CHAPTER TWENTY-TWO

From top management’s perspective, Loeb and Valdes had to be fired, and they acted swiftly to remove the perceived danger both men posed. As a member of the Eastern Pilots System Board of Adjustment, the judicial body that adjudicates various pilot grievances including firings, I knew that once a pilot is sacked, either rightfully or wrongfully, many of his fellow pilots shun him: the “guilty until proven innocent” mentality. Top management knew for these men it would, to a degree, destroy their credibility, isolate them and deny them a forum. There would be no access to cockpits, crew rooms, pilot lounges or operations offices, where they could freely speak their minds with fellow pilots. Because of Davidson’s recall, Loeb would no longer be viewed as being an important MEC Committee Chairman or as a pilot eyewitness to illegal actions. Valdes would no longer be the pilot concerned with South American air safety and matters surrounding the Flight 980 disaster. Both men would be stigmatized, relegated to “disgruntled former employee” status, ex-pilots conducting personal vendettas against their former employer. Anything they said concerning Eastern top management would appear to be tainted. Management would assist in this endeavor by never missing an opportunity to reinforce this perception. Another side benefit would be that Loeb’s and Valdes’ challenging of their terminations to regain their jobs would keep much of their attention diverted to that singular goal. Thus, on April 21, 1986, via hand-delivered letter, management first fired Loeb.

This is the text of Loeb’s termination letter:

April 21, 1986

HAND DELIVERED

Dear Capt. Loeb:

Effective upon receipt of this letter, you are hereby notified that your employment with Eastern Air Lines, Inc. is terminated.

Attached and incorporated to this letter are two hand-written memoranda entitled “EAL Management, A Tactical Plan for Incumbent Management Removal and Installation of New Management” and “Tactical Planning for Borman’s Removal, a Chronological Recap of Events and Planning Phases.” Both of these documents state that they were prepared by you, and they contain your signature. We have independently verified that you did engage in much of the conduct outlined in these memoranda. The actions referred to in the attached documents form the basis for your termination.

You have intentionally engaged in an outrageous course of conduct well beyond all bounds of acceptable employee behavior. For example:

1.You provided the Federal Bureau of Investigations with a “19-page report” alleging that senior Eastern management officials are engaged in “bribery,” “corruption,” “illegal kickbacks” and other serious felonies. Your allegations are false and groundless, and they were maliciously put forth to the FBI by you for the purpose of achieving the goal of your “Tactical Plan”—the removal of incumbent management by any means;

2. In paragraph 9 of your December 26 memorandum, you state the following:

“A look-see at the personal lifestyles of certain high-level EAL management members is already underway by several, non-related sources. This highly sensitive area is being handled by very discrete and trusted contacts.”

Independent investigation has verified that senior management officials were subjected to this unreasonable deprivation of their privacy. There can be no excuse for you to engage in or condone this type of conduct;

3. You repeatedly made false and groundless accusations of sabotage involving the crash of EAL Flight 989* in La Paz, Bolivia, in January, 1985. Additionally, you have groundlessly alleged that senior Eastern management officials have attempted to cover up the alleged sabotage;

*Note: the flight number utilized is incorrect, it should be Flight 980. I believe they chose to give the appearance of downplaying its importance by using an incorrect number.

4. You implemented a plan designed to effectuate the “conversion” of select incumbent EAL BOD [Board of Directors] members through persuasion of defecting from the incumbent EAL management group or risk personal, financial devastation.” You have advocated a plan to coerce members of the Board of Directors into voting to remove incumbent management with threats of devastation of “their individual personal fortunes by way of multibillion dollar derivative litigation” and “prosecution of certain EAL BOD members for [alleged] SEC violations.”

