in Cuba of American nationals, and to provide equitable relief to the proven claimants. I am most appreciative of your very generous and kind cooperation, Mr. Chairman, in scheduling these hearings so that all aspects of the bill may be thoroughly discussed and reviewed. I am particularly pleased that this legislation was assigned to the Inter-American Affairs Subcommittee since I am confident that your leadership and knowledgeable background in Latin American affairs will be invaluable to all of us in these hearings. The bill before us today provides for the determination of losses suffered by U.S. nationals as a result of the actions of the Castro administration in the Republic of Cuba. Such determination is long overdue and as more time passes it will become ever more difficult for claimants to find the necessary documents and witnesses to establish their claims. I am convinced that the proving and determination of claims through the already established channels of the Foreign Claims Settlement Commission will also constitute a major step toward the clarification of our position vis-a-vis the Castro government. Thus, the concept of adjudication at this time is the basic concept of the bill we are now considering. The second principal goal of H.R. 10327 provides a manner for the utilization of strategic talent. We need the abilities of our citizens who suffered losses in Cuba elsewhere in Latin America. After all, here is a valuable reservoir of international talent and the loan provisions of H.R. 10327 seek to provide a way whereby the United States can make use of that experience. The bill provides for loans of up to 80 percent of proven and determined claims to those individuals who reenter the Latin American field in projects which fit into, and win the approval of, the Alliance for Progress. It also provides loans up to 30 percent to individuals in other categories. The 80-percent loan provision will be helpful in providing an additional spark to aid, making the Alliance an exciting reality. The bill also provides that blocked Cuban assets be turned over to the proper American official in order that they may be used to satisfy these claims. When the citizens of one of our States are buffeted by an earthquake or a tornado, financial assistance is usually made available by the Government to those suffering financial hardships or the loss of income-producing properties. It is recognized that a state of emergency exists. Indeed, such assistance is often made available to those in foreign lands when severe blows are experienced. Yet, nothing has been done for the thousands of U.S. citizens who lost all they had built up over many years of hard work when Fidel Castro took over in Cuba. Their losses were certainly as great as those who are hit by earthquakes or other natural disasters; generally, they were even more severe, as the majority who fled Cuba escaped with only the clothes on their backs. Surely, the blow that fell upon them was as much a catastrophe as an earthquake, and it did not result from any actions of theirs. It is true that those people who go to foreign countries to engage in commercial or industrial activities are usually fully aware of the risks that exist. The Americans who lost their life earnings in Cuba do not want a handout or even sympathy; what they do want, and what they feel they are entitled to, is some form of help that will enable them to become gainfully employed once again, in a field where they can contribute the wide and invaluable experience accumulated over many years. The majority of U.S. businessmen in Cuba were a vital factor in the impressive economic and social gains made in that country in the years subsequent to World War II. It was not their fault that Fidel Castro and his Communist followers felt it desirable to make a whipping boy of the United States and the private economy system. In fact, it was largely because these people were so successful in demonstrating to Latin America and the world at large that the capitalist system can work if properly administered that the Castro regime was forced into making the wholesale confiscations. Businessmen as well as economists are unanimous in insisting that private capital and private know-how are vital to the success of U.S. efforts to revitalize the economy of the Latin American Republics. This country has no obligation to provide such capital, but it is decidedly to our interest to do everything within our power to see that our neighbors to the south develop along orderly lines, and without undue delay. This is the philosophy behind the Alliance for Progress and the philosophy behind the entire foreign policy of this country. Many of those U.S. citizens whose properties were confiscated by Castro are attempting to rebuild their lives in the States. In time, most of them will certainly succeed in so doing. But, at what a cost! Their knowledge and experience in doing business abroad, built up through many years of trial and error, is lying fallow at a time when it is so desperately needed in practically every country of Latin America. Many are ready to begin again in new fields, but in order to get started they need some form of temporary financial assistance. H.R. 10327 gives them this chance, and at the same time it will give