THE MYSTERY MAN OF THE TANKER FLEET

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP75-00149R000600090046-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: November 16, 2016
• Document Release Date: March 17, 1999
• Sequence Number: 46
• Publication Date: June 2, 1955
• Content Type: NSPR

STATINTL
THE RE ppved For Release 2000&&4 2d9 DP75-00149R000600090046-0
The Mystery Man
~- Of the Tanker Fleet
CPYRGHT
()NE EVENING last July, just as dusk
was falling., a large white yacht
nosed into the tiny harbor of Monte
Carlo and tied up at the dock. This
was no ordinary vessel. Once a Cana-
than frigate, she had steam-turbine
engines capable of driving her at a
brisk twenty knots. Beneath the
bridge was a spacious office equipped
with. a telephone system able to com-
municate with any city or ship with-
in five thousand miles. Each of her
twelve luxurious cabins had a pri-
vate bath. Her comfortable book-
lined smoking room had a wall cov-
ered with lapis lazuli. On the after
deck was an inlaid floor of bright red,
blue, and yellow mosaics depicting a
Minoan bullfighting scene. This
could serve in the evenings as a
dance floor or else be lowered (luring
the day by hidden motors to form
the bottom of an outdoor swimming
pool. From her great yellow funnel
to the one-star flag of Liberia droop-
ing over her stern, everything about
the 1,600-ton Christina was as fabu-
lous and unique as her proprietor,
Aristotle Socrates Onassis, the multi-
millionaire owner of the world's larg-
est private fleet of tankers and mer-
chantmen.
As Onassis stepped ashore that
evening he could feel that at last,
after several particularly strenuous
and momentous months, he had re-
turned home. Two weeks earlier he
had been in Kiel to take his yacht
on her maiden voyage. Three weeks
before that he had transferred the
headquarters of his Societe Olym-
pique Maritime from its crowded of-
fices on the Avenue de l'Opcra in
Paris to the more spacious quarters
of the newly repainted and refur-
bished Sporting Club d'Hiver over-
looking the harbor of Monte Carlo.
One week prior to that he had been
in Hamburg to witness the launch-
ing of the most colossal of all exist-
ing oil tankers, the 46,800-ton-ca-
pacity All-Malik Saud Al-Aral, or
King Saud I, named for Arabia's
present monarch.
Not long before that, Onassis had
been in New York arguing with
lawyers and judges about an accusa-
tion brought against him and others
by t'he U.S. government of having
tried to defraud it of some $20
million through the illegal purchase
of surplus American ships. And as
though that were not enough, the
world was just beginning to wake up
to the fact that the enterprising Greek
shipping magnate had signed an
agreement at the beginning of the
year with the Saudi Arabian govern-
ment that might one day give him
the larger share of the transport of
forty million tons of oil a year.
Onassis's activities and engage-
ments on various fronts seem, if any-
thing, to have grown in recent
months. His right flank has been
engaged by the Peruvian govern-
ment, which recently seized and im-
pounded five of his whaling ships
on the ground that they had violat-
ed the two-hundred-mile fishing zone
off its coast which it regards as its
private preserve; and his left has
unexpectedly been attacked by a fel-
low Greek entrepreneur named
Spyridon Catapodis, who has filed
suit against him in Paris for alleged-
ly having drawn. up a fake contract
in disappearing ink that did him out
of about $570,000.
Tobacco and Tragedy
Aristotle Socrates Onassis was born
in 1906 at Smyrna, then Turkey's
most thriving port. His father, a
tobacco merchant, was an important
Vide World
Aristotle Socrates Onassis
businessman in the city. It was a fam-
ily calamity that first projected the
young Onassis on his spectacular ca-
reer. The tragedy happened in 1922
during the Greco-Turkish war, when
Smyrna was captured and a large
part of the city was burned by the
attacking Turkish soldiers. In the
course of the sack the two-thirds of
the city's inhabitants who were
Greeks were either killed or forced
to flee.
