831.6363/33
The Secretary of State to the Minister in Venezuela (McGoodwin)
Sir: … You state in your despatch No. 2315 of March 25, 1921,4 that a settlement has been reached between the Venezuelan Government and the Colon Development Company Limited; and you express your opinion that the Venezuelan Government was influenced in reaching this settlement by its desire to protect the one-fourth interest in the Colon Development Company Limited, owned by the Carib Syndicate. You refer in this connection to the Department’s telegraphic instruction No. 23 of June 24, 1920.
On May 29, 1920, the Department addressed the following letter to Mr. C. K. MacFadden, Chairman of the Carib Syndicate:
“The Department has received your letters of May 3, 1920, and May 18, 1920, in regard to the proposed annulment by the Venezuelan Government of certain concessions held by the Colon Development Company, Limited, of London, England. You say that the Carib Syndicate, Limited, which is a New York Corporation, is owner of practically twenty-five percent of the shares of the Colon Development Company, Limited, and that its interests are represented in the latter by two Directors, yourself, and Mr. Julian A. Arroya, of Daytona, Florida.
“Since it appears that the Colon Development Company, Limited, is not an American corporation, and that your concern holds only a minority interest in it, I am obliged to inform you that the Department does not consider that it would be warranted in taking action with respect to the reported proceedings of the Venezuelan Government, which, according to the information in the possession of the Department, are based upon the failure of the Colon Company to fulfill its obligations under its contract with Venezuela.”
It is understood that the concession involved in the suit against the Colon Development Company Limited was granted to one Andres Vigas, who transferred the concession upon certain terms and conditions and with certain reservations to the Colon Development Company Limited. With respect to the vendor’s rights, retained by Andres Vigas, and transferred by him and his associates to the Carib Syndicate, the following is quoted from a letter dated June 16, 1920, addressed to the Department by Mr. C. K. MacFadden:
“The Carib Syndicate has received from Vigas and one Julian A. Arroya and Joseph J. Paris, who were associated with Vigas, and received an assignment of some of his vendor’s rights, all the rights that the vendor retained for himself; in other words, the Carib Syndicate succeeded to all the rights of the original holder of the concession. If the Colon Company failed to carry out his contract, the Carib Syndicate, by virtue of this arrangement, would receive [Page 937] the concession and would then be in a position to develop it itself. As you may see from this brief recital, the Carib Syndicate is today the owner of whatever equity the original vendor or the original holder of the concession had, so that since a forfeiture has occurred, by reason of the failure of the Colon Development Company to fulfill its obligations to the Government and to the vendor, the Carib Syndicate has an equitable interest in these forfeited rights. The Carib Syndicate is an American Company; a New York Corporation, owned insofar as the stock list shows, entirely by American citizens; in fact, the principal officers of the Company are in control of upwards of 80% of the stock.”
The Department understands from your telegram No. 45 of June 11, 1920, that the Colon Development Company’s concession had been annulled by the Venezuelan Supreme Court on that date; and it was the vendor’s rights, claimed by the Carib Syndicate, and not the rights in controversy between the Venezuelan Government and the Colon Development Company Limited which were referred to in the Department’s telegram No. 23 of June 24, 1920, and regarding which you were requested to inform the Venezuelan Foreign Office.
It is assumed that this was your understanding of the Department’s telegram No. 23 of June 24, 1920, and that you did not make representations to the Venezuelan Government in behalf of the Colon Development Company Limited. The Department would, accordingly, appreciate information regarding the precise nature of your representations, whether the British Minister at Caracas made any representations to the Venezuelan Government or had any conversations with you relative to the vendor’s rights claimed by the Carib Syndicate, and whether your representations were known to the British Minister at Caracas. It would appear from your despatch No. 2315 of March 25, 1921, that the British Government was not lending support to the Colon Development Company in its controversy with the Venezuelan Government.
To certain companies operating in Venezuela, such as the Caribbean Petroleum Company, the Colon Development Company Limited, the Venezuelan Oil Concessions Limited, the Carib Syndicate and others, which are known to be either British controlled or closely affiliated with British controlled companies, no diplomatic assistance should be given, generally speaking, without clear and specific instructions from the Department.
Referring to your telegram No. 45 of June 11, 1920, you are requested to keep the Department fully and promptly informed regarding any action that may be instituted by the Venezuelan Government against any other companies with the object of annulling petroleum concessions.
I am [etc.]
- Not printed.↩