MAJOR SCANDAL IS HINTED AS HEARING OPENS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP73B00296R000200020013-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 9, 2016
• Document Release Date: August 20, 2001
• Sequence Number: 13
• Content Type: NSPR

Approved For Release 2001/08/28 : CIA-RDP73B00296R000200020013-4
THE EVENING STAR
Major Scandal.
Is Hinted as
Hearing Opens
By JAMES DOYLE,
Star Staff Writer
A network of payoffs, kick-
backs and favors such as villas
and party girls in exchange for
beer, liquor and other distribu-
tion rights has dominated the
military post exchanges in Viet-
nam, senators were told today.
There were hints,of a major
scanital that could touch gen-
eral officers and the top admin-
istrators of the PXs a pd serv-
icemen's clubs as th Sena
chairedi. yy_ Sen.
Abraham Ribicoff, D-Conn., op-
ened hearings into supply opera-
tions of the club and PX sys-
tems.
Duffy Leads Off
Laverne J. Duffy, assistant
counsel for the subcommittee,
led off with a 45-page statement
devoted mostly to activities of
a liquor and slot machine dis-
tributor who left Korea after
the war there with the Criminal
investigations Division of the
Army investigating him for al-
leged corruption.
The distributor, William J.
Crum, an American citizen
born in Shanghai in 1918, ended
up as one of the bigegst busi-
nessmen in South Vietnam, with
access to many of the top execu-
tives in the PX system, Duffy
said.,
Duffy said the subcommittee
would show "that William
Crum had considerable capabil-
ities for extracting favors and
contracts from sergeants who
were club custodians, from sen-
ior officers and from ranking
civilian officials.
"He apparently worked on the
!assumption that men thousands
of miles from home and family,
in an alien environment, can
be bought for a price," Duffy
said.
Methods Cited
"At times in Crum's activities,
the line between bribe and
favor was hazy - the action
might be questionable but not
unlawful. On other occasions,
the gift was blatant and obvious,
a clear-out bribe or kickback
According to- Duffy's testi-
mony, Crum used methods in
Vietnam that he had been under
scrutiny for in Korea, only more
extensively.
He would smuggle merchan-
dise into the country under the
cover of post exchange mani-
fest, then sell some of it either
legitimately or on the black
market without paying duty.
He wold offer kickbacks to
service club custodians and PX
procurement officials ? in return
for pushing his merchandise
in the clubs and exchanges. And
he would provide "lavish enter-
tainment and gifts of value for
U.S. civilian and military of-
ficials," the statement said.
Duffy read from records of
sworn depositions showing that
Crum was welcomed into the
homes of general officers and
was awarded in 1966 a "certi-
ficate of achievement" by Brig.
Gen. Charles R. Meyer, then
commanding general of the U.S.
Army Support Command in Qui
Nhon.
Villa Supplied
In 1966 he supplied a lavish
Saigon villa with six bedrooms
and a corps of servants and
often party girls for the com-
mander of the Vietnam post ex-
changes, Lt. Col. John G. Good-
lett Jr., now retired, according
to a deposition from Goodlett
which Duffy introduced.
Goodlett paid $100 a month
for food, but the villa cost $1,600
a month in rent and another
$400 in maintenance, the testi-
mony said. Crum said in a letter
he spent $5,000 decorating it,
Duffy said.
Goodlett said that while he
spent little of his time in the
villa, "I know that arrange-
ments were made for women to
be part of the entertainment,"
Duffy said.
Besides Goodlett, the villa oc,
cupants included the top four
civilians working in the ex.
change system, Duffy testified.
They were:
Peter B. Mason, general man-
ager of PXs in Vietnam, who
controlled much of the system;
Richard Lewellyn, chief of pro-
curement, who set the levels of
all needed merchandise; Clar-
ence Swafford, chief of the food
branch and concessions, who
determined how much and what
food was ordered, as well as the
jukeboxes and slot machines
and other entertainment devices,
and Ralph White, who decided
where retail exchanges were
set up.
and all parties. to it kn9kvpfisoved
i11 t1 iitv." Duffy said.
