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and Licensing; and Andrew Weissler, Deputy Director of the Bureau of Industry Economics.

I do have a prepared statement here and it was sent up to your committee and your staff yesterday with the exhibits.

In the interest of time, if you would prefer, I could submit the statement for the record and make myself and staff available for comment or I can read it, whichever way you prefer.

Senator METCALF. Since I am alone, since the staff and I have talked about the statement, I would think in the interest of time it would be better for you to put the statement in the record and highlight the points that you want to make. Unless there is objection, it will be incorporated in the record in its entirety at the conclusion of your testimony and then you may make such special mention as you want and we will ask you a few questions.


Ms. BENTLEY. At the Federal Maritime Commission we have two annual reports which are required to be submitted. These reports help tabulate and disseminate the information showing corporate structure, stock ownership, debt holding, and related data pertinent to the shipping industry.

Both reports represent joint reporting forms. One is used by the Interstate Commerce Commission, the Maritime Administration, which is an agency of the Department of Commerce, and the Federal Maritime Commission. It is designated by us as FMC-64. It is required to be filed on an annual basis by certain U.S.-flag common carriers by water using self-propelled vessels in offshore foreign commerce, coastwise and intercoastal commerce and domestic offshore commerce. This form is designated Form M by the ICC and Form MA-172 by the Maritime Administration.

Use of the joint form was intended to minimize the burden of financial reporting of affected parties. The second of these reports is a form used jointly by this Commission and the ICC. It also must be filed on an annual basis by certain U.S.-flag tug and barge carriers who operate in the offshore foreign commerce coastwise and intercoastal commerce and domestic offshore commerce.

Their form is designated Form FMC-63 by the Maritime Commission and Form D-A by the ICC.

Originally an Interstate Commerce Commission form, this report was adopted by the FMC in order to minimize the reporting burden on affected parties. Both reports require the submission of detailed financial information of the persons filing them. For purposes of this subcommittee's present interest only certain pages of each report provide pertinent information. That information is detailed throughout my statement.

Now I would like to turn over to page 5, sir, and I will point out there a step that we have taken recently to fulfill our obligations in regulating the industry.

I refer in detail throughout the statement on the various instructions and forms, and in addition to the regular instructions on forms at the request of this committee on March 4 and 5, 1974, special instructions regarding the providing of this corporate information was distributed

1 These reports may be found in the files of the subcommittee.

to all affected persons. A copy of those instructions include in each package containing FMC Form 64 and 64 now. These instructions specifically require as follows:

Give names of the 30 principal voting stockholders at the date of the latest closing of the stock book or compilation of list of stockholders of the respondent (if within one year prior to the actual filing of this Report). In responding to this request it is important to keep in mind that the proprietary (legal) owner, whether it be an institution or an individual empowered to vote the stock, must be identified; that the stock must be reported in the name of the institution or individual (rather than in a street name); that various accounts controlled by a single such institution or individual must be aggregated for reporting purposes; and that a complete mailing address of each of the 30 top institutional and/or individual stockholders must be included in this Report.

The requirements of these special instructions were applicable to reports due at the FMC by April 1 of this year which is just about 3 months ago. As of this time we have received 19 such reports. The information contained in these filings may be inspected at our offices at 1100 L Street or we would be happy to furnish this information. upon request.

We do wish to note here however that such filings are submitted to us in confidence. While we have no hesitation in furnishing these reports to this committee we do wish to emphasize their confidential


There remains one other area in which corporate ownership information is gathered by this Commission in furtherance of our regulatory duties. Both the Shipping Act of 1916 and the Commission's regulations prohibit a forwarder from being a shipper, consignee, or seller or purchaser of shipments to foreign countries or from having any beneficial interest therein, nor may they directly or indirectly control or be controlled by such shipper, consignee, or by any person having such a beneficial interest.

In our procedure for licensing of independent ocean freight forwarders, the application which must be filed with our agency requires. the certification of certain facts showing the independence of the forwarded requesting license approval. And we do have investigations before a license is issued in every case.

