Mr. BARTIMO. I would be glad to supply that for the record.
Mr. GALIFIANAKIS. Thank you very much.

Chairman PATMAN. Mr. Blackburn.

Mr. BLACKBURN. Thank you, Mr. Chairman.

Mr. Bartimo, a question has come to my mind which I will submit to Mr. Morganthau, who testified earlier today, and the other witnesses, but I would like to have your thoughts on it.

The whole purpose, as I understand, of the secrecy of the bank accounts is to permit the transfer of funds to a person whom the transferror does not wish to be identified.

Mr. BARTIMO. That is correct, sir.

Mr. BLACKBURN. And in the case of the manipulations of the PX accounts, the funds would be deposited by a firm in America through their American bank to a numbered account in Switzerland. The secrecy occurred at the time the money was deposited in the numbered account in the Swiss bank?

Mr. BARTIMO. Yes, sir. I believe that is correct, sir.

Mr. BLACKBURN. So, the transfer of funds is completed at the time the beneficiary of this deposit goes to Switzerland and draws the funds out and then brings cash into this country?

Mr. BARTIMO. That is correct.

Mr. BLACKBURN. Now, do you think it would be helpful if we had a requirement that persons bringing huge sums of money, or sums in excess of some figure, say a thousand dollars in cash, be required to declare that on their declaration? I know when we come in we have to tell how much perfume we bought or watches or whatever else we might have on hand, but we don't have to tell how much cash we have. Usually, there is very little in my pocket. But do you think that would be a device that would be helpful?

Mr. BARTIMO. Yes, sir. And I note that in your bill you make such a provision. I think it would be helpful indeed.

Mr. BLACKBURN. Good. That is my only question.

Thank you, Mr. Chairman.

Chairman PATMAN. Yes, sir. Mr. Griffin.

Mr. GRIFFIN. Yes, sir. I wanted to ask you a question in line with Mr. Reuss's questions. You apparently have taken no action against the suppliers that were involved in kickbacks and what not?

Mr. BARTIMO. Well, I am sorry if I didn't answer that fully, but I would like to explain what I meant by my answer.

Let's go back a way and focus on the suppliers selling to the post exchange. First of all, it might be useful for you to have a feel for the magnitude of this problem.

I happen to have the figures with me, and I would like to refer to them.

For example, in 1969, the post exchange, which means the Army and Air Force Exchange, did $1.17 billion worth of overseas business. In the continental United States it was $1.67 billion, I believe, or a total of $2,238,000,000.

Now, focusing again on overseas, the number of businesses involved, that is, the number of buyers that sell goods to the post exchange, were 2,918, which we term small business, 1,347, which we call large business, or a total of 4,292 suppliers.

The post exchange is like any other big business; they go to salesmen who are representing these 4,000 some odd firms rather than going to

the firms themselves. And the reason I understand is if they were to buy directly, it would cost them more money than by going through these so-called manufacturers' representatives.

In the case that I alluded to, having this as background, where they had set up a dummy corporation in Europe, and yet they were representing a number of American suppliers

Mr. GRIFFIN. How many suppliers were involved there?

Mr. BARTIMO. I don't have the exact number, but I can supply that for the record. But I think I can still make the point.

Mr. GRIFFIN. If you made an example of two or three of them and blacklisted them, I would think that would be the best enforcement. Mr. BARTIMO. I was going to bring that out to show you how this works, and make that statement. As soon as we find in the Department of Defense that any supplier, or a manufacturer's representative is bribing our people, our buyers, he is immediately blacklisted.

Mr. GRIFFIN. The agent is blacklisted?

Mr. BARTIMO. The individual who was guilty of the deceit and the fraud, the man who gave kick-back to our buyers.

Mr. GRIFFIN. Right. But what about the industry involved, the particular person, the company that was manufacturing some of these items. Have you taken any action against a manufacturing concern?

Mr. BARTIMO. We have this one case I mentioned in my testimony. I think we could speculate and say that the manufacturers should have known or should now know that this was going on-what have they done about it? I don't have an answer. And I have asked our authorities in the Army-Air Force exchange located in Texas.

However, I would like to add this for the record, if I may, that we have been meticulous in working with other Government agencies. For example, we try to at least correct what we can. These individuals, these representatives who set up a dummy corporation in Europe so that they wouldn't have their profits taxed were doing it under a device by saying that the sale was consummated in Europe and not the United States. We are now working with the Internal Revenue Service so that all PX sales, no matter where bought, it will actually reflect on the consignment that the sale was consummated in the United States of America; therefore, giving the Internal Revenue people a better focus on

Mr. GRIFFIN. That would help. But if you would find two or three flagrant violations by the manufacturers to make an example out of that would make everybody honest, I think, because it is a tremendous business, over a billion dollars involved.

Mr. BARTIMO. I agree. Yes, sir.

Mr. GRIFFIN. Thank you, Mr. Chairman.

Chairman PATMAN. I would like to ask you-now, you are in Vietnam most of the time, are you not?

Mr. BARTIMO. No, sir. I have my office in the Pentagon, but I have made trips there.

Chairman PATMAN. You are in Washington, but you have made six trips recently over there?

Mr. BARTIMO. Well, over the last 4 or 5 years; yes, sir.

Chairman PATMAN. Do you know anything about the servicemen borrowing funds and where they borrow these funds and the rates of interest that they pay, and so forth?

Mr. BARTIMO. Generally, I know something of it, sir.

Chairman PATMAN. Who do they get their money from, like they have some urgent call from home and they have to borrow funds.