a substantial boost to the Alliance for Progress and to the U.S. drive to build a solid economy in Latin America. In this connection, I should like to quote some of the conclusions reached in a report prepared by the Atlantic Community Development Group for Latin America, which is designed to channel private enterprise funds into Latin America and assist Latin American development efforts: "Finding ways to help Latin America move successfully through the enormously difficult decade ahead, which among other things will require a major improvement in the tempo of private economic activity, is one of the most important and urgent challenges now facing the free world. "Without a considerable additional infusion of strength from these great resources (of the Northern Hemisphere) to the private sector within Latin America, it is almost impossible to see a good outcome. This judgment is even more valid today than it might have appeared 2 years ago, when many still believed that intergovernmental aid could largely meet the problem, and that such aid would be forthcoming in adequate amounts. "There is needed a fundamentally optimistic and forward policy of private activity, consistent with the only acceptable assumption about Latin Americathat it will remain part of the free world. "It is our belief that a confident and resolute policy on the part of traditional private activities, and realistic policies on the part of governments, are the keystone for enabling Latin America to come successfully through this crucial decade. New and creative undertakings on the part of the private sector can probably represent the strongest source of incremental economic energies that is available. We [are] deeply convinced that major new private sector undertakings toward Latin America are necessary, and are feasible. For the private sector to remain half paralyzed and not play its full role during this period would almost certainly prove a historical tragedy. The times require a new seizing of the initiative, a forward and active policy rather than disengagement. A more vigorous rate of economic advance in Latin America is surely one of the best assurances that the web of political, social, and intellectual forces there will be able to evolve in constructive directions." H.R. 10327 is a forward-looking bill which will play an important role in our Latin American development program. It will permit a group of willing and experienced experts to devote their talents to this country's welfare in Latin America. I am pleased that a representative group of these individuals has come here at their own expense to provide us with their views on this bill. I believe that H.R. 10327 while providing reimbursable assistance to Americans is also an important step toward the realization of U.S. aspirations and hopes for Latin America. I am pleased to say, Mr. Chairman, that identical legislation has been introduced in the Senate by Senator George A. Smathers, of Florida, and by my colleagues in the House, Congressman Pepper and Congressman Cramer. Thank you once again, Mr. Chairman and members of the subcommittee, for your splendid cooperation, and for allowing me this opportunity to appear before you. SECTION-BY-SECTION SUMMARY OF H.R. 10327 GENERAL H.R. 10327 adds a new title to the International Claims Settlement Act of 1949, as amended (22 U.S.C. sec. 1621 et seq.). This title deals with claims of U.S. nationals against the Government of Cuba for the Castro takings. Other titles in the act have dealt with claims of U.S. nationals against Russia, Bulgaria, Hungary, Rumania, Italy, Czechoslovakia, Yugoslavia, and Poland. As summarized in its title, the bill's purpose is "To amend the International Claims Settlement Act of 1949 to provide for the determination of the amounts of claims of American nationals against the Government of Cuba; to provide for payment of such claims; and to provide that the uncompensated portion of approved claims may be the collateral for certain loans made to claimants by the Secretary of State." The provisions of the bill can be divided into three main groups: I. Adjudication provisions.-Sections 501-510 and 519 provide for adjudication now of claims against Cuba by the U.S. Foreign Claims Settlement Commission. These sections are similar to the provisions of title IV of the International Claims Settlement Act dealing with the Czechoslovak claims program. II. Vesting provisions.-Sections 511-518 provide for the vesting of the Cuban assets in the United States blocked by the Treasury Department in July 1963, and for their use to make payment on U.S. claims against Cuba and to reimburse the Treasury for the Claims Commission's administrative expenses. These sections are similar to provisions of title II of the International Claims Settlement Act providing for the vesting of Bulgarian, Hungarian, and Rumanian property to pay U.S. claims. III. Loan provisions.