I might note that the American ocean freight forwarding industry consists of approximately 1,400 forwarders licensed by the FMC and of this substantially more than 50 percent of the members of the Foreign Freight Association, 16 of these have 15 or fewer employees and of the total 1,000 licensed forwarders 753 or 74 percent are corporations; 21 or 2 percent are partnerships; and 243 or 24 percent are individual sole proprietorships.

Most of the sole proprietorships and partnerships are relatively small forwarders and a number of corporate forwarders are small family-held corporations.

The last general investigation of the entire freight forwarding industry was completed in 1958 by the Federal Maritime Board, predecessor of the Federal Maritime Commission. It was thereafter that the steps were taken to license forwarders as we are now doing. These reports and applications I have discussed represent the sum of the information regarding corporate control and ownership with which the FMC deals.

37-133 0 - 74 pt. 3 3

To date this data has proven adequate for purposes of the administration of the legislation under which we act. For that reason we have seen no need to seek further authority in this regard prior to this time.

This concludes the summary of my prepared statement and as I said, I submit the whole thing for the record.

Thank you, Mr. Chairman.

Senator METCALF. Thank you very much for coming, Madam Chairman, and thank you for bringing your staff here. I have a few questions.

I probably should have reversed the order of the presentation because you heard me ask the Federal Communications Commission why they couldn't have provided the rule such as the one that you have in your instructions, to give the names, the actual names of the 30 largest stockholders and go behind the street names and give a report.

So I applaud and compliment you on taking that action and going forward in it without worrying for 2 years about rulemaking or something of that sort.

The staff has looked at some of your reports and the Shipping Act of 1916, I am told, and your Commission regulations require licensed applicants to report certain facts demonstrating independence. You indicate in your statement that some of this information relates to ownership of a forwarder. You say:

In certain instances these applications bring to our attention the possibility that a forwarder may not in fact be independent.

In such instances of questionable ownership or control of a forwarder the Commission conducts a thorough investigation to determine the true corporate ownership of the forwarder.

During the staff investigation of ownership reports of the domestic water carriers Sealand Services was studied. Somebody is familiar with Sealand Services?

MS. BENTLEY. Yes. We all are.

Senator METCALF. Their ownership report to you directly states that Sealand Services is a wholly owned subsidiary of McLean Industries, but the information in your files stops there.

McLean Industries in turn is a wholly owned subsidiary of R. J. Reynolds, a major conglomerate. The true corporate owner of Sealand Services, the forwarder, is not in McLean Industries, but R. J. Reynolds.

Isn't there a stopgap in your reporting requirements where you really don't look through and find out where the real owner and where the independence of the forwarder stops?

Ms. BENTLEY. Sealand is not a forwarder, sir. They don't come under that at all.

Senator METCALF. I understand. I am involved in areas, Madam Chairman, in which a lawyer from a Mountain State doesn't get involved very often.

Ms. BENTLEY. I grew up in the Mountain States in the West, too, sir.

Senator METCALF. But anyway, you did go far enough to find out that McLean Industries owned Sealand, but then you didn't take the next step.

Who is responsible for taking the next step and looking through to find out the real owner is not McLean Industries, but a huge American conglomerate, R. J. Reynolds?

Ms. BENTLEY. We have all of that on here about R. J. Reynolds. I don't know the exact steps that were taken there, but certainly we have had a hearing for over years that involved R. J. Reynolds and its ownership in Sealand and proposed merger with U.S. Lines and I think our records are so loaded down, they would fill this whole table here as to the ownership of R. J. Reynolds and Sealand and that type.

Senator METCALF. As I say, this is an area that I am not quite as familiar with as the Federal Power Commission, for example, and I am going to ask some questions that you can probably tell me has some easy answer if you just knew where to go.

Ms. BENTLEY. Like the State of Montana, the State of Nevada has no ships.

