Black Bart's strategic retreat
By Chip Drago
Mobile Bay Times
In an extraordinary letter to his employees just days before Christmas in 1989, Mobile oilman and attorney Bart B. Chamberlain Jr. explained his version of the bitter, decades-long dispute with government officials and business competitors, including charges of bribery and corruption in high places, that prompted him to flee the country rather than pay a multi-million dollar judgment.
Chamberlain died recently in the Bahamas at age 93.
U.S. authorities were never able to collect a $19.4 million court judgment related to violations of pricing rules designed to counter the 1970s Arab oil embargo. U.S. Department of Justice lawyers finally gave up in 2002, after having seized almost $13.5 million, and a federal judge declared the case closed.
Chamberlain lived in the Swiss Alps and Spanish Wells, The Bahamas, outliving most of his friends, associates and enemies and even the civil judgment that so notoriously bedeviled and dominated the final 30 years of his life.
Writing Dec. 22, 1989 on Douglas Oil Purchasing Company, Inc. letterhead to "all employees," Chamberlain opened, "It is in a spirit of considerable sadness instead of the kind of spirit we like to enjoy at this time of year that I write this letter."
Almost 7-1/2 pages later, including a one-page post script, Chamberlain writes: "I have deliberately absented myself from the U.S. and plan never to return, which is also sad. My family has been living in Mobile a long time -- on my father's side since before Alabama was a state. My mother's father left the Spanish Army in Cuba in the 1870's and moved to Mobile where he established not only a fine reputation but a thriving business and raised four daughters and one son.
"My maternal grandmother's family had emigrated from Germany to Michigan to escape from the harsh economic conditions which existed in Germany during the mid-1800's.
"Permanently leaving the U.S. is not, therefore, exactly a joyous event for me, but my feeling of resentment against the treatment I have received from the U.S. Government because it was corrupted and improperly influenced by a corrupt man possessed of enormous wealth is so intense that I have deliberately and carefully concluded that it is best for all concerned that I expatriate myself, which I have done.
"At an appropriate time, and in accordance with law, for the same reasons, I expect to renounce my American citizenship and do so with apology to no one, certainly not to the U.S. Government."
In between, the razor-sharp Chamberlain recounted a Byzantine story of of greed and political influence prevailing over justice, at least by his lights.
While Douglas' employees were no doubt aware to some degree of the "destructive litigation" in which the company was embroiled, "only a few of you have the slightest idea what it has really been about lo these 11 years," Chamberlain wrote.
Chamberlain said neither he nor the company were charged with any wrongdoing, but rather with "having made a mistake."
"The mistake that I made was that I trusted the written word of the U.S. government, and the opinions of our lawyers," said Chamberlain.
"Little could I have foreseen in December 1973, 16 years ago, when I asked the Department of Commerce (DOC) to issue export licenses so we could sell crude oil to BORCO in the Bahamas that DOC, with the approval of the Department of Energy (DOE), would issue the licenses, but that almost five years later they would file suit against us and against me, personally, for having made the sales that the export licenses specifically authorized. Incredible as it may seem, that is precisely what happened."
Chamberlain's companies were accused of skirting laws controlling domestic oil prices by shipping it out of the U.S. and bringing it back into the country as foreign oil. Though he later decried the political machinations of his enemies, Chamberlain himself was accused of political chicanery in the acquisition of the export licenses themselves.
Sales, of about equal proportions, were made by Citronelle-Mobile Gathering, Inc. and Citmoco Services. The total pre-tax profits amounted to about $6.6 million, according to Chamberlain. After state and federal taxes, the profits stood at about $3.5 million, he said.
Chamberlain estimated he personally made about $55,000-$60,000 after taxes.
According to Chamberlain, the Kemp estate, Howard M. Pack, Joseph Kahn, Central Oil Co., Ergon and "a host of others" received similar payments without drawing a lawsuit from the government.
Chamberlain points an accusatory finger at DOE general counsel Lynn Coleman who suspiciously "left a law firm where he was legal counsel to Amerada-Hess to accept a salaried position at DOE earning half as much as his private law practice earnings."
As evidence of DOE's vendetta, Chamberlain claims it "even tried to conjure up a criminal action against me," which the DOJ rejected out of hand. The DOJ was reluctant even to pursue a civil action against Douglas and Chamberlain but ultimately Coleman's persistence finally persuaded DOJ "contrary to its own notions of what was right and what was wrong, to file that suit in which it has finally prevailed," according to Chamberlain.
"The fact that we lost the litigation does not mean we were wrong," Chamberlain states. "We were right on the law and right on the facts, but right and wrong does not always determine the outcome of litigation ..."
Chamberlain contended that the playing field was slanted in DOE's favor, noting that DOE has its own special appellate court, the Emergency Court of Appeals (TECA) "which has never ruled against DOE -- not in one single case."
The legal battle had cost $4 million, Chamberlain confided, adding that the expense had "trashed the two companies we spent 30 years building and operating."
"By this time I expect all of you who are not in the know are curious why a large company like Amerada-Hess would take such action against us," Chamberlain continued. "Our records depict those reasons quite persuasively."
"Leon Hess bought the old Gulf terminal, now the Hess terminal, in late 1959/early 1960 from Gulf Refining Company and immediately focused on our ownership of the Citronelle Field and the pipeline as a juicy tidbit to be acquired by Hess at a bargain price," Chamberlain related. "Leon Hess personally knew that George Jett and I were heavily indebted and were beginning to have trouble finding an adequate market for Citronelle crude oil ..."
Hess had an article "planted" in the Oil and Gas Journal suggesting that Citronelle crude oil was of low quality and further that Hess' acquisition of the Gulf terminal would impede "deliveries to our customers," Chamberlain alleged.
