B-137933, B-141322, MAY 31, 1961

B-137933,B-141322: May 31, 1961

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RETIRED: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 7. WHEN YOU WERE PRESIDENT OF OERLIKON TOOL AND ARMS CORPORATION OF AMERICA. THIS MATTER WAS THE SUBJECT OF OUR DECISION OF JULY 1. THESE PROVISIONS PROHIBIT THE PAYMENT OF RETIRED PAY TO A RETIRED OFFICER OF THE REGULAR AIR FORCE FOR A PERIOD OF TWO YEARS AFTER RETIREMENT WHO FOR HIMSELF OR FOR OTHERS IS ENGAGED IN THE SELLING OF OR CONTRACTING FOR THE SALE OF OR NEGOTIATING FOR THE SALE OF TO ANY AGENCY OF THE DEPARTMENT OF DEFENSE ANY SUPPLIES OR WAR MATERIALS. ALSO WE HAVE RECEIVED LETTERS DATED OCTOBER 24 AND 28. THAT DURING THE PERIOD HERE INVOLVED HE WAS ON ACTIVE DUTY AS DEPUTY CHIEF OF STAFF. HAD FULL KNOWLEDGE OF THE OERLIKON ROCKET PROCUREMENT AND THAT TO THE BEST OF HIS KNOWLEDGE THE ROCKETS WHICH WERE PURCHASED BY ARMY ORDNANCE FOR AIR FORCE USE IN KOREA WERE MANUFACTURED IN SWITZERLAND.

B-137933, B-141322, MAY 31, 1961

TO LIEUTENANT GENERAL K. B. WOLFE, USAF, RETIRED:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 7, 1960, FORWARDED WITH A LETTER OF NOVEMBER 15, 1960, FROM YOUR ATTORNEY, MR. MORTON WILNER, CONCERNING YOUR ENTITLEMENT TO RETIRED PAY AS A LIEUTENANT GENERAL, USAF, DURING THE PERIOD AUGUST 22, 1951, TO JUNE 30, 1953, WHEN YOU WERE PRESIDENT OF OERLIKON TOOL AND ARMS CORPORATION OF AMERICA.

THIS MATTER WAS THE SUBJECT OF OUR DECISION OF JULY 1, 1960, B 141322, TO THE SECRETARY OF THE AIR FORCE HOLDING THAT ON THE BASIS OF THE EVIDENCE BEFORE US, YOUR ACTIVITIES AS PRESIDENT OF OERLIKON TOOL AND ARMS CORPORATION OF AMERICA BROUGHT YOU WITHIN THE PROVISIONS OF SECTION 1215 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1951, 64 STAT. 768; SECTION 1309 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1952, 65 STAT. 757, AND SECTION 1409 OF THE SUPPLEMENTAL APPROPRIATION ACT, 1953, 66 STAT. 661, IN EFFECT DURING THE FISCAL YEARS 1951, 1952, AND 1953. THESE PROVISIONS PROHIBIT THE PAYMENT OF RETIRED PAY TO A RETIRED OFFICER OF THE REGULAR AIR FORCE FOR A PERIOD OF TWO YEARS AFTER RETIREMENT WHO FOR HIMSELF OR FOR OTHERS IS ENGAGED IN THE SELLING OF OR CONTRACTING FOR THE SALE OF OR NEGOTIATING FOR THE SALE OF TO ANY AGENCY OF THE DEPARTMENT OF DEFENSE ANY SUPPLIES OR WAR MATERIALS. AS AUTHORITY, FOR THE APPLICATION OF THE STATUTORY PROVISIONS OF YOUR CASE WE CITED 38 COMP. GEN. 470; 39 COMP. GEN. 366; SEASTROM V. UNITED STATES, CT.CL.NO. 220-57, DECIDED NOVEMBER 4, 1959.

IN ADDITION TO YOUR LETTER, MR. WILNER FORWARDED LETTER DATED OCTOBER 14, 1960, FROM GENERAL ORVAL R. COOK, USAF, RETIRED; LETTER DATED OCTOBER 21, 1960, FROM THE HONORABLE ROSWELL L. GILPATRIC, AND LETTER DATED NOVEMBER 15, 1960, FROM MR. RALPH A. GILCHRIST. ALL OF THESE LETTERS PERTAIN TO YOUR ACTIVITIES WITH THE OERLIKON ROCKET PROCUREMENT PROGRAM. ALSO WE HAVE RECEIVED LETTERS DATED OCTOBER 24 AND 28, 1960, FROM HONORABLE EUGENE M. ZUCKERT, AND HONORABLE JOHN A. MCCONE, RESPECTIVELY, REGARDING THIS MATTER.

