Mr. Bartimo, there was testimony before this committee this morning by the former U.S. attorney for the eastern district of New York, Mr. Morgenthau, and I will quote it. He said: "The facilities of a California bank and a Midwestern bank were used under circumstances that should have aroused suspicion, to transfer funds from an American company to a Swiss bank that were used to pay kickbacks to employees of noncommissioned officers clubs."

There was further testimony that more than a million dollars was involved there.

What was the California bank? What was the Midwestern bank? What was the American company? What was the Swiss bank? Who were the noncommissioned officers? Where was the noncommissioned officers' club? And what are you doing about it?

Mr. BARTIMO. If I may give you a general answer to that, there were two situations which I understand Mr. Morganthau to refer to. One was the so-called PRYSUMEEN account. This appeared in great detail before the hearings of Mr. Ribicoff's committee which, as you know, is still in the process of conducting elaborate and detailed hearings with respect to black marketing and currency conversion problems in South Vietnam.

Now, the PRYSUMEEN account, as I understand it, sir, was an account really involving the so-called Indian money manipulators in South Vietnam. And I believe that you have testimony here from Mr. Parker on how that arrangement worked.

Now, it is true-but I would like to clarify the record-that in the so-called PRYSUMEEN account we found checks involving certain military personnel. But I believe the record should reflect that the PRYSUMEEN account was not an account involving primarily U.S. civilians or military personnel. It was the so-called Indian money manipulators who still persist in engaging in black market business in South Vietnam.

Mr. REUSS. I think then that was not the case that Mr. Morganthau had reference to since the one he had reference to did involve, so he testified

Mr. BARTIMO. Yes, sir.

Mr. REUSS. U.S. noncommissioned officers.

Mr. BARTIMO. Now, the case that Mr. Morganthau alluded to this morning was one which is still under very active investigation. We are working very closely with the Department of Justice. However, I think I can say without prejudicing that case that it did involve a group of military personnel, and it did involve a U.S. civilian who was selling to the military personnel involved, and they in turn were getting kickbacks. Foreign bank accounts were used for these arrange

ments.

Now, if I can satisfy you with that answer, I would be happy because it is a case under very active consideration.

Mr. REUSS. You prefer not to mention names at this time?
Mr. BARTIMO. I would, sir. I think that by doing so-

Mr. REUSS. I will ask you not to supply the names, but was Mr. Morganthau testifying truly when he said the kickbacks were more than a million dollars?

Mr. BARTIMO. I actually do not know the exact figure. It seems to me high from what I do know. There may be a million dollars involved.

in the machinations, but I don't believe that is the ballpark figure that the Ribicoff committee, for example, has brought out. I am just not certain.

Mr. REUSS. Can you give us a closer estimate of the amount of the money that changed hands?

Mr. BARTIMO. My recollection, sir, is that it was in the nature of $300,000 or thereabouts.

Mr. REUSS. Still a very substantial sum.

Mr. BARTIMO. Yes, sir; still a very substantial figure.

Mr. REUSS. And anything that is stolen in this vay is money that in effect is stolen in about equal measure from the Americans and from the soldiers in Vietnam who are being swindled by this type of practice.

Mr. BARTIMO. That is absolutely correct, and I would like to add to something you have already asked-what are we doing about it? When this case first came to the Secretary of Defense's attention he moved with dispatch and contacted the Secretaries of the Army, Navy, and Air Force, issued a mandate that this type if situation be corrected as soon as possible. I believe he gave the three Secretaries 2 weeks in which to give him an interim report detailing exactly what corrective actions were take.

They did come back in 2 weeks, and one of the immediate actions that was taken was to have more unannounced I.G. investigations. Some of the services have instituted an outside independent audit in addition to our own internal audits, and I am very happy to report that I think that this situation has been straightened out in large

measure.

Mr. REUSS. Well, are the criminals who gave the bribe and the criminals who took it in the penitentiary?

Mr. BARTIMO. As I stated earlier, sir, this case is under very active. consideration with our people in the Department of Defense and the Department of Justice. Even though justice sometimes moves slowly, I am convinced from where I sit that justice will be done

Mr. REUSS. But it has not yet been done.

Mr. BARTIMO. No, sir. This case has not yet come to trial.
Mr. REUSS. When did this happen?

Mr. BARTIMO. Well, the case goes back a number of years, as you probably know.