Mr. BARTIMO. Well, I know you are a great expert in this area, Mr. Chairman, and I know the answer you would like me to give, and I will give it, that they make use of so-called co-ops. The Pentagon

co-op

Chairman PATMAN. You mean credit unions?

Mr. BARTIMO. Credit unions; yes, sir.

Chairman PATMAN. Well, now, we ran into some very unfortunate cases over in Vietnam. They were paying 50, 70, and 100 percent interest. And those who wanted an automobile, they would have to pay $200 or $300 more than they should have to pay to finance it, and they were just really being robbed in many ways, and we working with the Defense Department

Mr. BARTIMO. Yes, sir. I know that.

Chairman PATMAN. And we had good cooperation.

Mr. BARTIMO. Thank you.

Chairman PATMAN. We got the credit unions over here to have an office over there, and that way they do their business by mail, and they got their checks back rather quickly.

Mr. BARTIMO. Right, sir.

Chairman PATMAN. Is that the way they still do it?

Mr. BARTIMO. Yes. I believe that your stimulus in this area has, I think, been very beneficial to many of our GI's located in South Vietnam and elsewhere in the world.

Chairman PATMAN. It saves them a lot of money on interest.
Mr. BARTIMO. Yes, sir; it does, sir.

Chairman PATMAN. And they are not robbed by these sharks.
Mr. BARTIMO. That is correct.

Chairman PATMAN. We have a number of credit unions in the United States that have offices overseas. In fact, we have sent people from this committee, investigators, all over the world, and everyplace where men are assembled, we have made it possible for them to get loans through credit unions.

Mr. BARTIMO. Yes, sir.

Chairman PATMAN. Directly through some credit union here

Mr. BARTIMO (continuing). And at a low rate of interest and saved them enormous sums of money, millions of dollars. Yes, sir. That is

true.

Chairman PATMAN. And we are proud of it.

Mr. BARTIMO. Well, you can be proud and we are delighted that you have helped us.

Chairman PATMAN. Yes, sir. Now, I have here the Wall Street Journal of February 9, yesterday, heading "Swiss Bank. Swiss Credit Bank is pleased to announce its new location at 100 Wall Street." And next to a picture of the building, it says, "We look forward to serving our customers in our spacious modern offices and making new friends in our new home. Visit us soon and let us welcome you to our world of banking. Swiss Credit Bank, New York Branch, 100 Wall Street, New York, N. Y. Telephone number; Pacific Coast Representative office, 900 Wilshire Boulevard, Los Angeles, Calif., telephone; Head office, Zurich."

(The advertisement referred to follows:)

THE WALL STREET JOURNAL, Monday, February 9, 1970

Swiss Credit Bank
is pleased to announce
its new location at
100 Wall Street.

We look
forward to
serving our
customers
in our

spacious,

modern offices and making

many new

friends in our

new home.

Visit us soon

and let us
welcome you

to our world
of banking.

Chairman PATMAN. Of course that is Switzerland. And it occurred to me that we are going rather far when we let these banks that obviously have secret numbered accounts come into our country and under auspices that we know about. It occurs to me that somebody is not doing their duty. Maybe it is Congress. I don't know. But somebody should look at this situation.

Now, you are sure that they don't operate in Vietnam, the Swiss banks?

Mr. BARTIMO. No, I am not, sir. And I have already agreed to provide that information for the record.

Chairman PATMAN. I wish you would. I think you will find that they do.

Mr. BARTIMo. We will look into that.

Chairman PATMAN. Also the Hong Kong banks.

Mr. BARTIMO. The Hong Kong banks we are certain of. They do have secret accounts and we have had some difficulty

Chairman PATMAN. And don't they operate in Vietnam?

Mr. BARTIMO. I don't know the answer to that, sir, but I will provide it for the record.

(The information requested follows:)

INFORMATION ON BANKING FACILITIES IN SOUTH VIETNAM, HONG KONG, MOROCCO, AND TANGIERS

In accordance with the committee request the following information has been supplied to me from officials in the Republic of Vietnam.

Banking facilities in the Republic of Vietnam are not permitted to maintain numbered or specially designated secret bank accounts. Bank National De Vietnam notice number GTU concerning the opening of checking accounts requires all accounts to be opened by signature and by name.

Bank of America is the only bank operating branches in the Republic of Vietnam and Switzerland. The Vietnam manager assures without reservation that no accounts have been or will be opened in the Switzerland branch through the RVN branch.

Hong Kong does not permit secret accounts.

Although numbered or secret accounts can be opened in Morocco and Tangiers, none of the banks operating in the Republic of Vietnam have branches in those

areas.

Multinational Banking Directory, January 1970, received by banking officials in Vietnam 17 February lists the Chase Manhattan Bank (Switzerland), 118 Rue Du Rhone, Geneva, Switzerland. Chase Manhattan Bank (Vietnam) officials assure that accounts will not be opened in the Swiss Subsidiary through the military or commercial branches in Vietnam.

LIST OF BANKS IN SOUTH VIETNAM

In accordance with the committee request the following is a list of banks doing business in South Vietnam:

Central bank.—National Bank of Vietnam, 17 Ben Chuong Duong Est. 1954 Acting Governor: Nguyen Van Dong.

Refinancing fund.-c/o National Bank of Vietnam Est. 1967 Director: Tran Ba Tuoc.

Development banks.-1. Industrial Development Center 40 Nguyen Hue Est. 1957 Managing Director: Khuong Huu Dieu.

2. Vietnam Development Bank (SOFIDIV) 3 Vo Di Nguy Est. 1961 Director

General: Lam Van Si.

3. Agricultural Development Bank 7 Bis Ben Chuong Duong Est. 1967 (successor to National Agricultural Credit Office) General Manager: Dr. Nguyen