821,6363/493: Telegram The Chargé in Colombia (Matthews) to the Secretary of State BOGOTÁ, October 6, 1928—11 a. m. 122. My 121, October 5, 11 a. m. House of Representatives yesterday voted down motion citing Minister of Industry to appear and state Government's attitude on the reports, knowing his desire not to appear. Discussion in first reading of bills advocated in both majority and minority reports will be continued today. Bills were attacked in House of Representatives as blackmailing the Tropical, as being unconstitutional, and as showing the world the bad faith of Colombian Government. Reaction of this nature appears to be growing and chances of passage of bills diminishing. There also seems to be a feeling of uneasiness as to what our Government might do if either bill is passed. The Government will therefore probably not press the matter... MATTHEWS 821.6363/507: Telegram The Chargé in Colombia (Matthews) to the Secretary of State [Paraphrase] BOGOTÁ, October 18, 1928-11 a. m. 130. My telegram No. 127, October 11, 11 a. m.,5 and previous correspondence. I have been reliably informed that the Minister of Finance proposed to the Council of Ministers that the Government issue a statement that it considers the Tropical Oil Company concession a valid one; that the proposal was defeated, the majority favoring a policy of silence. Yesterday the Minister of Industry called in the Tropical Oil Company representative and intimated that nothing further would be heard of the investigation committee reports if the Tropical Oil Company would accept his interpretation of clause 5 of the contract as implying the Government's right to royalty of refined products in quantity equal to that derived from 10 percent of the crude petroleum production (which the Tropical Oil Company estimates to be the equivalent of 30 percent gross crude production). The Tropical Oil Company interprets this to be an admission of defeat by the Minister of Industry of the attempt to cancel the concession. The Committee reports and bills advocated therein will probably be "Not printed. referred to the Permanent Committee on Hydrocarbons. This will mean shelving them temporarily, but will permit the revival of the question at any time by the next Congress. MATTHEWS 821.6363/554: Telegram The Minister in Colombia (Caffery) to the Secretary of State BOGOTÁ, December 16, 1928-5 p. m. [Received December 17-12:40 a. m.] 189. Legation's 130, October 18, 11 a. m., first sentence, second paragraph. Controversy over royalty which has been going on over two years settled yesterday by Government's accepting amount offered by the company as full price of crude petroleum royalty without [with] the following proviso, however: "But as the Government is not in agreement with the company as to the interpretation of clause 5 it expressly reserves the right to submit protocol to the judicial authorities"; and both parties agree that if the Government submits the matter to the courts they will abide by the decision. CAFFERY GOOD OFFICES OF THE DEPARTMENT OF STATE IN BEHALF OF AMERICAN INTERESTS IN THE BARCO PETROLEUM CONCESSION 821.6363 Barco/64 The Carib Syndicate, Limited, to the Secretary of State NEW YORK, January 5, 1928. SIR: We beg to enclose herewith a brief memorandum setting forth the facts and circumstances under which the Carib Syndicate, Limited feels warranted in laying the case of the so-called "Barco Concession" before the State Department with a view to such action in the matter. as may appear appropriate. The Barco Concession was granted by the Government of the Republic of Colombia to General Virgilio Barco in 1905. As is fully explained in the attached memorandum, American interests acquired the Concession in 1918. Since that date, American interests have held control and exercised rights of ownership over said concession, this control and ownership being continuous and undisputed until February 3, 1926, when the Colombian Government, through its Department of Industries and over the signature of the President of Colombia, declared the Concession forfeited for alleged causes almost in their entirety antedating 1918. The Concession was declared forfeited notwithstanding the fact that the Colombian Government had expressly approved and joined in the transfer of the Concession to American interests in 1918 and had taken advantage of the occasion of that transfer to exact substantial changes in some of the terms of the Concession. Furthermore, the terms of the declaration of forfeiture are in direct conflict with the contention of the Colombian Government as set forth during its boundary dispute with Venezuela. At that time the Colombian Government, in its formal case to the Swiss Arbitral Board, pointed to and stressed the Barco Concession and the fact that it was then, and had been since 1905, in full force and effect. The Barco Concession is located in territory which, prior to 1922, was claimed by the governments of Colombia and Venezuela. The territory was awarded to Colombia by the Swiss Arbitral Board in 1922 and undisputed possession given to Colombia under the Swiss demarkation and survey completed in 1925. Not only are the alleged grounds of forfeiture, as set forth in the Resolution of the Colombian Government, baseless, but also the Colombian Government has denied and is denying justice by its continued failure to take any action, either adverse or favorable, on the Company's memorial filed on March 16, 1926, in strict accordance with Colombian law, asking for reconsideration of the resolution of forfeiture. It would appear that the Colombian Government has consumed the period since March 16, 1926, in a vain effort to find some plausible arguments to refute those contained in the Memorial. Further attention is called to the fact that, although the declaration of forfeiture of the Concession was issued by an administrative branch of the Government and has not even become final before that branch by reason of the Company's appeal and protest for reconsideration, nevertheless the Colombian Government, contrary to Colombian Law, has forcibly ejected