Commerce Secretary Juanita M. Kreps has told a House subcommittee that she has rejected its recommendation to split off the promotional and marketing activities of the Maritime Administration (MarAd) from its subsidy program.
But in the same letter to subcommittee Chairman Rep. Benjamin S. Rosenthal (D-N.Y.), Kreps revealed that a number of employes of MarAd had certain trade organization "relationships" that she has ordered curtailed.
The disclosures apparently grew out of a still uncompleted investigation by the General Accounting Office of the relationship between the Maritime Administration and several trade groups.
The issue was first raised before Rosenthal's House Government Operations subcommittee last July, where it was revealed that the National Maritime Council, a private organization run on a day-to-day basis by the Maritime Administration, had carried on a questionable lobbying campaign on behalf of controbersial "cargo preference" legislation.
The Maritime Administration is the arm of the government that subsidizes the maritime industry.
Shortly after the congressional hearings, Kreps ordered an end to the relationship between MarAd and the National Maritime Council. But The Washington Post has learned that a continuing GAO investigation has found widespread cooperation between MarAd personnel and other shipping organizations.
Capt. Thomas J. Patterson, West Coast MarAd director, confirmed in a telephone interview from San Francisco that four GAO investigators had questioned him about his links with three organizations: the Naval Reserve Volunteer Training Unit, the Navy League and the Propeller Club of the United States.
Patterson acknowledged that he served as director of one group and was a leading member of the others. He also confirmed that he cosponsored many promotional events with those groups, which were created to promote naval activities and upgrade the caliber of the Merchant Marine and Naval Reserve.
He said government employes were used to prepare mailings for meetings.
Several congressmen have called upon Kreps to sever all promotional functions of MarAd and MarAd personnel from other agency functions, particularly the subsidy program.
Rosenthal's subcommittee report pointed out, for example, that from 1975 to 1978 MarAd granted a total of $1.2 billion in construction differential subsidies to companies which are, or were, members of the National Maritime Council. The subsidies are designed to pay the difference between the cost of operating ships under U.S. flag and foreign flags, and building ships here rather than abroad. They are intended to make U.S. shipping interests more competitive around the world.
The subcommittee said that for MarAd to subsidize companies while at the same time using MarAd employes and MarAd funds to support grassroots lobbying efforts by the industry and other promotional and trade group activities is "running afoul of federal conflict-of-interest requirements." The subcommittee then recommended that all such ties be severed.
Subcommittee staffers pointed out that, while most federal agencies went out of their way to avoid contact with the industries they regualted, the Maritime Administration seemed to be going in the opposite direction.
Kreps said in her letter that she had learned of the ties between MarAd employes and several clubs, and ordered that, while individual memberships would be allowed in these organizations, no MarAd employes could serve as officers, perform club support services or attend club functions, "except on personal time and with personal resources."
At the same time, Kreps added, "I have concluded that it would be artificial to further separate the 'promotional functions' of MarAd from its 'subsidy functions' and that a more formal division would not significantly advance important policy objectives."