IN HIS LETTER OF OCTOBER 14, 1960, GENERAL COOK STATES, AMONG OTHER THINGS, THAT DURING THE PERIOD HERE INVOLVED HE WAS ON ACTIVE DUTY AS DEPUTY CHIEF OF STAFF, MATERIEL, U.S. AIR FORCE, AND HAD FULL KNOWLEDGE OF THE OERLIKON ROCKET PROCUREMENT AND THAT TO THE BEST OF HIS KNOWLEDGE THE ROCKETS WHICH WERE PURCHASED BY ARMY ORDNANCE FOR AIR FORCE USE IN KOREA WERE MANUFACTURED IN SWITZERLAND. GENERAL COOK EXPRESSES THE VIEW THAT PROGRESS REPORTS--- FURNISHED BY YOU PLANT FACILITIES AT ASHERVILLE, NORTH CAROLINA, DID NOT CONSTITUTE "SELLING.' HE ALSO STATES THAT DURING THE PERIOD 1951 TO 1953 HE WAS IN A KEY POSITION TO HAVE SOME INFLUENCE UPON THE CHOICE OF AIR FORCE WEAPONS AND HE DOES NOT RECALL THAT YOU EVER ATTEMPTED TO PERSUADE HIM THAT THE AIR FORCE SHOULD BUY THE PRODUCTS OF OERLIKON OR ITS AMERICAN AFFILIATE.

MR. GILPATRIC STATES IN HIS LETTER OF OCTOBER 21, 1960, THAT DURING PART OF THE PERIOD HERE INVOLVED HE SERVED AS ASSISTANT SECRETARY AND UNDERSECRETARY OF THE AIR FORCE AND THAT HE WAS FAMILIAR WITH THE CIRCUMSTANCES UNDER WHICH YOU LEFT THE AIR FORCE AND BECAME ASSOCIATED WITH OERLIKON. HE EXPRESSES THE OPINION THE AIR FORCE WAS "SOLD" ON THE OERLIKON ROCKET BEFORE YOU LEFT THE AIR FORCE AND HE CONSIDERED YOUR POST- RETIREMENT ACTIVITIES IN CONNECTION WITH THE PROCUREMENT OF SUCH ROCKETS TO BE IN THE NATURE OF "EXPEDITING" RATHER THAN "SELLING.'

MR. MCCONE IN HIS LETTER OF OCTOBER 28, 1960, STATES THAT HE WAS UNDERSECRETARY OF THE AIR FORCE UNTIL OCTOBER 15, 1951, AND THAT HEWAS FAMILIAR WITH YOUR ENTRY INTO ARRANGEMENTS WITH THE OERLIKON COMPANY OF ZURICH, SWITZERLAND, FOLLOWING YOUR RETIREMENT AND THAT HE DID NOT THINK SUCH ARRANGEMENTS WERE IMPROPER. HE SAYS THAT IN APRIL 1951, HE VISITED THE OERLIKON PLANT IN ZURICH ACCOMPANIED BY YOU AND OTHER AIR FORCE OFFICERS, AND THAT UPON RETURN HE RECOMMENDED ACQUIRING THE OERLIKON ROCKET FOR SHIPMENT TO KOREA AND THAT THIS APPARENTLY WAS DONE. ALSO HE STATES THAT HE DID NOT HAVE FIRST HAND KNOWLEDGE OF YOUR ACTIVITIES, BUT HE ASSUMED THAT IMMEDIATELY FOLLOWING YOUR RETIREMENT YOU WERE ACTIVELY ENGAGED IN WORKING OUT DELIVERY OF ROCKETS PURCHASED FROM OERLIKON IN ZURICH FOR DELIVERY TO KOREA OR FOR TESTING IN THIS COUNTRY. MR. MCCONE ADVISES THAT THERE WAS AN INTERSERVICE CONFLICT ON THE OERLIKON VENTURE AND THAT THIS MAY POSSIBLY BE THE CAUSE OF SOME COMPLAINT AGAINST YOU.

