U.S. DEPARTMENT OF STATE REPORT ON NATIONALIZATION, EXPROPRIATION, AND OTHER TAKINGS OF U.S.

AND CERTAIN FOREIGN PROPERTY SINCE 1960 Reviewed work(s): Source: International Legal Materials, Vol. 11, No. 1 (JANUARY 1972), pp. 84-118 Published by: American Society of International Law Stable URL: http://www.jstor.org/stable/20690846 . Accessed: 31/07/2012 16:49
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84

U.S.

DEPARTMENT OF STATE OTHER TAKINGS OF U.S.

REPORT ON NATIONALIZATION, EXPROPRIATION, 1960* AND CERTAIN FOREIGN PROPERTY SINCE

AND

I.

YEARS RISINGTRENDIN RECENT

that have nationalized, The list of noncommunist countries of foreign-owned assets, or negotiated usually purchases expropriated, now incorporates some in connection with nationalization actions, ? Included among these countries depending on how 34 countries. ? in are 9 in Latin America;!5 in Africa;5 actions are defined Prominent among recent actions the Middle East; and 5 in Asia. in Chile, the has been the takeover of the large copper companies and either firms in Bolivia, Peru, and Algeria; or both in Libya, Somalia, Sudan, Uganda, firms and India. Principal Causes suggest its banking and insurance Zambia, Yemen (Aden),

Congo (Kinshasa), and Zambia (a majority share); petroleum production

in developing countries Studies of economic nationalism aside from fundamental changes in form of government, that, causes are to be found in such factors as: a)

support for the widely held view in many of increasing the LDCs that they are excessively dependent on foreign take a disproportionate companies which export resources, share of profits out of the country, and more generally exercise undue influence over governments and lives of economic power; people through their international of developing the increasing political responsiveness leaders to the popular sentiment outlined above, country its debatable merits; despite

b)

attitudes taken the increasingly and self-reliant positive countries toward their development by many developing technical problems, partly as a result of increasing of State, of Intelligence from U.S. Bureau and Department *[Reproduced of November entitled "Nation Research 30, 1971, Research, Study RECS-14 of United States and Certain and Other Takings Expropriation, alization, 1-6 and pp. 19-60. since pp. Property I960'1, Foreign II concerns the omitted. II and IV of the Study have been Part [Parts c) in communist countries". IV deals claims with "pending is June 30, 1971, for the information in the Study date [The cutoff some notes of the be an updating There will with added August. through in the future. will Materials the ad International Legal carry Study to the original as an addendum Ser information ditional Study. Foreign Part
vice 11 impact on assets of United States companies in noncommunist countries";

the ment

reports

have

been

the

principal statement

source on

of economic

the

material assistance

contained and invest

in

Study.
[The United States policy

security expropriation
twentieth

nations in developing appears of American-owned property by Affairs

published

at

page foreign
of

on report in the governments 23 9. The

Com

mittee

on Foreign

century,

on July

by

the

U.S.

House

Representatives1

19,

1963,

appears

at

2 I.L.M.

1066

(1963).]

over trade 85 competence, partly as a result of frustrations and partly because they have an increasing and aid issues, centers in a world of expanding capital of choices range and and institutions; d) that compete against the appearance of infant industries both to less expensive foreign firms with easier access and more up-to-date technology. financing to increase foreign firms, advantages In the view of national pride

is In LDCs a primary aim of economic nationalism control over their economies and to reduce the role of even at the expense of economic growth and technological with the developed countries. gained from association and some LDC governments, the gains in self-confidence will outweigh this cost which they tend to minimize.

In Latin America and in Africa, especially among the least control and fear of resentment of foreign developed countries, In many LDCs the by foreign interests are deep. exploitation visible are not particularly economic benefits of foreign investment natural to the people. Many of their people believe that valuable minerals and petroleum, have been exploited resources, especially much more for the benefit of the foreign firm than for local economies. Governments of some of these countries appear to have concluded that not only are the economic gains from continued foreign operation in terms of new investment and of such enterprises questionable, costs, particularly technology, but also they are outweighed by social domestic political instability. actions probably have nationalization* Thus, in some countries on political than on an assessment of been based more motivation the economic gains or losses, although the latter may have been taken into account. Impact on Developing Countries

from developed countries and the manage Private venture capital with it have associated and marketing skills ment, technical, to the output and exports of the LDCs. contributed substantially in all of the major mines and petroleum fields For example, almost of these were opened up by foreign firms. Nationalization LDCs firms or taking an increased share of their profits can yield certain gains for the LDC governments involved. political from nationali Whether any balance-of-payments benefits, resulting can be sustained depends largely on both the zation or expropriation, of the nationalizing ability country to run the enterprise well and on the general climate of investor confidence the government is able to action is taken in the context of If the nationalization inspire. a political course which gives the business sector ? foreign and cause to have doubts in the future stability of the domestic declines in investment and capital currency, flight may be far than any "savings" which the elimination of the profits greater remittances of a foreign firm may entail. The major short-term economic drawback of nationalization is its effect on the investment climate, where prompt, adequate, particularly and effective Credit may dry compensation is in question. lenders and investors hesitate up as potential pending an assessment of the new situation. A number of projects involving substantial new investment in some Latin American countries, for example,

86

reportedly

have been suspended

during the past year.

are frequently more direct costs of nationalization Additional, in considering These the pros and cons of this issue. overlooked often at higher costs include the cost of technological assistance, to the host country than previously provided by the foreign investor, and the cost of financing imported equipment to maintain the usually at shorter terms and higher interest rates than operation, to the foreign firm. Moreover, commercial would have been available such loans expect payments on time, regardless creditors offering whereas remittances by foreign of the foreign exchange situation, and foreign exchange to be tempered by business conditions firms tend in the host country. situations prevailing to pay adequate compensation depends on The decision at the time of takeover as well as situation the domestic political on economic factors. However, where profits are low or negligible, Where it financial resources, compensation becomes difficult. other factors may influence the decision, economically possible, credit worthiness. including a need to maintain overall

or where the government already deeply in debt and has little is

is

in the The long-term impact of growing economic nationalism invest LDCs which possess resources that might attract additional ? ment will depend largely on what happens to the investment climate clear and workable rules for foreign whether the countries establish The flexibility and whether they apply them consistently. investors, in responding to new operating of investors and adaptability conditions wi 11 also be a major determinant of the future. are underway an all current cases involving Negotiations or expropriation of US interests in noncommunist nationalization an agreed settlement is considered countries,and likely in most cases. India, for example, has stated that it will compensate all insurance firms recently nationalized in repatriatable foreign Petroleum Company case in Peru, In the International currency. of the large copper compensation for expropriated properties is in dispute. However, agreement has been reached in companies Chile on takeover of some other concerns, including an iron mining comoanv and a bank. Compensation agreements on current cases have not been reached in a number of other countries, including Libya and In the latter country, as well as in some others, Yemen (Aden). settlement is complicated In relations. by the lack of diplomatic has been slow. others, progress Impact on Developed Countries

negotiations have been difficult.

In Chile, the amountof

or expropriated Although some compensation for nationalized is generally offered ? and is often required under the laws property of LDC governments ? payments may not be considered adequate by the former owners who expect fair market value. Recently LDCs have tended to base their offers on depreciated book value, and to spread out over fairly payments say 15 to 30 years. Often, long periods, of an agreement, however, other factors may influence the conclusion for example, related agreements with governments for repatriation of profits, management contracts, etc. Government-backed guarantees against expropriation covering portions of large US investments in LDCs are a matter of considerable concern to the United States. investments Government-guaranteed amount to several hundred million dollars in Latin America alone.

87

The guarantee program, formerly under AID, is now administered the Overseas Private Investment Corporation (OPIC).

by

The Hickenlooper Amendment to the Foreign Assistance Act, passed in to countries that take for the suspension of assistance 1962,provides property of concerns owned 50 per cent or more by US interests and that under fail to take "appropriate steps" to discharge their obligation, and effective international law, to make prompt, adequate, compensation. in Ceylon, soon after enactment. The Hickenlooper Amendmentwas applied when expropriations have taken Further invocation has not occurred,although and other measures to foster the US Government has used diplomatic place, settlements providing for just compensation. looking toward Negotiations a settlement are generally considered by the US Government to be "appropriate are usually between the company and the foreign government. steps" Negotiations the investor countries Unlike investor companies or individuals, are not likely to experience a heavy impact even if many LDCs national and apply increasingly ize the bulk of existing foreign-owned enterprises measures to new investment. Some developing countries, restrictive among them many of the more prosperous ones, will continue to welcome In others, new forms of investment are likely to foreign investment. the older forms and will continue to produce income, though replace probably not at as rapid and high a rate, for the developed countries. is being for certain natural resource enterprises Further, capital and to areas shifted by developed countries to domestic opportunities which have generally welcomed such such as Canada and Australia, investment and where the outlook is favorable for new discoveries. Effect on Relations Between Developed and Developing Countries

in the Over the next few years, rising economic nationalism LDCs probably will result between them and the in greater friction In the petroleum at least in some areas. developed countries, which in recent years have been industry, producer governments, in new oil production companies, have also demanded participating a share of the older, wholly foreign-owned private companies. A larger share of oil production is likely to come under government The copper-producing control. countries, having gained control of a substantial portion of the world industry, may try to control and the interests, prices, although because of their disparate of copper, they are not likely to be successful. competitive position A prolonged attempt to raise prices by restricting production, for sources example, would encourage the development of alternate
elsewhere.

