832.6363/10–247: Telegram

The Chargé in Brazil (Key) to the Secretary of State


1374. Brazilian National Defense Council, composed Cabinet members, but army-dominated, reported have drafted project law regulating refinery concessions without reference to committee drafting petroleum law. Text project not yet obtainable, but General Barreto has indicated confidentially provides for eventual 51 percent Brazilian stock ownership with Brazilian interests contributing at outset 10 percent, with remaining 90 of 51 percent to be paid from earnings, 49 percent foreign interest to provide remainder of immediately required financing.

President Dutra signed decree September 30, published Diario Oficial October 1, appointing committee of Chief Staff General Obino, McNarans, Pestana and Minister Labor Figueirrio to review project and present him their opinion. Evidence points to Sampaio group with 20,000 barrel refinery concessions at Paulo as instigator project. Thought is advanced some quarters that action National Defense Council may be attempt force US hand on questions loan to Brazil. Text project will be communicated if and when available.

Emerico Kahn Sampaio’s financial man now en route US to obtain financing for São Paulo refinery.