Harry J. Smith Jr., a Washington shipping agent hired by the government of Jamaica to help lower the cost of food imports, channeled Jamaica's business to two foreign corporations that added apparently unnecessary costs to Jamaicans' food bills.
Smith, who also has exclusive contracts to arrange shipping for several other developing countries, has close connections with both corporations that profited from the Jamaican business and has had a financial interest in one of them.
A Washington Post investigation, based on documents detailing the transactions, shows that hundreds of thousands of dollars were paid to the two firms in 1975 and 1976.
Part of that money also was used to pay alleged kickbacks to two Jamaican officials in charge of the import programs.Both were fired last month and one has disappeared.
The payments to the two corporations apparently were legal under U.S. law, but they added to the import costs of the Jamaican government, which is nearly bankrupt.
Smith could not be reached for comment.
The two corporations are:
Agrocom International Ltd., which, as The Washington Post reported last week, received more than $150,000 in unauthorized commissions from Continental Grain Co. for grain sales to Jamaica. Jamaican officials say Continental executives told them that Smith's firm, St. John International, directed the payments to Agrocom's Swiss bank account. Continental says it was not aware the commissions were unauthorized.
Agrobulk Shipping Corp., which purportedly made more than $900,000 profit, according to the documents, shipping grain to Jamaica, although it neither owned nor operated any ships. As shipping agent for the Jamaicans, St. John International hired Agrobulk. Agrobulk in turn contracted for other companies to ship the grain.
Smith acknowledged in 1976 that he was an "indirect shareholder" of Agrobulk, the documents disclose.
Jamaican officials say they did not know that Agrocom was receiving commissions on grain purchases or that Smith, their shipping agent, had an interest in the shipping company he hired for them.
As a shipping agent, St. John International was supposed to represent the interest of the Jamaicans and get them the best possible deal on shipping. The Jamaicans say they expected their agent to contract directly with ship operators rather than work through a middleman.
"We were buying basic commodities for the poorest people," said one Jamaican official. "We thought we were getting the best possible price by going direct" to ship owners and grain companies.
Documents obtained by The Post show that in the year ended Nov. 30, 1975, Agrobulk had income of $4.2 million and expenses of $3.3 million, making a $933,000 profit.Agrobulk collected $3.5 million in freight fees and paid $2.5 million in freight costs, the documents show.
Jamaica's contracts with St. John International and Agrobulk were negotiated by Dexter Rose, former director of the State Trading Corp., the national importing agency.
Rose, Jamaican officials say, "eluded surveillance" 10 days ago and fled the country shortly after he was removed from office. Also fired was Sedley K. Pyne, director of the Washington Office of Jamaica Nutritional holdings, the state-owned company in charge of grain imports.
Rose and Pyne were removed for allegedly violating Jamaica's currency control laws, which prohibit Jamaicans from maintaining bank accounts outside the country.
Jamaican investigators believe the two used foreign bank accounts and two Liberian corporations to collect kickbacks on the nation's grain and shipping contracts.
On July 8 and 9, 1975, Agrobulk Shipping Corp. wrote two checks payable to Rose on its account at Chase Manhattan Bank, according to documents obtained by The Post. The checks were for an identical amount, $22,152.96.
Agrobulk is incorporated in Liberia and once had an office in Washington.
Huno Pederson, a Washington shipping agent, acknowledged last week that he was associated with Agrobulk at the time it handled Jamaica's grain shipments, but said he had left the company and was bound not to discuss its business.
In addition to the direct payments to Rose, Agrobulk transferred funds to the Swiss bank account of Young and Wilcox, a corporation formed in Liberia by Rose, according to the documents.
One of the transfers was for $10,414.02, the documents show. During December 1976 the commissions paid on eight shipments to Jamaica totaled $10,414.02.
The transfer of funds was arranged for Agrobulk by a Brussels businessman named Etienne L. Lamouline. Lamouline is the Brussels representative of St. John International, Jamaican investigators and shipping industry sources said.
Lamouline in 1977 also served as agent for Agrocom with power to "do all and every business matters" (sic) and "to negotiate, conclude, enter into and undertake contracts," other documents show.
Rose's Young and Wilcox Corp. was incorporated by H. George Schweitzer, a Washington attorney who was associated with Smith in an earlier business venture.
Schweitzer was listed on District of Columbia corporation records in 1975 and 1976 as corporate secretary and one of three members of the board of directors of St. John Maritime Co., a shipping firm that apparently is no longer in business. Smith was president of St. John Maritime, which in the early 1970s handled rice shipments to Korea for Tongsun Park.
Asked about Young and Wilcox, Schweitzer said he incorporated the firm but knew nothing about its operations.
In addition to the Swiss bank account to which documents show Agrobulk transferred funds, Young and Wilcox also had a bank account in New York. In 1975 and 1976, Rose wrote two checks to Pyne on the New York account totaling $10,500. Rose told Jamaican investigators the two checks were a loan to his coworker.
Young and Wilcox Corp. listed an address in Belgium on some of its records, but that address turned out to be a garage.
Jamaica's involvement with St. John International and Agrobulk came as a result of the nationalization of Jamaica's import industry by the socialist government of Premier Michael Manley. Manley had the government take over food imports in an attempt to lower the cost of food and to reduce the island nation's bill for imports.
Jamaica's economy has been in trouble for several years and charges that a top government official took kickbacks brought new criticism of the Manley government last week in Kingston.
Before becoming the exclusive shipping agent for Jamaica, St. John International was the shipping agent for several Third World nations. St. John's list of clients has included South Vietnam, Bangladesh, the Philippines, Ghana, Guinea, Bolivia, Cambodia and Zaire.
A 1975 Washington Post series on international shipping identified St. John International as the shipbroker that represented the most foreign governments.
An alumnus of Georgetown University, where he has lectured in ocean transportation, Smith has a reputation as an aggressive competitor in a cut-throat business. In addition to its main office at 1666 K St. NW, St. John International has offices in New York, Brussels and Kinshasa, Zaire. Smith maintains a townhouse in Georgetown and an apartment in New York City.