Sales Invoice #7676, September 3, 1965, $1043.65; commission, $20.20. Sales Invoice #1953, September 30, 1966, $14,234.00; commission, $705.70. The 3 sales shown above were concluded on direct shipments to the U.S. Mission and Central Purchasing. However, we neglected to mention that this commission was paid in Form #281; the reason being that the quotations were theoretically submitted directly to the government. This was an oversight. It should be stated, however, that the first two commission items were paid but that the third item of $705.70 has not as yet been paid by us. The first contact we had with DTC was in March, 1965, when a company for whom we are exclusive international distributor received a request from DTC for a quotation on certain equipment which it manufactured. The request was forwarded to us and we made contact directly with DTC. All three of these sales, including Invoice #1953, which was finally concluded on September 30, 1965, had their origin in 1965. In connection with this last sale, we had received the specifications for the commodities involved with a letter from DTC dated September 24, 1965. We were anxious to expand our business in Vietnam which had fallen off very substantially in 1965. We desired an agent in Vietnam to develop additional sales. In view of the fact that Central Purchasing insisted that any company wanting to do business with Vietnam must have a registered and accepted agent, we were forced to seek an agent in order to participate in government bids since, otherwise, we would not qualify. Between March and September, 1965, DTC had initiated the three transactions which ultimately led to sales. It should be noted also that all bids were concluded directly—that is, our offer with bid bonds were submitted directly to Central Purchasing and government agencies, referring to DTC as our representatives. Only copies of our offers were mailed, requesting that DTC report to us any successful bidders with competitive prices. DTC was successful in saving at least part of the order of our Invoice #1953 by having Central Purchasing divide the order, giving us a portion of this total contract. We obtained a Dun & Bradstreet report on DTC which contained no negative features. By cable dated September 30, 1965 and letter dated October 6, 1965, we agreed to DTC acting as our agent in Vietnam and to the use of our trade name, "Schuco International", in connection with business performed for us. DTC thereafter proposed various terms on which any new business would be handled between the parties and submitted to us various offers to purchase medical equipment or pharmaceuticals. No sales were made by us on any other equipment submitted by DTC after their appointment as our agent in Vietnam. Apparently, DTC did not realize that we do not handle pharmaceuticals and drugs, etc., but only surgical and hospital equipment. Therefore, we could not participate in the tenders. In one of their earlier letters, DTC offered to give us large orders, evidently to tempt us to collaborate with them. Reference is made to a proposal letter from DTC dated October 13, 1965, which was answered by my Administrative Assistant, Mr. Ulbricht (who is no longer connected with our company, having returned to Germany last year). In his letter of October 21, 1965, Mr. Ulbricht invites further proposal from DTC and stated that at the time. I was on a trip to the Far East as a member of the U.S. Trade Mission for the Department of Commerce. No meeting ever took place with DTC and I have never met anyone connected with DTC. No further reference was made to this subject and no business whatsoever materialized, and the agency with DTC was terminated on December 30, 1966. A new contract was entered into by us with another importer who has the necessary technical services and facilities important in our type of business. STATEMENT This is to certify that the only commission paid to DTC are those shown on our ledger cards. The attached xerox copy referring to DTC's Swiss Account #690256 in the amount of $52.82 is the only amount ever remitted by us to this account. In DTC's letter of December 17, 1965, reference was made to the Swiss Credit Bank and account number. We have not made any other payments of any kind to DTC, directly or indirectly, or through any other company or organization affiliated or associated with us. Sincerely yours, Dated: April 20, 1967. H. E. SCHUELER, Jr. JOHN ZAWACKY, Notary Public OCTOBER 6, 1965. DOANH TIN CUOC, Reliance Commercial Agency, Saigon, South Vietnam. GENTLEMEN: Thank you very much for your letter of September 11, 1965 to which we replied with our cable of September 30, 1965 indicating that we are very pleased to work together with you in the market of South Vietnam. We would however, like to know in more detail how you visualize a cooperation with our company as we are very much interested and we would like to determine the basis on which such a relationship between our companies could be most effective. We wonder whether you might be interested in carrying our company name thus establishing a Schuco International Saigon branch as a division of Doanh Tin Cuoc