CIAIR – Dr. Ralph Cox and USOA vs. CIAIR – Weak Link in the Covert Action Chain
When Dr. Ralph Cox left the military after serving as a Navy flyer during World War II he didn’t return to his Pittsburgh dental practice but instead bought some government surplus airplanes and began the United States Overseas Airlines, based in Rio Grand, near Wildwood, New Jersey.
In 1947 there were hundreds of similar, small, independent airlines like Cox’s USOA, mainly servicing remote areas that were considered unprofitable routes for the large scheduled airlines.
By 1962 USOA was one of the largest, most reliable, safe and financially stable supplemental air carrier in the country, operating six DC6s and 12 DC4s, most of which were clear of any debt.
A few years later the planes were grounded and the company bankrupt, mainly because their long-held and properly serviced Military Air Transport (MAT) government contracts were suddenly and mysteriously diverted to a few, newer, smaller and untested airlines, including Southern Air Transport (SAT).
Although Cox suspected political schennigans were somehow involved at the time, it is now well known that SAT was a wholly owned subsidiary of the U.S. Central Intelligence Agency (CIA), and the other airlines who received the diverted contracts had secret intelligence connections.
"The CIA put us out of business," said Cox, who has been running a camp ground at the Jersey Shore, not far from the Cape May County International Airport where the USOA once operated.
When the CIA’s connections to Southern Air Transport were first revealed in 1975 by Victor Marchetti and John Marks in their book The CIA and the Cult of Intelligence, both Cox and Richard Newman, of California Air Charter both separately sued the CIA and the Civil Newman failed to get monetary restitution and Cox’s case was thrown out of court on a technicality, both men wanted to get back into the air and fly again.
At his home Cox sifts through reams of files he claims supports his case while he explains how, even before the CIA buried them, the CAB tried to suppress the small independent airlines to the benefit of the major carriers. This was done not only to the detriment of the industry, but also hurt the pockets of the general public and even endangered the nation’s security, as well as eliminating their jobs and livelihoods.
"We were a good, solid airline, and not a fly-by-night operation," Cox asserts. "We owned all our own equipment and planes and had good, dependable employees." Newspapers and magazine clips of the period show that USOA developed one of the first flight simulators to train pilots, successfully serviced remote points that were unprofitable to the major carriers – like Alaska and Okinawa, pioneered group charters and was the frits airline to employ native stewardesses, breaking a once stringent segregation barrier.
USOA, along with other small, independent carriers, were branded "Non-Scheduled Airlines" by the Civil Aviation Board (CAB) and nicknamed "non-skeds." They were the little guys in the same business as TWA, United, Eastern and Delta. They’re the ones who provided emergency airlift relief and support to Berlin, Israel, the Congo, Korea and the Defense Early Warning (DEW) outposts in the artic. The industry’s collapse made the evacuation of South Vietnam a major fiasco.
Although the CAB has been disbanded and the industry "deregulated," the non-skeds are still out of action. They not only lost their business, but their wings, and they want to fly again.
The non-skeds’ case against the CIA became a newsworthy issue in the 1980s because of the SAT involvement in the Iran-Contra affair. In fact the whole secret operation came unwound when the Sandinistas shot down a SAT Contra supply plane in Nicaragua. Baggage handler Eugene Hasenfus survived the crash and was captured. In his pocket was the name and phone number of Feliz Rodrigez, the Cuban Bay of Pigs Brigade veteran and personal friend of George W. H. Bush.
This was not the first time a CIA operation was blown by an airman who survived being shot down over enemy territory. In 1958 Allen Pope was shot down and captured while working on Gen. Ed Lansdale’s "Indonesian Operation."
Pope was a Civil Air Transport (CAT) pilot who, once he was released from the Indonesia prison in 1962, went to work for SAT. Alex E. Carson, the attorney for SAT at the time, was also the lawyer for Double-Check Corporation and CARAMAR – the Caribbean Marine Aero Corporation, the CIA front companies that hired the Alabama Air National Guard pilots to fly during the Bay of Pigs, some of whom were killed during the invasion. Secret CIA operations in Indonesia, Cuba and Nicaragua were all blown by the weak link in the covert action chain – the air link.