Probable

Related

Changes

in Investment Patterns

In spite of numerous recent nationalization moves in LDCs, the trend toward increasing foreign private investment in these countries during the past decade will probably continue, although in different forms. Management contracts, joint ventures, possibly and similar arrangements are likely to replace the older forms of investment in many cases, and will continue to produce income for countries. Investors continue to seek entry into expanding developed markets, development of new sources for both raw and semi-processed materials and products, and a satisfactory rate of return which, be lower than in the past. however, may Developing countries want additional investment to develop those industries which foreign

they also want greater control they cannot finance independently,but of profits and decision-making. Demand for local equity participation, The Andean Group either private or state, will undoubtedly increase. of countries in Latin America proposes to experiment with built-in mechanisms for eventual transfer of equity from foreign to local
investors.

In the Japanese type of investment, the investor typically makes loans, often to pay for machinery and equipment which he or no equity; may or may not supply managerial takes little supplies; on a contract basis; skills and contracts to buy the enterprise's output for a long term during which time the loan is paid off.

be opportune for developing new international approaches to invest ment disputes. The settlement of investment disputes has generally been on a bilateral on sometimes leading to rigid positions basis, the part of the investing company and the host government. The home government of the investing company may also be involved. Possibly both developed countries and LDCs may come to view more favorably the facilities of international for organizations An international the settlement of disputes. institution exists of investment for the arbitration Centre (the International disputes use has for Settlement of Investment Disputes), but thus far little Some Latin American countries, been made of it. for example, have refused to submit foreign investment disputes to traditionally arbitration international because of conflict with local laws or The establishment constitutional of an international provisions. investment insurance agency, along the lines proposed in the that have been taking place for a number of years in discussions the World Bank, would offer foreign investors safeguards against risks while avoiding bilateral confrontations. political

of foreign property cited in this paper suggests that the time may

The review of nationalization,

expropriation,

and other takings

III.

ANDCURRENT OF DETAILBY COUNTRY SETTLED IN COUNTRIES SITUATIONS NONCOMMUNIST

and current situations The following review covers settled and other takings of United expropriation, involving nationalization, Some situations since 1960. States and certain foreign property in connection with nationalization involving negotiated purchases of the Department that have been brought to the attention actions are also included. Brief statements concerning US claims in non are also included in this section. US claims in communist countries are covered in Part IV. communist countries Limitations 1. Coverage of this ? review, which also apply to Part II, include:

to be virtually believed complete with respect to situations nationalization, involving and other takings of property in expropriation, not which US firms hold a majority interest; in which with respect to situations complete or on US firms have a minority interest, since information on such sales, negotiated

89

situations may not have come to the attention of the Department of State; ? that are settled adequately promptly may not come to the attention Department; some cases and of the

a few borderline cases which may not constitute or expropriation or either nationalization sales but do involve takings are negotiated also included in this section, particularly where they involved the attention of the Department (these cases might more appropriately as various types of contract be classified

disputes);
certain

example, 2. 3. More emphasis

cases.

been included for comparative purposes ?for Part III;

Congo (Kinshasa) and Zambia], in has been placed on current than on settled

cases

involving

foreign

firms have

information and this review have been prepared or economic officers who do not by political principally Statements do not necessarily have legal training. a legal view. for older cases constitute Particularly where information was scarce, sources included private etc. research studies, newspaper accounts, Both source The definition of "prompt, adequate, is a contentious issue compensation" countries and investing countries. and effective between developing 1971. Some

4.

5.

Cutoff date for data in this report is June 30, information has been added through August.

LATINAMERICA
Argentina Settled Argentine

ownedby: Cities Service Oil Company

Cities

Service

Development Company

Marathon EftTf PetroleuTliraentina

Argentinian Continental

20 per cent Signal Oil and Gas Company - 17 Union Oil and Gas Company of California per cent " Southeastern Company Drilling Oil Company of Argentina) ,/Dnfllv%? iftint venture a J01nt

63 per cent

Inc. (Standard Oil of N.J.) Esso Argentina, Oil Company (Standard of Indiana) ParTAmerican International Tennessee Argentina S.A. (Tenneco) Trarisworld Drilling Company (Kerr-McGee Company) Service Union Oil Company of California (separate from Cities

above)

90

administration On November 15, 1963, in Decree 743-45, the Ulia and development contracts awarded to annulled petroleum exploration

American firms and at least one other foreign firm, Shell Production although not Company, of Argentina, a British firm, were affected, were entitled their contracts to claim financial all compensation. by settlements by 1967, and some continued All negotiated out-of-court in each Settlements in Argentina under new arrangements. operating or other factors. case varied with the terms of the original contract Cash settlements to six US firms (Cities Service, Esso, Pan American, in the form of notes discounted Transworld, Union),usually Tennessee, by foreign banks, ranged from about $4 million for Transworld to Shell received $21.5 about $42 million for Esso and Pan American. million. Bolivia Current Bolivian Gulf Oil Company

foreign firms from 1958 to 1961 by the Frondizi administration.

Eleven

Three weeks after taking office in a coup, the Revolutionary Gov ernment nationalized all Gulf assets on October 17, 1969. According to in Bolivia, had Gulf, it had since 1957 invested nearly $150 million only earned a return since 1967, and valued its assets at about An Compensation talks with the company started almost immediately. was announced September 10, 1970,under which Bolivia would agreement under a separate agreement, during a 20-year period after oil and gas exports. The agreed resumption of full-scale is in process of being implemented. International Metals Processing Corporation (IMPC)*

$120 million.

Bolivia set their worth at about $85 million.

pay Gulf $78.6 million, plus $16.4 million in outstanding loans,

the settlement

On January 12, 1971, the Bolivian Government announced the abrogation of the concession granted in 1965 to IMPC to work the wastes and tailings from a COMIBOL tin mine. The expropriation decree providing for compensation will be taken under consideration are held with the company. Both IMPC by the Cabinet before discussions and its parent company, Harvest Queen Mill and Elevator Company, carry an amount of OPIC investment guarantee insurance against expropriation. Mina Matil de Corporation* On April 30, 1971, President Torres announced the rescinding the Mina Matilde Corporation's Mina contract. concessionary of

Matilde, jointly ownedby the US Steel Corporation and Philipp

Brothers, operated a zinc mine under a twenty-year lease granted in 1966 from COMIBOL, the Bolivian National Mininq Company. The The investment of the US firms is covered by OPIC'insurance. Torres decree turned the Mina Matilde operation over to COMIBOL and The advent to power of the Government of Colonel Hugh Banzer in of these cases. August 1971 has improved the prospects for resolution *

91

The froze all of the Corporation's bank accounts. specifically the a commission which had 60 days to evaluate decree established amount of indemnification. Private Claim

was expro A small parcel of land owned by United States nationals priated in 1961 under the Bolivian agrarian reform program. The For several years, the property is valued by claimants at $825,000. has been prepared to espouse the case, provided claimants Department filed a formal claim.

Brazil Settled American and Foreign Power Company

On May 11, 1959, the State of Rio Grande do Sul expropriated the holdings of American and Foreign Power Company. On April 22, 1963, Brazil agreed to purchase all of the company's holdings in Brazil for $135 million. Another property, in the State of had been expropriated,and Pernambuco, many of the company's operations in Brazil had become unprofitable. The agreement called for a cash

of payment $10 million with the remainderpayable in 6 to 6 1/2

per cent notes over 25 years. Companhia Telefonica Final agreement was reached Nacional

in 1964.

The Governor of the state of Rio Grande do Sul decreed the of a subsidiary of Companhia Telefonica a expropriation Nacional, of International on February 16, subsidiary Telephone and Telegraph, over the valuation 1962, after two years of unsuccessful negotiation and sale of the company's assets in the state. Failure to reach agreement promptly on compensation was one of the chief reasons for the passage of the Hickenlooper Amendment by the US Congress in In January 1963 ITT reached a satisfactory 1962. interim settlement and final settlement was agreed to in 1967, when Brazil purchased all of iTT's Brazilian The property in question utility holdings. reportedly was valued at $7 to $8 million.

Chile
The Government of Chile* which has been in oower since November 1970, plans to extend state ownership over many important sectors of the private economy, including domestically-owned as well as foreign-owned enterprises. Current Copper Nationalization of large-scale copper mining companies and one smaller copper mining company was accomplished by adoption of a con on December 22, 1970, and stitutional reform, introduced in the Senate The nationalization law signed by President Allende on July 15, 1971. accepted methods of compensation in several departs from traditionally deduction of For example, it provides for the retroactive respects. "excess profits" earned by the companies. It bypasses established

92

Chilean judicial including access to the Supreme appeals procedures, Court, and it in effect nationalizes only those companies in which US as investors had interests. Compensation was to be equal to book value of December 31, 1970, less certain deductions. The term for paying cannot be more than 30 years, nor the interest rate less compensation than 3 per cent per annum. On July 16, 1971, by special the decrees, Government of Chile took over the five copper mines. and Exotica mines; by El Salvador, Anaconda in the Chuquicamata, in Kennecott in the El Teniente mine; and by the Cerro Corporation the Rio Blanco mine. Compania de Cobre Chuquicamata S.A. (formerly the Chile Company, an Anaconda subsidiary)* Exploration

The nationalization bill affects the equity held by

Chilean state-owned copper concern, and 49 per cent by Anaconda. Under the agreement between Anaconda and the Frei Government, payment in this company and in Compania for CODELCO's 51 per cent interest to be $174.6 million, de Cobre El Salvador S.A. (see below) totaled over 12 years starting June 30, 1970, made in semiannual installments The at 6 per cent tax free interest on the outstanding balance. included an understanding to purchase the remaining 49 agreement

51 per cent ownedby the Chilean Copper Corporation (C0DELC0), the

This

company, the largest

of the Chilean

copper

producers,

was

per cent equity between 1973 and 1981. At year end (1970) Anaconda listed its investmentin Chile at $457.5 million.
Compania de Cobre El Salvador Mining Company)* This company was also Anaconda. by Compania Minera Exotica S.A. (formerly the Andes Copper

51 per cent owned by C0DELC0, 49 per cent S.A.*

This relatively new,mixed company was 25 per cent owned by investment A part of Anaconda's 75 per cent by Anaconda. C0DELC0, insurance against expropriation. is covered by 0PIC Soc. Minera El Teniente a Kennecott subsidiary)* S.A. (formerly the Braden Copper Company,

This company was 51 per cent owned by C0DELC0, 49 per cent by Kennecott Corporation. The Chilean Government in 1967 obtained a in this company for $80 million, in promissory 51 per cent interest notes, payable over 1967-71, with interest based on the US prime Kennecott agreed to relend El Teniente these note payments as rate. Kennecott1s loan is partially received. covered by 0PIC guarantees. thus lent, bearing interest at the rate of 5.75 per cent The dollars over a 15-year per annum, were to be amortized in annual installments December 31, 1971. period beginning

Taken over July 16, 1971, by the Government.

