824.154/12–3147: Airgram

The Chargé in Bolivia ( Galbraith ) to the Secretary of State


A–407. Vice Consul Dorr, Cochabamba, telephoned Embassy yesterday stating that Bolivian Development Corporation there had obtained a legal order prohibiting Mr. Durso to leave Cochabamba and, secondly, ordering him within a two weeks’ period beginning December 22nd to render complete accounts. According Dorr, Durso stated he has actually seen this order, but that he has been informed orally by Knaudt (Cochabamba superintendent for Corporation) that the order has been amended to read Republic of Bolivia rather than City of Cochabamba.

Durso informed Dorr that 2 weeks would be sufficient time solely for the preparation of an inventory, and that the rendition of complete accounts would take approximately 5 months. Dorr added that, if the order as presently standing is carried to its logical conclusion, Durso will be jailed upon the expiration of the 2 weeks. Durso said that the legal order places him in an impossible situation and that if it is not changed, he will resign as legal representative of McGraw–Warren Company, thereby leaving no legal representative against whom the order could be made operative. Durso further informed Dorr that it is not and never has been his intention to abandon Bolivia until he has arranged McGraw–Warren affairs, but that he cannot do this with the above-mentioned 2 weeks’period.

Embassy, also yesterday, discussed matter informally with General Bilbao in La Paz, who stated that the above information was not in accordance with the facts. The General stated (1) that it was the Minister of Government who issued an order that the McGraw–Warren representative be prevented from leaving Bolivia until full accounts are rendered to the Corporation, inasmuch as a definite winding up with McGraw–Warren is desired as soon as possible and the Corporation is of the opinion that the legal provisions of the contract have [Page 363] not been lived up to by McGraw–Warren and that therefore such action is necessary; (2) that the 2 weeks’ period mentioned above refers solely to the submission of inventory data and that this period was fixed because Durso stated that inventory could be completed in 2 weeks if five Americans and one Bolivian were put back on the Corporation’s payroll to do this job. The General stated that authorization to hire the additional workers had been granted but for only a 2 weeks’ period. The General added that, if the inventory is not completed in 2 weeks, an extension for the individuals hired should be requested; and (3) the General categorically stated that the jailing of Durso is not contemplated in any event and that it is recognized that the completion of the accounting records could not be made in such a short time. The General further stated that no time limit has been made to Durso either for the preparation of the inventory or for the completion of the accounting records, and that such a move was never intended.

The action on the part of the Bolivian Government in taking Ministry-level steps in preventing the departure of the McGraw–Warren representative appears to be extreme, in that it could be accomplished merely through refusal of an exit visa, and points up the strained relations between the BDC and the McGraw–Warren Company brought to a head by the rescission of the highway contract. General Bilbao declared that the McGraw–Warren Company is under obligation to present an inventory of machinery and equipment and to submit proper accounting records of its activities as soon as possible so that the future of the program could be planned without delay. He added that if the McGraw–Warren Company chooses to send to Bolivia any other representative, fully empowered to act for it, to complete the windup of its activities, the Government would not insist on Durso remaining after the arrival of such official but that it would insist on some representative remaining here until the windup is completed.

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