Company. We are sure that the well-known trade name of Schuco all over the world would contribute greatly to the business and to introduce the Schuco products. Furthermore, it would be appreciated if you would send us a list of all the Governmental Agencies involved in the procurement and requirement of medical and laboratory equipment in South Vietnam. It is understood that we shall help you in the promotion of our products by supplying you with catalog material. Furthermore, should you decide to take up our trade name, you would be free to direct inquiries to our branches all over the world and thus get favorable quotations from the respective countries, such as England, Germany, Pakistan, Japan. Finally we would like to mention that we recently established new financing possibilities for hospital projects where credits are required for the purchase of hospital equipment as well as for the construction costs of same. We are attaching hereto our yellow Schucogram describing these new financing possibilities. We now hope that you will favor us with your early comments and remain, Yours very truly, GENTLEMEN: We are most interested in carrying your company name, thus establishing a SCHUCO International Saigon branch which can be an organism dependent or independent from Doanh Tin Cuoc and devoted to the importation and sale of all the products exported by you, to the Governmental Agencies and particulars involved in the procurement and requirement of medical and laboratory equipment in South Vietnam. These Government Agencies are Ministry of Public Health, Pasteur Institute, Customs Office, etc. which must buy through the intermediary of Central Purchasing Authorities which are periodically organizing the international tenders, but we are projecting to import for the private physicians, chemists, etc . . . too. We will pay you cash by irrevocable and confirmed L/Cs in US$. A reasonable commission 30% may be officially declared while 70% is granted to us separately for advertisement purpose or for the office expense in Saigon (not to be declared in AID form 280). We can realize with you business totalizing one million of US Dollars per year if you can double your price for paying us 100% of commission and advertisement expense. As we are the buyers acting for our own account, there is absolutely no problem from our side and you may increase your price as you like. Awaiting with most interest your soonest reaction for doing the first business with you, we are, Very truly yours, file DOANH TIN CUOC, OCTOBER 21, 1965. P.O. Box 133 Saigon, S. Vietnam GENTLEMEN: Your letter of October 13, 1965 has been received and we would like to thank you very much for your prompt answer and we are more than pleased to hear that you are interested in our proposal to establish a Schuco International Saigon branch. We are really very enthusiastic about such an arrangement and we feel that under our trade name we could realize enormous sales volumes. Your suggestions sound very plausible to us and we would like to comply with them. Perhaps you could already submit to us a concrete proposal with all your ideas and suggestions so that we may establish a basis for discussion. The President of our company, Mr. H. E. Schueler, is presently on a trip to the Far East which he is undertaking for the U.S. Trade Mission to Hong Kong, Singapore and Kuala Lumpur. However, if his tight schedule makes it possible, he is planning to visit also Saigon and will certainly not fail to contact you. We would suggest that you try to be available during the month of November so that you are able to meet with our Mr. Schueler. Such a meeting would certainly be most profitable as it will enable you to discuss all pertinent problems and aspects regarding the establishment of Schuco International Saigon with him and we are sure that we shall reach a mutually satisfactory arrangement between our companies. We now hope to be favored with your further comments and remain, SCHUELER & COMPANY, Adm. Assistant. Nous accusons bonne réception de votre remise suivante : que nous utilisons selon vos instructions. Doanah Tincax Vielam P 546 11-69 Nous vous présentons, Messieurs , nos salutations distinguées. SCHUELER & COMPANY, New York 11 (N.Y.-USA) DOANH TIN CUOC, Saigon, December 14, 1965. GENTLEMEN: Whenever you want to participate in any bid, please address your offer directly to us so that we can know thoroughly of the details and follow-up the bid. Since if you submit your offer directly to the Central Purchasing Authority, many bad consequences might arise: 1. One might open the envelope to take a look at your offer prior to the opening of the bid. 2. The competition might use tricky means to get a look at your details and offer, thus to better their technical planning and make their offer cheaper. As to the commission, please grant us 5% over FOB instead of 1% as mentioned in your letter of October 20 covering bid 1919. As you know, since the award of the bid until the signature of the contract, a heavy amount of cable fees and other charges must be incurred. Supposing: For bid 1728, many disbursements have been made while as of yet no results