The Chargé in Argentina ( Reed ) to the Secretary of State

No. 17035

Sir: I have the honor to forward to the Department two sets of photostatic copies of contracts74 which may be of interest in the consideration of the continued utilization of prominent German firms by the Argentine Government in its rearmament program.

Both of these negotiations are notable as representative not only of affirmative assistance and financial aid given by the Government to a key German firm, Siemens-Bauunion, Cía. Platense de Construcciones, S.A., but also of the virtual official agency status conferred upon that company by the Government. By virtue of the legal dispositions involved in the letting of Government contracts under “Regimen Planilla D”, the main contractor possesses the right to offer sub-contracts in a private licitation to any three firms it cares to designate. The Government may also nominate three additional bidders.

. . . . . . . . . . . . . .

Both of these sub-contracts were given to the firm, Vago y Cía., Darwin 525, Buenos Aires. Sr. Julio Vago, owner and manager of this firm has been interviewed by an officer of the Embassy. He has stated that these are the only two instances in which his firm has worked with Siemens–Bauunion or any other firm included in the Proclaimed List. Moreover, Vago stated that shortly before receiving the first of these invitations, he had been informed by an army officer that if his firm refused any work offered to it in behalf of the Ministry of War, the Dirección General de Ingenieros, which the officer claimed to be representing, would see to it that his firm should not receive any Government work whatsoever. Several days later, the Siemens invitation appeared. The Embassy is, of course, not inclined to place any considerable credence in the coincidences adduced by Sr. Vago, although it is possible that some such statement was made at some time or other. The Embassy believes that Vago y Cía. bears watching, but, unless the Department is of a contrary opinion, does not propose to initiate Proclaimed List action at this time.

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The Embassy feels that these two transactions may have more than ordinary interest and would point out particularly the following:

The dates involved, from May 4, 1943, to March 15, 1944, show a continuing utilization of the Siemens firm by the various cliques which held public office in Argentina during this period.
The procedural details reveal considerably more than the simple granting of a Government contract to an enemy firm. The Government conferred upon Siemens additionally:
The right to hold private licitation for sub-contracts.
The right to nominate the bidders.
The right to disburse payments of public funds.
The right to inspect for the Government the quality of the work.
The existence in both contracts of Article 8 which gives to a notoriously enemy firm the power to compel the employment only of workers acceptable to it on projects of the Argentine Nation is an amazing and dangerous illustration of disregard for the realities of German penetration.

The Department may wish to consider the present despatch as an addition to Section II (Domestic Transactions) of the report recently completed by Messrs. King and Skelton (WT)75 and transmitted to the Department by pouch on Saturday, January 6, 1945.

Respectfully yours,

For the Chargé d’Affaires ad interim:
David C. Berger

First Secretary of Embassy
  1. Not printed.
  2. The report by Nat B. King and Byron G. Skelton (World Trade Intelligence Division) entitled “The failure of Argentina to observe her commitments under resolution V of the Rio Conference,” not printed.