Attorney General Griffin B. Bell has informed Sen. Daniel K. Inouye (D-Hawaii) that the Justice Department will not suspend its "ongoing prosective efforts" against several shipping concerns under investigation for making illegal rebate payments.
On Friday, Bell sent Inouye a letter from the senator in early December, asking the Justice Department if it would consider holding of prosecution of the firms until Congress has had time to enact legislation to give domestic shippers amnesty from such prosecution.
It is our considered judgment that any such suspension of ongoing prosecutive efforts on our part would be without precedent and entirely inappropriate," Bell wrote.
Several member of Congress have argued that the prosecution could unduly harm the operations of American flag shippers, because foreign firms are suspected to using the same rebate practices, but are not under the jurisdiction of U.S. courts.
Although Congress made rebating a civil, rather than criminal, offense in 1972 after a request too do so by the Justice Department, U.S. attorneys in Celveland and Newark are pursuing criminal conspiracy indictments against several shipping concerns.
Although the Federal Maritime Commission has levied nearly $5 million in fines for such rebate payments against firms that have admitted the practice. It was learned that federal investigators have found a pattern of nearly $100 million of questionable payments.
The payments center on shipping rates set by the FMC and international shipping conferences. The FMC regulates rates in an effort to keep the shipping field competitive because of fears that without regulation only a few large carriers would survive.
For years it has been common practice for carriers to solicit new business by offering "rebates" that take many forms, investigators say.
In some cases, customers would be given free warehousing or free services at the port. In other cases, cash payments or bearer bonds were given to company executives, sources said.