Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume VI

840.51 Frozen Credits/9398: Telegram

The Secretary of State to the Ambassador in Peru ( Norweb )

Washington , February 13, 1943—5 p.m.

168. Your A–556, February 3, and your 192, February 9.²³ It would appear that two problems are raised by the above communications:

1. Repatriation of private Peruvian bonds from Switzerland where the ultimate ownership of those bonds is not known.

2. Control over remittances to Switzerland where the ultimate beneficiaries are unknown.

The following considerations may be of assistance to you in dealing: with these problems:

1. Under Resolution IV (b) of the Washington Conference,²⁴ each American republic is required to take appropriate action to prevent transactions in securities located outside the Western Hemisphere, which would benefit the Axis. In view of Axis looting in the occupied countries and the convenient channel provided by Switzerland to realize on such loot, it is believed that any transaction involving the repatriation of securities from Switzerland should be viewed with suspicion, particularly where payment for such securities would be made by remittances abroad. In this connection if the price for which securities are being repatriated is below recent market prices, this will lend credence to suspicions that the Axis may benefit. Consequently, it would be highly desirable for the Peruvian Government to prevent this transaction unless it obtains complete information concerning the ultimate beneficiaries.

2. With respect to remittances of Swiss francs for interest payments on bonds, the Peruvian Government, under Resolution II of the Washington Conference, should take all steps necessary to prevent undesirable interests from benefitting from such transfers. As you know, any such remittances from the United States to Switzerland must, in the absence of a special license, be remitted pursuant to General License 50,²⁵ which provides that any such transaction can be undertaken only pursuant to the direction of the Swiss Government or the Banque Rationale Suisse, and then only if no national of a blocked country other than Switzerland has an interest in the transfer. A Swiss corporation, 25 percent or more of whose stock is owned by a national of another blocked country, say Italy, is a national of Italy as well as of Switzerland and hence the transaction cannot be consummated under General License 50. Reports are required to be filed as to all transactions consummated under the general license. This permits scrutiny to determine whether the terms of the general license have been complied with. Further this Government would probably not grant special licenses for transfers not covered by General License 50 unless it first received full information as to the ultimate beneficiaries. This requirement would not be waived merely because a Swiss bank or corporation stated that it could not legally divulge the names of the ultimate beneficiaries and that it was impossible to trace the holders of bearer securities.

It is suggested that you bring the foregoing considerations to the attention of the appropriate Peruvian authorities to the end that: (a) the repatriation of the private Peruvian bonds will not be permitted unless there is absolute proof forthcoming as to the ultimate beneficial owners thereof. (In this connection, the obvious difficulties in obtaining such proof make it desirable that the transaction be prevented altogether); and (b) that remittances to Switzerland for interest payments on Peruvian securities not be permitted unless appropriate assurances are first obtained either from the Swiss Government or the Banque Rationale Suisse that only Swiss interests will benefit.

Little information is available here as to the Societe Privee de Banque et de Gerance or the Swiss corporations, Sudamericaine Electricite, Zurich, and Suisse Americaine Electricite. From an intercept of two letters from Finapar,²⁶ Lugano, Switzerland, to Urfina, S.A., Uruguay, which letters enclosed letters from Motor Colombus, S.A., Baden, to the Swiss companies in question, however, it would appear that there is some connection between those companies and Finapar. Finapar is on the British Black List and our Confidential List as it is suspected of being Italian owned. Finapar has also apparently had correspondence with Dr. G. Brianchind of Lima, Peru, as appears from an intercept of January 15, 1941, concerning a shipment of electric meters from the factory in Switzerland via Italy and Lisbon to its ultimate destination (presumably the Lima Light & Power Company). The Department is requesting other Washington agencies and the Embassy in Bern to investigate the Swiss companies involved.

Hull

23. Neither printed.
24. For text of the resolution, see Pan American Union, Congress and Conference Series No. 39: Final Act of the Inter-American Conference on Systems of Economic and Financial Control (Washington, 1942). For correspondence concerning this Conference, held at Washington, June 30–July 10, 1942, see Foreign Relations, 1942, vol. v, pp. 58 ff.
25. Board of Economic Warfare issuance.
26. S. A. Di Partecipazioni in Aziende di Finanziaminto.