TREASURY SECRETARY LAW AND ORDER WORDS NOT MATCHED BY DEEDS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00957A000100100024-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 16, 2016
• Document Release Date: July 21, 2005
• Sequence Number: 24
• Publication Date: August 24, 1976
• Content Type: OPEN

Approved For Release 2005/08/03 : CIA-RDP79-00957A000100100024-3 $. 8969
August 24, 1976 CONGRESSIONAL RECORD-HOUSE
nlent. Its payload will be almost twice Drastic budget cuts and fund diver- conspiring to defraud the Treasury of
that of the B-52. Also, because it is lions have reduced the number of agents $12.3 million in Federal excise taxes.
manned the B-1 can react to unantic- assigned to investigate tax evasion by Both the corporate officers were fined . in ad ipated events, both from a threat situa- narcotics trafficki-s, gamblers, and other and received jail se tent and ba kdi ion
tion as well as bomb damage assessment. racketeers by one-third. the corpoon fined Tle The Arms Control and Disarmament Severe restrictions have been placed and interest w lab as sessedof a con d
Agency has had the following to say on on the use of con ldential funds to pur-1F,6%_Un=cred result the B-1: chase information about tax cheaters deetiaigsourse an no ~`Y-t"salt o
The B-1 can be expected to enhance the who keep no books and record 3.
US deterrent capability In the 1980's by its An important tool in tracing money Tills s Uu c have been a victory in
improved survivability, increased flexibility laundering and illegal income was lost which the Treasury Department took
applied to a variety of missions and roles when the_ secret bank account question pride. Instead, the victory was tarnished
(especially limited nuclear contingency op- was removed from tax returns by the by Secretary Simon who treated a con-
tions), and a lesser sensitivity to future ministration. victed felon, Mr. Rowan, as a person Im- Soviet offensive and defensive threats. range Treasury Department cooperation with worthy of honor and respect.
and yields of a ra could n be ge the Justice Department Organized Crime In 1970, a Federal grand jury indicted
of nuclear f nucaccuracy weapon in. the types delivery
expected reduce unintended collateral Strike Forces he q been curtailed. W. Rowan, Mr. Grace, and the corpo-
damage ge and d fatalities. Today, I would like to to report on still ration itself. It alleged that they and
in- two unindicted coconspirators had con-
7107epart
ment,
From every standpoint, I believe we a wme' spired to defraud the Treasury of $12.3
must proceed with the B-1 bomber. As a al are to g~}dr,911e_ mrr`I r^m- million i t Federal excise taxes between
I pointed out in 1972, we should have y giant ~:ornor~ actions. 1956 and 1965, the years of Mr. Rowan's
placed the B-1 in production at that Iffe erne evenue Service program stewardship of Fruehauf's financial
time. Inflation costs continue to be criti- to deal with huge corporations, with a ai sRowan served as controller of the
cal. Delay will make it that much worse. geographically disbursed books and rec-Mr.
Overall defense ense expenditures on ad- ords, is the coordinated examination- Fruehauf Corp. in 1955 and had risen
ousted dollars have remained fairly con- large case-program. The program in- to the position of vice president, finance,
stant in the last 15 years, even down eludes approxirriately 1,200 corporations by 1965. In his positions with Fruehauf,
some. The defense of our country is no with gross assets in excess of $150 million. Rowan was responsible for the account-
place to cut. A team of several Internal Revenue ing, tax and recordkeeping procedures of
On the keel of the nuclear aircraft car- agents per corporation conduct these the corporation. Mr. Rowan was accused
1?ier that bears the name of President types of audits. of having been an originator of a fraud-
Dwight Eisenhower are his great words: The corporations involved in the Be- ulent, complex pricing and accounting
Until war is eliminated from international curitfes and Exchange Commission and scheme which included a fake wholesale
relations, unpreparedness for it is well nigh media di.sclosu1=s of bribes or similar price structure and nonexistent extra
as criminal as war itself. improper payments were virtually all service charges to wholesalers. He and
elped
within the large case audit program. The the others, e a and jury said, h part of
tax liability by substantial
The SPEAKER pro tempore. Under a coverage of these corporations is 100 per- Fruehauf evade its
a system of
previous order of the House, the gentle- cent. That is, each corporation in this excise
cepti
ices. man from Texas (Mr. GON2ALEZ) is rec- written Si ecetary Simon and Commis- deLa tvyearothe Fruehauf Corp., Mr.
ognized for 5 minutes. stoner Alexander several times since Rowan and Mr. Grace were convicted of
[Mr. GONZALEZ addressed the House. March 1, 1976, seeking an explanation tax fraud after a 50-day-long trial. U.S.