On rejoining the remnants of his
persecuted family on the Greek
mainland, Onassis's father found
that he was the sole surviving male
adult. In addition to his wife and
his four children, he now had to take
care of his four brothers' widows and
their seven children-a total of six-
teen people. Unable to do it on the
now drastically reduced profits of his
partly salvaged tobacco business, lie
called a family council. It was de-
cided that the family's hopes should
be pinned on the most vigorous and
promising of the younger generation
-sixteen-year-old Aristotle Socrates.
Money was scraped together to buy
him a steamer passage to South
America, and with $100 in his pocket
he sailed for Buenos Aires to try his
luck in the New World.
Horatio Socrates Alger
When young Onassis arrived in
Buenos Aires, he had $60 left. It
was enough to allow him to take
a small room in a cheap boarding-
house and to start an intensive train-
ing course in switchboard operation
in a language with which he was un-
familiar. After three weeks lie be-
came a regular night switchboard
operator for the United River Plate
June 2, IApproved For Rele> 2 DOV05/24 : CIA-RDP75-00149R000600090046-0 33
 CP`pgfWed For Release 2000/05/24: CIA-RDP75-00149R000600090046-0
Telephone Company. Allowing him-
self just three hours of sleep a day,
he used the remaining daylight
hours to set himself up in the to-
bacco business, with which he was
already well acquainted.
At that time only about ten per
cent of all Argentine cigarettes were
made with Greek, Bulgarian, and
Turkish tobacco, the rest being ei-
ther American or Cuban. Onassis
promptly got to work to change this
ratio. Operating out of his boarding-
house bedroom as a self-established
importer of Oriental tobacco, and
with the help of his father in Greece,
he managed in just two years to work
up the proportion of eastern tobacco
used in Argentine cigarettes to thirty-
five per cent. At the end of that time
he had given up his job as a tele-
phone operator and was worth about
$100,000, well on his way to his first
million.
By 1928 lie was already so well
known that the Greek government
thought it natural to commission
him to negotiate a trade deal with
Argentina. He carried it off, and was
rewarded by being appointed Greek
Consul General in Buenos Aires at
the age of twenty-two.
Into the Shipping Trade
By the time that the world depres-
sion of 1930 had set in, Onassis was
rich enough to be able to cast around
for other worlds to conquer. Irre-
sistibly he was attracted by shipping.
Characteristically, Onassis waited for
the propitious moment before the
launching. It came in 1931, when
banks were collapsing and panic-
stricken citizens all over the world
were anxiously stuffing banknotes
under their mattresses. A Canadian
steamship company in Montreal put
up it fleet of ocean-going cargo ves-
sels for sale. Onassis promptly moved
in and bought up six of them for a
mere $120,000-or about one per
cent of their cost price. (Proper tim-
ing has been one of the major secrets
of Onassis's many business successes.
Some years later, when he had ac-
quired a small fleet of whalers, lie
piled up a large store of whale oil
at a time when the world market
was glutted. A year or two later a
serious shortage developed, and he
was able to liquidate the entire stock
at a comfortable profit.)
The Tanker Race
Just as in the Argentine tobacco
business Ona.ssis had seen the possi-
bilities of expanding the use of Ori-
ental leaf, so in the shipping business
he was among the first to realize that
the future lay in oil transport. In
1939 Onassis had his first oil tanker
built in Goteborg, Sweden. He gave
it the distinguished name of Aris-
tophanes. After the Second World
War broke out, he had a small fleet
of tankers and merchantmen. He
promptly put his available ships at
the disposition of the Allies and
made impressive profits from high
wartime freight rates.
At the end of the war Onassis
helped form several companies that,
along with others, bought sixteen
surplus war tankers and freighters
for some $20 million. (By compari-
son, a recent tanker cost Onassis $8
million to build.) It is this astute
postwar bargain that has recently
gotten Onassis into hot water wit
the U.S. government because of a
U.S. Maritime Commission decision
forbidding the sale of wartime sur-
plus ships to foreign concerns.
