The government of Jamaica yesterday filed a series of civil lawsuits charging a group of Washington businessmen conspired to defraud the Jamaicans of $3.7 million by overcharging on grain shipments.
The lawsuits charge the Americans paid nearly $250,000 in bribes to Jamaican officials and collected nearly $300,000 in "secret commissions" from grain exporters.
The three lawsuits, seeking $10 million in actual and punitive damages, were filed in U.S. District Court here after a year-long investigation by Jamaican authorities of that country's dealings with American grain shippers. j
Principal defendants in the cases are Harry J. Smith Jr., a Washington shipping broker who is president of St. John International Inc., and Herbert J. Waters, president of Tadco Enterprises Inc., a District of Columbia export consulting firm.
Also sued were Huno K. Pederson, president of Transatlantic Shipping Agency Inc. of Washington, Harold S. Grehan Jr., an executive of Central Gulf Lines of New Orleans, and Archer Daniels Midland Corps., an Illinois-based grain company.
The Jamaicans claim they lost millions of dollars through a scheme that involved secret Swiss bank accounts, shadowy Liberian corporations, under-the-table payments and international bribes.
The individuals named in the suit could not be reached for comment yesterday.
Aided by U.S. government officials and private American investigators, the Jamaican government began probing the island nation's grain import business after a series of stories in The Washington Post in early 1979. The stories raised questions about the business activities of Smith, who was hired to arrange ships to carry Jamaica's imports.
The news stories were based on documents sent to The Post and government officials by anonymous informants. After the stories appeared, the FBI revealed the documents came from two persons allegedly trying to extort $2 million from Smith.
Federal extortion charges were filed against Martin Henry Donohoe, a former employe of Smith's firm, and Charles Breen Dwyer, a former college roommate of Donohue.
Dwyer pleaded guilty and received a suspended sentence. Donohoe fled the country and has never been arrested.
Also still at large is Dexter Rose, the former head of Jamaica Nutrition Holding Ltd., the government-owned corporation that handled that country's food imports. Eluding Jamaican police assigned to keep him in the country, Rose slipped out of Jamaica after first reports of the scandal were published.
According to the lawsuits, Rose between 1975 and 1977 received almost $240,000 in bribes from Agrobulk Shipping Corp., a Liberian company. Bribes were also paid, the lawsuits charge, to Sedley K. Pyne, who headed the Washington office of Jamaica Nutritional Holdings. The two received payoffs directly and through the Swiss accounts of Liberian corporations they formed to shelter their dealings, the suits claim.
The Jamaican government formed the state importing company in 1973 on the advice of Waters, a former aid to the late senator Hubert Humphrey (D-Minn.) and onetime official of the Agency for International Development.
The lawsuits charge that Waters not only collected consulting fees from the Jamaican government, but also got $138,241 in "secret commissions" from Archer Daniels Midland for grain sold to Jamaica. The Jamaicans say they did not know Waters was collecting commissions on the grain sales and charge doing so was a breach of his legal duty as an agent of the Jamaican government.
A spokesman for Archer-Daniels Midland yesterday denied the firm paid any "secret commissions" and said all payments were properly recorded on the company's books.
Waters, according to the suit, suggested in 1974 that Jamaica hire Smith's company, St. John Internationaal, to arrange grain shipments. Waters failed to disclose that he was receiving $5,000 a year retainer from St. John, the suit charges.
Smith, whose job was to hire ships, chartered vessels through Transatlantic Shipping Agency, which in turn contracted with Agrobulk Shipping Corp., which contracted for the boats. "Smith failed to disclose that he, Pederson of Transatlantic and Grehan were the owners of Agrobulk," the lawsuit charges. "Smith failed to disclose that the rates in the [shipping] contract were excessive."
The lawsuits allege that Agrobulk made profits totaling $3.7 million on the Jamaican business. The suit seeks to recover the entire amount, plus $5 million in punitive damages.
Agrobulk added as much as 40 percent to the bills for shipping Jamaican grain, for doing nothing but passing the business to another firm, Jamaican authorities said. They said Smith's contract paid him a small commission for arranging shipping at "the lowest possible costs" and was not supposed to include any other payments to him.
Smith, through a company he controlled called Agrocom International Ltd., also allegedly collected commissions totaling $159,000 on grain sold to Jamaica by Continental Grain Co. of New York. Those payments were also hidden from the Jamaican government, the lawsuits allege.
The lawsuits culminate an investigation ordered by Jamaican Prime Minister Michael Manley, said Alfred Rattray, Jamaica's ambassador to Washington. He said the Jamaicans opened up their import records to probers headed by Troy Register, a former U.S. Internal Revenue Service investigator.