His remarks will appear hereafter in the for the failure of the Internal Revenue District Court Judge Thomas P. Thorn-
Extensions of Remarks.] Service to uncover these frauds. Thus ton found that Mr. Rowan "willfully and
far, they have not furnished a satis- unlawfully part of planauf
The SPEAKER pro tempore. Under a factory explanation.
previous order of the House, the gentle- Well over 100 U.S. corporations have Corp.'s excise tax liability by employing
man from Illinois (Mr. A eNuNZIO) Is rec- acknowledged to the SEC that they had the deceptive Invoicing procedures." Ac-
ognized for 5 minutes. paid overseas or domestic bribes. Over cording to Judge Thornton, Mr. Rowan
a year ago, the IRS told Congress that "willfully and unlawfully conspired to
[Mr. ANNUNZIO addressed the House. at least 50 large corporations had been defraud the United States by impeding,
His remarks will appear hereafter in the Identified as being under investigation impairing, obstructing, and defeating the
Extensions of Remarks.] for claiming possible illegal deductions. lawful governmental functions of the In-
Yet, not one of these cases has to date ternal Revenue Service of the Treasury
ITR,EASURY SECRETARY LAW AND been referred by Treasury to the Justice Department of the United States in the
ORDER WORDS NOT MATCHED Department for prosecution. Worse yet, ascertainment, computation, assessment,
BY DEEDS Secretary Simon admitted to me in a and collection of Federal manufacturers'
letter dated June 3, 1976, that the IRS excise taxes."
The SPEAKER pro tempore. Under a has not yet even asserted civil fraud In late 1974, while the recommenda-
previous order of the House, the gentle- penalties against these corporations. tion for prosecution was under consid-
man from Ohio (Mr. VANix) is recog- I am not yet certain whether there eration by the Government, Secretary
nized for 5 minutes. Is a failure in the structure of the large Simon appointed Mr. Rowan chairman
Mr. VANIK. Mr. Speaker, in recent case program. I am certain that there "of a Detroit area U.S. Industrial Payroll
months, I have placed before the Con- is a failure of will. Savings Committee. As the name sug-
gress and the public a record which An example of Secretary Simon's lack gests, the committee promotes the sale of
plainly shows an utter disdain by the of support for his own agency's law en- Government savings bonds among work-
Treasury Department for one of its ma- forcement program is well illustrated by ers at Detroit area Industrial plants-
jor responsibilities: law enforcement. an action which he took late last year. including Fruehauf's-through the same
Bold words and glittering generalities it involves Mr. Robert D. Rowan, a con- payroll deduction mechanism by which
have been accompanied by massive inac- victed tax evader, who was appointed their Federal income taxes are withheld.
Lion against organized and white-collar and reappointed to serve on an honorary Even after Mr. Rowan was convicted, in
crime: board of the Treasury Department. a Treasury initiated prosecution, Treas-
The narcotics traffickers tax program Last year, the Government prosecuted ury Secretary Simon reappointed Rowan
c
has been terminated despite strong con- _ o a rA Elifi""first-rrii:.1trm - as chairman of the savings bond commit-
gressional support. tion of a mayor cor sea its nth- tee.
The Treasury Department has refused cers Ina tax case. The Fruehauf Corp., it is fitting that the honorary position
to collect hundreds of millions of dollars s rrmali af' the board, William E. afforded Mr. Rowan was the chairman-
and Robert D. ship of an industrial
convicted of ? bond committee. Tax cheating, s
to gambling by which
the in Justice Department. Rowan, were indicted president,
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 H 8970
Approved For
CONGRESSIONAL RECORD-M-MV 024-3 24, 1976
u~ ugu8
the Treasury Department investigates
and prosecutes, is a form of adding to
the Nation's debt. The sale of Govern-
ment savings bonds, which the Treasury
Department promotes, is a means by
which many ordinary citizens under-
write that debt. Mr. Rowan and his cor-
poration stole from the Treasury and
then asked the workers to make up the
loss by loaning some of their hard earned
wages to the Government.
