840.51 Frozen Credits/7293

The Ambassador in Ecuador (Long) to the Secretary of State

No. 3326

Sir: I have the honor to inform the Department that long before the receipt of the Department’s instruction No. 1251 of July 20,7 we became disturbed because of the receipt of evidence which we deemed to be reliable that the provisions of the Decree of February 9, 1942 were being laxly administered.

Our evidence comes from the Consulate General and contact with our British colleagues. It looks like substantial evidence but we must remember that the Decree was virtually a wholesale freezing measure and probably caught a considerable number of accounts, particularly those belonging to Italians who were not regarded (by some) as sympathetic to the Axis.

Methods for Improving Administration

It is suspected that little could be accomplished in the way of improving the administration without direct authorization from the Executive, who is one of Ecuador’s outstanding lawyers, numbering among his former clients many of the leading business people of the country.

At the time of deporting Axis nationals we learned some lessons, namely that there was a divergence of opinion as to which of the former clients were pro-Axis. In the light of this experience we are inclined to believe that evidence against firms or even other evidence, which could not stand up under the severe attack of talented lawyers, might possibly be omitted in our initial negotiations and our efforts might preferably be guided along the following lines:

That as six months has elapsed since the issuance of the Decree we would appreciate it if an examination might be made of the results of the administration under the committees of three at Guayaquil and Quito, and that we would be disposed to assist in an examination of the record supplying at our own expense the American personnel necessary to collaborate in this survey.
Should the survey reveal as many violations as we think have taken place we might possibly then be in a position to continue our representatives, having them appointed as members of the Committees or as technical assistants.

Our telegram no. 620 of July 28, 5 p.m.8 requested instructions. However, it failed to mention that our British colleague would prefer [Page 418] to take joint action. The Department’s advice on this particular point is requested. It is my own impression that parallel action might accomplish the same results, although I have no objection to the joint action if the Department approves.

One of the problems to be faced in the event the Ecuadoran Government should accept our offer to lend a technician to examine the records would be the finding of the individual who could do the job. There are no competent certified public accountants in this country so far as we know, however we are inclined to believe that we could take a member of the staff of the Economic and Reporting Section of the Embassy who has a pretty fair background extending over a period of years.

We recognize, of course, that we have no individual who might be as skillful at this particular task as some of the accountants of the large foreign companies located in Ecuador. For example, the British Anglo-Ecuadoran Oilfields Ltd., or the South American Development Company. Possibly one or both would lend a competent technician. If not we might be able to get someone from the Ecuadoran Corporation (Norton Interests) who would be available on a part time basis.

Respectfully yours,

Boaz Long
  1. Not printed; it concerned the investigation of the Ecuadoran Committee that handled the freezing of Axis assets (840.51 Frozen Credits/6638).
  2. Not printed.