The excerpts referred to above from your memoranda are illustrative of the type of conduct which caused you to forfeit your right to continued employment with Eastern Air Lines. It is somewhat understated to say that your actions as exhibited in the attachments were contrary to the best interest of Eastern Air Lines, Inc. You set a goal of the removal of incumbent management, and you proceeded to attempt to attain that goal by falsely and maliciously accusing senior management officials of engaging in serious criminal activities, by invading the privacy of senior management officials by investigating their personal lives with the view to coercing some unidentified action, by attempting to coerce members of the Board of Directors to disregard their fiduciary obligations and to “convert” to your tactical plan by threats of criminal prosecution and devastation of their personal wealth, and you have made false and groundless claims that lives were lost in the crash of an Eastern Air Lines plane as a result of intentional sabotage, and that management and several governmental agencies are covering up the alleged sabotage. Each of these individual actions would justify your termination. Combined, your actions are so ruthless and disloyal and so contrary to the best interests of the airline that there is no choice but to effectuate this termination immediately.

Sincerely,

R. J. Shipner

Vice President

Flight Operations and System Chief Pilot

Two items in the letter that immediately caught my attention were the words, “We have independently verified that you did engage in much of the conduct outlined in these memoranda,” and, “Independent investigation has verified that senior management officials were subjected to this unreasonable deprivation of their privacy.” There is no further information on how, where and when top management independently verified that Loeb had engaged in “much of the conduct outlined in these memoranda.” Was it the Intercontinental Detective Agency that provided this material? That question is quite pertinent because it was shown by the Valdes formal complaint that they tried to manufacture false information.

Loeb immediately realized that his greatest mistake was in the timing of his reports, as he referred to management replacement in almost the same breath as the hauntingly mysterious circumstances surrounding the Flight 980 crash. As a result, for the first time, Loeb grasped that something much larger than his dismissal was at stake. But instead of simply “going away,” as management hoped, Loeb now attempted to obtain related information concerning U.S. government investigations into the possible relationships between Eastern, the Flight 980 crash, potential sabotage of Flight 980, the then-unfolding Iran-Contra money-laundering scandal and the associated drug smuggling. He felt this information might provide him with the means to go a step further and establish a link to his termination, which could then be used in his defense at his reinstatement hearing at the System Board of Adjustment. Loeb utilized the United States Freedom of Information Act (FOIA) to try and secure the needed information to establish these links. The Freedom Of Information Act is purportedly the federal law designed to make it easier for American citizens to check on what their government is doing behind closed doors. There are exceptions, like the previously mentioned use by the NTSB of internal memos during their Flight 980 crash investigation so they would not be subject to these requests. Despite what this law was supposed to represent, every United States federal government agency Loeb contacted denied him access to any relevant information. From the tone of the denials, some agencies seemed to be inviting him to hire a lawyer and sue them, which he could not afford to do. I became clear that Loeb had underestimated the power and inter- relationship between the various government agencies and Eastern top management. Loeb wondered who the good guys were and who the bad guys were. It came as no surprise to me that Loeb’s requests were met with the classic bureaucratic runaround. I had run into, and continue to experience to this day, the exact same roadblocks from the NTSB with my Flight 980 crash-related requests.

The only federal agency that supplied any information to Loeb was the FBI, and the documents they provided were heavily censored. Neither the Drug Enforcement Administration nor the Central Intelligence Agency released anything, both claiming they either didn’t have them, couldn’t locate them, or that they were part of unspecified top-secret records not covered under FOIA. The CIA wanted money to even check into their files to see if there was any information available.

Since the only connection between Valdes and Loeb was the Flight 980 crash, Valdes became the next target on management’s hit list. His similarly worded termination letter was also hand delivered on April 24th, 1986.

As an aside, I had never before seen letters of termination hand delivered. The normal, contractually mandated procedure was to send it certified U.S. mail, return receipt requested. I believe this action further demonstrates top management’s abnormally high level of concern.

The Loeb and Valdes termination letters were both signed by Captain Bob Shipner, the system chief pilot. I had known Shipner informally since he had unsuccessfully run against Captain John O’Donnell for ALPA President. He was one of the former ALPA officials given management positions. After losing, he had been subsequently offered the System chief pilot post, a high-level management position. Although he later denied it was the case, I knew Shipner had close relationship with Borman and would blindly do his bidding. Terminating a pilot was the equivalent of “capital punishment,” reserved for only the most serious offenses. This made it essential that Borman have someone, like Shipner, in the chief pilot position that would not question the true motivation behind them. This was especially important, because upon closer examination it was clear that even if the charges in the letters were factual, neither Loeb nor Valdes was guilty of anything warranting termination.

