837.61351/4483
The Ambassador in Cuba (Braden) to the Secretary of State
[Received December 22.]
Sir: I have the honor to refer to previous correspondence concerning the insurance scandal relative to the 1943 Cuban sugar crop and to the opinion which I have expressed on various occasions that unless the Institute takes a strong stand in the matter a similar unsavory deal is likely to be attempted (and consummated) with respect to the much larger 1944 crop.
I consider that the only sound procedure in the premises will be for the Institute to call for bids for the 1944 insurance, with the understanding that should there appear to be collusion among the underwriters and unsatisfactory bids submitted, the whole subject be aired and a new call for bids made. Should this be done, I have no reason to doubt that responsible companies will make offers combining reasonable rates with maximum security.
In order to sound out the situation I have taken up this question informally with several of the leading American hacendados,72 having in mind that in the first instance the Hacendados Association73 could be useful in promoting through its members in the Institute full discussion of the matter, with a view to Institute endorsement of competitive bidding. Insofar as I have been able to determine thus far, all of the American hacendados favor competitive bidding with the possible exception of Mr. Philip Rosenberg of the General Sugar Estates (National City Bank) who had a falling-out with his underwriters two years ago with the result that he contracted for insurance on the 1942 and 1943, crops through the Rhode Island Insurance Company (represented in Habana by Enrique Godoy). I have not yet discussed the matter with Mr. Rosenberg, although I intend to do so. Other American hacendados have been emphatic in denouncing the “negocio sucio”74 of the 1943 insurance and in deploring the way in which it inevitably damaged the prestige and standing of the Institute.
I have good reason to believe that, although eight months ago he loudly condemned the Godoy deal as “un atraco”75 Senator Casanova76 in fact had considerable to do with putting it across. Should there be any discussion of these matters during the forthcoming [Page 196] molasses-alcohol negotiations, it might be desirable to bear the fore-going in mind.
While I appreciate that at this juncture the question of insurance on the 1944 crop is not a matter in which our Government has any official say, nevertheless the insurance eventually “shall be subject to acceptance by Commodity and the Institute…”78 pursuant to Article 10 of the 1944 contract.79 I wish therefore to reiterate the view which I have earnestly expressed on previous occasions, namely that the good name of our Government was not enhanced by our acceptance of the 1943 crop deal, the corruption involved in which was a matter of widespread public knowledge in Cuba and likewise in sugar and insurance circles in the United States. It was a source of deep regret to me that the Department did not see fit to support my recommendations in this matter, and my purpose in raising the issue again, at this time, is that unless we cease to be acquiescent in this particular, I should expect last year’s arrangement with its attendant graft to be duplicated when the time comes to insure the 1944 crop.
Respectfully yours,