B-137171, OCT 15, 1958

B-137171: Oct 15, 1958

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SUCH REQUEST WAS MADE PURSUANT TO THE TAX RELIEF AGREEMENT DATED JUNE 23. 1954) AND STATED THAT THE UNITED STATES WAS PREPARED TO PAY TURKISH SUPPLYING AGENCIES FOR PETROLEUM. WAS GRANTED ON JULY 29. EXECUTED THE ABOVE CITED PURCHASE ORDER AND CONTRACTS WITH PETROL OFISI AND THAT PAYMENTS FOR DELIVERIES THEREUNDER WERE EFFECTED IN A TOTAL AMOUNT OF 343. THAT TAX-FREE PURCHASES FROM PETROL OFISI HAD BEEN APPROVED ON CONDITION THAT PAYMENT WOULD BE MADE IN AMERICAN DOLLARS AND IT WAS THEREFORE REQUESTED THAT ACTION BE TAKEN TO MAKE PAYMENT IN DOLLARS AT THE RATE OF 2.8 LIRA TO $1 AND TO RECEIVE BACK THE TURKISH LIRA ALREADY PAID. 470.55 TURKISH LIRA WAS SUBMITTED TO DETACHMENT 30. MENTIONS A RATE OF EXCHANGE AND YOU ADVISE THAT THE DOLLAR VALUE OF THE PRESENT CLAIM IS COMPUTED AT THE OFFICIAL RATE ($1 2.8 TURKISH LIRA) SINCE NO AGREEMENT EXISTS FOR A MORE FAVORABLE RATE FOR DOLLAR PAYMENT.

B-137171, OCT 15, 1958

PRECIS-UNAVAILABLE

R. B. EDRIS, CAPTAIN, USAF:

YOUR LETTER DATED JUNE 27, 1958, WHICH HAS BEEN FORWARDED TO THIS OFFICE BY HEADQUARTERS, USAFS, REQUESTS OUR ADVANCE DECISION ON THE PROPRIETY OF PAYING THE CLAIM OF PETROL OFISI ARISING OUT OF ERRONEOUS PAYMENTS ON PURCHASES OF PETROLEUM DURING 1956 AND 1957 UNDER PURCHASE ORDER NO. (61- 353)57-264 AND UNDER CONTRACT NOS. AF 61(353)-4,-23,-27, AND -60.

YOUR LETTER STATES THAT SUCH CLAIM ARISES OUT OF A REQUEST BY MAJOR GENERAL SHEPARD, CINCPOR, MADE UPON THE TURKISH GOVERNMENT UNDER DATE OF JULY 21, 1955, FOR TAX RELIEF ON ESTIMATED REQUIREMENTS OF PETROLEUM, OIL, AND LUBRICANT PRODUCTS FOR THE CALENDAR YEAR 1955 FOR AMERICAN FORCES IN TURKEY. SUCH REQUEST WAS MADE PURSUANT TO THE TAX RELIEF AGREEMENT DATED JUNE 23, 1954, BETWEEN THE UNITED STATES AND TURKEY (LAW NO. 6426 DATED JUNE 30, 1954, PUBLISHED IN GAZETE NO. 9747 DATED JULY 6, 1954) AND STATED THAT THE UNITED STATES WAS PREPARED TO PAY TURKISH SUPPLYING AGENCIES FOR PETROLEUM, OIL, AND LUBRICANTS ACTUALLY DELIVERED IN 1955 AND SUBSEQUENT YEARS BY DOLLAR INSTRUMENTS, WITHIN TURKEY. APPROVAL OF TAX-FREE PURCHASE FOR THE 1955 REQUIREMENTS AND FOR THE PURCHASE THEREAFTER OF SUCH PRODUCTS, CONDITIONED UPON PAYMENT BEING MADE BY DOLLAR INSTRUMENTS, WAS GRANTED ON JULY 29, 1955, BY THE PRESIDENT, NATO TURKISH CENTRAL COUNCIL.

YOU ADVISE THAT DETACHMENT 30, TUSLOG, BEING UNAWARE OF SUCH AGREEMENT, EXECUTED THE ABOVE CITED PURCHASE ORDER AND CONTRACTS WITH PETROL OFISI AND THAT PAYMENTS FOR DELIVERIES THEREUNDER WERE EFFECTED IN A TOTAL AMOUNT OF 343,470.55 TURKISH LIRA. ON DECEMBER 31, 1956, THE NATO TURKISH CENTRAL COMMITTEE ADVISED HEADQUARTERS, JAMMAT, THAT TAX-FREE PURCHASES FROM PETROL OFISI HAD BEEN APPROVED ON CONDITION THAT PAYMENT WOULD BE MADE IN AMERICAN DOLLARS AND IT WAS THEREFORE REQUESTED THAT ACTION BE TAKEN TO MAKE PAYMENT IN DOLLARS AT THE RATE OF 2.8 LIRA TO $1 AND TO RECEIVE BACK THE TURKISH LIRA ALREADY PAID.