Shipner subsequently revealed to me that he hadn’t written either termination letter. He simply affixed his signature to them after they were written by Magurno, also claiming that he was “forced” to sign them, without further explanation of what would have happened if he didn’t. But, the worst that could possibly happen would be that Shipner would be relieved of his chief pilot position and returned to line flying as a captain, since he was on the Eastern pilots’ seniority list. I believe Magurno wrote both termination letters at Borman’s behest. I do not believe that Shipner knew the true motive behind why Borman wanted Loeb and Valdes fired, although Shipner did know Loeb had gone to the FBI with information concerning money laundering and drug trafficking on Eastern, along with his belief that Flight 980 might have been sabotaged. From his union background, Shipner also knew that since Loeb had been removed from an important union position, he was vulnerable. Since the Railway Labor Act guarantees protection for a union official to carry out his or her duties without fear of reprisal, if a union person is fired, a good labor attorney like John Loomos could make a compelling argument for immediate reinstatement, with most arbitrators giving the benefit of the doubt to the employee. But I believe that Davidson’s recall of Loeb was carefully orchestrated to prevent Loeb from utilizing this defense.

After learning of Loeb’s sacking, since I was now an ALPA MEC delegate, Copeland and I telephoned other MEC members, soliciting each to join with us in calling a special meeting to address Loeb’s removal from his committee position and subsequent dismissal. With Loeb present, after in-depth deliberations, it became crystal-clear that Davidson’s basis for Loeb’s removal was not credible. I proposed a resolution directing that ALPA National pay Loeb his full pilot salary (he was now a Boeing 727 captain) pending the outcome of the hearing disputing his dismissal. There was a small amount of resistance from some MEC members who had initially voted to remove him, but I countered these arguments by explaining that Loeb had been operating with Schulte’s full knowledge. I also played on their guilt by stating that by voting to remove Loeb they might have inadvertently assisted management in upholding his firing. Over Davidson’s vociferous protests, and despite Schulte’s telling silence, the majority voted to have ALPA pay Loeb his full salary until a decision was rendered. This agreement also stipulated that if he won reinstatement with back pay, he would reimburse the money. At least Loeb wouldn’t starve.

From informal discussions I also learned that some MEC members had only heard management’s side of Valdes’ termination. They were told that Valdes had hired a private investigator and was out to destroy top management and also determine Magurno’s sexual preference, which would somehow allegedly do immeasurable harm to the airline.

In the airline industry, the Railway Labor Act mandates a trial-like hearing for employee grievances, including terminations, by the aforementioned System Board of Adjustment. The Board was comprised of two members representing ALPA and two representing management. If these four people deadlocked, as would undoubtedly happen with Valdes and Loeb, a fifth, neutral person would be called in to reach the final determination.

Under the Eastern pilot contract, both Valdes and Loeb had the right to bypass the four-member Board and proceed directly to the five-Member Board, which is what Valdes chose to do. His hearing commenced in Miami on January 27, 1987 and continued until January 30th. Mr. Louis Crane was the fifth and final authority. The decision was rendered on April 20, 1987. The final Award paragraph of the nineteen-page decision read:

The Association’s motion to dismiss is granted. Ramon Valdes’ discharge is therefore set aside, and he is hereby reinstated with full seniority rights, and with the pay and benefits he lost as a result of his discharge.

Valdes had been vindicated and reinstated with full back pay, and I was elated. However, after much deliberation he decided not to return, as he was pretty worn out after the legal battle. Plus, he wanted to take care of his spouse, who was ailing with cancer that ultimately proved fatal. So after receiving his back pay and benefits, he opted for early retirement. By doing so, he inadvertently accomplished one of management’s goals; no longer actively employed, he would have no further involvement with any South American flight safety items or Flight 980-related activities.

Allow me to digress to underscore top management’s treatment of yet another Eastern pilot, as their actions clearly demonstrate their inordinate fear of anything that any pilot uttered in connection with Eastern and drug smuggling. Unfortunately, for this particular pilot, it was a matter of mistaken identity.