Mr. REUSS. I don't know because I first heard of it this morning. Mr. BARTIMO. Oh, I see. I thought you probably did know. These machinations existed in Europe and then they peregrinated all the way to Southeast Asia. The investigations and I am very happy to say this for the record-were done by the Army itself. The Army discovered these facts, these arrangements, and moved in, and I am happy to tell you that they moved in with vigor. They put over 40 investigators on this case. And these things go back a number of years. The immediate case we are addressing ourselves to in South Vietnam, I believe, stretched over a period of a couple of years. Mr. REUSS. From when to when.

Mr. BARTIMO. I must give you a guesstimate. I don't have the exact dates. We could correct the record. But they go back I believe beginning in 1965, some of the cases.

Mr. REUSS. And extending into 1967.

Mr. BARTIMO. Extending through 1969, I believe.

Mr. REUSS. And when did Secretary Laird hear of this?

Mr. BARTIMO. Secretary Laird heard of this approximately a year

ago.

Mr. REUSS. On another matter, Mr. Bartimo, Mr. Morganthau testifying before this committee on December 4 testified that a member of the organized underworld had been assisting noncommissioned officers in Vietnam in manipulating service club monies through Swiss accounts. Has your investigation developed any information on that? Mr. BARTIMO. Mr. Reuss, I don't want to take issue with you, but I would like to read into the record exactly what he did say. I think it comes out a little differently, if I may do so.

Mr. REUSS. Please do so. I thought I was accurately

Mr. BARTIMO. I quote from the record of December 4, 1969. Mr. Morganthau was testifying. He says, "It will be no surprise to any member of this committee that Swiss bank accounts have been used integrally in the irregular financial transactions surrounding military establishment in Vietnam. We have learned that a bank account in Switzerland was opened in 1966 by an American with strong underworld connections, who was acting as a representative of several U.S suppliers of service clubs and of a U.S. Government hotel and recreation center maintained primarily for Americans in Saigon. Since that time, on a regular basis, the American suppliers have caused varying amounts to be deposited in this account. From time to time, withdrawals were made by checks signed with a code name in favor of certain noncommissioned officers", and so on.

I think the gist of the way I read that testimony is that these private entrepreneurs who are selling to American military personnel had some connection with the underworld. But I very happy to report that nothing, and I want to emphasize this, nothing in our extensive investigations has shown any connection with military personnel and underworld characters.

Mr. REUSS. What has your investigation shown about the member of the organized underworld referred to in Mr. Morganthau's testimony and his activities, coordinating activities, if you will, of those who were supplying the military in Vietnam.

Mr. BARTIMO. As I related

Mr. REUSS. I should add I don't like that either.
Mr. BARTIMO. Nor do I. I don't like any of this.

Mr. REUSS. What are you doing about it?

Mr. BARTIMO. So far as I know, and I have tried to keep on top of this case by monitoring it-it is being conducted as I have indicated earlier by the Department of the Army investigators-no evidence whatsoever has come to my attention that military personnel were in any way involved with underground, so-called underground criminals. Now, it is true

Mr. REUSS. Yes. However, my question concerned the allegation by the U.S. Attorney recently retired from the Southern District of New York, that member of the organized underworld is at work in Vietnam coordinating the activities of those who are supplying the armed services. This I don't like to hear. Is it true or is it false? And what have your investigators told you about it?

Mr. BARTIMO. Well, may I clarify. If you are alluding to the testimony I just read

Mr. REUSS. Yes.

Mr. BARTIMO. If I may, with due regard to you, sir, I did not read that testimony implying any such thing. That testimony to me means that an underground character, whoever he may be, is on friendly terms with the seller who is selling materials to the military personnel.

Mr. REUSS. Mr. Reporter, would you read back my question. Either I am hallucinating or we aren't communicating. Just read back my last question to the witness.

Mr. BARTIMO. I am sorry, I did not understand you.

Mr. REUSS. Well, these things will happen and I am trying to get together with you.

(Whereupon, the reporter read the question.)

Mr. BARTIMO. You are absolutely correct, sir, that is a legitimate question.

I am sorry to say I don't know the answer.

Mr. REUSS. I see.

Thank you very much.

Chairman PATMAN. Anyone else like to question these witnesses? Mr. GALIFIANAKIS. I would.

Mr. GRIFFIN. I would like to.

Chairman PATMAN. All right, Mr. Galifianakis.