IN HIS LETTER OF OCTOBER 24, 1960, MR. ZUCKERT STATES THAT IN 1951 HE WAS ASSISTANT SECRETARY OF THE AIR FORCE AND WAS COGNIZANT OF THE OERLIKON PROCUREMENT AND THE CIRCUMSTANCES WHICH BROUGHT IT ABOUT. HE SAYS THAT THE FACT THAT YOU WERE EMPLOYED BY OERLIKON HAD NOTHING TO DO WITH THE AIR FORCE DETERMINATION OF THE NEED FOR THE 8 CM ROCKET ON THE BATTLEFIELDS OF KOREA.

IN LETTER OF NOVEMBER 15, 1960, MR. GILCHRIST STATES THAT HIS FIRM WAS COUNSEL FOR THE OERLIKON AMERICAN CORPORATION DURING YOUR TERM AS PRESIDENT AND HE EXPRESSES THE VIEW THAT YOUR ACTIVITIES IN THAT CONNECTION WERE ENTIRELY PROPER.

YOUR LETTER OF NOVEMBER 7, 1960, REVIEWS THE BACKGROUND OF YOUR EMPLOYMENT BY THE OERLIKON FIRM, INDICATING THAT YOU WERE INFLUENCED TO ACCEPT SUCH EMPLOYMENT BY A DESIRE TO INSURE AN ADEQUATE SUPPLY OF WEAPONS NEEDED BY THE AIR FORCE FOR USE IN THE KOREAN CONFLICT. YOU SAY THAT AS CHIEF EXECUTIVE OF THE AMERICAN CORPORATION YOUR TIME WAS SPENT MAINLY IN ARRANGING THE CONSTRUCTION OF A NEW PLANT NEAR ASHEVILLE, NORTH CAROLINA, WHICH FACILITY HAD THE SPONSORSHIP OF THE AIR FORCE, BUT WAS OPPOSED BY ARMY ORDNANCE OFFICIALS. ALSO, YOU SAY THAT YOU HAD NO INFLUENCE WITH THE OFFICERS AND OFFICIALS OF THE ARMY ORDNANCE DEPARTMENT; THAT YOUR VISIT TO THE CHIEF OF ORDNANCE ON AUGUST 22, 1951, MENTIONED IN OUR DECISION OF JULY 1, 1960, WAS NOT FOR THE PURPOSE OF SELLING BUT TO ADVISE THE DEPARTMENT OF THE PLANS FOR ESTABLISHMENT OF THE AMERICAN FACILITY IN VIEW OF THE AIR FORCE DEMANDS UPON ORDNANCE FOR THE PRODUCTION OF THE 8 CM ROCKET IN THE UNITED STATES; AND THAT YOUR OTHER CONTACTS WITH DEPARTMENTAL OFFICIALS WERE FOR THE PURPOSE OF KEEPING THEM ADVISED OF THE PROGRESS OF THE PLANT CONSTRUCTION AND PROTECTING OERLIKON PATENTS. YOU URGE THAT YOU WOULD HAVE BEEN REMISS IF YOU HAD NOT REPORTED ON THE PROGRESS OF THE FACILITY AND ITS AVAILABILITY TO THE AIR FORCE (AND TO ARMY ORDNANCE, THE PROCURING AGENT FOR THE AIR FORCE). ON THE BASIS THAT YOUR ACTIVITIES WERE PROMPTED BY PATRIOTIC MOTIVES; THAT YOU DID NOT TRY TO USE ANY INFLUENCE FOR PERSONAL GAIN; AND THAT YOU HAD CLEARED YOUR OERLIKON EMPLOYMENT WITH THE AIR FORCE AND DID NOT KNOWINGLY VIOLATE ANY CODE OF ETHICS OR LAW YOU REQUEST THAT WE RECONSIDER OUR DECISION OF JULY 1, 1960.