I find it reprehensible that Secretary
Simon has so little regard for his agen-
cy's law enforcement program that he
would appoint a convicted felon to an
honorary board. The criminal statutes
that are within Secretary Simon's juris-
diction to enforce are the very laws that
Mr. Rowan deliberately violated in the
biggest corporate tax evasion conviction
in history.
Secretary Simon's action is a slap In
the face to our law enforcement officials.
It Is a clear and unmistakeable signal to
career Treasury employees that further
efforts against major corporations will
not be encouraged. They have gotten the
message. The result is the failure of the
large case audit program to uncover
fraud committed by the giant corpora-
tions.
ETHIOPIA CONTINUES TO INTERN
POLITICAL PRISONERS WITHOUT
PROSPECT OF A FAIR TRIAL
The SPEAKER pro tempore. Under a
previous order of the House the gentle-
man from Wisconsin (Mr. AsPIN) is rec-
ognized for 5 minutes.
Mr. ASPIN. Mr. Speaker, the military
Government of Ethiopia continues to
Intern a number of political prisoners
without any prospect of a fair trial on the
horizon.
The situation was most thoroughly
described in an article February 8th in
the Observer of London by Mr. Colin
Legum.
I believe that the Government of the
United States should use its considerable
leverage with the Government of Ethi-
opia to help persuade it to initiate fair
trials for all political prisoners.
The executive branch always argues
that arms sales are advantageous, be-
cause they give us leverage with foreign
governments. Our sales to Ethiopia fis-
cal year 1976 have totaled $109.4 million.
If this leverage truly exists, then we
should use it to help persuade the Gov-
ernment of Ethiopia to grant fair and
speedy trials to political prisoners.
I have written to the Department of
State to urge our Government to begin
exerting additional pressure on Ethiopia
to initiate fair and speedy trials for the
prisoners involved.
I have also written to Mr. Sean
McBride, an executive of. Amnesty Inter-
national which is a leading international
group that seeks justice for all prisoners
regardless of their political persuasions.
The Observer article, my letter to the
State Department, and my letter to Mr.
McBride follow:
J XULY 20, 1976.
Mr. ROBERT McCroszsor,
Assistant Secretary for Congressional Rela-
tions, Department of State, Washington,
D.C. -
DEAR MR. MCCLOSKE`r I am writing to you
today concerning the imprisonment of a
number of Ethiopians by them 111tary govern-
ment in that country.
I hope that you could provide me with spe-
cific information on tlc. number of all politi-
cal prisoners in Ethiopia today and the
lengths of their internment. In addition, r
am interested in learn fug the Department of
State's assessment of t:-he conditions in which
they are being held aod what trials, if any,
are planned.
I understand that on several occasions the
government of the United States has made
specific representations to the government of
Ethiopia that we believe that political pris-
oners should be given sa speedy and fair trial.
Apparently, our effort? with the government
of Ethiopia have not pone beyond mere repre-
sentations. Thus far, in fiscal year :1976 we
have sold Ethiopia $92.6 million worth of
arms and granted credits for another $15.8
million worth, or a grs.id total of $109.4 mil-
lion worth of weaponr.
In view of our long:: sanding arms relations
with Ethiopia and numerous other lonnec-
tions with that country, I hope that the gov-
ernment of the United States would begin
exerting additional pressure on the govern-
ment of Ethiopia to conduct fair ane' speedy
trials.
The argument is ofc en made by the execu-
tive branch that arm. sales provide the gov-
ernment of the United -States with "leverage."
If this is true, we surely should hale some
leverage with the Ethiopians and should be
able to pursuade then. to conduct speedy and
fair trials of all political prisoners.
Thank you very mu^ri for your cooperation
in this matter.
Sincerely,
r.-.s AsPIN,
lfember of Congress.
A.[ GUST 2, 1976.
SEAN MCBRIDE,
Amnesty Internationct,
New York, N.Y.
