832.796/912

The American Ambassador in Brazil (Caffery) to the Brazilian Minister for Foreign Affairs (Aranha)10

No. 111

My dear Mr. Minister: As Your Excellency is aware, I have been endeavoring for some time and am still endeavoring to help Condor. As Your Excellency is also aware, our efforts have been successful to the point of making arrangements at Washington for necessary material and technicians.

However, I must repeat that in my frank opinion, notwithstanding the fact that a number of very useful steps have been taken by the Brazilian Government to cut Condor loose entirely from Lufthansa, all the necessary steps have not yet been taken.

In view of the well known desire of the Brazilian authorities to sever completely all ties between the Deutsche Lufthansa (which is, in effect, the German Government) and the Serviços Aéreos Condor. I venture to make the following suggestions:

1. All outstanding contracts, commitments and agreements between Condor and Lufthansa to be specifically annulled and cancelled by law. (This especially refers to the exchange of letters between Condor and Lufthansa dated December 31, 1941 and the new social contract of Condor dated January 6, 1942. These documents clearly show that just as soon as the war is over, Lufthansa will once more in fact control Condor. See enclosure No. 1.11)

2. Liquidation of Condor’s indebtedness to Lufthansa which is on the books for 54,989 contos. This debt to be completely wiped out. Obviously it is for the Brazilian Government to decide whether it desires to assume this debt or whether it is to be liquidated or cancelled in some other convenient manner.

3. Although Condor has made great strides in the Brazilianization of the line, the financial and corporate structure of the company is [Page 780]still very confused. It could be reorganized so that it would possess a solid legal and factual structure, which it lacks today. For example, I cannot believe that the Brazilian Government wishes simply to turn over the very valuable Condor property, which is unquestionably worth many thousands of contos, to the five Brazilian private partners, who have obtained control of it for 100 contos, the total capital!

In view of the very close connections which the present Condor partners maintained with the former Condor–Lufthansa set-up, and the nature of the December 31, 1941 agreement and the contract of January 6, 1942, it is difficult to avoid the conclusion that although these Brazilian partners are nominally in possession of the quotas comprising the 100 contos capital, they might be holding them in trust for the German interests until hostilities have ceased.

Again I venture a suggestion, and that is that the answer to the problem might be in the conversion of Condor into a Sociedade Anonyma. In this manner the properties which are worth, say 40,000 or 50,000 contos, would appear in the form of capital and thus title to the assets of the company would not remain in the hands of the Germans. Furthermore, in accordance with the law of Sociedades Anonymas (Decreto-Lei No. 2627, September 26, 1940) the shares would have to be nominative. However, this of course would be a matter for the Brazilian Government to decide.

4. I venture another suggestion and that is that, in my opinion, an excellent impression would be made if the name “Condor” were changed into, say, a name like “Rondon” for instance.

5. Finally, I venture to invite attention to the fact that Herr Ernest Holck is still a director of the company.

In this connection I enclose the following: Copy of a memorandum of April 6, 1942; Copy of a memorandum of May 29, 1942.12

With all good wishes,

Sincerely yours,

Jefferson Caffery
  1. Copy transmitted to the Department by the Ambassador in his despatch No. 7506, June 2; received June 9.
  2. Not printed.
  3. Neither printed.