93

Cia.

Minera Andina S.A.*

This company, which operated the new Rio Blanco mine, was 70 cent owned by the Cerro Corporation and 30 per cent by C0DELC0. per Tentative agreement was reached on the purchase of Cerro1s interest by the Government May 19. Final approval of the arrangement by the Chilean Government has been delayed. Cerro holds OPIC insurance with respect to some of Cerro's debt invest against expropriation ments in Andina. Other situations

Banco do Brasil (Brazil)

Frances e Italiano

Bankof Londonand South America (UK) First National City Bank (US) Bankof America (US]
The Chilean Government has indicated its intention of nationalizing the principal commercial banks in Chile. This would entail taking control of the operations in Chile of the above banks, including the US-owned City Bank and the Bank of America. The Government of Chile has reportedly concluded a agreement with the Bank of America.** insurance. City Bank carries OPIC expropriation Alimentos Purina

(French and Italian)

In December 1970 the Chilean Government officially intervened in the operations of Alimentos Purina, a company 80 per cent owned by the Panamanian affiliate of the US Ralston Purina Company. Alimentos Purina had initiated their Chilean operations in 1966 and have OPIC investment guarantees against expropriation. with the Negotiations Chilean Government for the purchase of Ralston Purina's equity interests are well advanced. Anglo-Lautaro (Soquimich)

The Government announced, at the end of May, nationalization of the nitrate from Anglo-Lautaro of 49 industry through acquisition per cent of the shares of Soquimich, in which it already had a The Chilean Development Corporation 51 per cent interest. (CORFO)paid in notes due March 31, 1972. $4.1 million plus $3.5 million Bethlehem-Chile Iron Mines Company

one of Chile's Bethlehem-Chile, large iron ore mining concerns, was a wholly-owned subsidiary of the Bethlehem Steel Corporation, a US concern. Agreement was reached on March 22, 1971, on the terms of sale to the Compania Acero del Pacifico (CAP), the Chilean state-owned steel company. Transfer took place as expected in is to be June 1971. The price, by agreement between the parties, a recognized established by definitively independent auditing firm.***

* ** ***

Taken over July 16, 1971, by the Government. Completed July 31, 1971. Price is to be based on book value.

94

Compania de

Telefonos

de Chile

(Chiltelco)

The International Telephone and Telegraph Corporation announced June 10 that it is holding talks with the Chilean Government, at Chile's to explore the possible request, purchase of ITT's 70 per cent interest in Compania de Telefonos de Chile (Chiltelco). Of the remaining 30 per cent, 24 per cent is already owned by Corporation de Fomento, a Chilean Government agency, and 6 per that Chile could increase its ownership of the company's stock to 49 per cent over a period of years with the right to buy the company was intervened by the GOC October 1, 1971. outright by 1980. Chiltelco Ford Motor Company On May 27, 1971, the Chilean Government requisitioned the Ford to forestall the closing of at Casablanca Motor Company's facilities within the had become unprofitable the plant. Ford's operations losses had induced the company financial and considerable past year When of the assembly plant. to gradually wind down operations to find a mutually with the Chilean Government failed negotiations means for keeping the plant open, Ford on May 7 laid satisfactory was subsequently Industrias

cent is ownedpublicly in Chile.

In 1967 Chiltelco had agreed

off 400 of its 600 employees. A labor dispute ensued and the plant
requisitioned by the Chilean Government. Nibco SGM Sudamericana Ltda.(NIBSA)

This company was owned 50 per cent by the Northern Indiana Brass financing Company (NIBCO); 25 per cent by Adela, a European-based consortium; and 25 per cent by C0RF0. The plant was "intervened" by the Chilean Government in November 1970 when the NIBCO- appointed to lack of marketing plant manager decided to close the plant due On April 30, brass fittings. prospects for a mounting inventory of

1971, NIBCOsold its interest in NIBSAto CORFO.

RCA-Chile

In February 1971 the Chilean government agency CORFO purchased in RCA-Chile, which assembles TV sets interest the controlling CORFO also received the option to buy out under foreign licenses. RCA completely after ten years. South American Power In August a Boise-Cascade 1970, after subsidiary, South American Power, lengthy negotiations, its 70 per cent holding to sell agreed

The agreement Government-owned CORFO for a total of $81.3 million. for a cash payment of $3 million with the remainder payable called in 6 per cent CORFO debentures over 25 years. Ecuador Current All America Cables By Decree and Radio 1970, the Ecuadorean Government

in CompaniaChilena de Electricidad Limitada (Chilectra) to the

256, March 25,

95

nationalized All America Cables and Radio (AACR),a subsidiary of on April 9, 1970. The principal assets of the Company Ecuador in
included a contract running through February 20, 1976,to operate cable and radio services, an operating plant ana equipment, were and several pieces of real estate. Compensation provisions not specified,but, in general, Ecuadorean law does not permit the takeover of private property without compensation. International Telephone and Telegraph. The Decree was made public

In its adjusted claim against the Ecuadorean Government, ITT assets at about $4.5 million, placed the value of its expropriated the contract,
imminent.

including $3.6 million for lost future profits throughthe termof

and $800,000 for physical assetsAgreement appears

Guyana Current Demerara Bauxite Company (Demba)

Formal takeover of the Aluminum Company of Canada's (Canadian owned) subsidiary, Demba, with gross investment of rouahlv US $118 million, pending since final enactment of the nationalizing In last-minute March 1, occurred on July 15, 1971. legislation to takeover, Alcan and the Government reached agreement prior negotiations The new GOG and terms of compensation. on amount ($53.5 million) concern will be known as Guybau.

Haiti Settled
Valentine Petroleum and Chemical Corporation

a refinery On August 28, 1964, the Haitian Government cancelled held by Haitian Petroleum and Refining Company concession agreement in which Valentine Petroleum and Chemical Corporation (US) had A board of AID investment guarantees. investments covered by had occurred and awarded found that expropriation arbitration AID recently concluded a settlement with compensation to Valentine. This was the first claim under the investment guaranty Haiti. program, now under 0PIC. Mexico

Settled
American and Foreign In 1960 Power Company

took over the American the Lopez Mateos administration Incor a subsidiary of Ebasco Industries, and Foreign Power Co., New York. power company also (A Canadian-registered porated,of over in preparation for a constitutional was taken change reserving were completed The transactions the power industry to the state.) American and Foreign Power was to be paid $69.5 September 27, 1960. in the form of Mexican Government notes, which million, principally have by now largely been repaid to Ebasco.

96

Asarco Mexicana, S.A. Industrias Penoles, S.A. These companies, the largest mining companies in Mexico, were Mexicanized within 5 years after the passage of a new mining law in in mineral development. Ascarco T961, restricting foreign capital of American Mexicana, formerly the Mexican operating subsidiary Smelting and Refining Company (ASARCO) is now owned 51 per cent by and 49 per cent by ASARCO. ASARCO continues to Mexican interests handle the marketing of exportable production of lead, zinc, copper, and other minerals. Mine and plant expansion are planned. silver, American Metal Climax holds a minority interest in Industrias and silver. Penoles, producing mainly lead, zinc, Compania Azufrera Mexicana, S.A. de C.V. Compania Explotadora del Istmo S.A. de C.V. These former US sulfur-producing in companies were Mexicanized 1967. Compania Azufrera Mexicana, S.A., sold a 66 per cent interest for $49.5 million to the Mexican Government (43 per cent) and a group of private Mexican investors (23 per cent), with 34 per cent remaining with the original of Houston, owner, Panamerican Sulfur Incorporated, 66 per cent of its Texas. Gulf Sulfur agreed to Mexicanize by selling newly formed operating subsidiary, Compania Explotadora del Istmo S.A. de C.V.-,to Mexican nationals. Both of these actions followed imposition of quotas by the Government limiting exports of sulfur companies to a maximum of 10 per cent of their proven reserves. These reserves have in recent years been increased. Current Compania de Azufre Veracruz S.A. (CAVSA)

This concern, a subsidiary of Gulf Resources and Chemical of Houston, was limited by the Mexican Government to Corporation, of 250,000 metric tons in 1969, and required to sell production 150,000 tons in Mexico, whereas other sulfur producers were not to quotas. Gulf Resources interpreted this action to restricted be evidence that the Government desired it to Mexicanize and started with a group of Mexican investors. Because of a fall negotiations in the price of sulfur on the world market, the parties could not agree to a sale at the originally agreed amount of US $24 million, and the mine was shut down at the end of 1969. Private Claims

After discussions with the Foreign Ministry, the Department obtained the promise of settlement of a claim for the taking of and valued at $1 million. Four property owned by a US national other property claims involving US citizens, valued at $2 million, have been discussed but are not yet settled.