Mr. GALIFIANAKIS. I would like to ask a question. You made reference to the fact of course that justice moves slowly. Have any of these cases been prosecuted under the Uniform Code of Military Justice? Does it come under that jurisdiction?

Mr. BARTIMO. Yes, sir. We have many such cases of so-called black marketing, money manipulations which have been handled under the Uniform Code of Military Justice.

Mr. GALIFIANAKIS. Can you tell generally what the disposition is of those cases that have been handled pursuant to that code?

Mr. BARTIMO. The cases, depending as you know on the facts, the amounts involved, the circumstances, can run all the way from a severe fine, in some cases a reprimand, if it is an inadvertent changing of money rather than going to a finance center, all the way to a general court martial bringing forth a dishonorable discharge and a long penitentiary sentence.

Mr. GALIFIANAKIS. Have any of those cases resulted in restitution of the money?

Mr. BARTIMO. Yes. If you can find the money, that usually is seized. For example, if somebody is caught engaging in what we call money manipulation on the black market, that may be confiscated.

Mr. GALIFIANAKIS. There has been no such thing as restitution of money allegedly suspected to be deposited in

Mr. BARTIMO. Well, in one of the cases that I alluded to in my testimony, you remember, $47,000 in a civil action, we got a judgment for the money involved, thus we got the money back-the restitution that you are alluding to.

Mr. GALIFIANAKIS. The other question that I would like to ask, I would like to know what interests predominate in Saigon. What banking interests predominate in that region? Are they foreign banks or are they South Vietnamese banks or are they

Mr. BARTIMO. Well, if I may just take a minute to explain what the situation is with respect to our own personnel? You are talking about military and civilian personnel.

We have a number of civilian banks which have been invited out to do what we would call ordinary banking business, type of business you and I do. They may deposit monies. They may have checking accounts. They may have a savings account. We have a number of these banks

Mr. GALIFIANAKIS. Those are established banks, are they?
Mr. BARTIMO. Those are established U.S. banks; yes, sir.
Mr. GALIFIANAKIS. And you do it by invitation?

Mr. BARTIMO. We give them certain logistic support, for example, a place to have an office. As a matter of fact, some of this is Govrenment-supported on the logistics side. It is all done through the cooperation of the Department of the Treasury. They work with us, and it is done in accordance with regulations which set up these banks.

Mr. GALIFIANAKIS. Are most of the personnel who allegedly perpetrate the fraud with the defrauding serviceman Americans primarily?

Mr. BARTIMO. Well, if we are talking about the so-called money black market, Mr. Parker-I believe you weren't here when he testified-what he was saying is true, from our own observations and investigations. I myself have visited South Vietnam on six separate occasions and each time I focused some of my time on this particular problem. Generally, it is what is often referred to as the Indian money changers. By Indian, I mean they are from India, not American Indians as some might suspect. These people make a living out of the socalled money black market. One of the reasons is, and we are trying to cope with this problem, the piastre is officially exchanged at 118 piastres to an American dollar. Unfortunately, the black market brings as much as 300, and, I am told, on some occasions 380 piastres to the dollar. Therefore, it is very difficult for an ordinary GI who must buy his piastres at the official rate, and get 118 piastres when he is tempted on all sides by being offered 300, 350, 360 to the dollar.

Now, this is not to say that we have a lot of this on the part of the GI's. I think that conductwise our troops have done an outstanding job. But nevertheless, the propensities of some to get 400 piastres or 350 instead of 118 leads them to this so-called money black market. Mr. GALIFIANAKIS. One more question. Then I will yield. Are the banks that are local, or parochial in Saigon, are they governed by secrecy laws, do you know?

Mr. BARTIMO. I don't know the answer to that, whether the banks in Saigon are governed by secrecy laws. But I can state that our problem is not with the banks in Saigon. They are either in Hong Kong or elsewhere in the world. I am sorry, but I could supply the answer for that.

Mr. GALIFIANAKIS. Well, if there were branches for those banks with which you have difficulty, it facilitates the fraud if they are located there in Saigon, doen't it? Could you ascertain that for us for the record?

Mr. BARTIMO. Yes, Perhaps one of my colleagues knows the answer. I don't know whether you heard that answer. He doen't know whether there are any secrecy or secret bank accounts in Saigon. I doubt it from what I observed. But he did also say that we have Bank of America and other U.S. Banks which I have already

Mr. GALIFIANAKIS. Would you be kind enough to see if there is a source of information on that?