—Section 520 of the bill provides for loans to claimants by the State Department against the uncompensated portion of approved claims. It also authorizes the appropriation of such funds as are necessary to carry out the loan program. Section 501. Purpose of title I. ADJUDICATION PROVISIONS Section 501 states that the purpose of the bill is to provide for the adjudication of claims arising since January 1, 1959 (the date Castro came to power) out of (a) Cuban Government takings of, or special measures directed against, property of American nationals; and (b) disability or death caused American nationals by violations of international law by the Government of Cuba; to provide for payment of such claims to the maximum extent possible; and to provide for certification of approved claims to the Secretary of the Treasury. Section 502. Definitions The provisions of section 502(1) define what individuals and business entities are entitled as "nationals of the United States" to file claims. Section 502 (2) makes clear that references to the "Commission" are to the Foreign Claims Settlement Commission of the United States, the U.S. Government agency which has handled all the other claims programs under the International Claims Settlement Act. Section 502 (3) gives a broad definition of the range of property interests covered by the claims program. Section 502 is similar to section 401 of the Czechoslovak claims title of the act. Section 503. Receipt of claims Section 503 (a) sets a deadline for the submission of property claims. Such claims must be submitted within 6 months after the enactment of the new title or within 6 months after the property was taken, whichever last occurs. The requirement that the Commission apply "applicable substantive law, including international law" follows similar requirements in other titles of the International Claims Settlement Act. As is made clear in section 505, claims for both direct and indirect U.S. property interests are included. Section 503(b) sets a deadline for the submission of disability and death claims. These claims must be submitted within 6 months after the enactment of the new title or within 6 months after the claim first accrued, whichever last occurs. Section 504. Ownership of claims Section 504 (a) follows the pattern of previous U.S. claims programs by requiring that any property claim considered, be based on property that was directly or indirectly owned by a U.S. national on the date of the taking and continuously held by U.S. nationals up to the date of claim filing. Section 504 (b) requires that any claim for disability be filed only by or on behalf of the disabled person and that death claims be filed by or on behalf of the spouse, children, or parents of the decedent. Section 505. Corporate claims Section 505(a) requires that a claim based on an ownership interest in a business entity which is a U.S. national be filed by or on behalf of the business entity itself rather than by individual owners or stockholders. It is contemplated that the claim could be handled as any corporate claim without participation by separate stockholder interests. Section 505(b) provides that a U.S. national (individual or business entity) having a direct ownership interest can file for any property loss suffered by reason of a taking of a foreign business entity or its property regardless of the percentage of that interest. This means, for example, that a U.S. citizen or corporation can claim for a taking of any property or direct ownership interest in a business entity in Cuba regardless whether this property or ownership interest was 100 or 1 percent U.S. owned at the time of taking. Section 505 (c) provides that where the interest in a property claim is indirectly owned by a U.S. national, at least 121⁄2 percent of the entire ownership interest in the entity or property taken must have been U.S. owned. This means that U.S. individuals or business entities who suffered losses indirectly because their property in Cuba was indirectly held-e.g. the property was owned by the Panamanian subsidiary of a U.S. corporation-can file a claim for this indirect loss only if at least 122 percent of the entire ownership interest in the property or business entity taken was American owned. Section 505(d) provides that for both direct and indirect losses through takings from business entities the claim shall be calculated on the basis of that proportion of total loss suffered by the business entity that corresponds to the claimant's proportionate ownership interest in the entity suffering the loss. Section 505 is similar to section 406 of the Czech claim provisions except that the American indirect ownership interest needed to qualify a claim for an indirect loss is 12% percent instead of 25 percent. Section 506. Offsets Section 506 is designed to prevent double benefits. Awards are to be reduced by any payments the claimant may have received from other sources-e.g., insurance-on account of the same loss. Section 506 is similar to section 407 of the Czechoslovak claims program. Section 507. Action of Commission with respect to claims Section 507 provides that the Foreign Claims Settlement Commission shall certify to both the Secretary of the Treasury and the claimant the amount determined to be the loss or damage suffered by the claimant which is covered by this title. Section 508. Cooperation with Department of State The State Department has previously invited claimants to send it their claims against the Government of Cuba. No analysis has been made of these claims and they represent only a partial collection. Section 508 assures that this material would be made available to the