GOVERNMENT: Ship Seizure

In New York harbor last week, a U.S. Customs officer briskly climbed aboard the S.S. Mohican, a World War II Liberty ship, as she lay at anchor. The officer informed the captain that the ship was being seized by the U.S. Government. His reason: the U.S. ship, in violation of a 1916 law, was being operated by an alien owner, Stavros Niarchos, a Greek who had bought her as war surplus through U.S. nationals as dummies.

In seven months, Assistant Attorney General Warren Burger, chief of the Justice Department’s civil division, has seized 29 such vessels (19 of them oil tankers), with an estimated value of $32 million.

When Burger took office, a test seizure of the S.S. Meacham had already been made by the Truman Administration, and the owner’s appeal was laboriously dragging its way through the courts. The former Administration felt powerless to seize any more until the test case was determined. But as soon as Burger, 45, a St. Paul lawyer and an influential Ike-before-Chicago organizer, took over, he found an ingenious way of cutting the legal red tape.

Admiral at Work. Burger simply seized the ships, then let them continue operating under the same officers. But he first had both captain and first mate sworn in as deputy U.S. marshals, with the duty of impounding all profits made by the vessel. To accomplish this, Burger had to get the owners’ agreement to the arrangement. They were willing because their only alternatives were to keep the seized ship at anchor (at a cost of $1,000 to $2,000 a day), or put up bond equal to its value. As a result, Burger is now running so many ships that, at Justice’s staff luncheons, FBI Chief J. Edgar Hoover calls him “Admiral.” Moreover, he has obtained secret, sealed indictments against several of the principals for making false statements. The owners of the ships also stand to lose vast sums if the Meacham case runs against them. Hardest hit will be Niarchos, who has had eight tankers and five Liberties seized, and his brother-in-law, Aristotle Socrates Onassis, the Greek capitalist who bought the gambling casino at Monte Carlo and operates some 80 ships around the world (TIME, Jan. 19). Onassis has had six tankers, five Victory ships and one Liberty taken over. The group of corporations that ex-Congressman Joe Casey and Newbold Morris helped set up, and that touched off a congressional investigation of all the sales (TIME, March 3, 1952 et seq.) have had five ships seized.

Corporate Maze. The dodge used by many foreigners to acquire U.S. ships was to hire U.S. nationals to form a dummy corporation to bid for the vessels. The foreigners would provide the money indirectly, by putting up the collateral for loans which banks would then make to the dummy. After getting title to the ships, the dummy would then lease them to the foreigners at ridiculously low rates—so little that the dummy would never make enough money to incur U.S. taxes. Instead, all the profits would flow to the foreign operators and the true ownership would still be concealed in a bewildering maze of companies.

Some of the cargo ships have been engaged in traffic with Red China, and some of the tankers, using underpaid foreign crewmen, have underbid U.S.-owned tankers enough to knock U.S. seamen out of jobs. Admiral Burger expects to seize about 75 ships before he is done and, if the courts uphold him, sell them over again.