Peru Settled Banco Continental A 51% interest in this bank was held by Chase Manhattan and 5% In early 1969 the Government Bank. by Deutsch Sudamerikanische a banking decree restricting issued foreign ownership of domestic Chase Manhattan had planned to commercial banks to 25 per cent. a merger of Banco Continental with reduce its share by negotiating ended when another Peruvian Bank, Banco Popular, but negotiations On August 28, 1970, the Peruvian Government that bank was seized. announced that Banco de la Necion had negotiated purchase of Chase shares in Banco Continental. Manhattan's and Deutsch S?damerikanische^ to both of the foreiqn Terms of the settlement were satisfactory holders. Peruvian Telephone Company

In October 1969, the Government of Peru agreed to buy out the Peru The settlement was vian Telephone Company, an ITT subsidiary. to ITT, which received part of its payment in long-term bonds satisfactory in Peru, that could be used at face value if reinvested Sheraton, an is using the bonds to build a luxury hotel in Lima which ITT subsidiary, complements the Peruvian Government's plans for developing tourism. Current American Smelting and Refining Company Andes del Peru (Anaconda] Cerro de Pasco Corporation (Cerro Corporation) under mining Because of lack of compliance with new requirements laws passed in 1970 American Smelting and Refining Company gave up and Andes del Peru lost its Cerro its Michiquillay copper concession The Government declared that four mining concessions Verde concession. held by Cerro Corporation had lapsed; the company is appealing on and accepting the Government's ruling on two two of the concessions Six active mining projects of Cerro de Pasco, which is others. the largest mining company in Peru, were not affected. Cerro de Pasco Corporation (estates and animals)

Under the Agrarian Mining Reform law of the Belaunde Government and the animals on them were (pre-October 1968), 19 mountain estates the The Military Government has expropriated to be expropriated. estates and made an ample settlement on one estate and on all of the The valuation animals. of the remaining estates is currently in the courts. International Petroleum Company, Ltd. (IPO

of IPC, owned99.99 per cent by Standard Oil Company (NewJersey).

on October 9, 1968, abrogated a compromise settlement by the previous and expropriated the refinery complex and oil fields Government

In its first week in office, the RevolutionaryMilitary Junta

On July 25, 1969, title was assigned to the state oil firm, Petroleos del Peru (Petroperu). Peru claimed that the Government has always owned title to IPC's oil field, a claim IPC rejects. IPC's oil production since 1924 at a price based on the East Valuing

Texas

Efforts at various levels to settle the dispute have been underway over an extended period but have not thus far been successful. W.R. Grace & Company In June 1969 the Peruvian Government, acting of the Agrarian Reform Act, took over W.R. Grace Cartavio and Paramonga sugar estates, including Grace was offered compensation in the amount of nontransferable bonds carrying 6 and 5 per cent

Peru offered to oav IPC $71 million if "debts owed Peru" were paid.

Field

price,

Peru claims

IPC owes the Government $690 million.

$67,000 would be in cash and the balance in 20 and 25-year

interest

under the provisions and Company's sugar refineries. of which $10,148,000, respectively.

Grace values the expropriated at about $26 million. properties The difference arises from the absence of any valuation for standing cane and roots by the Peruvian Government, from the increased of W.R. Grace (mainly associated with indemnity for the liabilities of W.R. Grace employees stemming from the expropriation), separation and from differing evaluations of machinery values, receivables,and
inventories.

On March 3, 1971, the Peruvian Government appointed a commission to deal with the proposed sale of Grace industrial in properties Peru and, as a practical The matter, with compensation questions. Commission was given 120 days to complete its work and was to report

by July 1, 1971.

are now in the hands of private Both estates comprised of former workers.

cooperatives

AFRICA
Settled Algeria or otherwise Following independence in 1962, Algeria nationalized intervened in numerous foreign firms and properties. From 1967 to 1970 nine settled cases involving American petroleum or related firms are known to the Department of State, although they were not necessarily the subject of official A summary listing follows: claims.

Petroleumand Related Firms (US)

Description Atlas and Magcobar, two Dresser subsidiaries that were oil field service companies, placed under custodianship. El Passo Natural Gas assets placed under custodianship* but El Paso apparently remains in control. Disposition ended Custodianship when new joint venture ALDIA?formed by Dresser Legal Basis

June 1967

Custodianship

and S0NATRACH (state company).

for Custodianship

On June 23, 1969, and agreements subsequently, new projects concluded.

June 1967

99

Description Getty Oil Co. operations placed still under custodianship, operational. Mobil Oil Co. refining, pipe distribution system line>and Other holdings nationalized. under custodianship, placed then announced as "nationalized/1 Phillips

Disposition

Legal

Basis Custodianship

Agreement signed October 19, 1968k Agreement reached regarding compensation November 22, 1970.

June 1967
Ordinance

166 August 24, 1967

Custodianship

67

June 1967

Co., placed Specialities under custodianship and

taken over.

subsidiary Drilling

Petroleum and

Reported subsequently as settled.

Ordinance 70-46 June 12, 1970 Settlement announced November 3, 1970. Decree 69-50

June 1967

Custodianship

Sinclair concessions revoked for alleged breach of concession agreement by merging with Atlantic
consent.

April 25, 1969

Richfield without Algerian

Standard Oil Co. (New and Jersey Marketing distribution system and share of a refinery nationalized. Compagnie Francaise des Prospection Seismiques (Seismograph Services Corp., Tulsa) placed under custodianship.

April 17, 1971.

Settlement

announced

August 24, 1967

Ordinance

67-164

Still

operational.

June 1967

Custodianship

Current Algeria Compagnie Francaise des Petroles (French) Petrolieres Enterprises de Recnerches duplications (French)

On February 24, 1971, Algeria nationalized most French natural gas and oil interests the Government's minority or partial by increasing ownership of oil, gas,and pipeline companies to majority or complete owner

per cent control of five natural gas and pipeline companies, but seems to have retained unchanged its holdings in five oil, refinery,or gas liquification companies, where Algerian Government holdings range from none to 80 per cent. The action came after an impasse in lengthy negotiations and seems to have involving a wide range of French-Algerian relationships ended the special between the two countries. On June 30, 1971, relationship

ship.

Algeria took 51 to 57 per cent ownershipof 9 oil companies and 100

100 a comprehensive agreement between the Algerian Government and Compagnie des Petroles Francaise company affected, was (CFP), the second-largest It provides for compensation payments of remaining CFP assets announced. of an Algerian takeover in 1975 if the through 1978 and the possibility It was two parties fail to agree on renewing portions of the agreement. de Recherches also announced that the major company affected, Entreprise

duplications

Petrolieres

will open compensationtalks with (ERAP),

a majority interest

Algeria July 19. The French Government holds in CFP. ERAP and a minority interest Detersav-Algerie

in

on were nationalized detergent plant operations Detersav-Algerie's Assets were valued at $2.1 million. This company 7, 1967. September was a branch of Proctor and Gamble's French subsidiary,and the French to have acted on its behalf. No claim has been Government is believed submitted through the US Government. Private Claims

Twelve private claims, valued at $4.5 million, dating from govern in 1963 and 1964, were submitted officially ment actions by the US Settlements have not yet been achieved. Government during 1965-66. Congo (Brazzaville)

Societe Industrielle et Agricole du Nairi (SIAN) Sucriere du Niari (SOSUNIARlT Socifetfe

In 1970 the Government of Congo (Brazzaville) two nationalized a major part of the sugar cane harvest to avert the loss of companies and to maintain the production of sugar in the Congo. The companies had in wage disputes with company workers and the directors become embroiled had planned to cease operations in September 1970. SIAN was 100 per cent owned by Grand Moulins de Paris,and SOSUNIARI ownership was divided a 60 per cent share, and the Congo between Grand Moulins de Paris,with Government with a 38 per cent share. in Jacob and These enterprises operated two sugar factories in oil milling, and other activities elsewhere transportation, engaged a complex employing 7,000 The two companies constituted in the Congo. workers earning about $30 million per year. Their exports generated in foreign currency and about $5 million about $20 million in taxes
annually.

The Government of Congo is now operating the former properties the two companies. No settlement has been made.

of

Congo

(Kinshasa) du Haut Katanga

Union Miniere La Generale holds the former (UMHK), Katanga Before concern.

Settled
(mainly Belgian-owned)

des Mines (GECOMINES), a state-owned firm, Congolaise of the Union Miniere du Haut and facilities concession a Belgian an affiliate of Societe Generale de Belgigue, at the end of 1966, the Government of nationalization

101 the Democratic Republic of the Congo owned a 24 per cent voting and an 18 per cent equity interest in UMHK. An arrangement to reopen the was facilitated mines in February 1967 after nationalization by the good officeb of the Belgian Government and those of the United States. It for a management Societe Generale des Minerais provided (SGM), contract^by also an affiliate of the Societe" Generale. Counter-claims clouded prospects of resolving compensation, which was left open for further were resumed. while operations Before the settlement, the negotiation to take a 40 per cent equity Government sought new foreign capital in the property, but prospective interest investors were deterred by the over marketing of legal entanglements with UMHK, principally probability arrangements abroad.

SGM will continue to manage investment would thereby be facilitated. a payment of a commission the property under a 25-year contract, receiving less marketing expenses for the first 15 years and of 6 per cent of sales UMHK 1 per cent thereafter. will eventually realize compensation of to be paid out of the fees accruing to SGM. million approximately $500 (Exports of Congolese copper have been valued at about $400 million annually during the past few years.) Two foreign groups have invested in Congolese copper since nationali zation of UMHK. Both groups were granted concessions in Katanga Province in areas that were carved out of the old UMHKreserves. et Minier du Congo (Sodimico) Societe' de Developpement Industrie! 85 per cent owned by the Japanese firm, Nippon Mining Company, through its Congolese subsidiary, CODEMICO, and 15 per cent by the Congolese of the concession Government. Japanese exploration preceded the seizure the Congolese of UMHKassets. Production is scheduled to begin at the company's Musoshi mine in southern Katanga in October 1972. An international copper consortium, in which two US companies have about a one-third interest, in Tenke and is developing properties The consortium companies are Soci?t? des Internationale Fungurume. is

settled in 1969, with the help of the IBRD, in the hope that newforeign

Differences

between the company and the Government were finally

by

Mines du Congo (SIMICO) and Soci?t4 Congolaise de Tenke-Fungurume (SOCOTEF).

