Foreign Relations of the United States, 1952–1954, The Near and Middle East, Volume IX, Part 1

886A.2553/8–2454

No. 367
Memorandum of Conversation, by the Deputy Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Jernegan)

secret

[Washington,] September 24, 1954.

Subject:

• Utilization of Papers Showing Bribery in Connection with Onassis Contract

Participants:

• Mr. Paul Gerrity of Maheu Associates
• SCA-Mr. McLeod
• NEA—John Jernegan

Mr. Gerrity had with him a file composed of a lengthy statement purporting to be signed by Mr. Cotopadis and to detail the negotiations by which Onassis obtained his agreement with the Saudi Government.¹ It appeared to specify the exact terms agreed upon between Onassis and Ali Reza, including the payment Ali Reza was to receive. Photostats of various documents were attached. Mr. Gerrity said this statement by Cotopadis and the photostats of the documents had been purchased by Mr. Stavros Niarchos from Cotopadis. In addition to the copy which Mr. Gerrity had with him, a second copy was in the hands of CIA in Washington and a third in possession of Mr. Maheu who was in Beirut. Mr. Gerrity’s set, however, was the most complete.

Mr. Gerrity said that his firm considered that these papers should be gotten into the hands of King Saud and that this should be done quickly before there was any publicity about bribery in connection with the Onassis agreement, since such publicity would embarrass the King amd make future relations more difficult. He thought the best channel would be Mr. Karl Twitchell, who was in Jidda and who could give the papers to the new Saudi Arabian Finance Minister and get him in turn to lay them before the King. This would avoid any involvement of the US Government or Aramco. He asked Mr. Jernegan’s opinion, saying that CIA had already been consulted but had as yet given no answer.

Mr. Jernegan observed that he agreed it would be undesirable for either the US Government or Aramco to be in any way involved and he thought Mr. Twitchell might be the proper man to carry out the operation, however he could not give an opinion offhand. He thought it necessary to consult CIA and considered that organization should continue to be the channel for handling this matter. Mr. Gerrity agreed and observed that his firm had been working with CIA all along.

Mr. Gerrity also said his firm and Mr. Niarchos thought it essential that everything possible be done to save King Saud’s face if he were brought to abrogate the Onassis Agreement. With this in mind, they thought it would be very helpful if public announcement of the abrogation were made in a joint factual statement by the Saudi, British and American Governments. This statement would merely include the fact of the abrogation and explain in general terms that it had been decided upon because the agreement had been found injurious to the interest of Saudi Arabia and of the other two countries concerned.

Mr. Gerrity said the British Government favored this procedure and he was sure the King would likewise endorse it. As another means of helping the King, Mr. Gerrity said both the Aramco parent companies and Niarchos would be willing to place some of their tankers under the Saudi flag, thus giving the King one of the advantages he had hoped to gain from the Onassis Agreement, namely a Saudi Arabian merchant marine. Niarchos would also be willing to assume the obligation of establishing a maritime academy in Saudi Arabia.

Mr. Jernegan said that he could see no objection to the suggested joint statement provided it was desired by the King.

Mr. Jernegan promised to get Mr. Gerrity a prompt answer on the question of using Mr. Twitchell as a channel for placing the Cotopadis papers before the King.

Mr. McLeod expressed the desire to be left out of future operations in connection with this question.

Mr. Jernegan later checked with CIA and it was agreed that Mr. Twitchell seemed the best available channel for getting the Cotopadis documents to the King. On telephoning Mr. Gerrity the following day, Mr. Jernegan found that he had already learned of this decision. Mr. Gerrity said that his copy had been turned over to CIA for transmission to Mr. Twitchell, who had an appointment to see the Saudi Finance Minister on Wednesday, September 29.

1. No documentation has been found in Department of State files. There is, however, a document from The Hague, dated July 30, not printed, on information about the Onassis-Saudi Arabian Agreement, which was received from an associate of Copodolis by Aramco officials. (886A.2553/7–3054)