NOTE: The use of exact dates in this chapter is to allow any reader that can use my document files to follow the story in more detail.
Vera was very happy with my plan to set up a sales office in Moscow. She wanted to travel with me on this important mission to give me support if I started to change my mind. I convinced her that the trip would be short and full of meetings, and if we waited for her visa it might be to late. The main reason was that I did not want Consarc to pay her expenses for this act of mutiny.
All the cards were laid face up on the table in Moscow on July 21,1985. I was setting up a sales office in Russia, and the customer would pay the costs including telephone and air travel to Moscow. The buying house was getting their money from the British government, which had caused the problem in the first place. The end user was getting his project engineer and the necessary technical staff. He also could buy what he needed with the funds already approved.
Ivanov continued to be bewildered with the whole affair, but he did his duty in drawing up the papers the way I suggested. He saw that I was getting a free sales office as a gift from the British, but he was getting much more.
The Russians then did a stupid thing; they got stingy. For only a fraction of the original contract they could have gotten what was required. They would not hear of five hundred dollars per day per engineer. I tried to explain that that was a cheap price for a good consulting engineer, but they thought it was highway robbery. Not only were they stingy, they then got greedy and would not allow me to mark up the prices on the spare parts so it would equal their internal claim.
I called Wilson with the problem and told him to walk around the shop and find some junk that was not on our books and give names and prices so the Russians could pick out what they wanted. One of the items selected was a scrap piece of steel that we had machined to test the first isopress, which we never used. Cold Bottoms had a price of about forty thousand dollars in the original contract, but these had been removed in a horse trade in the early days.
To compensate for their stingy attitude I kept increasing the amount of junk carbon insulation they would buy at elevated prices. We finally signed three contracts.
First was a contract to BEPA for service people for 1000 man days in exact conformance with the law and informed permission from Washington. This contract also was permitted by a resolution by the Consarc Board and the stated and written position from London.
Second was a free of charge contract to Consarc spare parts and the equipment necessary to mix and mold carbon fibers to allow them to produce Calcarb material. The insurance group had already paid Ninety percent of the costs. The amount of this contract was 397,653 pounds. Delivery was required before the end of 1985.
Third was a contract to BEPA for some spares and carbon insulation. The amount of this contract was 458,250 pounds. Delivery was required before the end of 1985. This contract had my guarantee with a required letter from my bank that my deposits in cash exceeded the amount of the contract.
If the profit in the BEPA operation had been larger, I probably would have resigned my position in Consarc, departed Scotland, and set up shop in the USA and kept my mouth shut. After all, I was legal in my actions and I certainly did not feel the balance of power was being altered by my actions.
The Customs agents at Heathrow were waiting when I passed through the green zone to exit the airport upon my return from Moscow. They went through all my papers, including those in my pockets. They were looking for technical data that was on the control list. The BEPA contracts did not interest them.
Wilson was shocked by the BEPA contract but pleased with the settlement that had his signature. Cooke understood that the liabilities and my costs in Scotland were almost finished. The managing director in answering my letter expressed understanding of why BEPA was the best way out of the problem but did not address the shortfall in income for BEPA.
I informed the British government that the contract with Consarc had been closed, subject to sending out the parts agreed in the settlement, which required specific approval of the DTI before shipping.
I set up service contracts with Consarc and its suppliers. The contract with the Russians had an amendment that changed the one hundred pound per calendar day payment to one hundred fifty pounds per day. This was done in part to hide the sum from the Soviet engineers, who were paid less than that amount per month, and to allow BEPA to pay expenses that were not covered by the contract.
Consarc and its sub-suppliers had already agreed to the one hundred pounds on the previous contract, and while both wanted more money, they agreed to my terms. Tom Dick was satisfied with seven hundred pounds per week with all expenses paid. This would allow him to establish a business and continue his courtship of Alla, who was to later become his Russian wife. A full set of documents including the BEPA contract was sent to Hall (DTI) in London.
Everyone wondered what Rowan would think of the solution. My first action was to write Rowan a letter on the 30th of July 1985 explaining the actions taken. A letter was also sent to the Board of Directors suggesting that the Free Port of Shannon Ireland would be a good location for the new trading company and BEPA could be assigned to Consarc or Inductotherm.