MR. WILNER STATES IN HIS LETTER THAT IN JULY 1951 YOU CAME TO HIM FOR PROFESSIONAL ADVICE CONCERNING YOUR EMPLOYMENT WITH OERLIKON AND HE SUBMITTED A COPY OF HIS LETTER OF JULY 10, 1951, ADVISING YOU, IN SUBSTANCE, THAT IN HIS OPINION YOUR EMPLOYMENT WOULD NOT BE INVIOLATION OF PERTINENT STATUTES AND REGULATIONS. ALSO HE REFERS TO AN ADVISORY OPINION FROM THE UNDERSECRETARY OF THE AIR FORCE DATED JULY 14, 1951, ADVISING YOU, IN SUBSTANCE, THAT NEITHER AIR FORCE REGULATION 30-30 NOR APPLICABLE STATUTES WOULD PREVENT YOUR ACTING AS A CONSULTANT TO THE PARENT OERLIKON CONCERN, NOR WOULD THEY PREVENT YOUR SUBSEQUENT EMPLOYMENT AS AN EXECUTIVE OF THE COMPANY, EVEN THOUGH SUCH EMPLOYMENT MIGHT REQUIRE YOU TO MAKE DECISIONS AND DETERMINATIONS ON BEHALF OF THE COMPANY WHICH WOULD EFFECT ITS CONTRACTUAL AND OTHER RELATIONSHIPS AND DEALINGS WITH THE AIR FORCE AND TO CONFER WITH OFFICERS AND OFFICIALS OF THE AIR FORCE ON VARIOUS MATTERS. MR. WILNER SAYS THAT THE AIR FORCE AT THAT TIME CONSTRUED THE TERM "SELLING" OR "SALE" IN ITS DIRECT SENSE, AND HE ASKS THAT WE ACCORD GREAT WEIGHT TO THE ADMINISTRATIVE DETERMINATION IN THE MATTER. CONTENDS THAT THE LANGUAGE OF AND HEARINGS ON H.R.10959, 86TH CONGRESS, RELATING TO THE EMPLOYMENT OF RETIRED COMMISSIONED OFFICERS BY CONTRACTORS OF THE DEPARTMENT OF DEFENSE AND THE ARMED FORCES AND FOR OTHER PURPOSES, SHOWS THAT IN THAT CONNECTION, CONGRESS HAS NOW RECOGNIZED THAT THE TERM "SELLING" AS WRITTEN IN THE EARLIER STATUTES WAS TO BE CONSTRUED IN ITS NARROW AND DIRECT SENSE. MR. WILNER ALSO EXPRESSES THE VIEW THAT THE AUTHORITIES CITED IN OUR DECISION OF JULY 1, 1960, TO THE SECRETARY OF THE AIR FORCE, HAVE NO APPLICATION TO THE FACTS AND CIRCUMSTANCES INVOLVED IN YOUR CASE.

WE DO NOT QUESTION YOUR PATRIOTIC MOTIVES IN ACCEPTING THE INVOLVED POST- RETIREMENT EMPLOYMENT AND OUR DECISION OF JULY 1, 1960, WAS NOT INTENDED TO IMPLY THAT YOU KNOWINGLY AND WILLFULLY VIOLATED ANY LAW OR CODE OF ETHICS. HOWEVER, THE STATUTES INVOLVED ARE A PART OF THE GROUP OF SO- CALLED CONFLICT-OF-INTEREST STATUTES AND, PARAPHRASING THE SUPREME COURT OF THE UNITED STATES IN THE CASE OF UNITED STATES V. MISSISSIPPI VALLEY GENERATING CO., DECIDED JANUARY 9, 1961, CONCERNING A VIOLATION OF 18 U.S.C. 434; SUCH STATUTES DO NOT SPECIFY AS ELEMENTS TO THEIR VIOLATION THAT THE VIOLATION BE KNOWING AND WILLFUL BUT ARE MORE CONCERNED WITH WHAT MIGHT HAVE HAPPENED IN A GIVEN SITUATION THAN WITH WHAT ACTUALLY HAPPENED.