In terms of his present operations,
this deal was small. Since it was
made, there has been a revolutionary
innovation in postwar oil transport.
This is the simple realization that
it is far cheaper to ship oil in large
tankers than in small ones. A tanker
of 15,000 tons' capacity needs a
crew of about forty officers and men,
but a 45,000-tonner, capable of
carrying three times as much oil
and at higher speeds, can get along
with a crew of fifty. The resulting
economies can make a difference of
tens of thousands of dollars on a
single ocean trip.
Brother-in-Law Trouble
In waking up to the momentous im-
plications of this new fact, Onassis
has been ahead of most of his rivals
-with only one important excep-
tion. This is Stavros Niarchos, who
happens emt ohTy'?a co'Tpatriot
of Onassis but his brother-in-law as
well. In December, 1.946, Onas-
sis married the seventeen-year-old
daughter of Stavros G. Live anos, an
old and respecte ' reek shipowner,
in New York. Shortly thereafter
Niarchos married Livanos's second
daughter, Eugenie. As it result, the
three-Livanos, Niarchos, and Onas-
sis-now constitute the most formi-
dable shipowning clan that the world
has ever seen.
The building race between Onassis
and Niarchos, which began during
the war, has now reached enormous
proportions. Its scale may be judged
by the fact that in the single year
1954 Onassis commissioned seven-
teen new tankers with a total ca-
pacity of more than 375,000 tons.
Niarchos at the moment has under
construction nine tankers totaling
345,000 tons' capacity.
The heart of the competition lies
in the construction of bigger and
better "supertankers" (of more than
25,000 tons' capacity) . Onassis got
off to a head start two years ago with
the launching in July, 1953, of the
45,000-ton Tina Onassis (named
after his wife) at the Howaldtswerkc
in Hamburg. Seven months later,
Niarchos launched a 45,500-tonner
called World Glorv at the Bethlehem
Approved or Release
 Approved For Release 2000/05/24: CIA-RDP75-00149R000600090046-0
Steel yards in Quincy, Massachusetts.
On June 5 Onassis took the lead
again with the launching of the 46,-
800-ton King Saud I. But the race
doesn't show any signs of stopping
there. Niarchos is understood to be
building two gigantic supertankers
at the Vickers-Armstrong yards in
England that are guaranteed to put
even King Saud I in the shade.
But there is a natural obstacle to
uninhibited growth - the depth of
the Suez Canal. The King Saud I,
which was recently chartered by the
Socony-Vacuum Company for its
maiden trip from Arabia, is expected
not to be able to take more than
39,000 tons of oil through the Canal
on its way to Europe.
When Onassis and Niarchos began
their titanic duel several years ago,
it was in the belief, then generally
shared, that the annual increase in
the world demand for oil would be
of the order of eight per cent. This,
it was estimated, would more than
absorb the current production of
supertankers. But this has not
proved to be the case. The recent
output of tankers has so far exceeded
the amount of oil to be shipped that
by last summer international freight
rates had been forced down to the
point where competition was really
murderous, and Onassis was driven
to putting newly launched tankers
up for sale.
The Arabian Deal
Late in 1953, Onassis appears to
have concluded that the best way he
could protect himself against the de-
pressed state of world tanker-charter
rates would be to assure himself a
large chunk if not the monopoly of
the transport of oil from one or
more Middle Eastern countries. The
proposition could be made attrac-
tive to the interested country by
having the prospective charter com-
pany registered as a Middle Eastern
concern and have its tankers fly the
country's flag. The idea was astute,
because at more than one of the pe-
riodic meetings of the Arab League,
Arab leaders have urged the crea-
tion or acquisition of national mer-
chant marines.
