Letter from Rowan About Deportation
INDUCTOTHERM INDUSTRIES, INC. August 30, 1988
I was shocked by your phone call though it is always nice reminiscing. I was sorry to hear that the Inductotherm Brazil coil at Electometal had given trouble. That's unfortunate, but I am sure they will take good care of the customer.
What I found alarming were your comments about your home and belongings there in Scotland. You indicated you had been in touch with Bill Cooke of Consarc Engineering in Bellshill, and had asked him to buy your home, computer, and some other things for 52,000 British pounds. When I asked what interest Consarc Engineering would have in buying these things, you indicated that if we would do this you would leave England quietly but that if we did not, then you would go to the liberal socialistic government and the liberal press resulting in further publicity implying that this would put us in some kind of jeopardy or damage our reputation.
We categorically reject your proposal. The press has already aired this twice in great detail, in February 1985 and again in November 1987. We at Consarc are proud of our capabilities and our integrity and our contribution to those countries in which we have operations. We have worked closely with the US and British governments and have nothing to hide from the governments, the public or the press.
Your closing words were especially shocking. I believe you said, "I will do you as much damage as I can in the press." Our record will speak for itself, Jim, all of this is most unbecoming to you. Why you harbor such resentment is indeed puzzling.
To: Inductotherm Industries
Rancocas, New Jersey
Attn.: Henry Rowan
President September 6,1988
I know you are not hard of hearing so it looks like others misled you again before our telephone conversation.
Hank, I do not wish to do you harm and would never consider blackmail. I do however intend to protect myself and continue my work in both carbon and induction fields.
I am accused of being in the camp of the enemy while others remain pure white. The following is a general summary of the events.
We sold and installed one of our furnaces in the Ukraine between 1973 and 1978. I met Vera on my second trip to Russia in 1973. You, as the owner of Inductotherm, made much more profit than we did each time we sold a job. You now seem to want to forget that you sold furnaces to the Russians.
This company merged with Consarc, another one of your companies, in 1978. We selected Raymond Roberts, a naturalized American citizen, who is married to a woman from Czechoslovakia, as our president. The new company won a very nice order from the Russians in late 1978 for the same type furnace we installed in the Ukraine. This time the installation point was in Chelyabinsk, a medium sized city in the Ural mountain area. I divorced my first wife and married Vera just as the Russians were invading Afghanistan.
Consarc bought a Scottish company in early 1982. The company was located in Bellshill, Scotland, under the direction of Thomas Dick. When the value of the dollar went through the roof, we had no choice but to build our next order from the Russians in Scotland. We were also very aware of the changing policy of the United States with respect to trade with the Soviets, and the stability of trade in Britain.
Our ability to buy embargo insurance in London weighed heavily on the company's final decision to build the equipment in Great Britain. The order we obtained from the Russians, in March 1983, was for heat treatment of carbon and pressing pitch into a carbon fiber matrix. The British authorities were aware of the details of the project and written approval was obtained to complete the contract. This equipment was much less important than the work Consarc was finishing in Chelyabinsk.
Everyone knew that carbon could be used as a heat shield on space vehicles, but the stuff also has thousands of other uses. None of the equipment sold can make the high strength fiber material called carbon-carbon. Other types of furnaces can make the material, but they require a license to export.
The company transferred me to Scotland after we signed the contract with the Russians in 1983. The project was a technical and financial nightmare, as we did not have the technical staff with experience to do the job in Scotland. The value of the contract was twenty times larger than the Scottish company.
To make things more complicated; I convinced the company to enter into a new business. The new company was to produce carbon thermal insulation which we could use ourselves for the Russian and other projects. The Scottish development agency was used to supply the money for the project. We used the established itemized prices from the Soviet contract to set the amount of money we would obtain from the government.
By selecting the right items the company was able to get much more money than it deserved. Some outright lies in the documents led the government to believe that the new company, Calcarb, was going to produce carbon-carbon.
Rules that govern the sale of items to the Soviets were being changed almost monthly during 1984. One item was added to the British list which was very near to the type of equipment we were building. Roberts convinced me that we were well within the limits of the regulations.
A surprise inspection in late November 1984 by the special customs agents left me feeling uneasy, but I told them that we were in major technical difficulties and that an embargo would be welcomed. A few days later the British government gave us an informed green light to continue the project.
Consarc Scotland was in trouble with the banks, so we had to agree with the Russians in Moscow to do additional testing and supply a lot more items in the future if they would allow us to ship and get a partial payment.