Roberts called me at home just after he learned that the BEPA contract was signed. He was very angry and accused me of gross manipulation and several illegal acts. I listened and let him cool down. The next morning I wrote him a fax letter that was not very diplomatic. "To accuse me of manipulation is the stove calling the pot black." I later sent him a short note withdrawing the letter.
Consarc management met in Rancocas without me to discuss the event. They thought I was going to make a fortune with my new company. It did not matter that they could not have written such a contract in Consarc's name. When Rowan joined them he was not in the mood to find fault with me. When asked if one of them took such actions would he be fired, his answer was yes.
Before leaving Moscow I was already having second thoughts about going it alone and asked Ivanov to give me permission to transfer one of the contracts to Calcarb. He sent me a telex on the 1st of August allowing the transfer providing BEPA sent engineers per their contract.
A letter from Ivanov arrived the next day asking for prices on a small isopress for processing pitch, equipment for producing rigid carbon plates and cylinders, a large resistance furnace for 1600 degrees with CVD capability, and a small furnace with plasma abilities. This was part of a list of equipment that I told him would not need an export license and I knew he had money because he had paid nothing for the equipment on site. I sent a letter to the DTI giving them this list and ask for an export opinion.
Rowan replied to my communications with a stinging letter on 6 August 1985 suggesting that " I was dancing to the tune of the Russians".
Later a long letter was sent which told the sad story of our carbon company. The attachment is that exchange of letters.
Ivanov informed us that due to lack of hotel rooms in the tourist we should delay sending of service people until September 7.
On the 9th of August Cooke notified the DTI and Customs officials that a final shipment to close the Consarc contract would be made on 20th of August 1985. Cooke was able to arrange that Customs employees help with the packing of the containers so they could be officially sealed before being sent to the port.
Roberts came to Scotland to meet me before the board meeting. I told him that if the Board would not approve then I would act alone. He said if that happened he would see me in court. My battle with Roberts began when he decided to set his pay higher than mine without consulting me. He also refused a company car for me while he drove one. On most items of importance we worked as a team but this time he was wrong. We discussed the details of the material contracts and I told Roberts that supply of these was not in compliance with the resolution of the Consarc Board he forced me to accept at the April meeting. He said he would discuss this with Rowan. Later he sent me a note that Rowan did not object if the governments approved.
On the 16th of August the DTI confirmed that the items requested by Ivanov did not require a license but that CVD was under discussion and might be put on the list later.
I departed Scotland on the 17th of August for a ten day visit and to give my report. The board meeting that followed my report was calm. The resolution to draw up an agreement for the sale of BEPA for a dollar was the requirement by Roberts at the meeting. I did not object to the requirement but saw no reason for the actual sale, since it was my intent to have no direct gain from the situation. I did, however, plan to operate the company totally outside the control of Consarc.
We had used a procedure for several years to circulate the minutes of a meeting for initials before the next meeting that approved the record of the previous meeting. Raufer was an excellent secretary for our board meetings. He always recorded the content and tone of the meeting and was rarely challenged. Our board meetings were not strict, formal affairs so most of the words spoken to persuade or argue with each other were never written down. Rowan was very angry with Raufer for issuing the draft minutes. He told Raufer that his Boardrooms were privileged and that the words in the draft did not reflect what was said. He instructed Raufer that advanced circulation of the draft was not to occur again. Rowan asked Raufer to find all copies of the draft and destroy them. Raufer's draft was true and correct, as it always had been in the past but Rowan did not want the following words recorded. ---After a complete review of the above, Rowan commented that the "BEPA contract" route selected to handle our obligations to start this equipment up on behalf of this customer was a clever one-Raufer was not aware that I had a signed draft copy. At that time I was saving all documents in case they were required in the future.
Attached are those minutes:
The cheapest way to get to Scotland from the US was to fly through Shannon Ireland. The entry stamp gives a traveler the right to visit all of the United Kingdom. When I arrived at Glasgow on the 27th of August 1985 I presented my two year work permit. Immigrations gave me a letter that allowed me three months to regularize my position on the United Kingdom.