Onassis therefore sent out one of
his top directors, who spent four
months touring the Middle East. He
finally struck luck in Saudi Arabia,
where the sudden death of King ibn-
Saud seems to have brought about a
momentary change of policy, perhaps
because of the influence of several
Arabs who have long been anti-
American, like Jemal Husseini, a
relative of the Grand Mufti of
Jerusalem; Yussif Yassin, a Syrian
who is deputy Foreign Minister; and
Rashid Ali Gailani, the Iraqi poli-
tician who led the 1941 Nazi-backed
uprising against the British in Bag-
dad. These men were only too glad
to seize this opportunity of driving
a wedge into Aramco's dominant
position in Saudi Arabia.
The resulting contract, signed in
January, 1954, was one of the most
fantastic ever signed in the history of
oil negotiations. Under its terms
Onassis was obligated to contribute
500,000 tons of tanker shipping to-
ward the establishment of the Saudi
Arabian Maritime Tankers Com-
pany, Ltd., which was to have its
headquarters in Arabia. Its tankers
were to fly the Saudi Arabian flag,
but it was to be owned and directed
by Onassis. The new company was
to have the priority rights on the
shipments of Arabian oil, with the
sole reservation that nothing would
be done to interfere with the exist-
ing oil-transportation arrangements
made by tankers owned and regis-
tered in the name of Aramco's par-
ent companies (Standard Oil of
New Jersey and California, Socony
Vacuum, and the Texas Company)
on or before December 31, 1953. In
return for this privileged status,
Onassis's new companv was obligated
to hand over one shilling and six-
pence as royalty rights on each ton
of oil transported and to set up a
maritime school in Jiddah for the
training of fifty Arabians a year in
the science of navigation and naval
engineering.
The secret of this deal was so well
kept that it was only four months
later, in May, that knowledge of its
provisions began to leak out. The
result was an uproar in shipping
circles in London and New York.
Most immediately threatened by the
new monopoly were the British ship-
ping interests, and after them Nor-
wegian, Danish, and Swedish ship-
owners who have been transporting
most of the Saudi Arabian oil that
is not carried in Aramco parent-
company ships. But the secret accord
was even a long-range threat to
Aramco itself. For the fact is that
few of the oil tankers were actually
owned and registered in the name of
the Aramco parent companies prior
to December 31, 1953, and they can
carry only forty per cent of the oil
coming out of Arabia. Thus, if the
contract were strictly carried out,
most of Aramco's tankers could also
be eventually forced out of the Ara-
bian oil market through obsolescence,
and Onassis's company could be as-
sured of a virtual monopoly on the
transport of more than 40 million
tons of oil a year.
The Catapodis Accusations
The most amazing thing about this
extraordinary bargain, however, was
jute 2, 1A)provect ase 2000/05/24: CIA-RDP75-00149R000600090046-0 35
 i
Approved For Release 2000/05/24: CIA-RDP75-00149R000600090046-0
the price at which it was obtained.
Officially Onassis was required to
pay only the Saudi Arabian govern-
ment one shilling and sixpence (or
twenty-one cents) as royalties on
every ton of oil he transported, or
just four per cent of what he would
be getting for the journey from the
Persian Gulf to England. This con-
trasts with the fifty per cent (more
than $5) that the Saudi government
gets from Aramco on the profits of
every ton of oil extracted from Ara-
bian soil. At the start, with 500,000
tons of tankers committed to the
new company which would trans-
port four million tons of oil a year,
the most Arabia could get out of the
deal would be $840,000-less than a
two-hundredth of what it gets every
y ar from Aramco.
Spyridon Catapodis, the Greek
ntrepreneur who brought suit
I against Onassis in Paris, has accused
him of having obtained this fantastic
bargain by bribing the former Saudi
Arabian Finance Minister, Sheikh
Abdullah al Suleiman al Hamdan,
and the present Minister of Trade,
Sheikh Mohammed Abdullah Ali
Reza, to the tune of some X830,000.
Ali Reza has vigorously denied the
charge, but Abdullah Suleiman is
now hardly in a position to. Last
fall he was summarily dismissed by
It
King Saud as Finance Minister when
was implicated in a deal with a
erman engineering company.
Double Cross?
to put forward all sorts of theories.