WHILE, AS MR. WILNER SUGGESTS, A LONG-STANDING AND UNIFORM ADMINISTRATIVE INTERPRETATION OF A STATUTE GENERALLY IS GIVEN MUCH WEIGHT BY THE COURTS IN THE CONSTRUCTION OF AMBIGUOUS STATUTORY PROVISIONS, WE DO NOT BELIEVE THIS RULE OF STATUTORY CONSTRUCTION IS FOR APPLICATION IN THE CIRCUMSTANCES OF THIS CASE. THAT RULE WAS NOT MENTIONED BY THE COURT IN THE SEASTROM CASE, SUPRA, AND THE SUPREME COURT CONSISTENTLY HAS HELD THAT NO GOVERNMENT AGENT CAN PROPERLY CLAIM EXEMPTION FROM A CONFLICT-OF- INTEREST STATUTE BECAUSE HIS SUPERIORS DID NOT DISCERN THE CONFLICT. EWERT V. BLUJACKET, 259 U.S. 129; PROSSER V. FINN, 208 U.S. 67; UNITED STATES V. MISSISSIPPI VALLEY GENERATING CO., SUPRA. MOREOVER, SO FAR AS WE ARE ABLE TO DETERMINE THE STATUTORY PROVISIONS HERE INVOLVED HAVE NOT, AT LEAST UNTIL QUITE RECENTLY, BEEN THE SUBJECT OF ANY APPRECIABLE NUMBER OF ADMINISTRATIVE INTERPRETATIONS. CONSEQUENTLY, WE DO NOT FEEL THAT WE WOULD BE JUSTIFIED IN APPLYING SUCH A RULE IN YOUR CASE, EVEN IF IT WERE OTHERWISE PROPERLY FOR APPLICATION.

WHILE, AS POINTED OUT IN OUR DECISION OF JULY 1, 1960, THE PRECISE MEANING OF THE SALES TERMS USED IN THE STATUTES IS NOT CLEAR, WE DO NOT THINK WE CAN APPLY SUCH TERMS SO AS TO DEFEAT WHAT WE BELIEVE TO BE THE PURPOSE OF CONGRESS BY EXEMPTING CERTAIN ACTIVITIES FROM THE PROSCRIPTION OF THE STATUTES UNLESS IT IS QUITE CLEAR THAT THOSE ACTIVITIES ARE IN NO WAY RELATED TO THE SELLING PROCESS.

WE HAVE CAREFULLY CONSIDERED THE ADDITIONAL INFORMATION CONCERNING YOUR RELATIONSHIP WITH THE SWISS OERLIKON CONCERN AND YOUR ACTIVITIES AS PRESIDENT OF THE OERLIKON TOOL AND ARMS CORPORATION OF AMERICA DURING THE PERIOD INVOLVED. SUCH INFORMATION AND THE OTHER FACTS OF RECORD INDICATE AN EFFORT AND CONTINUING ACTIVITY ON YOUR PART LOOKING TO THE PROCUREMENT BY OR FOR THE AIR FORCE OF A SPECIFIC TYPE OF OERLIKON WEAPON AND THE ESTABLISHMENT OF A READILY AVAILABLE SOURCE OF SUPPLY OF SUCH WEAPON. ARE OF THE OPINION THAT YOUR EFFORT AND ACTIVITY WERE RELATED TO THE SELLING PROCESS AND, AS SUCH, WITHIN THE PROSCRIPTION OF THE STATUTES.

WE HAVE NO REASON TO DOUBT THAT THE AIR FORCE HAD A PRESSING NEED FOR A WEAPON POSSESSING THE CAPABILITIES OF THE OERLIKON WEAPON, AND IT IS CLEAR THAT YOU ACCEPTED THE EMPLOYMENT ONLY AFTER THE RECEIPT OF ADVICE FROM ADMINISTRATIVE AND PRIVATE LEGAL SOURCES THAT SUCH EMPLOYMENT WOULD NOT CONTRAVENE ANY FEDERAL STATUTE OR REGULATION. FOR THE REASONS EXPLAINED ABOVE, HOWEVER, SUCH CONSIDERATIONS AFFORD NO BASIS UPON WHICH WE MAY CONCLUDE THAT YOUR ACTIVITIES WERE NOT RELATED TO THE SELLING PROCESS.

ACCORDINGLY, WE MUST ADHERE TO THE CONCLUSION REACHED IN OUR DECISION OF JULY 1, 1960.

THE SECRETARY OF THE AIR FORCE IS BEING FURNISHED A COPY OF OUR LETTER TO YOU SO THAT APPROPRIATE ACTION MAY BE TAKEN TO OBTAIN REPAYMENT OF THE RETIRED PAY RECEIVED BY YOU DURING THE PERIOD AUGUST 22, 1951 TO JUNE 30, 1953.