One of the most significant players in the Iran-Contra deal was Al Schwimmer of the Israel Aircraft Industry, who first proposed the United States swap arms for American hostages in Iran in the first place.
Adolph "Al" Schwimmer, an American born Israeli citizen and close advisor to former Israel President and foreign minister Simon Perez, helped instigate the Iran-Contra affair by suggesting the American hostages in Iran could possibly be exchanged for military hardware. Israel then refused to permit Schwimmer to testify before Congress on the special prosecutor investigating the Iran-Contra scandal.
According to Cox, Schwimmer used to operate out of the Burbank, California airport. "He leased one of my planes to assist the early government of Israel," said Cox, "but eventually they ended up stealing the plane." Since they used the USOA plane to ferry diplomats, arms and other cargo to the fledging country of Israel, U.S. Air Force General Curtis LeMay threatened to shoot it down for violating U.S. neutrality laws.
"When the Israelis learned about LeMay’s threat," relates Cox, "pointing to a Life magazine article and photo, "they appropriated the plane, painted El Air markings over the USOA insignia and used it to begin their national airline." Cox said he was later paid the insured value of the plane, but not for the time it was used by Schwimmer.
Stewart Steven, in his book The Spymasters of Israel, reports that, "….Al Schwimmer, the remarkable American Jew who, in 1947, became one of the founding fathers of the Israel Air Force by purchasing old aircraft in the United States and cannibalizing them to produce serviceable planes for Israel. Since then, Schwimmer had risen to become president and chief executive of Israel Aircraft Industries, which he started from nothing and which now employs 15,000 people."
Steven also details Schwimmer’s role in the 1968 covert operation that led to Israel obtaining the blueprints for the French Mirage jet fighter aircraft, and refers to him as one of the world’s most knowledgeable arms dealers.
According to the President’s Tower Commission Report on the Iran-Contra affair, Schwimmer was initially responsible for suggesting the arms for hostages deal with the Iranians, and for leasing the cargo aircraft that was used to ferry U.S. missiles to Iran.
A private, commercial air cargo plane had to be leased because, as one insider put it, "jaws would drop if a plane with Israel or U.S. markings landed in Iran."
But when it came time to transfer the arms, Schwimmer’s lease for the planes had expired, and retired General Secord was called to acquire new planes, and he resorted to the old CIA standby – Southern Air Transport – SAT.
SAT was founded in Miami, Florida in 1949 by F.C. "Doc" Moor and Stanley G. Williams. On October 1, 1960 the CIA paid $500,000 fo the little airline that had only $100,000 in assets, and according to Christopher Robbin’s book Air America, "….immediately began to fly international MATs contracts to undisclosed destinations." While Air America ran the CIA’s Far Eastern routes, Southern Air Transport took care of the Latin American routes. The CIA also owned Air Asia, Intermountain Aviation and several other air charter companies.
The whole Iran-Contra connection began to come unraveled when the SAT plane was shot down by Sandinistas in Nicaragua while delivering arms to the Contras, and Eugene Hasenfus survived. Although the CIA maintained that it no longer owned SAT, agency attorneys and corporate managers with intelligence connections maintained control over the airline. "I don’t care what they say," said Cox, "I believe SAT is still controlled by the CIA."
"At first we had to fight the CAB," Cox relates, "but they were a political entity, and we could deal with them, but how do you fight the CIA? We had to fight the federal government every step of the way."
The CIA has acknowledged that it owned SAT from 1962 until 1973.
The CAB, by over-regulation, had forced the Non-Skeds to rely on Military Air Transport (MAT) contracts to survive, contracts that were safely and successfully fulfilled for many years.
But suddenly millions of dollars in MAT contracts were cut off and given to the small, relatively unknown Southern Air Transport.
"Although we had a spotless record, without one passenger ever getting so much as a scratch, they grounded our planes," explained Cox, "and the military was banned from using the types of planes we had. So all of a sudden, we had ten planes rotting on the runways."