As a member of the Eastern System Board, I had arbitrated cases which ran the full gamut, from minor contractual disputes to termination cases. I knew from experience that Eastern normally only fired pilots for serious offenses. In July of 1987, I was requested to hear the concluding testimony in the dismissal of another Eastern pilot, Edwin Korczynski, which had been continued from an earlier date. This was the second time that the Chicago-based Korczynski had been fired. In a prior case, a different arbitrator had overturned Korczynski’s discharge and ordered him reinstated. But before his return to duty could be accomplished, Shipner fired him again. This time it was for allegedly improperly attempting to get reduced rate transportation.

I was aware that Shipner detested Korczynski for unspecified reasons, and believed it likely that he had taken out his wrath by firing Korczynski not once, but twice. I immediately became suspicious of the motivation because I knew from similar situations that when an employee had abused reduced rate travel privileges, the usual punishment was to suspend the benefit for a specified period of time and have them pay for the flight in question—not to fire the person. I concluded there had to be another reason.

During the closing portion of this case, after hearing the testimony, I sensed that things were not going well for Korczynski. Although I picked up the case during Korczynski’s testimony in defense of his actions, it was clear from the tone of the neutral member’s remarks and probing questions that he had doubts. I related this concern to John Loomos, who was representing Korczynski. Loomos was also worried, because after his first victory, Korczynski came off as arrogant, confident of also winning this case. After Korczynski finished testifying, Loomos told the Board members that he had one more witness to call the following day and informed the Board that it would be him. This was highly unusual, and although allowed under the Board’s rules, I had never before seen an attorney take the witness stand on a client’s behalf.

When his testimony began, I was surprised. To paraphrase what Loomos said under oath, over vigorous but failed objections by Eastern’s attorney, Korczynski was terminated because in 1985 he had been mistakenly identified by top management as having gone to the Drug Enforcement Administration asserting that Eastern crewmembers were bringing drugs into the U.S. on flights from South America. As a result, the DEA threatened to launch a full-scale investigation, with some members of management the specific targets.

Loomos discovered there was a DEA agent with a Polish last name that sounds very similar to Korczynski’s and that he was peripherally involved in an investigation of drug smuggling on Eastern. When Shipner had heard the similar-sounding name, he immediately, and erroneously, assumed it was Korczynski. This turned out to be yet another case where management concocted an underhanded plot to terminate an employee they believed, in this case erroneously, had reported drug smuggling on Eastern, with the firing done under the guise of “pass abuse.”

I attempted to learn if management had also retained the Intercontinental Detective Agency as part of its investigation of Korczynski, but couldn’t get a definitive answer, although indications pointed in that direction. This case clearly demonstrated the lengths management would go to silence any pilot they perceived as concerned about drug smuggling on Eastern. If there was nothing to hide, why use such measures?

Back to Loeb. While his termination case was pending, he was subpoenaed and in February of 1988 gave sworn testimony before U.S. Senator John Kerry’s United States Senate Subcommittee on Terrorism, Narcotics and International Operations. As word leaked out about the drug smuggling on Eastern, this Senate Subcommittee wanted to know why and how this was happening right under the noses of the government persons who should have been interdicting the shipments and apprehending those responsible. Loeb testified how he had witnessed the cash shipments being offloaded from his Eastern flights in Panama, and also brought up an Eastern “Frequent Flyer,” a fellow he dubbed “Fast Eddie” [his true identity remains unknown]. “Fast Eddie” always accompanied the money shipments to Panama, showing up at the last possible moment, undoubtedly after having witnessed the money safely stowed onboard. Loeb nicknamed him Fast Eddie because no matter where he was seated, he was always the first to deplane. He would then stand on the ramp, a supposedly restricted area, and supervise the money being off-loaded into the waiting Panamanian Defense Force’s armored vehicles.