Commission. Section 509. Application of other laws Section 509 incorporates by reference the technical provisions of title I of the International Claims Settlement Act that are applicable: Subsection 4(b): Notice of filing time, publication, basis of decisions, and finality of decision. Subsection 4(c): Administration of oaths, examination of witnesses, subpenas, reporting of hearings, witness fees, and contempt. Subsection 4(d): Depositions. Subsection 4(e): Penalties. Subsection 4 (h): Notification of disposition of claims, right to hearing, finality of Commission's decision. Subsection 4 (j): Compliance with Administrative Procedure Act. Section 510. Cuba Claims Section Section 510 authorizes the Commission to establish a Cuba Claims Section to handle the work in connection with its adjudication of the claims against Cuba. II. VESTING PROVISIONS Section 511. Cuban Claims Compensation Fund Section 511(a) provides that any property blocked by the U.S. Treasury's Cuban Assets Control Regulations (31 C.F.R., pt. 515, et seq.) and which is still so blocked 6 months following the date of the enactment of these provisions, except for property taken by Cuba from direct or indirect U.S. ownership since January 1, 1959, is to be vested and liquidated. Section 511(b) establishes in the Treasury a Cuban Claims Compensation Fund into which the proceeds of the vested Cuban assets and any other funds authorized for this purpose are to be paid. This fund is to be used to pay unsatisfied claims of U.S. nationals against Cuba as determined by the Foreign Claims Settlement Commission. Section 511 (c) provides that 5 percent of the Cuban Claims Compensation Fund is to be deducted to reimburse the United States for the administrative expenses of the Commission and the Treasury in carrying out their responsibilities under the Cuban claims program. Section 511(d) gives the President, or the officer to whom the President assigns responsibility for the vesting of blocked Cuban property, powers to obtain information with respect to that property. Section 512. Claims to vested property Section 512 affords legal remedies to a party wishing to challenge the vesting of property on the ground that the claimant is the owner of the property and not subject to the blocking order. The claimant to the property may either sue in equity for the return of the property or the proceeds thereof or file a notice of claim with the officer responsible for vesting the property. The latter remedy is supplemented by rights of appeal to the courts. Section 513. Payment of debts; claims allowable Section 513 permits use of the vested assets or the proceeds thereof to be used to pay certain debts of the person who owned the property immediately prior to its vesting. No payment of debts of the Cuban Government, or of debts payable in foreign currencies or of debts which had not matured as of the date of the blocking order (July 8, 1963), is permitted. Similarly, the creditor group entitled to payment on their debts is limited to a specified class of creditors. Section 514. Application of other laws Section 514 makes applicable a number of technical provisions in title II of the International Claims Settlement Act, which deals with the vesting and liquidation of blocked Bulgarian, Hungarian, and Rumanian property to pay U.S. claims: Section 203: Cancellation and issuance of shares of stock or other beneficial interest in corporation. Section 204: Filing of order of conveyance. Section 205: Acquittance and discharge of obligation. Section 206: Rules by district courts; appeals. Sections 208 (b), (c), (d), (e), (f), (g), (h), and (i): These, in addition to section 513 of the bill, make applicable the remainder of the provisions of section 208 of title II of the act on the assertion of debt claims against the former owner of the vested property. Section 211: Fees of agents, attorneys, or representatives (in connection with recovering vested property; not to be confused with the limitation on fees of attorneys acting on claims to the Foreign Claims Settlement Commission in section 519 of the bill. Section 212: Taxes: liability (in connection with vested property). Section 515. Hearings on claims; rules and regulations; delegation of powers Section 516. Limitations Section 516 establishes a 1-year statute of limitations for suits to recover vested property or the proceeds thereof. Section 517. Determination of expenses and time for filing suit; notice of claim and debt claim Section 517 is a technical provision dealing with the determinations to be made by the officer or agency vesting the blocked Cuban property as to the amount necessary to meet his administrative expenses and the tolling of the various periods of limitation for asserting claims with respect to vested property. Section 518. Payment of awards; manner of payment Section 518 provides for the priority and mode of payments to be made from the Cuban Claims Compensation Fund. An initial payment of $1,000 or the amount of the award, whichever is less, is followed by pro rata payments as compensation funds are available. Subsection (e) makes clear that no partial payment extinguishes a claim. It is not contemplated that a claims settlement agreement with Cuba would be made before the total of the adjudicated claims |