have been obtained. So, please understand our position, and be assured of our best feelings. Very truly yours, DOANH TIN CUOC, DECEMBER 22, 1965. Saigon, South Vietnam. GENTLEMEN: We would like to revert to our letter of October 21, 1965 at which time we informed you about the trip of our President, Mr. H. E. Schueler to the Far East as a member of the U.S. Trade Mission to Hongkong, Singapore and Malaysia. Unfortunately, his trip schedule was so tight that he could not manage to meet with you and discuss the possibilities of establishing a branch under the emblem of Schuco International Saigon Division of Doanh Tin Cuoc. Nevertheless, we would like to stress again our extreme interest in such a venture and would very much like to continue our negotiations in this respect. Therefore, kindly let us have your suggestions and proposals and we shall gladly discuss all necessary details with you. A first step for such a venture would be the printing of stationery mentioning our name as above: Schuco International, Division of Doanh Tin Cuoc which is very important as our Schuco trade name is very well known all over the world and would already enhance business enormously. Awaiting your suggestions, we remain, SCHUELER & COMPANY, Adm. Assistant. The CHAIRMAN. The subcommittee concludes this series of hearings which has initiated our investigation of Vietnamese operations of the commodity import program administered by the Agency for International Development. The testimony of these 3 days indicates that there has been gross laxity and inefficiency in the administration of the AID program. If the testimony accurately reflects the conditions under which AID has been administering the shipment of commodities in Vietnam, it is evident that there has been much waste and extravagance in the program and that the U.S. Government funds have been used improperly and in transactions of highly questionable legality. It is apparent that circumvention of AID regulations and the exploitation of loopholes which have been discovered by unscrupulous individuals have contributed to the gold drain which has troubled the U.S. economy. It is clear that dollars furnished through AID have been funneled in Swiss bank accounts in some instances, and probably have been diverted improperly into other countries. The subcommittee has been assured by the Assistant Administrator of AID, Rutherford M. Poats, that new policies and procedures have been instituted to eliminate the abuses which have been discussed in this testimony. It is certainly hoped that these hearings will prompt the AID administration to take further appropriate, corrective administrative action. In that connection, I would certainly suggest and insist that this $10,000 limitation be substantially reduced, and regulations should be promulgated that will prevent its abuse and the circumvention of it by simply sending in a number of orders for a lesser amount, aggregating a much larger total. I think that can be done by administrative action and by proper supervision. The abuses that have occurred by that means of circumvention can certainly be stopped. The Chair wishes to thank the officials of the Government agencies, particularly Mr. J. K. Mansfield, Inspector General of Foreign Assistance and Mr. Howard Haugerud, Deputy Inspector General of Foreign Assistance, together with officials of AID and of the Inspector General's Office of the State Department who have assisted the subcommittee in this inquiry. I wish to commend the assistant counsel, Mr. LaVern Duffy; chief counsel to the minority, Mr. Philip Morgan; and accountant Thomas E. Nunnally for their usual diligence and competent work in conducting this investigation for the subcommittee. The subcommittee will continue its inquiry into a number of matters relating to the AID program in Vietnam. It is likely that we will hold further hearings in due time. This series of hearings will now be recessed, and the committee. will reconvene at the call of the Chair. Before I finalize this statement, Senator Mundt, have you a comment? Senator MUNDT. Thank you, Mr. Chairman. I would like to associate myself with your words of commendation of our staff members who handled this matter, and also Mr. J. K. Mansfield, the Inspector General of the State Department; Mr. Howard Haugerud, his Deputy; and all of those who have cooperated in making this brief hearing, I think, very productive. We have had testimony from the AID officials during the course of these 3 days which showed that, while they have made several important changes in the AID and the AID commodity import program, the CIP, in Vietnam, there was obviously a great amount of laxity, ineptitude, and the failure of smooth functioning of this program at the early stages of the concentration of our American effort, during what is commonly alluded to as the troop buildup and, in fact, some of these corrective changes are only of very recent origin in their program-one as late as just a few hours ago when AID finally sent a telegram to the American suppliers of this particular Vietnamese importer to discontinue doing business with him or to make any further payments. |