The independent airlines that ferried U.S. troops and relief supplies around the country and the world for years, to Israel in 1948, Hungry in 1955, Belgian Congo in 1960 and Berlin in 1962 were suddenly grounded.
On September 24, 1964, $250 million in MAT contracts were diverted from some 30 independent airlines, including USOA, and given to SAT and five other CIA linked carriers. USOA filed for bankruptcy.
"We didn’t know what happened until ten years later," said Cox bitterly. As a conservative, Republican, anti-Communist veteran, Dr. Ralph Cox didn’t suspect secret government collusion at first, and really didn’t learn the specifics until 1974, when Marchetti and Marks wrote about the CIA links to the airline industry in their book.
"There was dirty works at the crossroads all the way through," said Cox, "but we didn’t know it. We naively thought that we were dealing with the federal government, like the Post Office, a neutral, unbiased entity. Well, we’ll never believe that again."
The CIA didn’t even underbid the other airlines. "In some cases, they even charged more," Cox said.
According to a congressional aide who looked into the matter for then Congressman William Hughes, "This whole story is kind of intriguing. It’s the kind of thing you expect to find in a cloak and dagger mystery novel. But actually it had quite an impact on Cape May County’s economy. If they had been able to stay in business and grow, they would be quite significant players in the airline industry today."
By the mid-1950s the approximately 500 supplemental airlines had been widdled down to 150 Non-Skeds, and in 1962, the 30 airlines that had shared the $250 million in MATS contracts were suddenly shut out and the contracts given to six small, relatively new air carriers. Two of them, Air American and Southern Air Transport, were wholly owned subsidiaries of the CIA.
Although he didn’t know the CIA was involved, Cox did notice that Southern Air Transport and the five other airlines that received the MAT contracts were all represented by Coates Lear or connected to Lear’s National Air Carriers Association (NACA).
Since Cox’s USOA had serviced a U.S. Navy contract that was picked up by the Air Force, Cox knew that Lear worked out of the D.C. law office of Zuckert, Scoutt & Rasenberger.
Mr. Eugene Zuckert, a senior partner in the firm, was the Secretary of the Air Force, and Coates Lear was his law partner. Both Lear and Zuckert served as presidents of the NACA. Gerald Scoutt later replaced Ed Daley as Chairman of the Board of World Airways.
Lear was attorney of record for World Airways, Capitol Airlines, ARCO and a major stockholder of Overseas National Airlines, all companies that received the MATS contracts. (The other airline that received MATS contracts was Los Angeles Air Services, which became Trans-International, which was under Ted Burwell, another CIA connected officer).
Because of its destructive, below cost military contracts, ONA reported a minus net worth of nearly $4 million in 1960, and used a number of DC7s that American Airlines had made available to General Leasing Corporation, a subsidiary of the Convair Division of General Dynamics.
Continental Airlines hired Pierre Salinger as a corporate officer. Salinger possibly knew of the CIA connections to the airlines because of his position as President Kennedy’s assistant.
Continental also obtained government contracts, including lucrative troop transport contracts delivering soldiers to Vietnam. Continental opened a Nevada based subsidiary, Continental Air Services, and made Robert Rousselot president. Rousselot, an ex-Marine pilot, was an old CIA China hand who had worked for CAT for 17 years.
Recognizing Lear’s influence in the awarding of the MATS contracts, Cox went to Lear and asked him to help arrange for the USOA to continue receiving the MATS contracts in order to stay in business. Lear told Cox, "the boys won’t let you in," as if it was some elite private club for members only. Cox called the CIA connected airlines "MATS Mistresses."
In 1962 Cox testified before a Congressional committee that the new policies, "…practically eliminated independent supplemental air carriers, even though Congress has always held them to be a vital part of our economy and our national security."
