Wash Post (Pearson column)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64B00346R000400090006-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 15, 2016
• Document Release Date: September 25, 2003
• Sequence Number: 6
• Publication Date: January 10, 1962
• Content Type: NSPR

Appj acv For Rel e : -
The Washington merryGo-Round
THP WASHINGTON POST Wdi+exlor, lea- tn, 2962 F Y I
HcCone-Kaiser Relations Recalled
By Drew Pearson
One of the first problems
f,icing the Senate Armed Serv-
ices Committee Will be, to re-
view the record laid downby
McCone, with being "merely
on leave of absence. from his
position as president of the
Bechtel-McCone Corp.... be-
comes Under Secretary of the
Air Force and arranges a nice
fat gift for Kaiser, and that is
how Kaiser manages to con-
tinue to suck defense doll" ra
while our boys in Korea we
for lack of planes."
McCone denied tba eta te.
meat. However, he did not
deny that the Bechtel family
owned 4206 shares of Kaiser,
Frazer common stock. He also
bad a hard time putting a good
light on the highly unusual
chain of facts which Sen~
Bridges placed before the Sen-
ate Armed Services Subcom-
mittee as to how, Kaiser got
the Flying Boxcar contract.
At that time, 1950, Henry J.
Kaiser's attempt to rival other
auto manufacturers. with the
"Henry J" small-ailed ear and
other Kaiser-Fraser makes had
been a flop. Re had a heavy
overhead, a factory at Willow
Run, Mich., which was closing
down, and a large supply of
machinery on hand.
According to the testimony
unearthed by Sea: Bridges,
Latsews close assbetate with
Force, under McCone, how-C-11119 in the Kaiser Willow
ever, took part of.the contract G Run plant was discussed.
the higher cost. McCone, try-
ing to explain this to Sen.
Bridges, said that the Defense
On Dec. 8, oxte day later, the
Kaisers appear d at the Fair-
chilii plant in Hagerstown and
demanded engineering data on
loved senior
R epublican,
Styles Bridges
of New Ramp-
shire, regard-
President
Kennedy's hew
chief of Cen-
t. r a l Intelli-
grace.
the new CIA
chief, John A. li!farsen
McCone, was appointed by Mr.
Kennedy lust a few days after
Congress adjourned last Sep-
tepiber and it is now up to
the Senate Armed Services
Committee to confirm him.
If Sen. Bridges'- colleagues
turn to their own subcommit
tee hearings of June 2.-'IM
and thereafter, they will find
some amazing testimony by
and about the new CIA chief.
Amazing as it it, the teati-
mony is not quite complete,
because later testimony by Me-
Cone before the Joint Atomic
Energy Committee. Jetty 2,
1958, shows that he may- have
been guilty of a conflict of in-
terest when as Under Secre-
tary of the, Air Force he award-
ed a Flying Boxcar cataract to
the Kaiser-Frazer Company
for three tones the prise the
Governigiui`nt was paying to the ( The cost per plarw so built
Fairchild Corporation, by Kaiser was two be $MAW,
One Re~utdican, ff.ep, Alvin as compared V% I WON Per
O'Konski of W i So o n Aft as
n, plane as buiK by ?afrdtild in
charged ble fellow;tgpubliran, hugerstown, Md. The Air
Whom he had been engaged in
West Coast shipbuilding, John
A.. McCone, cot him off the
quickie contract to nsanntfac-
ture the C-1U* or Flying $ox-
secondary suppliers. He had the C-110 which Fairchild had
to admit under cross-examina-ldeveloped and was then pro-
tion, however, that. Secretary I ducing. Under an Air Force
of Defense Marshall had is. contract Fairchild was re-
sued sued the directive on "second, collied toi give the data to a
suppliers" only after the ins days later, Dec. 16, the
Kaiser contract had been ne 1 decision wg was reached to award
gotiated. ~thu Flying the end Kaiser charged; lying Boxcar contract to
the Air Force not $688,363 aslKaiser. No facilities or cost
estimated, but $1,339,140 per
boxcar. It even charged up to
the Air Force $78,000 for
liquor, food, and the cost of
a dedication party for its first
C-110-though this was caught
and disallowed by Air Force
auditors.
Femur Than. Fast
The amazing, high-speed ne-
gotiations began on Dec. 5,
1950, when Kaiser, hard-
pressed from his unsuccessful
auto venture, applied to the
Reconstruction Finance Cor-
paration for a $25 million loan.
He was told he could get it
if he had a Government con-
treat.
Later that same day, thanks
to his old shipbuilding partner-
ship, he had lunch with Me-
0one, then Under. Secretary of
the Air Force in charge of pro-
curement. Son Edgar Kaiser
also was present, together with
Lt. Gen: K. B. Wolfe, deputy
ehhf of staff for materiel. At
this luncheon, Senate hearings
showed that the plan to build
studies had been made, and
the Air Force had -no idea
what Kaiser was going to
charge Uncle Sam for being
balled out at Willow Run,
All this caused Sen. Bridges
to ask McCone,
"If the Air Force's records
should indicate that the deci-
sion to award the contract for
the C-119 to Kaiser-Framer was
reached on Dec. 15 and that
the proposals were delivered
by Kaiser.Frazer to the Air
Materiel Command on Dec. 10,
four days later, what would
you say?"
. "I would say that the action,
though apparently fast, was
proper under the sense of
emergency that we were op-
stating," replied McCone.
"It is even faster than fast,
is it not?" asked Bridges.
,,it is pretty fast, you bet,"
agreed McCone.
In all the testimony, how-
ever, McCone would not admit
that he had any continuipg
financial relationship w I t h
Kaiser:
Ionians isu, 2+n aradi. t.. Iran.
Approved For Release 2003/10/10 : CIA-RDP64B00346R000400090006-7