821.6363 Barco/126: Telegram
The Minister in Colombia (Piles) to the Secretary of State
[Received August 6—4:03 a.m.]
64. President signed a resolution comprising 40 typewritten pages yesterday afternoon confirming forfeiture of Barco concession. After reciting history of concession and admitting that there are grounds for argument on causes of forfeiture in Bravo resolution he makes certain new additional points which he says prove justice of forfeiture. These points are the following and primarily apply to concession since 1918:
- 1.
- That company did no work in years 1923, 24 and 25, as obligated under terms of concession and if work of any sort was done it was merely preparatory and not “explotacion.” (Under terms of concession while “trabajos” must be continuous there is no requirement that “explotacion” be continuous.) Furthermore, that concession may be forfeited if “trabajos” cease for three months and that company abandoned “trabajos” for three years.
- 2.
- That there was no force majeure to
prevent company’s fulfilling contract, as company alleged, for
the following reasons:
- (a)
- That necessary machinery and materials could have been introduced through Colombian territory by roads which the company should have built.
- (b)
- That Venezuelan Government did not prevent passage of said materials over its territory as is proved by shipments as far as Encontrados and that Venezuelan Government merely required that they be passed through Colombian customs at border.
- (c)
- That since there is a customs in Cucuta, materials could have been brought there; therefore it was not an act of Venezuelan Government but the nature of the country known when concession was negotiated, and the difficulties of which were not impossible to overcome, which prevented company from importation of materials.
- (d)
- That the Colombian Government’s willingness to open customhouse at Rio de Oro is not evidence of the existence of force majeure but merely shows Government desire to be of assistance.
- (e)
- That there was no suspension of traffic on Lake Maracaibo and the fact that material was brought to Encontrados proves this.
- (f)
- That company has not judicially proved existence of force majeure.
Resolution terminates with the statement that the concessionaire either carried on “explotacion” and did not pay Government royalty, thus violating clause 6 of the concession or did not carry on statement ex-concessionaire [stated explotacion?], thus violating clause 3. This last argument especially is a sophism, for under original concession Government royalty was 15 percent net and Barco’s “explotacion” produced no net profits and concession was changed in 1918 to provide [Page 624] for Government royalty of 5 percent gross production and company does not maintain that there has been actual production (explotacion) since that date but merely continuous work (trabajos).
Failure resolution to make definite commitment concerning original resolution of forfeiture is apparently intended to avoid difficulties with Venezuela and a contradiction of the position taken before Swiss arbitrator.
[Paraphrase.] The representative of the company is convinced from the phraseology of the resolution that it was drafted by the President himself, that it shows the President’s careful study, and that it is self-evident that its preparation must have been under way for over a month. The resolution has been given to the press, but it has not yet been presented to the representative of the company. In Government circles it is considered as an open defiance of the United States. It is understood that at the Cabinet meeting where the resolution was approved, there was little or no discussion, and that the only ministers who voted against approval were the Minister of Finance and the Foreign Minister, the Minister of Public Works being absent. It is also understood that before the resolution was issued the President asked at least two judges of the Supreme Court whether the resolution could be sustained, and that both judges said it could.
The press is unanimous and enthusiastic in its approval of the resolution.
The representative of the company is cabling verbatim the concluding portion of the resolution. [End paraphrase.]