At the Consarc office I looked over the packing lists of two containers with about 22 tons of material and parts shipped. I noted a letter from the ECGD that they had no objection to the shipment of parts on which they had paid insurance. The key items in the containers were rigid and loose insulation to complete the furnaces. Another main item was the equipment to produce Calcarb. I also noted that the "Cold Bottoms" were held for the customer until a license was received.
The DTI requested a meeting in London for the 6th of September 1985.
Vera and I had dinner with Kolosov and his wife in London on September 5, 1985. They were on their way back to Moscow and did not know what their new assignment will be. People with good positions in Moscow did not want to see a restructuring of the economy and changes in methods. We rented a white Rolls Royce for the dinner at the Savoy. That evening I became aware how the British Government allowed the ECGD to pay us and still not make claims. Thatcher ordered the funds be transferred to ECGD from another program.
The next morning I took my lawyer to the meeting with the DTI. Cooke invited himself. Without Cooke the minutes of the meeting would never have been taken.
The meeting was interesting as they gathered information and gave me a small scolding for my actions. They did not tell me to stop the contract.
The meeting continued with discussions on other outstanding business with the DTI. This related to the new enquiries with USSR - the 500 kg VIM and the new CVD project.
Wilson told me he had heard that Hall had departed for the States the day after our meeting. Hall must have been fuming when he arrived in Washington to meet with the CoCom group on September 8,1985. I imagine that the group included people from Commerce, the Pentagon and the CIA. Hall had to confirm that Thatcher was not going to make laws restricting British subjects from traveling abroad or shipping items of hardware that individually are outside the controls. He probably asked Commerce to at least make laws to stop me. Royce reported the event on December 10, 1987 in Newsday.
"Newsday also reported that western technicians had helped to assemble the equipment even after the embargo. Bryen said his office "went berserk" in July, 1985, when it learned that the Commerce Department was allowing Metcalf to continue work at the Soviet plant. Commerce revoked its permission three months later. Bryen said he has asked the British government to stop allowing British technicians to work at the Soviet plant. But he said British law does not prohibit engineers from selling their skills abroad, even for work on equipment that itself may be embargoed."
We traveled in the first class section of Aeroflot to Moscow on September 7,1985. This is one of the little goodies I put in the contract. Tom Dick, as director and part owner of BEPA, did not like the terms and conditions of Consarc's resolutions. I was not the owner or a director of BEPA but no one ever bothered to ask about my real legal status. Vera was ninety nine percent owner and a director of the company that bore her name. The company additionally selected Soderstrom as its operational director. He was an employee of Consarc but was going to be fired before I took him to Scotland on the carbon project. It was my plan to sell the company to Soderstrom and Dick as soon as possible. This would allow me to establish the selling office in Moscow and work out of London, where Vera wanted to live.
The Russians were not in a hurry and used the excuse that hotels could not be found until September 8. The contract provided first class travel on Aeroflot or business class travel on other airlines in case Aeroflot had no space. Dick, Soderstrom, Vera and myself had the whole first class section to ourselves to hold the first meeting of the BEPA board of directors. We read the Consarc resolutions and agreed to abide by them. I told Soderstrom that we were legal under American law but that I fully expected them to change the law in due course. We read the regulations that were issued on April 5 and the letter of permission given on July 8. We decided that no American would provide assistance or technical information on any item contained in the April 5 regulations. Most of the equipment was not covered by the new rules.
Dick would not agree that his new company, Vacuatherm, was bound by the Consarc resolutions nor was he obligated to observe American law. It was agreed, however, that he would observe the law and the resolutions while acting for and being paid as director of BEPA. It was agreed that his activities outside the control of BEPA was none of our business as long as they were not in conflict with our interests. I told Dick that I would report all his activities to the British and American governments. He had another problem; as a paid consultant to Consarc Engineering, he could not accept any contract from the Russians that Consarc considered their business.