One evening, a Panama-to-Miami return flight was cancelled for mechanical reasons. The entire crew, along with Fast Eddie, went to the airport hotel and Loeb ran into him in the bar. The guy became inebriated, and Loeb asked him what was in the pallets. Fast Eddie confirmed it was money and informed Loeb he was working for Eastern in some vague capacity. Loeb didn’t know whether to believe him because, although he did produce valid Eastern ID, from their discussion it became obvious he knew nothing about the airline’s operations other than the money shipments. A few months later, Fast Eddie mysteriously vanished without a trace.

Additional witnesses also offered sworn testimony before Senator Kerry’s Committee that verified Loeb’s accounts concerning the money. Ramon Milian Rodriguez, born in Havana, Cuba, at the time was incarcerated for 43 years in the Federal Corrections Institution at Butner, North Carolina, for violations of the criminal Racketeering and Influence Corruption (RICO) laws. Specifically, he was jailed for crimes of illegal money laundering and transporting cash to Panama. I won’t go into all of his testimony, only excerpts confirming what Loeb had witnessed.

Mr. Rodriguez. “Anyway, the money was packed in these boxes which were very official looking . . . and transported to an air freight facility . . .”

Senator Kerry. “When we say ‘air freight’ did we use commercial airlines at the time? Were you using those?”

Mr. Rodriguez. “Yes. The reason we . . . ”

Senator Kerry. “did you use Eastern Airlines?”

Mr. Rodriguez. “Yes. The reason we . . . ”

Senator Kerry. “Was this money literally put on pallets and palletized?”

Mr. Rodriguez. “Yes.”

Mr. Rodriguez. “Yes. What you do is you put your money in the middle and you put cargo on the outside. You strap it, and you ship it on a commercial flight . . .”

Senator Kerry. “Was this money met on arrival in Panama?”

Mr. Rodriguez. “The money was met on arrival. . . An armored vehicle with a Panamanian Defense Force detail.”

Senator Kerry. “Was the Eastern station manager . . . on the payroll of the [Medellin] cartel?”

Mr. Rodriguez. “No Sir. The Eastern and Braniff people were Noriega men.”

Senator Kerry. “They were Noriega people?”

Mr. Rodriguez. “Yes sir.”

Senator Kerry. “Were they part of the drug process, laundering?”

Mr. Rodriguez. “I do not know all of General Noriega’s endeavors, but for some personal reason he maintained a very tight control over the airlines that landed in Panama, a control to the extent that he always was sure to name the [airline’s] station manager dealing out of Miami.”

Senator Kerry. “How much money did you begin to handle?”

Mr. Rodriguez. “Well, towards the end of my career I was handling $200 million a month.”

Senator Kerry. “Was there a central collection point?”

Mr. Rodriguez. “In Miami. . . we would put it on the pallets and ship it out of Miami.”

There was additional testimony given to the same Senate Committee from a Panamanian, Floyd Carlton Casides who was in the Federal Witness Protection program. He was thoroughly familiar with the Noriega-related money laundering operation and how it worked. He testified with a black hood over his face and what follows is a relevant excerpt from his testimony:

Senator Kerry. “. . . You became familiar with the money laundering operation that took place in Panama. You knew how it worked.”

Mr. Carlton. “Yes, that is correct.”

Senator Kerry. “Now, you know also that some money that came in to be laundered came in on commercial airliners; is that accurate?”

Mr. Carlton. “Yes sir.”

Senator Kerry. “do you know which airlines were involved?”

Mr. Carlton. “Air Panama, Eastern Airlines. . .”

Although I won’t quote them all, there were a number of others who also confirmed the Eastern connection to money laundering, which was exactly what Loeb had reported witnessing to both Borman and the FBI, and for which he was fired.

A decision on Loeb’s case was ultimately rendered at the System Board of Adjustment by Neutral member Ralph Baird, just prior to Eastern closing its doors and going out of business, and it went against him. Once again, Schulte never testified on Loeb’s behalf that he was working for him in attempting to have Borman removed, which could easily have changed the final outcome. However, at that point reinstatement was a moot point because there was virtually no Eastern to return to. For this reason, Loeb decided not to put much effort into his case or to pursue an appeal. At least Loeb suspected why he had lost his job. There were eventually approximately forty thousand other Eastern employees who lost their careers, with absolutely no clue as to why the airline had crashed and would never fly again.