Chamberlain called the article "vicious" and designed "to destroy our business."
"Under threat of litigation, I forced the Oil and Gas Journal to admit that Hess had planted the article," Chamberlain claimed.
Hess' motives were clear, wrote Chamberlain, because in short order Hess tried to buy "our daily production at a sacrifice price ..."
"Then Hess tried to buy us out lock, stock and barrel once again, on a 'fire sale' basis, which we rejected," Chamberlain related.
Chamberlain then launched a bombshell, alleging that all the while Hess had been "assiduously and methodically stealing from us, and not only stealing in volumetric terms but surreptitiously taking Citronelle crude oil out of our tanks and putting back much lower quality crude oil Hess was buying in Mississippi."
"Had it not been so serious, it would have been amusing that Hess was substituting the oil he had denigrated in the Oil and Gas Journal article as being of low quality and replacing it with his own 'high quality' Mississippi crude which was in fact of much lower quality than Citronelle," Chamberlain wrote.
According to Chamberlain's allegations, his companies recovered $440,000 "for the thefts and would have seen his people all the way up to Woodbridge, N.J., go to the penitentiary but for Hess' uncanny ability to corrupt public officials."
Chamberlain alleged that Hess through John Mitchell at DOJ "fixed" a serious prosecution for shipping stolen goods in interstate commerce and concealing his thefts by wire and mail fraud.
The suit not only "humiliated" Hess, according to Chamberlain, it also probably led to the loss of "many millions of dollars" for Hess' holdings because he failed to acquire Union Oil of California.
According to Chamberlain, Hess was behind negative news stories about the Mobilian's operations and a recommendation that the Cochrane Bridge be built on a route disrupting the operation of his oil terminal on the Mobile River. Chamberlain also claimed that Hess was behind lawsuits intended to destroy Citmoco, Citronelle-Mobile Gathering and Douglas.
Chamberlain described Hess as "a personally vengeful man" whose wealth "is not in the millions but in the billions."
Chamberlain then tied Hess to a former high official in the DOE who distributed to the news media "utterly false and incredibly scurrilous information about our transaction with BORCO." The official had been instrumental in securing the Old Oil Entitlements Program, according to Chamberlain, which benefited Hess by more than $200 million within 10 months. Shortly thereafter the official left government employment, setting up a consulting firm with "a very large, unsecured and unendorsed loan from a Hess-affiliated bank," Chamberlain charged.
"There is no question in my mind that this litigation was caused a result of efforts made by Hess, and that our inability to settle it, and adverse publicity concerning our inability to settle it and obtain legislative relief, all emanated from the Hess publicity machine," Chamberlain contended.
"I have never told this story to our employees as a group, but each of you will be furnished a copy of this to be tucked away and kept if you care to do so," Chamberlain wrote.
"We have not only almost exhausted ourselves financially, but also psychologically, and in legal terms," Chamberlain said in his letter.
It was with particular bitterness, he said, that he considered the windfall that befell others who with little risk and no effort "reaped millions of dollars ..." from the work of Chamberlain's companies and its employees.
According to Chamberlain, Pack and Susan Kahn Rosenkranz tried to exploit Chamberlain's vulnerability, offering to buy Douglas for $625,000 and also gaining control of the main pipeline and gathering system with a similarly distress sale proposal.
"Frankly, I was in such a distraught state of mind during those discussions with Pack that I came very close to making a deal with him, although it would have been the equivalent of an outright gift, but I finally experienced a lucid moment during which it became clear that doing what Pack wanted me to do might very well have justified accusations of fraud on my part, so I backed away from it," Chamberlain related.
Chamberlain contended the federal government in cahoots with private individuals sought to bring about Douglas' transfer to new owners.
Chamberlain anticipated the future of a government-directed Douglas nothing "like the form in which it now exists."
First, people will not want to do business with the government and, secondly, the government in trying to fasten a claim for $25 million on Douglas, rendering it insolvent, would thereby drive away big producers such as Phillips and others in the Citronelle field who would be unwilling to sell crude oil to an insolvent company on open credit, positioning themselves as mere common creditors, according to Chamberlain.
He was certain the government would reassure the producers, but "if this case has demonstrated anything to my complete satisfaction, it is that the government's word is no good ...," Chamberlain stated.
For myriad reasons, with the government involved in the operations, Douglas' demise was likely.
The experience had been "sad, frustrating and bitter," Chamberlain said.
Chamberlain said he did not expect to be associated with Douglas by the end of 1989. He advised the employees to "think about your own futures" because however the government handled the situation, the employees should not "depend on looking forward to a long term affiliation with the same company or its successor."
"This is one of the saddest letters I have ever felt obliged to write in my entire professional and business experience, and it is certainly the saddest communication I have ever had to prepare at this time of the year," wrote Chamberlain.
Though the employees may disagree with his decision to abandon the country, "at least you have it directly from me ...," he wrote.
"If ever any one of you needs a letter of recommendation from me, please feel free to ask for it," Chamberlain offered.
In a long post script, Chamberlain added that a settlement of his personal liability had been worked out and John Bolton, then head of the DOJ's civil division, had assured its acceptance, only to renege, saying "I had no idea Chamberlain had so many enemies at DOJ."
"I sincerely believe it is not my enemies, but Leon Hess' friends and those he can directly and indirectly influence, who brought about the aborting of the settlement agreement," Chamberlain asserted.
"There probably are those there (at DOJ) who resent our charges of fraud on the court which, incidentally, I will go to my grave believing are well-founded; in fact I have preserved a number of records because I intend to write a book on just why I believe it happened, and how."
Whether Chamberlain wrote the book is unknown. He suffered a stroke several years ago and was much debilitated for the rest of his life.
Reportedly, Chamberlain was cremated and his ashes scattered at sea off Spanish Wells.