Pahomey Port Services Settled

On May 1, 1969,the Council of Ministers of the Government of of all stevedore and dock services Dahomey decreed the nationalization the Port of Cotonou. Four French companies were affected by the nationalization action: Soci?t? Commerciales des Ports de L'Afrique and Transcap. operations. The companies derived 60 million CFA monthly from the

at

Societe Ouest Africaine d'Enterprise Maritime (SOAEM);Delmas; (SOCOPAO)i

Although the companies were unhappy with the Dahomey Government action, they had no choice other than to comply. The French Ambassador took up compensation with the Dahomey Govern ment,and the latter agreed to reimburse the French companies 26 million

102 CFA for port equipment; only a relatively disbursed as of September 1969. small sum remained to be

The Dahomey Government has reorganized the entire port operation into a central office responsible to the Ministries of Public directly Works and Finance. Guinea Bauxites du Midi (French;

parent

Settled

company Canadian)

of Alcan, a Canadian Bauxites du Midi (Bamidi), a French subsidiary firm with substantial US ownership, was taken over by the Government of Guinea in 1961. This action was taken because the company could not fulfill the Government tried requirements of its contract. Subsequently, to maintain mining and exporting of bauxite but, even with technical assistance from Hungary, was not able to do more than make a few shipments from the nearly exhausted Kassa Island deposit to Eastern European countries. Bamidi's former concession at the large Boke deposit remained undeveloped. was turned over to a joint the Boke' concession In 1962-63 Cie. des Bauxites de Guinee', 51 per cent owned by Halco enterprise, of Harvey Aluminum, a US firm?and 49 per (Mining) Inc.? a subsidiary In 1968 Halco divided its 51 per cent cent by the Government of Guinea. share among a consortium of Western firms. Harvey retained a 20 per cent firms are Alcan and Alcoa, each in Halco: other participating interest 10 per cent; Kuhlman Vereinigte Alu with 27 per cent; P6chiney-Ugine, 10 per cent; and Montecatini Edison S.A., 6 per cent. minum-Werke A.G., a new firm will be managing the expanded operations, the Thus, although new firm, with about 14 per cent in the former owner is represented as a part of the consortium agreement, Alcan was (51x27) ownership; investment of several million dollars. reimbursed for its original

Settled

and Current

were nationalized The Guinean assets of a number of French enterprises was promised in certain cases, the period 1960-62. Compensation during an important element in the financial claims constitute and unsettled currently underway between Guinea and France. Among the negotiations were several bank branches, privately-owned nationalized enterprises water and electric power companies, a maritime traffic and harbor Values company,and two French credit and insurance companies. lighterage are unknown. of the assets nationalized Kenya While some other countries are pursuing a publicized policy of and commercial enterprises, of industrial the Government nationalization of Kenya has quietly embarked on a variant policy intended to provide it At the same time the Government is with meaningful economic leverage. to its efforts to obtain increasing amounts of foreign capital continuing for its mixed economy. in June 1970 the Govern support growth Beginning ment of Kenya began to acquire significant holdings in a number of firms and industries. The Kenyan program has been marked existing major (1) Government involvement of less than by a number of characteristics: 100 per cent, (2) management contracts with existing management,

103 and public announcement delayed (3) negotiations private and confidential are completed; until negotiations (4) Government involvement reserved for and implemented one at a time; and (5) the Government selected industries In framework. without reference to an ideological program implemented it was not until March of 1971 that any Government spokesman fact, At publicly referred to the fact that a program of this type existed. that time, the Kenyan Minister for Finance and Economic Planning mentioned in the course of a public speech that there had been comment in several interest about the Government's acquiring important in but and that these actions did not represent a new policy, dustries were merely an implementation of the Government's long standing "basic a direct involvement in the strategic to "establish objective"
industries."

with the So far, the Government has worked out a relationship major banks which provides for competition between four country's Government three of which now have substantial major institutions, In another major industry, electric involvement. power, the Government sufficient shares on the London Stock Exchange to give it purchased a majority holding. the Govern In a third area, petroleum refining, ment negotiated a purchase of 50 per cent of the stock holding from in the owners, a consortium of the petroleum companies in business
Kenya.

American involvement in these developments has been minimal; Chase Manhattan, Bank of America, and First National City Bank of New York have minority interests in the three British banks affected by the GOK arrangements, and Esso, Mobil, and Caltex oil companies are in the petroleum refinery consortium. American investors participants are obviously not concerned by the Government program, as they continue to make new investments in the country. US private investment in now totals about US $80 million and involves close to 80 Kenya different firms.

Libya
Current Bank of America and Morgan Guaranty On December 22, 1970, Libya nationalized shares in foreign-held Libyan Banks, including Bank of America's 29 per cent share in the 10 per cent share in the Bank of North Sahara Bank and Morgan Guaranty's was to be paid for the value of the compensated Africa. Compensation shares but has not yet been awarded. Libyan Engineering and Construction Company

the properties of a former Prime Minister on Libya confiscated March 23, 1971, which included Libyan Engineering and Construction Company,

49 per cent ownedby Brownand Root Company. Libya stipulated that

foreign shareholders would be compensated,but compensation is unknown. Chappagua Oil Company the exact status of

In November 1969 Libya revoked a joint venture agreement between the Libyan Petroleum Company and the American-owned Chappaqua Oil

104 On May 3, 1970, Chappaqua filed an appeal to the Libyan Corporation. A full hearing is due sometime in 1971. Supreme Court over the revocation.

Gulf Oil
In mid-1970 Gulf Oil Company relinquished its exploration con cession after a dispute over rentals. Libya sequestered property valued at $350,000 by Gulf. No further action is known. Sahara Insurance Company

On December 22, 1970, the Libyan Government nationalized all The Sahara Insurance Company has a 25 per cent US insurance companies. The Government will presumably purchase shares held by interest. Value of the US interest is unknown. foreigners.

Standard Oil of NewJersey (Esso)

In July distribution Esso at about and stations to decide on 1970 Libya nationalized foreign-owned petroleum import and The only American property taken is valued by facilities. of 100 Jersey Standard service $17 million and consists some port facilities. Libya appointed a three-man commission the case is not yet settled. compensation,but Day Adventists

Church of God,Seventh

groups, the Church of God and the Property of two US-based religious has been taken by the Libyan Government. The Seventh Day Adventists, discussions between the Government Department of State has facilitated and these groups concerning settlement of their claims. representatives Settlements are imminent. Malawi Watch Tower Society

Settled

In January 1968 the Government of Malawi declared the various of Jehovah Witnesses1 leader M.J. Vigo and of the Watch Tower properties to forfeiture in accordance with section 2 of the Society subject Forfeiture Act. The Watch Tower Society apparently did not take any steps to protect property rights prior to seizure,and it refused to dispose of its property in manner earlier prescribed by the GOM. The American Embassy conferred with the Malawi Government regarding means for determining fair market value and cited urgency of arriving at equitable settlement. Full compensation for assets was paid by the Malawi Government. Sierra Leone

In December 1969 the Prime Minister announced that the Government intended to enter into a full, just,and freely negotiated partnership agreement with each of the mining companies operating within its borders. The Government hoped to achieve an example of government-business which would assure economic justice to all the people and a cooperation climate to prospective healthy investors, avoiding both foreign domination and domestic confiscation through mutual agreement on fair participation.

105 Settled Sierra Leone Selection Trust (mainly British) by the Government and

in SLST's diamond by the Government of a majority interest acquisition The agreement was ratified in Sierra Leone. by the mining operations Under the terms of the agreement, a new 1970. in December legislature company has been formed, the National Diamond Mining Company (Sierra Leone) Limited, which is 51 per cent owned by the Government and 49 per cent by SLST. The new company has a share capital of Leones 10 million The Government is paying for its proportion of the fixed (t5 million). Leones assets of the business by issuing negotiable sterling bonds totaling semiannual installments between June 30, 1971,and December 31 , 1978, and the bonds carry interest at a rate equivalent to 5 1/2 per cent after The Government paid for its share of the net of Sierra Leone tax. payment current assets in cash. The joint company will pay Sierra Leone taxes on its profits at a rate of 70 per cent. The Board of the new company has 11 directors of whom six, including the Chairman, are appointed by the Government and the other five by SLST. The Constitution of the joint company, as well as the agreement, contains safeguards for the protection of SLST as minority shareholders. Somalia Caltex

by Sierra Leone Selection Trust Limited (SLST) providing for the

On September 4,

1970, an agreement was signed

5.1 million (k2.55 million).

The principal is being repaid in 16 equal

Current

Caltex on May 17, 1970. The The Somali Government nationalized and equipment which it is company has a small investment in stations to sell to a local franchise rather than claim compensation. attempting The only remaining assets for which Caltex is requesting cash payment are $423,000 in inventory. Fearn International Inc.

Fearn International in the United Inc., whose parent organization States is the Kellogg Company of Battle Creek, Michigan, and whose operation in Somalia went under the name of Prodma, has filed an expropriation claim with the Overseas Private Investment Corporation letter of (0PIC). By January 13, 1971, Fearn filed the claim under guaranty contracts covering of a (1) a debt and equity investment in Prodma for the construction at Chisimaio, for the processing, facility Somalia, selling freezing>and of shell fish, and (2) a debt investment in Prodma for the construction and operation at Chisimaio of a petroleum products depot. The project was closed down in August 1970. The case is now under investigation by 0PIC which has suggested the company try to recommence operations in
Somalia.

