824.6363 St2/292
Mr. T. R. Armstrong of the Standard Oil Company of New Jersey to the Chief of the Division of the American Republics (Duggan)
Dear Mr. Duggan: As we did not consider the matter at the time to be serious or significant, we did not report to you a denouncement made in September, 1938 against the Standard Oil Company of Bolivia by the Comptroller General of the Republic for alleged violations by the Company of exchange regulations reputed to have occurred during the period February 1, 1934, to February 4, 1935. In fact, our people in La Paz gained the definite impression from statements made after the filing of the denouncement by an official of the Y. P. F. B.5 to a representative of Southern Radio Corporation, that the Y. P. F. B. in reality considered the transactions legally executed. The purpose of filing the denouncement was purely to discredit the Company in public opinion and as a part of the campaign of defamation against it.
About three weeks ago the Manager of the Company in La Paz was notified by a decree of the Comptroller General that unless proof of the legality of the exportation of the foreign currency was presented within a period of six days a large fine (Bs. 3,000,000.00) would be imposed. The threat was made that, if the fine was not paid, the Company’s representative would be imprisoned. Just what has happened in La Paz since the expiration of the six days we are not advised. In the meantime, Mr. Metzger has arrived at La Paz and informed the American Minister of all pertinent facts.
[Page 327]As reported to the Department, all of the files and records of the Standard Oil Company of Bolivia were seized and taken over by the Bolivian Government in March, 1937, being subsequently delivered to Y. P. F. B. On September 15, 1938 the Manager of the Standard Oil Company of Bolivia, Mr. C. Franco, was served with notice of the above denouncement phrased in vague terms but, in substance, claiming that the Company had violated the exchange regulations and stating that the only records available were the amount of Bolivian money remitted. Thereafter, the Manager replied to the denouncement stating, among other points, that the Company’s records were all in the possession of the Government and asked permission to examine such records. This was at first refused on the ground that the Y. P. F. B. had all the information necessary. The statement accompanying the denouncement merely listed check numbers, dates and respective values in Bolivianos issued by the Company, and there is nothing to indicate that the Y. P. F. B. had evidence of the purpose for which these checks were issued. The Company is presumably obliged to prove the negative fact that the checks were not issued for the purchase of clandestine exchange. To do this we must search files which have been seized by the Y. P. F. B. and possibly despoiled. We must seek this evidence despite the fact that Bolivian law flatly prohibits the use of private files for bringing charges against the owners.
Eventually, on October 21, a term of six days, declared to be non-extendable, was granted for a representative of the Company to examine certain files. Our representative reports that the vouchers attached to the checks were not found, having been either misplaced or removed.
The Government claims that the amount involved is Bs. 2,870,942.48 and is threatening to impose a fine in that amount or more and possible imprisonment of the Manager if the fine be not paid. The charges are being preferred under a regulation which did not come into effect until after all of the transactions referred to occurred, with the exception of one, a minor amount.
Mr. Franco has petitioned for a delay of thirty days during which time the Accounting Department in Buenos Aires will forward photostatic copies of the records it has of all the transactions, which should prove their legitimacy. We doubt that the Government will go so far as to actually imprison Mr. Franco who, incidently, had no personal connection with the exchange transactions now questioned. However, the illegal imposition of a large fine without a hearing is a real possibility.
[Page 328]We will be glad to procure and furnish you with copy of the entire record if you wish to have it. However, as the matter is urgent, we ask that you request the American Minister, preferably by cable, to investigate the facts of the denouncement and promptly report the present status of the situation.
Yours very truly,
- Yacimientos Petrolíferos Fiscales Bolivianos.↩