Mr. TURNER. I think on that point the chairman is referring to, as we just had the discussion with the Federal Communications Commission, these holding companies, the parents or grandparents, whatever they are, are going to be identified over in the Federal Communications Commission with respect to the 20 or 30 largest holders of stock. They are going to aggregate the nominees to show total holdings by institutions, they are even going beyond it to find the beneficiaries.

That is what is being done there. When we come to the Federal Maritime Commission, all we find listed in your new instructions would still be McLean Industries. So that tells us nothing, you see.

What I think the chairman was saying was who are the 30 largest holders of R. J. Reynolds? That is really what we want to know. Who are the major beneficial owners of R. J. Reynolds to see whether or not we have a problem of economic concentration?

MS. BENTLEY. In our file, you are right, it shows McLean Industries owns 100 percent of the stock and it doesn't go beyond that on this report. As I say, we had so much testimony on that particular company that it is laid out all over the record.

Mr. TURNER. Then let me bring your attention to the Matson Co. I am not sure that you have had so much litigation with respect to the Matson Navigation Co. Matson is the well-known line out in the Hawaiian Islands. We tried to find out who the real owner of that company were.

We went to your record and we found they were Alexander and Baldwin, Inc. That is all it says, Alexander and Baldwin, which has 2,703,000 voting shares of stock in Matson. That really doesn't tell the staff anything about Matson.

We looked for Alexander and Baldwin in the FMC files and we could find no record to indicate who owned Alexander and Baldwin. MS. BENTLEY, For our purpose, very frankly, we have not felt it necessary to have any further information in that, to apply the Shipping Act of 1916.

Mr. TURNER. Would you be concerned, Madam Chairman, if Matson was owned or controlled or at least in part owned by a foreign national?

MS. BENTLEY. Yes, we would. It couldn't be.

Mr. TURNER. Can you tell me now that Alexander and Baldwin wouldn't have substantial ownership by a foreign national?

Ms. BENTLEY. I couldn't tell you offhand, and I am just saying this from my own personal knowledge, that if we felt at all that Alexander and Baldwin had any major foreign holdings we would certainly go to the Securities and Exchange Commission and check on that.

Mr. TURNER. But if you didn't make a special investigation, there is no way you could survey all of your 47 companies to find whether or not in fact foreign nationals had some ownership in the parent? MS. BENTLEY. In our agency, no. Very frankly, we would need double our staff to do that.

Mr. TURNER. Do you make an audit, with respect to all of the corporate information that you have, every year of all of the 47 companies?

Ms. BENTLEY. No. We only do it on the domestic carriers. The Maritime Administration does it on the other carriers.

Senator METCALF. How do you know? What information in your files indicates to you that the company that Mr. Turner is talking about is a foreign or domestic carrier?

Ms. BENTLEY. First of all, only an American-owned company can service a domestic carrier.

Senator METCALF. How do you know they are American?

Ms. BENTLEY. It is a U.S. corporation filed with the Treasury Department.

Senator METCALF. It might be completely controlled by a foreign


MS. BENTLEY. It has to be more than 51 percent.

Senator METCALF. You may know a good deal about it, but there isn't anything to indicate that that company isn't completely controlled by a foreign national.

Mr. TURNER. I just want to get back on this audit because I think your best way is to audit, to find these things out by auditing. Do you have full-time auditors auditing these domestic water carriers?

You have full-time auditors auditing them and going behind the 100 percent owners to the parents and obtaining information as to ownership and control of those parent companies?

Ms. BENTLEY. We have full-time audits when they come in for rate increases.

Mr. TURNER. How many?

MS. BENTLEY. Full-time audits when they come in for rate increases.

Mr. TURNER. I am talking about corporate information.

Ms. BENTLEY. A company like Matsun can sail into domestic operations only under jurisdiction of the permission of the Treasury Department and only under the laws which come under the Treasury Department jurisdiction.

Mr. TURNER. So the Treasury Department would have the information the chairman was referring to?

Ms. BENTLEY. It should have; yes.

Senator METCALF. Your colleagues were going to make a response. We have covered the material.

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