First

National

City Bank and Other Nationalizations

By Law No. 26 of May 1970 the Government of the Somali Democratic of the Italian-Somali Electric Republic ordered the nationalization Banco Company and of the commercial banks (branches of Banco di Napoli, di Roma, Banco di Porto Said,and National and Grindlays Bank). First National City Bank holds 40 per cent share interest in National and Grindlays, the other banks and business companies are owned by Italian

106 citizens. National and Grindlays Somalia of unknown value. Bank held three small branches in

The Embassy took up the nationalization of National and Grindlays Bank with the Government of Somalia and urged fair compensation for the properties taken over under the nationalization decree. It is expected that the Government will arrive at an equitable settlement with the Bank. Sudan Sterling Drug Company

Settled

in June 1970 but were Sterling Drug assets were nationalized "denationalized." Sterling Drug is reported to be seeking subsequently a joint venture with local Government-owned drug firms. Current American Life Insurance Bank Barclays Hartford Fire Insurance National and Grind!ays Company Co. Bank

In 1970 the Sudanese Government ordered all foreign-owned insurance companies to cease writing new business as of May 25, 1970, but required that they service existing until transfer to one large Govern policies ment-owned insurance company. During May-June 1970, the Government US banking interests also nationalized all banks. affected included cent interest First National City Bank's 40 per in National and Grindlays and Bank of America's 3 per cent interest in Barclays Bank. Amount of compensation due the banks arid insurance companies is to be determined The form of compensation offered is by Sudanese Government committees. 15-year Sudanese Government bonds, redeemable 10 years from date of
issuance.

National Cash Register (NCR)

In June 1970 NCR's sales and service agency in Khartoum with assets of approximately $500,000 was nationalized. No compensation has yet a Government committee set up to consider the case been offered,although had been instructed to submit its report by the end of May 1971. However, no further report of progress has been received. The US Government has not been approached to offer assistance in any of the current cases. Tanzania American Life Insurance Settled Company and Other Insurance Companies

Act of 1967 The Insurance (Vesting of Interest and Regulations) of foreign-held shares by the provided for the compulsory acquisition American Life Insurance Company of Insurance Corporation. National The company was the only American firm affected. Wilmington, Delaware, but then dropped, a plan to sue for loss of future business. considered, Reinsurance Foreign shareholders?Munich Compensation was not an issue. and General Insurance (UK), Star (UK), Mercantile (Germany), Eagle New Insurance (UK), Guarantee and General Insurance (India), Provincial

107 an amicable agreement India (India), and Jubilee Insurance (Kenya)?reached with the Tanzanian Government which provided for the payment of just over $170,000 in 1967 and 1968 installments. Bank Nationalizations the National The National Bank of Commerce Act of 1967 established Bank of Commerce as the sole commercial bank in Tanzania and acquired of the country's 100 per cent of the Tanzanian assets and liabilities in the American banks held minority interests nine commercial banks. of three of the larger banks acquired under the act: parent companies National and Grindlays Bank Ltd. (40 per cent owned by First National City Bank of New York); Standard Bank (14 per cent owned by Chase and Barclays Bank (3 per cent owned by Bank of America). Manhattan); Compensation was subsequently agreed to in all three cases. Private Claim

will total $628,850 to be paid in installments through 1972. The

has been subdivided plantation African farmers.

of the Land Acquisition Act of 1967 the Acting under the provisions Tanzanian Government seized a farm of some 6,700 acres owned by a resi The owner and known as the Missouri Plantation. dent American citizen the seizure and with the help of the American Embassy negotiated protested a satisfactory settlement. Compensation by the Tanzanian Government and is now being worked by a number of

Current Bata Shoe Company (Canadian]" On January 25, 1971, the Tanzanian Parliament passed bills which authorized the Government to acquire full control of two local firms and of the former Bata Shoe Company to complete the nationalization Sixty per cent of the stock of the former Bata Shoe Company (Canadian). nationalizations. was acquired by the Government during earlier refused The parent Bata Shoe Corporation after extensive negotiations in this takeover. to recognize the Government's actions The Government has been holding the 40 per cent of the local firm's stock which in in a sort of escrow account theory belongs to the parent corporation since 1967. The new bill now allows the Government to absorb this latter block of stock. Compensation terms apparently remain those offered to the parent firm in 1967, i.e., full and fair.

Sisal

Estates and

of agreement on a costing formula for sisal estate investments. most of the acquired estates were losing money at the time Apparently of nationalization and did not resist takeover. No American firms were involved in this The seized estates are currently being expropriation. the Tanzania Sisal Corporation, a parastatal operated by organization of the Tanzanian Government.

other groups (European ownership). Settlement has been delayed by lack

Under the terms of the Tanzania Sisal Corporation (Establishment Vesting of Interest) Act of 1967 the Tanzanian Government nationalized six larje groups of sisal estates and took majority interest in 33

108 Nationalization of Buildings

On April 22, 1971, Tanzania enacted the Acquisition of Buildings all rental property not wholly owner Act, which in effect nationalizes No compensation is to be occupied and valued at more than $14,000. on buildings over ten years of age, and payments will be made on a paid scale according to age on buildings erected in the last ten declining of the bill will be upon the Asian property-owning years. Primary impact classes. Thus far American-owned property affected includes two Caltex a building owned by Singer Sewing Machine of Kenya (a wholly buildings, owned subsidiary of Singer, U.S.), and the private residence of a U.S. citizen. The latter takeover is presumably an error, as the American owner resides in the home herself. Both Caltex and Singer have engaged with the government over their properties. lawyers and are negotiating Tunisia Settled Property and Current

Agricultural

Government.

By Law 64-5 of May 12, 1964,the Tunisian Government expropriated all agricultural property held in Tunisia by foreigners and provided that Insofar as is known, the compensation be determined by the Government. the expropriation property holders have not challenged actions of the All but one of the several properties of US citizens affected involved claims of relatively minor value. Some have been settled; others are still For the one sizable pending. claim, the Tunisian Government has Embassy as the claimant is married made for US Government assistance. Uganda

offered Dl50,000 ($78,750).

The claim is being pursued by the UK

to a UK national. No request

has been

On May 1, 1970, President Obote of Uganda announced his government's decision to acquire 60 per cent ownership of all commercial banks and the mcst important private companies in manufacturing, mining, plantation and transportation. agriculture, By the time of the military coup d'etat of January 25, 1971,many of the 24 foreign-owned companies affected had reached agreement, at least in principle, on partnership with the Government. Ongoing negotiations to conclude the remaining agreements have been stalled since the military takeover, as there were Indications that the new regime was these proposed measures. On May 1, reconsidering Amin announced that his Government was now interested 1971,President in with which agreements had not been reached and would consider renegotiating the 60/40 and other arrangements already signed. Presumably the foreign firms concerned will now reconsider their positions,and final implemen tation of the Government's nationalization as redefined by program, General Amin, will be pursued. American companies as follows: African Ceramics affected by Uganda's nationalization policy are

obtaining only minority share (49 per cent) participation in those firms

Company

Interkiln Engineering, Inc., a Houston-based firm, holds a 17 per cent share in a local firm, African Ceramics Company. The Government is

109 its equity increasing 60 per cent. American Life interest in African Ceramics from 55 per cent to

Insurance

Company

This was the first foreign-owned firm to reach an agreement with the Ugandan Government. A new joint company, Uganda-American Insurance, Ltd., was formed on a 60/40 basis with management held by American Life. and therefore However, determination of the value of the company's assets, the amount owed by the Government for its 60 per cent share>has not yet been made. Bank of America Bank of America has a 3 per cent Barclays Bank. Chase Manhattan Chase Manhattan has a 14 per cent Standard Bank. interest in the nationalized interest in the nationalized

First National City Bank of NewYork

First National City Bank of New York has a 40 per cent the nationalized Grindlays Bank. Caltex for a 50/50 share relationship are still Negotiations continuing Caltex1s petroleum distribution in Uganda. concerning organization interest in

Mobil
This company has not yet accepted the proposed scheme. It is the smallest oil company in Uganda. Standard Oil of New Jersey (Esso) nationalization

At the time of the coup, Esso was still a 50 per cent negotiating Government of Uganda interest in its local marketing operation. No further information has been received. Other Nationalizations Foreign-owned Company companies nationalized Nationality include: Type of Business Petroleum Banking Banking Footwear Tobacco

Agip Italy
Bank of Baroda, Bank of India, Bata Shoe British American Tobacco Ltd. Ltd. India India Canada UK

110 Brooke-Bond Uganda, Ltd. Unknown Canada UK/Netherlands France Ltd. Kenya UK Tea and coffee Copper Petroleum Petroleum Beer Cotton

KilembeMining
Shell-BP Total Uganda Breweries, Uganda Company Zambia

Settled

Roan Selection Trust Ltd. (RST)

on January 1, 1970, RST was one of Zambia's two Until nationalized The company was approxi large foreign-owned copper holding companies. 80 per cent American-owned at the time of takeover, with a US firm, mately American Metal Climax, Inc. (AMAX), holding the plurality 42.3 interest, cent. The negotiated book value ($117.8 million) of the Zambian per of a 51 per cent equity in the reorganized Government's acquisition was considerably less than RST had proposed, but related company made settlement possible. concessions The Government agreed not to raise taxes of the new company for 8 to 12 years. RST also obtained 10-year sales and management contracts. As sales compensation RST receives another 3/4 per 3/4 per cent of turnover, and for management services cent of turnover plus 2 per cent of gross profits after payment of the mineral tax, but before income tax. Compensation is made in negotiable dollar bonds, backed by the Zambian Government, that are being retired Provision is also through 16 semi-annual payments of $9.52 million. nade for accelerated payments when the price of copper exceeds about 57 cents per pound. The Government's 51 per cent share in the mining company, renamed Mines Ltd. (RCM), is held and administered by a new the Roan Consolidated company, the Mining Development Corporation Ltd. (MINDECO), a holding and Mining Corporation Ltd. (ZIMCO). of the Zambia Industrial subsidiary a wholly owned subsidiary of as RST International, RST was reorganized AMAX, and holds a 20 per cent share in RCM. Private shareholders, largely of the American, hold a 16.75 per cent share in RCMjand an affiliate Anglo American Corporation of South Africa holds the remaining 12.25 per cent minority interest. RCM owns and operates the Mufulira, Luanshya, and Kalengwa mines,as well as the Ndola Copper Chilbuluma, Chambishi, Refinery.