According to one of these, Onassis
had the secret support of the British,
who were happy enough, after their
own monopoly had been broken in
Iran, to be able to drive a wedge into
America's monopoly position in
Arabia. According to another, Onas-
sis had the secret support of certain
powerful German financial interests,
headed by the notorious Hjalmar
Schacht, who were anxious to estab-
lish. a German toehold in the Ara-
bian peninsula.
ONASSIS'S own public explanation is
that he made the contract simply
because it is the natural trend, and
because sooner or later the countries
of the Middle East are bound to set
S
10, 0
1 ~II~IIII II (s
Ali
LAI9ZLO
up their own tanker companies.
There is probably some truth in this,
but Onassis, though a farsighted
man, is not one to risk present profits
on future speculations that are
vague. The probability, therefore, is
that. he undertook the contract know-
ing perfectly well that it would be
unacceptable to Aramco, but in the
hope that he could. goad it into
granting him a larger share of long-
term tanker contracts than it has in
the past.
Aramco has steadily refused to ac-
cept the contract, claiming that it
runs counter to Arainco's 1933 con-
cession in Saudi Arabia. The Saudi
Arabian government has not yet of-
ficially repudiated the contract, and
the dispute is to be thrashed out be-
fore an international lawyer in
Geneva the middle of next month.
present is that it will result in some
compromise.
Renaissance at Monte Carlo
Battling with Aramco or the Peru-
vian government or with irate Greek
entrepreneurs does not take up all
Onassis's attention. His great dream
now is to restore Monte Carlo to its
turn-of-the-century wealth and ele-
gance, when it was the favorite haunt
of the crowned heads and bejeweled
shoulders of Europe, when it was
visited by such international celebri-
ties as the Kings of Denmark and
Sweden, when its opera. was world-
famous and attracted conductors like
Massenet and Saint-Satins, and when
Nijinsky and Karsavina starred in
ballet under the inspired guidance
of Diaghilev.
Broken Bank
A start has already been made with
the Casino. With the aid of the new
inflow of capital provided by Onassis
a serious effort is being made to get
that famous institution out of the
red, where it has been for some years.
Floodlighting has been introduced
to set off its rococo beauties amid
the surrounding palm trees, the pon-
derous Victorian furniture of its vast
salons is slowly being replaced with
something gayer, and there is eve,
talk of air-conditioning the coppei
dome. The results, it seems, hav
been startling. For in 1953 the
Casino lost only 8 million francs,
compared with 60 million the year
before.
For Onassis all this represents a.
mere beginning of his projected ren-
aissance. He is convinced that the
salvation of the elegantly decaying
resort town can only be accom-
plished through the enlargement of
the scope of its attractions. His idea
is to turn Monte Carlo into a year-
round resort capable of rivaling
other Riviera spots like Cannes or
Juan-les-Pins by offering a variety of
possibilities for swimming, aquatic
sports, and yachting-even if it means
having to bring in truckloads of
white sand to cover the city's rocky
beaches. "I plan to destroy the
legend of Monte Carlo as a gambling
resort where people lose money and
grow bored," he declared some time
ago. He might just do it at that;
Onassis has pulled off bigger things
Hess. T1V'slrl~or elease 2000/05/24o: CIlA pRD1P75-00149R000600090046-0teen.
Approved
THE REPORTER
Explanations like Catapodis's, how-
ever, seem insufficient to account for
such a one-sided bargain. The truth
here looks more complex. There is
some likelihood that the Saudi lead-
ers signed the agreement with an eye
to the future rather than to the pres-
ent. Once they had enough trained
seamen and engineers there would
be nothing to prevent them from na-
tionalizing the Saudi Arabian Mari-
time Tankers Company and expro-
priating Onassis's ships.
Many other aspects of the deal re-
main mysterious. On the surface of
it such a bare-faced attempt to carve
out a one-man monopoly on the
transport of Arabian oil could not
fail to antagonize the British and
American oil companies who operate
tankers of their own, and on whose
favor Onassis is dependent for busi-