The project manager met us at the airport with the news that he had not found hotels and that we would be required to pay dollars for our hotels for the first few nights. I told him BEPA had no funds for that purpose and that the contract was in default. He thought we were joking, but during the meeting with Ivanov the next day he saw that we were serious. Ivanov had kept my nose to the grindstone on the previous contract, so it was my turn. He had to operate under strict rules. His regulations prohibited the payment of foreign currency to business people visiting the USSR. He could pay rubles but we did not need them. Rubles at that time were worth less than one-seventh their official value on the street. We agreed to continue the contract after he found us deluxe rooms. We had his gentleman's agreement that he would somehow find the dollars for the hotel rooms that I was required to pay.
Vera and I were assigned a three room deluxe suite on the fifteenth floor of the Rossia hotel overlooking the Kremlin, Saint Basil's and Red Square. This was one of the other little goodies; a perfect setting for setting up my expenses paid selling operation with all the opportunities the new Soviet government would open up in the future. The longer it took to fix the problems at the embargoed project the better. We were in the process of having a cook stove installed in the apartment. This floor was used for visiting heads of state and the security was massive.
When we finally got to the site, our first surprise was that they had not read the BEPA contract. They had assumed that our arrival meant the contract would proceed under the terms of the previous contract. Three days were spent explaining that Americans could not give them any technical data that was not already in their hands or published in the open literature. BEPA would be punished by the contract if any instruction given were not correct. We were there as business people to sell them items they needed if allowed by the regulations. They had not paid for the equipment and were only paying us a day rate, which was lower than our standards. The were informed that British citizens and companies were not under the same restrictions and that firms like Vacuatherm and Stansted might be willing to enter into contracts with guarantees.
Dick made proposals for the gas burning systems they thought they required. He also made proposals on the redesign of the water cooling system that was not working properly. The staff was confused with this new situation because they knew it would take months to place new orders through the Soviet system. Dick departed before anything was done. I instructed Soderstrom to look busy by setting up a helium leak detector that we had supplied from Germany.
I attempted to have them rewrite the technical specifications for the low temperature furnaces in a more realistic way so that we could take a firm contract to complete these items. I wrote a protocol agreement that they finally signed. I signed a new contract transferring the BEPA contract to Calcarb on the 24th of September 1985. This contract allowed partial shipments and payments and reduced the value of the contract if any item was embargoed. We were getting nowhere, so I decided to return to London to make a report to the DTI and await their instructions. Soderstrom was told to play it cool, including using a few sick days. Vera remained in the Rossia Hotel while I traveled to the United Kingdom. The enclosed letter was on my desk when I arrived at my desk on the 25th of September 1985.
The British authorities scared Stansted but he was pleased to get out of his startup and guarantee problems, however according to a letter from his lawyer he wanted full payment. The Stansted order was ninety percent upon shipment, five percent on startup and five percent after warranty period. He should have been very pleased with the additional five percent that he was offered at that time to settle his claim.
On the 26th of September 1985 a telex arrived that informed me that the Department of Commerce had rescinded their approval of July 8, 1985. It was almost two months later that a letter arrived from the embassy in London informing me of this action. The new law had removed the grandfather clause under which they had allowed me to proceed.
BEPA held a board meeting and agreed on a way of completing the contract that did not conflict with the new rules. My lawyer agreed that my proposed course of action was within the new rules and that I could rely on the Commerce letter of July 8 to continue the project.
I asked Dick to contact Tarlton to see if the MOD would tell us the same things they told Stansted. Customs or the MOD did not want to meet with us. I also told Dick that this and the new law meant that the government was getting serious and that we would have to quit the project sooner or later. He never did like the idea of the Americans telling him what to do. He felt that Thatcher was acting as a puppet in this matter, and he saw an opening for his own company to take over the business. Dick arranged a meeting with the DTI, as the chief spokesman of BEPA. Cooke attended even though Dick did not invite him. Again Cooke took extensive notes.
Tarlton from Customs agreed when I called him in the morning to meet me for a beer after the DTI meeting, to hear the inside story. He was told that the cold bottoms were only a piece of steel of no use to the project. I told him we would cut it undersized and out of round so anyone would know it was useless. This shipment would require a bill of lading for payment purposes so we could name it "cold bottom" for the Russians internal use. It would be named a piece of scrap steel for British Customs. When I called him after the meeting, he told me that we could not meet, as this affair was being handled by the Prime Minister herself. Of course, Maggie, the iron lady, might not have understood what a "cold bottom" was.