ZambianAnglo American(Zamanglo):(mainly Republic of South Africa)

This firm, prior to nationalization in 1969, was one of the two in Zambia. Its equity was large copper holding companies operating held primarily by nationals of the Republic of South Africa. Zamanglo is to receive compensation totaling about $175 million under an arrangement similar to that reached with Roan Selection Trust, viz., by the Government of 51 per cent of the assets with a payout acquisition over 12 years in negotiable bonds carrying 6 per cent interest. The bonds, guaranteed by the Government, have been issued by the Zambia

Ill

wholly-owned subsidiary. They will be retired by half-yearly payments of is also made for accelerated million. Provision $10.3 payments when the of copper exceeds about 57 cents per lb. price Zamanglo also received and sales contracts. The Government has agreed 10-year management not to raise taxes of the new company for 8 to 12 years. The new company, Nchanga Consolidated Copper Mines, Ltd. (NCCM), will own and operate the Nchanga, Rhokana, Bancroft, Bwana Mkubwa, and as the Rhokana Copper Refinery. The Anglo Nampundwemines,as well American Corporation, Ltd. (Bermuda) and Zambia Copper through Zamanglo hold 49 per cent of NCCM, as well as 12 Investments Ltd. (Bermuda),will cent in the other new concern, Roan Consolidated Mines Ltd. per Bank of America Chase Manhattan Continental Illinois

Industrial and Mining Corporation, Ltd,

is (ZIMCO), of which MINDECO a

First National City Bank of NewYork

to The

National

Bank

The Zambian Government announced in November 1970 its plans acquire 51 per cent interest in the country's five private banks. in four of the following American banks have minority interests

National Bank ($250,000 in Illinois Standard Bank, Ltd.), Continental interest in Commercial Bank of Zambia), and Bank of America (indirect Merchant Bank of Zambia through Societe' Financi&fe pour les Pays The Zambian Government is presently involved in negotiating d'Outre-Mer). a settlement with the banks and is expected to provide compensation for have recently been suspended.* any assets taken over. Negotiations A fifth foreign-owned bank, Barclays (UK) was also affected of America owns 3 per cent). action nationalization (Bank Insurance Companies by the

nationalized banks: First National City Bank of NewYork (40 per cent in National and Grind!aysJI Chase Manhattan (14 per cent worldwide in

President Kaunda also announced that he was "closing down" the private insurance companies, leaving the State Insurance Company the sole underwriter in Zambia. Existing private insurance companies, which are all subsidiaries of British firms, have not been permitted to virtually since January 1, 1971, and will not be permitted to write new policies after December 1971. renew existing policies Other companies will be compelled Apparently a number of foreign-controlled to the State Industrial to offer at least 51 per cent participation Lever Brothers Limited; Refined The firms are: (INDEC0). Corporation Oil Products; National Milling Company Ltd; Supra Bakeries, Ltd; Duncan, and Matheson Ltd; and Central Ciqarette Manufacturing, Ltd. Gilbey (British American Tobacco and Rothman's).

The Zambian Government announced on July 27 that it had rescinded its plan to nationalize all the country's private banks. According to the announcement, the Government would enter into partnership only with the Commercial Bank of Zambia, would require all other banks wishing to operate in Zambia to incorporate there, and would transfer all bank business from the Merchant Bank of Zambia to other private banks.

112

EUROPE
France

Current Private Claim

The United States Government has espoused the Arragon claim against after World War II of The claim arises from the nationalization France. in which Alan V. Arragon owned and electric utility eight gas companies There are substantial interests valued at $8.7 million plus interest. valuation Formal discussions between the extremely complex problems. Department of State and the French Ministry of Foreign Affairs began in November 1970.

NEAR EAST
Iraq American Life Insurance

Settled Company

In July 1964 the Iraqi Government American Life compelledthe Insurance Co., a subsidiary of a US company, to transfer its portfolio of policies to a government-owned insurance company. American Life, however, is understood to have reached a settlement with the Government involving the recovery of funds due the firm. The Value of the assets affected is unknown. Banks Several British and Lebanese banks were also affected by the 1964 No information is available Iraqi nationalizations. about the value of the assets taken over by the Iraqi Government. American Eastern Basra Slipway Everett Shipping Tankers Company Current

American Eastern Tankers supplied tankers that took off some Iraqi oil. The two other companies were associated with the date trade. They were all nationalized sometime after the February 1963 Baath takeover of the Iraqi Government. were made to the Government of Iraq from Frequent representations 1963 to 1967 about outstanding claims, but Governments succeeded each other so rapidly after 1963 that no Government felt secure enough?or, indeed, well enough acquainted with the circumstances?to make a decision in the matter. The US Government has had no direct represen tation in Baghdad since the 1967 Arab-Israeli war when Iraq broke off relations with the United States. Iraq Petroleum Company (IPC): (mainly British-owned)

On December 12, 1961, the Qasim Government terminated two years of and reduced Iraq's concession negotiations agreement with IPC and two subsidiaries from 168,000 square miles to 748 square miles. IPC has never accepted this action,although in the negotiations it had already 90 per cent of its concession area in stages. agreed to relinquish The

113 Standard former concession area covered virtually the entire country. Oil of New Jersey and Socony Mobil together own 23.75 per cent of IPC, which is mainly British-owned. it areas, Although the company retained all of its oil-producing states a small portion of the area lost, most of which had not been included some proved oil reserves and a few capped oil wells prospected, In 1964 Iraq assigned the former IPC in the North Rumaila Field. area to the Government-owned Iraq National Oil Company (INOC). concession Although it is prepared to negotiate with the IPC, the Government law which reduced the has refused to consider rescinding the original
company's concession area.

Israel Private Claims

Current

to date, the Department of State continues to Although unsuccessful whose provide good offices on behalf of several United States nationals in or territory property has been taken or destroyed in Israeli-occupied since 1967. United Arab Republic laws. In 1961 the UAR enacted a sweeping series of nationalization sectors of the and industrial The laws covered almost all financial economy and were directed against both Egyptian and foreign-owned firms, or obliged to admit the UAR which were either fully nationalized The most important of these laws Government to 50 per cent ownership. were: all banks and insurance Law No. 117 of 1961, which nationalized as well as 42 large industrial, commercial, financial transport, companies and land reclamation companies; and Law No. 118 of 1961 which decreed were to be These enterprises of 82 firms. the partial nationalization at least 50 per cent of the converted into Arab joint-stock companies, shares of which were to be owned by a public organization. Law No. 119 of 1961 prohibited any person or corporate entity from owning shares in 148 Law No. companies with a market value of more than LE 10,000 ($23,000). 72 of 1963 fully nationalized 222 companies, some of which had been to Laws Nos. 118 and 119 of 1961. Law No. 150 of 1964 subject previously released from public custody property of natural persons that was since 1956 under previous measures, and transferred ownership sequestrated of the property to the state. In general, compensation was paid *n 4 per cent Government bonds. 15-year Further land reform measures were passed in the 1960's, following on the land reform measure of 1952, the first act of the new Egyptian Government. The latter measures further restricted (Law 27 of 1961) and UAR.

finally prohibited (Law 15 of 1963) land ownershipby foreigners in the

bonds.

In general,

compensation

was paid

in 15-year 4 per cent Government

114 Settled US Losses and Current

Through Nationalizations

The State Department is reviewing possible procedures for the of claims for the nationalizations of US agricultural and presentation business properties. The Department is aware of 33 uncompensated claims of probable validity law held by US nationals under international against the UAR as a result of the various Egyptian nationalization decrees. The total amount claimed by the persons whose interests were affected is for settlement of these claims, Negotiations approximately $3.75 million. were being carried out on a case-by-case which have been suspended basis, since the rupture of diplomatic in 1967. relations European Losses Through Nationalizations

were Egyptian and The major losers in the Egyptian nationalizations European (many of them Egyptian resident) entrepreneurs. It has been estimated that the major losers were nationals of Greece in which $2 million was Dutch investment and Anglo-Egyptian Oilfields, million British. The Department is not aware of the compensation $1.5 In most of these cases, arrangements that were worked out in this case. compensation has generally been negotiated through bilateral repayments agreements negotiated between the Government of the UAR and the The UAR has been paying Governments of the European countries concerned. off these claims under the terms of the agreements. The only substantial actions nationalization interests since 1961 were nationalization foreign taken by the UAR against of all remaining Belgian

($20 million), Switzerland ($10 million), and Italy and the Netherlands ($5 million). The major foreign firm nationalized at the time was the

claims have been negotiated and are currently being repaid; Shell negotiated a compensation agreement with the UAR in 1965 and has been receiving
repayment.

properties and of Shell Oil (both in approximately 1965).

The Belgian

Syria Socony Mobil Oil

Current Company; Standard Oil

of New Jersey

of the the marketing facilities On March 4, 1965,Syria nationalized in Socony Mobil Oil Company. Syria reportedly offered compensation 15-year, 3 per cent bonds^but to the best of the Department's knowledge in the the company did not accept and the case remains unsettled small marketing facilities. Esso's view. also nationalized Syria company's Both companies, at last report, felt that Syria was not offering prompt involved in the principle or adequate compensation and were interested as well as the monetary loss. People's Democratic Republic of Yemen Current Co. (Aden)

American Life Insurance Caltex Esso and Mobil

By a decree of November 27, 1969, the Government of Southern Yemen the Aden assets of three U.S. companies: nationalized (a) Caltex, No Esso and Mobil, and (c) American Life Insurance Company (Aden). (b) the twenty-year state bonds offered at 2 company, apparently, accepted

The Department, in the absence of per cent interest as compensation. relations with the Government of Southern Yemen, requested diplomatic the Embassy of Great Britain as our protecting power in Aden to reserve This the position of the US Government on the question of compensation, was done on November 29, 1969.