geological parties sent to the Concession by the Company. The Company realizes that the Barco Concession matter is one of importance to the Colombian Government, not only because of the value which the Concession may ultimately prove to have, but also because of the fact that the terms of its resolution of forfeiture might be seized upon by Venezuela as furnishing grounds for requesting a reopening of the boundary question by showing that some of the arguments advanced before the Boundary Arbitral Board were advanced in bad faith. Almost two years have elapsed since the presentation of the Company's Memorial of protest and no reply has yet been received. Acquiescence in further delay might be looked upon in Colombia as a sign of submission to the confiscatory policy of the Colombian authorities or as an indication of inability to secure that assistance from the Department of State which is now the only effec tive means of obtaining a decision from the Colombian Government. In submitting this letter and the annexed memorandum and supporting documents,' the Department of State is respectfully requested to consider whether, for the protection of American interests, it can appropriately communicate to the Colombian authorities a request for an early and definite reply to the Memorial of March 16, 1926, in which the reconsideration of the declaration of forfeiture was requested. All possible means of securing such a reply, which can properly be employed by the Company, have been exhausted. Further delay will constitute a complete denial of justice. We therefore trust that the Department will be in a position promptly to communicate to the Colombian Government a firm request for an early answer to the Memorial of March 16, 1926. A. H. BUNKER President [Enclosure] Memorandum on the Barco Concession 8 (1) In 1905 General Virgilio Barco, a citizen of Colombia, was granted a fifty year concession by the Colombian Government to exploit petroleum and certain other mineral resources in an extensive area in the Department of Santander on the Venezuelan border. In 1918 a Colombian company, "Compania Colombiana del Petroleo", was organized by American interests, to take over the concession. The transfer of the concession was formally approved by the Colombian Government which was fully aware that the Colombian Company in question was controlled through stock ownership by American nationals. At the present time the stock of this Colombian company is owned by the Colombian Petroleum Company, a Delaware corporation. The stock of the latter company is in turn controlled as to 75% by the Gulf Oil Corporation of Pennsylvania, through its subsidiary, the South American Gulf Oil Company, and as to approximately 25% by the Carib Syndicate, Limited, through its subsidiary, the Carib Company of Maine. (2) This memorandum is presented by the Carib Syndicate, Limited. (3) American interests first became financially interested in the Barco Concession as a result of a trip which General Barco made to the United States in 1917 for the purpose of interesting American capital and disposing of the Concession. General Barco then recognized that neither his own nor other financial and technical resources Supporting documents not printed. Annexed documents not printed and all citations to them have been omitted. available in Colombia were adequate for the future extensive development of the concession. In fact by 1914 he had expended the larger part of his private fortune in developing the Concession and he then made a determined effort to interest American capital. At that time he entered into an option contract with a Mr. Frank Keyser, but the latter failed to take up the option. In 1917, however, during the General's visit to the United States, as mentioned above, he commenced negotiations with Mr. C. K. McFadden, then Chairman of the Executive Committee of the Carib Syndicate, Limited and an option contract was concluded at Washington on January 26th of that year. General Barco received $10,000 down and an additional $90,000 was to be paid if Mr. McFadden or his assigns elected to take over the concessionary rights within a period of 180 days. Also, General Barco under the option contract reserved to himself the right, under certain conditions, to 15% of the gross production of the concession. The Carib Syndicate, Limited, thereupon offered to H. L. Doherty & Company a 75% interest in the rights acquired from General Barco, retaining a 25% interest which the Carib Syndicate has held continuously since that time. The Doherty interests then sent a party to Colombia and caused careful investigations to be made of the concession and the petroleum possibilities of the area and on May 23, 1917, informed Carib Syndicate, Limited, of their acceptance of the proposition. (4) A Colombian company, "Compania Colombiana del Petroleo" was then formed to take over the concession from General Barco and carry forward the work of development; and the Delaware Company referred to above in paragraph (1) was organized to hold the stock of this Colombian Company. Thereupon final payment was made to General Barco pursuant to the terms of the original option contract with Mr. McFadden. (5) The transfer of the concessionary rights of General Barco was recorded in a public document entitled "Deed Three Hundred and Thirty-one" to which the Colombian Government, General Barco and "Compania Colombiana del Petroleo" were parties. This Deed, concluded at Bogota, April 3, 1918, contains the full consent and approval of the Colombian Government to the transfer of the concession and embodies certain changes in the Government's favor which were required as a condition of its assent. (6) It is pertinent to emphasize that the Colombian authorities in 1918, prior to according their approval and consent to the transfer, gave the most careful consideration and painstaking study to all the facts and circumstances. In the granting of its consent and approval and in the changing of certain of the terms of the concession, the Government specifically recognized, and so stated in the Deed of Transfer, |