Amendment number five was signed in Moscow in late December 1984. This amendment clearly shows that the contract was not finished since additional testing was required on our isopress before the Russians would really release the money. We did not have an isopress and were not planning to have one which would be capable of carrying out the tests. The British government gave us grants based upon false information. Most of the grants were in reserve when I sold my stock so you received most of the benefit.
It was not a covert action, but amendment number five assured that we would be embargoed, since autoclave technology that could be used for high strength composites required a license under American technical data laws. No British law was on their books, but if we stopped the contract using American law then we had no insurance. The Thatcher government had already proved that they would not allow American law to stop a contract during the pipeline argument.
We would never be able to make such tests because we did not have the knowhow. Everyone in Scotland was fully aware of the massive problems that faced us. Upon my return from Russia in early January 1985, the new Critical Military Technologies List which listed isopress of any pressure as something the Pentagon wanted to control was on my desk. The next inspection by the British was to find the reason to embargo Consarc. I was very nervous during the inspection and it showed. They were asked to embargo if the governments felt we were doing anything wrong.
We were in such technical trouble with the isopress and the carbon insulation that my only hope was to use my selling abilities to obtain more jobs of the same type from the Russians at prices which would cover the major costs to come on the present contract. We had been in this type mess before with American users and knew somehow that we would work our way out of the problems. A full report was prepared for the board of directors but it was not required, because on February 8, 1985, the customs agents seized the last container. That container was filled with junk insulation and a worthless isopress heater, not the vital parts which the Pentagon reported to Congress and the press. The people at Consarc Scotland knew that we would have to replace every bit of the shipment.
Four days after Thatcher embargoed the equipment, she went to Moscow to meet with Gorbachev, the new First Secretary of the Soviet Union. She did an about face after that visit by telling us we could finish the contract. We were not insured because we did not have the bill of lading on the container which was required to present the invoice.
We were paid by a special change to the insurance coverage, based upon the word of the insurance salesman when we agreed to buy the insurance. Consarc received much more than they deserved and were very pleased with the outcome. The British government had us in the middle since they knew we would not continue the work without payment.
The Russians got the equipment free. For some strange reason, the British government allowed Consarc to ship spare parts after the embargo, already paid by government insurance, therefore free for the Russians.
After the embargo we tried every method to obtain a note from any government department that would allow us to show the Russians that we had to stop the project. They said there is no law to stop you and we can not and will not comment on your commercial position. They did, however, tell the Soviets they would allow us to send people out to do the work.
The American government also gave us permission to finish the contract. We hired the best lawyers in Washington in order to obtain a letter saying that an American company could not finish a project which the press and the Pentagon claimed increased the accuracy of Soviet rockets.
When all failed, I opened up a company in Scotland, with a total worth of ten dollars. That company was named BEPA, which is the Russian spelling for VERA. This company could do the job without doing any of the parts which would offend the governments, while at the same time keeping the reputation of Consarc in good standing.
The formation of BEPA was my only way to protect a sales and business territory which we had worked so hard to build. You commented at the board meeting that it was a very clever move on my part to separate the liabilities from Consarc when the board ratified my actions. Roberts told me that he would take me to court if BEPA made a profit and asked for an agreement to buy BEPA for one dollar in the future. We had to remain at arms length to avoid returning any money collected to the insurance company, so no action was taken on his demand to draw up the sales agreement.
Travel to Moscow was also important to my wife, who needed a business visa to visit her homeland. The British screamed to the Commerce Department when they learned about BEPA. The American government changed the law in an attempt to stop my new company before any work was completed. The new law did not cover the work that BEPA was planning.
We both agreed that we must stop the project. You wrote me a letter, at my request, which was used to show the Soviet buyers that we must stop. They would not cancel the BEPA contract, but agreed to transfer the supply of carbon insulation to Calcarb. Roberts wrote me a letter giving your approval to continue with the supply to this project as long as the British government approved.
Tom Dick, as director of BEPA, finally closed the contract by taking on the job under his own company name, Vacua Therm. BEPA did not do anything for the Russians except bridge the complex problems which the new regulations and governments cause.
Hank, when I offered a quick solution to my private problems, you thought that it was blackmail. Vera has arranged to sell the items offered for 52,000 pounds for almost 58,000 pounds, so she would not have allowed the quick solution in any case.
I do not intend to use any of my knowledge, or feelings, about the insurance or grant payments unless forced to do so under oath. I considered using the press to support Vera's human rights, but this has already backfired. The Burlington County Times refused the human rights story once again last week.
Maybe Vera can be convinced that America is not such a bad place to live and that the British will allow the compromise offered.
James F Metcalf