THE CLAIM OF PETROL OFISI FOR PAYMENT OF $122,668.05 IN EXCHANGE FOR THE RETURN OF 343,470.55 TURKISH LIRA WAS SUBMITTED TO DETACHMENT 30, TUSLOG UNDER DATE OF JUNE 24, 1958. NEITHER THE UNITED STATES-TURKEY TAX EXEMPTION AGREEMENT NOR THE AGREEMENT ARISING OUT OF GENERAL SHEPARD'S REQUEST OF JULY 21, 1955, AND THE APPROVAL OF THE NATO TURKISH CENTRAL COUNCIL ON JULY 29, 1955, MENTIONS A RATE OF EXCHANGE AND YOU ADVISE THAT THE DOLLAR VALUE OF THE PRESENT CLAIM IS COMPUTED AT THE OFFICIAL RATE ($1 2.8 TURKISH LIRA) SINCE NO AGREEMENT EXISTS FOR A MORE FAVORABLE RATE FOR DOLLAR PAYMENT. HOWEVER, THE TURKISH LIRA PAID TO THE PETROL OFISI WERE ACQUIRED DURING 1956 AND 1957 AT RATES OF EXCHANGE VARYING FROM 5.65 TO THE DOLLAR TO 11.40 TO THE DOLLAR AND THE TOTAL ACQUISITIONS COST OF THE 343,470.55 TURKISH LIRA AT SUCH RATES WAS $32,401.62. YOU ADVISE THAT COLLECTION AND DISBURSEMENT VOUCHERS HAVE BEEN PREPARED TO COLLECT THE ORIGINAL TURKISH LIRA PAYMENTS AND TO DISBURSE $32,401.62, THE ACQUISITION COST OF THE TURKISH LIRA UTILIZED IN THE PRIOR PAYMENTS. ADDITIONALLY, YOU HAVE SUBMITTED A VOUCHER IN THE AMOUNT OF $90,266.43, PAYABLE TO THE NORKER BANKASI (AS REQUESTED BY PETROL OFISI) WHICH REPRESENTS THE DOLLAR VALUE OF THE DIFFERENCE BETWEEN THE ACTUAL ACQUISITION COST OF THE TURKISH LIRA ($32,401.62) AND THE COST ($122,668.05) OF SUCH LIRA IF THEY HAD BEEN ACQUIRED AT THE OFFICIAL RATE OF EXCHANGE OF 2.8 TO THE DOLLAR. THE RESULT OF THESE COLLECTIONS AND DISBURSEMENT ACTIONS WILL BE TO PAY PETROL OFISI THE IDENTICAL AMOUNT IN AMERICAN DOLLARS WHICH IT WOULD HAVE RECEIVED IF DOLLAR PAYMENTS HAD BEEN MADE AT THE OFFICIAL CONVERSION RATE, WHILE THE UNITED STATES WILL COLLECT THE IDENTICAL NUMBER OF TURKISH LIRA PREVIOUSLY ACQUIRED FOR $32,401.62 AND USED TO EFFECT THE CONTRACT PAYMENTS. YOU ADVISE, APPARENTLY IS EXPLANATION OF YOUR REQUEST FOR AN ADVANCE DECISION, THAT DOUBT EXISTS AS TO THE PROPRIETY OF THESE PAYMENTS IS THAT A PART OF THE AMOUNT ($90,266.43) REPRESENTS ADDITIONAL PAYMENTS ON CONTRACTS PAID BY A DIFFERENT, NOW INACTIVATED U. S. ARMY OFFICE, AND SUCH AMOUNT IS IN ADDITION TO PAYMENTS CONSIDERED TO BE "FINAL" ON CONTRACTS PREVIOUSLY CONSIDERED COMPLETED. YOU THEREFORE REQUEST OUR DECISION AS TO THE PROPRIETY OF THE PROPOSED COLLECTION AND DISBURSEMENTS.

OUR EXAMINATION OF THE CONTRACTS AND VOUCHERS IN QUESTION INDICATE THAT CONTRACT NO. AF 61(353)-60 DATED NOVEMBER 29, 1956, PROVIDED FOR PAYMENT OF PURCHASES OF KEROSENE, GASOLINE, AND DIESEL FUEL BY DOLLAR INSTRUMENTS AT UNIT RATES WHICH COMPARE FAVORABLY WITH THE UNIT RATES FOR THESE PRODUCTS IN THE REMAINING CONTRACTS IF THE TURKISH LIRA UNIT RATES STATED THEREIN ARE CONVERTED AT 2.8 LIRA TO THE DOLLAR. IN SUBMITTING THE CLAIM TO THIS OFFICE, HEADQUARTERS, USAFR, CONFIRMS THE FACT THAT SUCH CONVERSION RATE WAS USED BY THE CONTRACTING PARTIES AND THAT THE CONTRACT PRICES WERE JUST AND EQUITABLE FOR THE PROCUREMENT IN QUESTION. IT WOULD THEREFORE APPEAR TO BE SUFFICIENTLY ESTABLISHED THAT THE PAYMENTS IN TURKISH LIRA DID, IN FACT, RESULT IN UNDERPAYMENTS TO PETROL OFISI AND A RESULTING SAVING TO THE UNITED STATES, IN THE AMOUNT OF $90,266.43, WHICH SHOULD BE CORRECTED AT THIS TIME.

UNDER THE CIRCUMSTANCES, AND IN VIEW OF YOUR ADVICE THAT THE TURKISH FOREIGN OFFICE HAS REQUESTED A SIMULTANEOUS EXCHANGE OF THE MONIES, THIS OFFICE WILL INTERPOSE NO OBJECTION TO SETTLEMENT OF THIS MATTER, IF OTHERWISE CORRECT, BY PAYMENT IN THE MANNER YOU PROPOSE.

THE VOUCHER DATED JUNE 24, 1958, WITH ATTACHMENTS, WHICH WAS FORWARDED WITH YOUR REQUEST FOR OUR DECISION, IS RETURNED, ATTENTION BEING INVITED TO THE FACT THAT THE SUM OF $42,058.02 NOW APPEARS TO BE CHARGEABLE TO APPROPRIATION SYMBOL 5783400.

A COPY OF THIS DECISION SHOULD BE ATTACHED TO EACH VOUCHER ..END :