880.2553/7–1051: Telegram

The Ambassador in the United Kingdom ( Gifford ) to the Secretary of State


178. Gulf reps report that Shaikh’s London rep appeared pleased with company’s proposal for 50–50 sharing profits which was presented in mtg July 6. Fol detailed verbal explanation of proposal, during which company reps emphasized plan had been drawn up with idea of making fair offer and avoiding any bargaining over terms. Kemp said his immediate reaction was that plan seemed reasonable. Company stressed that proposals were patterned after Aramco plan and so far Kemp has not questioned inclusion principle deduction foreign taxes. Company has provided Kemp with copies of SA tax provisions and has arranged several subsequent informal mtgs with Kemp and Abdulla Mulla Saleh (Shaikh’s rep now here from Kuwait) to offer any explanations required.

Detailed procedure not yet formulated, but presumably proposal will be referred to Shaikh by Kemp. If acceptable, steps will be taken to prepare tax decree and make corporate modifications necessary for implementing plan which company hopes will become effective Oct 1. Since Shaikh’s consideration and necessary adjustments may require some time, Proctor and Hamilton departing for States July 11 aboard Niew Amsterdam with tentative plans return London approx early Sept to finalize agreement. Pertinent documents being airpouched.1

  1. Despatch 195 from London, July 11, not printed.