSON. Yes, sir. Chairman MCCLELLAN. It is 54 pages in length. Mr. JOHNSON. Yes, sir. I request permission to read the first five pages of the statement and then turn to page 48. At that point, Mr. Graham and Mr. Naumann will read the last six pages of the statement to bring the subcommittee up to date on the current development in the problem areas of surplus property disposal in Europe. Following the testimony of Mr. Graham and Mr. Naumann I suggest that we respond to questions of the subcommittee members. Chairman MCCLELLAN. Do I understand you would like to read that much of your prepared statement before responding to questions? Mr. JOHNSON. Yes, sir. Chairman MCCLELLAN. All right. Mr. JOHNSON. Yes, sir. In addition, we have 89 exhibits relating to our testimony. Chairman MCCLELLAN. Eighty-nine exhibits. Mr. JOHNSON. Yes, sir. Chairman MCCLELLAN. Are they covered in the prepared statement? Mr. JOHNSON. Yes, sir. Chairman MCCLELLAN. But you are going to skip those until you get to the substance of your prepared statement which discloses the present situation in the record and then you will go back to the exhibits, am I right? Is that what you propose? Mr. JOHNSON. Yes, sir. In our prepared testimony the exhibits are mentioned. Chairman MCCLELLAN. They are numbered? Mr. JOHNSON. Yes, sir. Chairman MCCLELLAN. You may proceed with your statement. Chairman MCCLELLAN. Wait a minute. You say the exhibits are numbered in sequence as referred to and described in your statement at the point at which they appear. Will you proceed to read the rest of the statement in the record so that the record will reflect what we are doing. Mr. JOHNSON. Certain exhibits consisting of a number of separate documents and these are lettered first with a single exhibit number and then with a series of letter designations. For example, exhibit 23, 23A, 23B, 23C. Most exhibits are official documents or true copies which have been taken from CID investigations. Others are affidavits taken by the subcommittee staff from persons involved in the various cases. We request permission to submit the exhibits now for the record with the suggestion that the record make appropriate reference to them as they are described in our complete prepared statement. Chairman MCCLELLAN. Without objection the exhibits as presented in the prepared statement will be received by the committee and marked according to their designation in the prepared statement. They will be exhibits for reference unless they are ordered printed in the record. (The documents referred to were marked "Exhibits 1 through 89" for reference and may be found in the files of the subcommittee.) Chairman MCCLELLAN. Without objection then, you may proceed to read that part of your prepared statement as you have requested. Mr. JOHNSON. Thank you, sir. Our testimony relates to six CID investigations into property disposal operations in Western Europe in the 1960's. We worked, supervised or had direct knowledge of each case. While each case is different, the six revealed common patterns of inefficiency, waste and corruption in PDO operations in Europe. The problem areas were: 1. Management. 2. Personnel. 3. Receipt and storage of property. 4. Segregation and classification of property. 5. Demilitarization procedures. 6. Sales. 7. Screening of contractors. 8. End-use controls. 9. Problem-solving. In each area there was inefficiency and waste and evidence of corruption. I will summarize our findings. 1. MANAGEMENT Excess property operations generally were poorly managed. Property disposal yards kept no reliable inventories of materiel. Property disposal yards functioned separately from one another, each operating independently, largely as if the others did not exist. An acceptable practice at one depot was not allowed at another. Job requirements were not clearly defined. Recordkeeping procedures were incomplete. Depots were managed carelessly. Morale was low. Controls against theft and inefficiency were weak. 2. PERSONNEL Executives, clerical help and yard personnel were not properly trained. Young, inexperienced officers-usually lieutenants-were put in charge of property disposal yards without being prepared. They were often given other jobs as well. They had neither the time nor the training to carry out their duties properly. The executives were assisted by foreign or third country nationals who knew something about PDO work. Often this meant that they not the Americans-decided how rules and regulations were to be interpreted and executed. Inexperienced officers and noncommissioned officers were forced to rely on the foreign assistants, who frequently abused their responsibilities or were incompetent themselves. The local and third country nationals often admitted that they did not know proper procedures. They knew only what they had learned in the field. It was frequently more than the Americans knew, but was still not adequate. The Americans, however, had to rely on them to manage the depots. The foreign employees were often underpaid and some stole property or accepted gratuities or cash from contractors. Dishonest or incompetent employees were often kept on the payroll because the Americans did not wish to terminate them. Incompetence and corruption were not always considered sufficient grounds for dismissal. 3. RECEIPT AND STORAGE OF PROPERTY Inefficient procedures were used to receive property. Storage methods were equally poor. Documentation on incoming materiel was insufficient. Sometimes there was no documentation. Warehouses were ineffectively organized. Yardmen could not find items on hand, and they wasted time looking for items which were not in stock. The ability of the PDO yards to supply American troops in Europe and elsewhere with needed equipment was severely limited. The entire concept of local screening-that is, supplying local troops and allieswas just a concept which didn't work. Depot security was inadequate. Valuable fire control equipment was stolen. Property was stored in unsecured, unfenced areas. 4. SEGREGATION AND CLASSIFICATION OF PROPERTY Property disposal depots did not properly segregate and classify property. Depot personnel lumped diverse categories of property into lots identified as miscellaneous scrap. Often valuable property, sophisticated fire control equipment and costly automotive parts were mixed with the scrap. This property-particularly the weapons and the fire control devices-should have been sold as scrap only after thorough demilitarization procedures had been inflicted on it. Demilitarization procedures, when properly carried out, meant that weapons, fire control equipment and other munitions list items, which require demilitarization, would be cut in two or crushed or mangled so completely that future military application was out of the question. In addition, for these automotive parts that did not require demilitarization, property disposal depots could have earned for U.S. revenues considerable returns by selling these parts for what they were. Instead, through the haphazard system of miscellaneous of mixed lotting, property of all categories-from serviceable weapons to usable carburetors were piled upon one another and sold by the pound. It was wasteful, costly, and resulted in weaponry getting out of American PDO yards in significant numbers. |