Memorandum by the Legal Adviser of the Embassy in Cuba ( González ) to the Counselor of Embassy for Economic Affairs ( Nufer )14

Mr. Nufer: Following your instructions I have very carefully gone over the whole file in the matter of the Havana Waterworks, and have specially scrutinized the draft of the agreement between the Corporation and Export-Import Bank; the concession from the [Page 255] Municipality to the Corporation and the Instrument discharging the outstanding first and second mortgages on the Havana Waterworks.

My examination and scrutiny have been limited to finding any loopholes in the main instruments (agreement and concession) which might give the remotest chance of graft, sinecures, etc.

I find that these instruments, from a legal viewpoint, are admirably drafted and certainly are the most effective way of putting through this negotiation in light of the present provisions of law, removing therefrom any possibility of intervention or tampering by politicians.

The concession turns over the whole Havana Aqueduct, its management and reconstruction, and the obtaining financing therefor, to the Corporation, and I see no way in which, once this concession has been legally and effectively granted, the politicians can have further intervention in the affair. This, of course, is provided the concession is granted in the specific terms set forth in the draft instrument containing the same.

The agreement between the Corporation and the Municipality closely follows the terms of the concession granted to the Corporation and provides further safeguards as to expenditures of monies, appointments of contractors and sub-contractors, disposition of funds, etc. The very close check placed on the whole construction work by the Engineer Supervisor and the fiscalization of expenditures and accounting by the Contador Interventor make it very difficult for any monies to be used for purposes other than those for which they are meant.

I can see nowhere any semblance of a loophole to permit graft or “botellas”, because the politicians, once the concession is granted to the Company, have nothing further to say in the matter. The fact that the plan is so fool-proof is precisely why it has met with opposition on the part of those who could and would like to profit by the usual methods in vogue here in public works projects.

L[eobardo] L. G[onzález]
  1. Copy transmitted to the Department by the Ambassador in his despatch No. 4233 of August 21; received August 25.