The too-few of Ed Daley’s World Airways planes were sent to evacuate Saigon and Da Nang, which certainly indicted how the failure of the supplemental airline industry was a direct threat to our national security. The two World Airways planes that landed in Da Nang to evacuate civilians were swamped by thousands of refugees, some of whom hung on to the wheels of the jets as they took off. South Vietnamese soldiers beat off women and children to make the flight.
Eventually Congress decided to investigate these matters, but when Robert Roussoulet was scheduled to testify before a Congressional committee in 1976, he mysteriously failed to appear, and never did testify.
One CIA director eventually asked the simple question, "How many planes does the CIA own?" But the answer came back that they really didn’t know. In fact, one of the CIA airlines had more employees (30,000) than the CIA itself.
On February 5, 1963 the CIA airlines were formally organized under the umbrella of EXCOMAIR – the Executive Committee for Air Proprietary Operations. EXCOMAIR was, "to provide general policy guidance for the management of air propriety projects and review recommendations for approval of air proprietary project actions." Lawrence Houston was appointed chairman of the committee.
In the fall of 1963 Coats Lear was killed by a shotgun blast to the head. Although some suggested it was suicide, others believe he was murdered.
Lear was a law partner in Eugene Zucker’s firm, and Zuckert, as Secretary of the Air Force, was involved in the awarding of contracts.
Ed Driscol, the man who handled the administration of many of the MATS contracts at the Pentagon, became Executive Director of the Civil Aeronautics Board after the death of Lear. Later, Driscol became VP at World Airways, one of the companies he funneled MATS contracts to from the Pentagon and CAB.
Driscol was the Director of Transportation under Joseph Imire, the Assistant Secretary of the Air Force and John H. Rubel, the Asst. Secretary of Defense. With CAB chairman Alan S. Boyd, they effectively ended the competitive bidding for MATS contracts and arbitrarily awarded them to their favorite airlines connected to the CIA and/or Lear & Zuckert.
Ruble, Imire and Driscol all resigned shortly before the death of Lear. While Driscol went on to the CAB and World Airways, Ruble and Imire became Vice President of Litton Industries, a major defense contractor.
Another explanation for Lear’s death is provided by Amos Heacock, another independent airline owner put out of business by the CIA, who believes that is a connection between Lear’s demise and the assassination of President Kennedy shortly thereafter.
Heacock believes Lear’s law partner, Eugene Zuckert, as Secretary of the Air Force, had something to do with the scheduling of the President’s visit to Texas. He may have been responsible for the upkeep of Air Force One and Two, the planes provided for Executive office use by the President, Vice President and the cabinet.
According to this theory, Zuckert, as Secretary of the Air Force, obtained foreknowledge of the assassination, information that was also picked up by Lear. This either drove Lear crazy enough to kill himself, or made him unstable and a threat tothose planning to kill the President, so Lear also had to die.
Zuckert, a graduate of Yale University, served as the Assistant Secretary of the Air Force from 1947-1952 and was a member of the Atomic Energy Commission from 1952-1954. He left the Nuclear Science and Engineering Corporation of Pittsburgh (no longer listed in the phone book) where he worked from 1960-61, to become Secretary of the Air Force. The NE&E Corp. is described in "Elites in American History" as "a relatively small Pittsburgh based concern which was backed by various financial interests, chief of which was probably New York’s Lehman Brothers, a concern with great politico-economic influence."
One of the most important decisions Zuckert made as Air Force Secretary concerned the F-111 jet fighter contract. Although every independent study recommended that the contract be awarded to Boeing, which designed both a less expensive and better performing aircraft, the contract went to General Dynamics.
This decision was made by four men – Secretary of Defense Robert McNamara, Deputy Secretary of Defense Roswell Gilpatrick, Secretary of the Navy Fred Korth and Air Force Secretary Eugene Zuckert.
Gilpatrick was a former Wall Street law firm of Cravath, Swaine & Moore, and had previously represented General Dynamics, while Korth was president of Continental National Bank of Ft. Worth, Texas. General Dynamic’s Ft. Worth Plant eventually received the bulk of the contract.
[William Kelly’s research is supported in part by a grant from the Fund For Constitutional Government Investigative Journalism Project.]