In a meeting with my lawyer in London, I was again assured that everything was legal. I sent Rowan all the copies of the documents that showed that we were clearly within the law.
Rowan asked for absolute assurance that the low temperature furnaces could not be converted to high temperature ones. The word "absolute" was important in his communication. The customer had three furnaces operating at high temperature for the final step of the process. That was the easy part. What needed was were low temperature furnaces sealed to handle the coal tar and also used for vapor state deposition. The work to be done was well within the existing regulations. BEPA was not going to provide information on the isopress equipment because we had none.
There was no way I could assure Rowan that these furnaces could not be converted because they already could achieve more than 2000 degrees C. The new rules no longer covered the operation in vacuum but now covered equipment for converting carbon to graphite. The reason to have the induction system use 750 volts for full power at the onset was to avoid something that was removed from the regulations. I did not tell Rowan that the original agreement with Inductotherm was not achieved and this had me worried before the rules were changed.
My plan was to have the Russians increase the density of the heating element so they would be sealed for CVD operations used in the production of friction materials. I could assure that these furnaces could and would not be used above 1200 degrees.
At this point both Rowan and I wanted the contact stopped. I told him that as the majority owner, he was the only man that could stop it and I would be happy if he took such action. Rowan promoted himself to Chairman of Consarc for the purpose of faxing me the enclosed letter.
Rowan's book tells the story with many the facts wrong. He had the facts so I will never understand why he did not use the truth.
I had already resigned when I gave Rowan's letter to the press. It was my intent to take the heat and show Rowan in the best light. The Rowan letter was written two years before I resigned.
Rowan knew that we had other contracts with the Russians and should continue all commercial operations that had government approval. The letter was structured to allow me to show the customer a document that ordered me to quit. It was not an order to stop making profits through legal business with the Soviets.
It was late in the evening when I called Hall at the DTI to give him the news that Consarc and BEPA were withdrawing from the contract. He understood clearly that Dick's actions on his own behalf were beyond our control. My telefax letter to the DTI that day confirmed our telephone conversation.
To: Hall DTI London
From: Metcalf Consarc Bellshill 4 October 1985
I confirm our telephone conversation of today when I informed you that the Boards of Consarc Engineering Limited and Consarc Corporation have agreed, notwithstanding loss of their commercial position, to withdraw from contract number 50-0166/34481 with Machinoimport with respect to supervision, assistance, start-up or testing in the field.
The companies do have a contract to supply Calcarb Insulation and another item at this time.
The companies will continue to respond with quotations for any other items of supply which do not of themselves require export licensing.
I have been re-assigned work which does not require me to travel to the USSR.
I acknowledge that you will advise Consarc by Wednesday, 9th October on our export license application for Cold Bottoms.
The Company BEPA Limited may continue in existence but will not provide field personnel for the project in question. Dick, with other interested parties, will decide upon its future and it is possible that it may be liquidated. TR Dick's actions on behalf of his own company is not connected in any way to Consarc.
"The devil has not gone away," was the heading of every letter or communication written after October 4, 1985 to my Scottish partners before the contract with the Soviets was finally completed. It did not matter that Rowan had stopped us or that the American government had ruled. A contract is not finished until both parties are satisfied. We had to solve the "cold bottom" problem.
I flew back to Moscow on the 10th of October 1985 for the final meetings with Machinoimport. Vera had been living like a queen in her deluxe apartment that she could show all her friends in Moscow. Soderstrom was not happy because he knew that his employment at Consarc was ending.
Ivanov thought I was cute, hiding behind my board of directors to get out of my obligations. He had a stroke during my absence. He said I had arranged the embargo to get out of my problems and then arranged for transfer of the property for free, against British wishes, and even arranged for his stroke. He had always admired my Scottish wool sweaters, so on the final day I took one off my back and made him a present. He tried to extort from me one more favor, but I gave him a signal that was more than an index finger. Our parting gesture was my extended left arm with a closed fist with the right arm striking the left elbow causing the left fist to the vertical position. Up yours!!! Somehow I felt clean as I walked away from the building on Smolinsk Square in the cool autumn air on the 11th of October 1985.