DEAR MR. MCBRIDE I am writing to you
today to request that Amnesty International
investigate the plight of political prisoners
in Ethiopia.
I am enclosing an article from February
8th's 1976 Observer lxy Colirr. Legurn which
describes the contin--3ed imprisonment and
mistreatment of political prisoners in Ethi-
opia.
I have always greaity admired the work of
Amnesty International and believe that it
is one international organization that can
help ease the pli.ghI of political prisoners
regardless of their political persuasions. .
I am enclosing a copy of a letter which I
have sent to the United States Department
of State urging my government to begin ex-
erting additional preF.=Ire on Ethiopia to ini-
tiate fair and speedy trials for the prisoners
involved.
Thank you very n: u:h for your ccnsidera-
tion in this matter.
Respectfully,
LEs ASP]N,
;,!ember of Congress.
A ROY,,). FAMILY
(By Coi:;n Legum)
The late Emperor Haile Selassie'l family
are, quite literally, being allowed to rot in
a prison appropriately named Alem l3ekagne.
It means "Finished with the Work(."
It holds 17 members of the royal family,
aged from 14 to 73. They have been in cus-
tody for over 16 months. No specific charger
have been made against them, and there ars
no prospects of a trial.
Among them are mothers of young chil-
dren, whom they have not seen for a long
time. Some are widows of men shot in the
Bloody Saturday massacre of November 1974.
Some have their husbands also In prison or
in exile, so that their children are practically
orphaned.
The "royals" are only one small group of
Ethiopia's political prisoners, who now far
exceed the numbers held during Halle Selas-
sie's reign. Nobody knows for sure how many
there are, but they certainly run into thou-
sands. Although a few hundred have been re-
leased over the past year, many more have
been arrested.
Their physical conditions are mostly scan-
dalous--despite a recent promise of decent
treatment from the Minister of Interior.
Ethiopia's prisons have always been notori-
ously bad.
The only political prisoners who have tol-
erable physical conditions are the 100-200
former members of the Imperial Establish-
ment held in the underground cellars of an
ancient palace. This group also includes
prominent academics and Marxist revolu-
tionaries who, having originally supported
the Dergue, have now joined their opponents.
Among the charges levelled against the
late Emperor by the Dengue (Ethiopia's
Provisional Military Administration Com-
mittee) was that he imprisoned his op-
ponents without trial and was 'vengeful' to-
wards them. Yet it would be hard to imagine
anything more vengeful than the treatment
now being meted out to the Emperor's fam-
ily and to others regarded as 'enemies of
the revolution.'
The oldest of the royal prisoners is Prin-
cess Yeshashe-Work Yilma, now 73 and a
diabetic. There are doubts about how much
longer she can survive prison life.
Princess Seble Desta, one of the most
dynamic members of the old Establishment
has not seen her three young children since
her arrest last year, when her youngest child
was only six months old. Her husband, the
Dejazmatch Kassa Wolde-Mariann, a former
chancellor of the Addis Ababa University,
was arrested at the same time.
Princess Zuriash-Work Gebre Igyiabhase,
now in her sixties is the widow of Ras Asrate
Kassa, the former chairman of the Crown
Council and an adversary of the Emperor.
He was shot on Bloody Saturday. She is
in prison with two of her daughters-Re-
becca, now 24, and Mimi, 18. Three of her
sons are in a different prison-Mulugeta, 25,
Kassa, 18, and Wond-Wossen, 16.
One young woman prisoner, recently-and
inexplicably-released, told friends: 'All I
wished for in prison was death, and all I
still desire is to die to expunge the memory
of what we have been through.'
One of the Emperor's grand-daughters,
Princess Mary Abebe, did succeed in killing
herself in prison. She was in her late thirties
and had three boys under the age of 10.
Her father was shot on Bloody Saturday.
Princess Sophia Desta has suffered a se-
rious mental breakdown. At least one other
prisoner has begun to show serious signs of
psychiatric disorder.
The 40-year,-old Princess Egigayehu Asfa
Wossen is described by a friend who saw
her six months ago as 'scratching herself
to death.' She has always suffered from a
serious skin allergy which needed constant
care even under the best conditions.
The physical and emotional strains of
prison life have seriously worsened her con-
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