.'I1
In this period, 1965-1966, the
PXs were expanding from fa-
cilities catering to 150,000 men
to an operation that could sell
to 450,000, the testimony
showed. The system grew to
generate $6 billion a year at its
peak, the subcommittee has es-
timated.
who re ortedly did
.,Dm ho
"Ti ~'icoff said among those to
be called would be Martin J.
Bromley, a colleague of Cruin's
in the slot machine distribution
business; "officials in the beer
ind liquor industry" and mili-
tary personnel, including former
Brig. Gen. Earl F. Cole.
Cole was the Army's deputy
chief of staff for personnel ad-
ministration. during this period,
and chairman of the board of
governors of the Vietnam Re-
gional Exchange.
The Army recently reduced
his rank 'to colonel and allowed
him to retire.
Court-Martials Announced
As senators opened the bear-
ings today, the Air Force an-
nounced it will court-martial
two majors and 12 sergeants on
charges they mishandled funds
belonging to Air Force clubs in
Thailand.
Over the weekend, the Army
announced it was removing
more than 1,700 slot machines
from its clubs in Vietnam on
the grounds their presence was
not practical in a war zone,
the Associated Press reported.
The accused In the Thailand
case were listed as: Maj. Ro-
land R. Fox, East Portland,
Maine; Maj. Jackie A. Nicker-
son, Muscatine, Iowa; Sgt. Rob-
ert D. Beaudean, Marshfield,
Maine; Sgt. Bobby L. Estes,
Oakland, Calif.; Sgt. Robert B.
Morris, Columbia, Miss.; Sgt.
James C. Bolin, Enumclaw,
Wash.; Sgt. James C. Burgess,
Bonham, Tex.; Sgt. George J.
'Dowdy, Abbeyville,' Ga.; Sgt.
Wallace J. Dubois, Yonkers,
N.Y.; Sgt. James F. Mclelland,
Pineville, La.; Sgt. Tilliman T.
Teague, Vance, Okla.; Sgt.
Romie C. Wailer Jr., Chandler,
Ariz.; Sgt. Francis Shaw, Long
meadow, Mass., and'Sgt. Albert
Sears Jr., Keary, Ky.
~~? xt13t. ~er'
con rolled al-
most all a n d of slot and pinball machines,
jukeboxes and other coin-oper-
ated amusements on U.S. mili-
tary reservations from 1967 un-
til last year.
Swafford recommended that
a large jukebox contract be
awarded to a company owned
by Crum in 1966, while he lived
in the Vietnam villa, and Lt.
Col. Goodlett, who also had ac-
cess to the villa, approved the
contract, Duffy said.
Crum also represented the
James B. Beam Distilling Co.
of Chicago and the Carling
Brewing Co. of Cleveland,
whose products he promoted
with the help of special pro-
motion funds which the com-
mittee expects to show were
used for payments to club op-
erators and favors for procure-
ment officers.
Wrote of `Old Buddy'
In 1965, according to letters
Duffy introduced, Crum wrote
to officials of the beer compa-
ny saying, "An old buddy of
mine is now the Navy chief in
charge of stock records and dis-
tribution in Saigon. What could
be greater? He has promised
me to escalate our orders..."
The same friend, Crum told a
Beam company vice president
"has promised faithfully that he
will not order any more Old
Crow until it runs out, and also
will increase his Jim Beam or-
ders so we will be in the No. 1
position even during the month
of June."
The committee was told that
Crum has been invited to testify
but has been eluding a commit-
tee subpoena. He lives on a
palatial yacht in Hong Kong har-
bor. Mason, the chief civilian
executive, is assuming perma-
nent residence in Greece, hav-
ing voluntarily given up his fed-
eral retirement funds because
"to apply for them, Mason
would have to return to the
United States," Duffy said.
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