800.01B11 Registration/8–1549
The Secretary of State to the Attorney General ( McGrath )1
My Dear Mr. Attorney General: I refer to Mr. Ford’s top secret letter of August 15, 1949, in which he states that the Department of Justice proposes to initiate in the very near future proceedings against the Amtorg Trading Corporation for failure to register with the Department of Justice, as required by the Foreign Agents Registration Act of 1938 as Amended. In his letter he states that the Department of Justice has given due consideration to various problems posed by the prosecution of Amtorg Trading Corporation which have been the subject of previous correspondence and conversations between our two Departments.
There is an additional consideration which I must bring to your attention. Amtorg, although an American corporation organized under the laws of the State of New York on May 27, 1924, is in fact owned by the Soviet Government and is staffed in part by officials of that Government, whose official status in this country is attested by the fact that they are bearers of special Soviet passports and are in the United States on official 3(1) visas. The presence of these Soviet officials attached to Amtorg is regularly reported to the Department by the [Page 758] Soviet Embassy, which has recently advised that as of July 1, 19492 there were thirty-three Soviet officials with thirteen dependents attached to the Amtorg Corporation. In these circumstances it is inevitable that the Soviet Government will interpret any proceedings against the Amtorg Corporation as being of a political character.
This Department has of course no objection to the proposed prosecution of Amtorg if convincing evidence in the possession of the Department of Justice indicates that Amtorg is not entitled to exemption under Section 3 (d) of the Act. I need not point out, however, the undesirable and unfortunate political consequences which would result from the failure of such a suit.
In view of the Soviet ownership of Amtorg, its official Soviet personnel and the interpretation which the Soviet Government is bound to put on any proceedings against the Corporation, I deem it of importance that before legal proceedings are instituted the Soviet Government be formally apprised of Amtorg’s failure to respond to the repeated invitations of the Department of Justice that it register in accordance with the Act.
In the last paragraph of your letter you refer to the activities of Amtorg as a cover agent for Soviet espionage. This Department realizes that such activities may be an important reason for the presence in this country of a part of the Soviet personnel attached to Amtorg. It is my understanding, however, that the Department of Justice does not intend to introduce this element into the case unless it becomes essential to the prosecution. This Department is prepared, wherever there is evidence of espionage by Soviet officials attached to Amtorg, to demand their immediate withdrawal by the Soviet Government, following the regular procedure respecting the withdrawal of a foreign official who has become persona non grata. Finally, it is my understanding that the Department of Justice proposes to send one final communication to Amtorg requesting the Corporation to register before proceeding to initiate legal action against it, and that the Department of Justice intends, in taking such action, to proceed in the usual manner through indictment prior to the arrest of any individuals in their capacity as officers or directors of the Corporation.
I should be grateful if you would advise me when the Department of Justice transmits its final communication to Amtorg3 so that, for the reasons set forth above, I may send a parallel communication to [Page 759] the Soviet Embassy in Washington along the lines of the enclosed draft4
Sincerely yours,