115

ASIA
Burma it is estimated that the Based on the scanty information available, value of expropriated foreign investment, including blocked accounts, Of this amount, about $70 million is believed totals about $100 million. about $25 million to be United Kingdom property and blocked accounts; the assets of Indian firms; and the remaining $5 million the assets of and other foreigners. Pakistani, Swedish, Chinese (People's Republic), The Burmese Government acknowledges liability to compensate the owners of nationalized but with few exceptions has not taken steps firms, are: The notable exceptions to settle the hundreds of outstanding claims. the largest single foreign investor in Burma; and (2) the compensation awarded to five of fourteen foreign banks totaling Kyat 1.4 million One of the foreign banks rate of exchange). at the official ($294,000 its award, but three others (two British and one reportedly accepted have appealed theirs. Indian)

Oil Corporation, (1) the compensationof $26 million paid to the Burma

British firms, some twenty-five have joined Among other expropriated This committee has to form a compensation claims committee. together a joint claim to the Burmese Government for compensation of submitted about L8 million This, however, does not include UK blocked ($.19 million). insurance account claims amounting to possibly another tlO million. claims cover four large firms and hundreds of small enterprises India's The British and Indian Embassies have made periodic represen and shops. tations to the Burmese Government to settle the outstanding claims, but with limited success. Current US cases Home Insurance are outlined Company below.

ment.

all insurance companies In 1964 the Burmese Government nationalized Home at the same time and blocked their local currency accounts. estimated Insurance Company of New York held Burmese deposits (minus which it valued at about Kyat 221,000 (or approximately liabilities) At first Home tried through rate of exchange). $46,000 at the official to the Burmese Government to obtain the release various representations of its accounts. However, Home is not now pressing its claim and is to develop a reinsurance relationship with the Burmese Govern attempting The American Embassy has provided advice to the Home Insurance on its behalf. Company and has made official inquiries Burma International Inspection Company, Ltd.

Nationalization Under Law No. 33 of October 19, 1963, the Enterprises the Burmese holdings of Law, the Burmese Government in 1963 nationalized the International Inspection and Testing Corporation of Chicago and a 40 per cent share in the Burmese These constituted Tokyo (INTEC0). Inspection Company, joint venture, Burma International cargo-inspection

116 INTECO is seeking compensation of about $421,000 for its invest Ltd. ment in the joint venture, plus an additional amount for real and estimated dividends. Since INTECO's office in Japan does a considerable amount of on behalf of the Burmese Government on Japanese cargoes inspection work to the Burmese destined for Burma, INTECO has limited its representations Government to periodic Claims requests to the Burmese Nationalization Committee for early settlement of its claim. INTECO has not pressed its claim vigorously,nor Embassy to intercede with the Burmese Government. Ceylon Caltex Ceylon Ltd. Esso Standard Eastern has it asked the

Settled

In April, May, and June of 1962, in the case which caused the only suspension of aid under the Hickenlooper Amendment, Ceylon nationalized distribution related equip by decree 83 service stations, facilities,and ment of Esso Standard Eastern, a subsidiary of Standard Oil Co. (New of California-Texas Oil Jersey), and Caltex Ceylon Ltd., a subsidiary Co. The companies originally evaluated their nationalized at properties the fair market value, and the Government of Mrs. $8 million, reportedly Bandaranaike evaluated the properties at $3.4 million, reportedly the cost. On February 8, 1963, US aid to Ceylon was suspended.* original After taking office in March 1965, the Government of Dudley Senanayake and the companies signed on June 22, 1965,a five-year compensation agreement under which each company was to receive $2.25 million. Esso Standard Eastern Current

In Mav 1970 a Government led by Mr. Bandaranaike was again elected office on a Socialist program. On December 29, 1970, the Government nationalized minor bunkering facilities of Esso Standard Eastern. India Current American Insurance Company Great American Insurance Company Hanover Insurance Company Hartford Fire Insurance Company Home Insurance Company New Hampshire Insurance Company

to

On May 13, 1971, the Indian Government announced that it would take over all general insurance firms, foreign and domestic. Among the 42 are six American companies earning between foreign firms affected $250,000 and $500,000 annually on premium income of about $4 to 5 million. Four of the concerns are members of the American and Foreign Insurance Associates Worldwide Insurance Group (American, Great American, Hartford and Home); and two are members of American International Underwriters The Government has agreed to compensate (Hanover and New Hampshire). * On all internal petroleum marketing facilities January 1, 1964 virtually were nationalized. The largest distributor, lost about as Royal Dutch Shell, as the two US firms combined and received about $7 million. many installations

all firms nationalized and has stated that foreign firms would be paid in repatriatable Four Government firms are to handle foreign currency. insurance in order to provide some degree of competition. general the takeover of India has seldom nationalized foreign business,and insurance firms in 1971 is the first nationalization affecting general commercial banks in 1969, it US concerns. When India nationalized larger exempted all foreign banks. Indonesia all During 1960-65, the last years of the Sukarno period, virtually had been nationalized except for the petroleurti foreign enterprises taken over by the Indonesian Government companies. Among the properties were plantations, On January 1, 1966, processing plants, and factories. the Shell Oil Company's assets were sold to the Indonesian Government through an agreement which involved a sales contract which the company found satisfactory. After the assumption of power by President Suharto in 1966, Indonesian policy toward foreign investment was reversed, and on December 14, 1966, he issued an order to all Government departments requesting them to take appropriate measures to return the assets taken over in 1964-65. Further, under an Indonesian Government policy of encouraging foreign investment, foreign firms have since 1966 sought and received approval with roughly one-third of the for new investments totaling $1.8 billion, investments by American companies. were returned included Important non-US companies whose assets Fraser and Neave, and Crossfield, Bata, Harrisons Unilever, Most British-American Tobacco, Dunlop Rubber Company, and Heineken. Dutch properties were not returned since Indonesian ownership of Several Dutch companies had been generally accepted. Dutch properties former in joint ventures with their nationalized have reinvested
companies.

and informally in The American Embassy intervened both officially It was instrumental in all cases involving the takeover of US assets. the return of assets of the eight firms listed below and continues to help in the three current situations.

Settled
American Foreign Insurance Association Goodyear Tire an3 Rubber Company (rubber estate and tire Inc. Flavors and Fragrances, International of America, Inc. Motion Picture Export Association National Carbon Company (Java) Ltd. (Union Carbide) National Cash Register Company Singer Sewing Machine Company U.S. Rubber Company - now Uniroyal (rubber estate) plant)

listed above were taken over during Assets of the eight businesses 1964-65 and returned since 1966. The National Cash Register Company chose to have its returned assets disposed of by its agent voluntarily and to confine itself to sales, but the other seven firms listed aoove resumed and expanded their activities. Current
P.T. Baud

P.T.

Baud was taken over

in 1964 under a separate

decree,

because

of

118

internal squabbling and incompetence in the company. The alleged Indonesian Government has expressed its willingness to return the and three rubber estates in Java. company, which had two tea plantations The case has been complicated, however, by lack of a definite decision on the part of the owners as to whether they wanted the estates back or Confusion has also arisen over differences between P.T. compensation. Baud, the Indonesian company, and Sea Oil and General Corporation of as to who is in charge of the New York, the principal shareholder, The Indonesian Government is presently awaiting a letter from company. Sea Oil and Central Corporation, promised in July 1970, permitting an amicable settlement in lieu of court adjudication. of consideration are valued by Sea Oil at $6 million. The estates Manhattan Securities Company

in West Manhattan Securities Company is the owner of a small estate valued at $750,000 by the firm, which was taken over in the early Java, In 1969 the Indonesian Government, in an effort to speed resolution 1960's. of claims cases, established July 31, 1969, as the deadline for filing for compensation for property whose return was not desired. claims filed a request for compensation in accordance with Manhattan Securities these provisions, but on July 29, 1969, the company cabled the Minister of an Affairs requesting State for Economic, Financial, and Industrial extension of the July 31 deadline and the right to apply either for or compensation at a later date. restoration its Manhattan Securities does not appear as yet to have settled claim, although its New York attorney, Alfred W. Green, has appointed a local attorney to deal with the Government. N.V. Tamiang Cultuur Maatschappij an The land concession of the N.V. Tamiang Cultuur Maatschappij, estate in North Sumatra owned in part by Dr. Bram B. Boonstra, who became an American citizen on September 28, 1959, was revoked in February 1962. Ostensible grounds for the revocation was "mismanagement although Dutch ownership of a portion of the company's shares appears to have been an element in the proceedings. Dutch property was being at the time. nationalized Dr. Boonstra is seeking compensation based on the value of the assets of the estate at the time of the seizure with 5 per cent interest per year added since that time. The Embassy has asked the Department of Foreign Affairs to investigate this case.

Khmer Republic Caltex,

(Cambodia) Esso, Current and Other Nationalizations

In late 1963 the Cambodian Government nationalized various functions such as export-import business and banking. and locally-owned Foreign firms were permitted to retain physical assets. In 1967 a law was various industries passed nationalizing However, including petroleum. were given 12-year grace periods American oil firms?Esso and Caltex? with the understanding that they would assist in the development of a new Cambodian oil distribution In 1970 the nationalization firm. act of 1967 was repealed. Constraint was thus lifted on the US oil companies. French and Chinese interests were the most strongly affected by the 1967 decree.