B-112864, OCT. 10, 1955

B-112864, OCT. 10, 1955

TO MR. MAX M. EIN:

REFERENCE IS MADE TO YOUR LETTER OF JULY 21, 1955, RELATIVE TO THE BASIC INDEBTEDNESS TO THE UNITED STATES OF EIN CHEMICAL CORPORATION AND MAX EIN MINERALS CORPORATION IN THE RESPECTIVE AMOUNT OF $48,680 AND $32,275, A TOTAL OF $80,955 REPRESENTING OVERPAYMENTS IN CONNECTION WITH SALES OF CRUDE SULPHUR IN FRANCE WHICH WERE FINANCED WITH ECONOMIC COOPERATION ADMINISTRATION FUNDS.

YOUR REQUEST, AS PRESIDENT OF THE DEBTOR CORPORATIONS, FOR PERMISSION TO LIQUIDATE THE INDEBTEDNESS BY THE PAYMENT OF $2,000 PER MONTH WAS APPROVED IN NOVEMBER 1952. SINCE THAT TIME YOU HAVE MADE PAYMENTS IN THE TOTAL AMOUNT OF ONLY $26,000, LEAVING A BALANCE OF $54,955. IN REQUEST FOR REVIEW OF THE MATTER YOU ASSERT THAT THERE IS NO LEGAL OR MORAL BASIS FOR THE CHARGES RAISED AGAINST THE CORPORATIONS, THAT THE PROFITS REALIZED WERE REASONABLE, AND THAT NEITHER THE UNITED STATES TREASURY, THE FRENCH GOVERNMENT, NOR THE IMPORTER IS ENTITLED TO RECEIVE ANY OF THE AMOUNTS COLLECTED FROM THE CORPORATIONS.

THE SUPPLIER'S CERTIFICATE (FORM 280) WHICH THE CORPORATIONS WERE REQUIRED TO EXECUTE IN ORDER TO QUALIFY FOR PAYMENTS FROM ECONOMIC COOPERATION ADMINISTRATION FUNDS, IS, IN PERTINENT PART, AS FOLLOWS:

"THE SUPPLIER HEREBY * * * CERTIFIES AND AGREES WITH THE ADMINISTRATOR AS FOLLOWS:

"/1) THE SUPPLIER IS ENTITLED UNDER SAID CONTRACT TO THE PAYMENT OF THE CLAIMED SUM, AND HE WILL PROMPTLY MAKE APPROPRIATE REIMBURSEMENT TO THE ADMINISTRATOR IN THE EVENT OF HIS NONPERFORMANCE, IN WHOLE OR IN PART, UNDER SAID CONTRACT, OR FOR ANY BREACH BY HIM OF THE TERMS OF THIS CERTIFICATE.

"/7) THE SUPPLIER FURTHER CERTIFIES, ON THE BASIS OF INFORMATION OBTAINED FROM SUCH SOURCES AS ARE AVAILABLE TO HIM, THAT TO THE BEST OF HIS INFORMATION AND BELIEF THE PURCHASE PRICE IS NO HIGHER THAN THE MARKET PRICE (WHICH SHALL MEAN THE EXPORT MARKET PRICE, WHERE SUCH A PRICE IS CUSTOMARY IN THE TRADE) PREVAILING IN THE UNITED STATES AT THE TIME OF PURCHASE, ADJUSTED FOR DIFFERENCES IN THE COST OF TRANSPORTATION TO DESTINATION, QUALITY, AND TERMS OF PAYMENT.'

SEE ECONOMIC COOPERATION ADMINISTRATION, REGULATION 1 AS AMENDED TO JUNE 1, 1951.

THE ADMINISTRATIVE OFFICE HAS REPORTED THAT THE INDEBTEDNESSES OF THE CORPORATIONS WERE ESTABLISHED BY A COMPARISON BETWEEN THE CORPORATIONS' CHARGES AND THE EXPORT MARKET PRICES CHARGED BY THE CORPORATIONS' SUPPLIER DURING THE PERIOD THE DELIVERIES IN QUESTION WERE MADE. HENCE, THE INDEBTEDNESSES REPRESENT THE AMOUNTS PAID TO THE CORPORATIONS IN EXCESS OF THE PREVAILING EXPORT MARKET PRICES IN EFFECT AT THE TIME OF THE SALE IN QUESTION. COPIES OF THE SCHEDULE OF EXPORT MARKET PRICES ISSUED BY THE CORPORATIONS' SUPPLIER, AND OF THE PRICE LISTS IN THE OIL PAINT AND DRUG REPORTER FOR THE PERIOD HERE INVOLVED HAVE BEEN FURNISHED IN SUPPORT OF THE ADMINISTRATIVE REPORT. YOU HAVE FURNISHED NO EVIDENCE TO ESTABLISH THAT THE CORPORATIONS' CERTIFICATES ON FORM 280 WERE CORRECT AS TO THE PRICES CHARGED. THEREFORE, ON THE BASIS OF THE RECORD, THE ADMINISTRATIVE REPORT MUST BE ACCEPTED AS CONTROLLING IN THE MATTER.

MOREOVER, UNDER THE TERMS OF THE AGREEMENTS BETWEEN THE CORPORATIONS AND THE ADMINISTRATOR, ECONOMIC COOPERATION ADMINISTRATION (FORM 280), THE UNITED STATES GOVERNMENT IS ENTITLED TO RECOVER ANY FUNDS CLAIMED AND RECEIVED BY THE CORPORATIONS IN THE EVENT OF A BREACH OF THE TERMS OF THE CORPORATIONS' CERTIFICATES. IN SUCH CIRCUMSTANCES THE DISPOSITION OF THE FUNDS SO RECOVERED IS NOT MATERIAL IN A DETERMINATION OF THE GOVERNMENT'S RIGHT TO RECOVER. HOWEVER, CONTRARY TO YOUR STATED BELIEF, THE RECORD SHOWS THAT DEPOSITS OF THE AMOUNTS PAID IN PARTIAL LIQUIDATION OF THE INDEBTEDNESS HAVE BEEN MADE BY THE GENERAL ACCOUNTING OFFICE TO THE CREDIT OF THE ACCOUNT AVAILABLE FOR MUTUAL SECURITY EXPENDITURES.

THE RECORD SHOWS THAT THE CORPORATIONS HAVE NOT MADE PERIODIC REFUND PAYMENTS IN ACCORDANCE WITH THEIR AGREEMENT WITH THIS OFFICE, AND THAT THE LAST INSTALLMENT PAYMENT WAS MADE IN JULY 1954. ACCORDINGLY, UNLESS A SUBSTANTIAL PAYMENT IS MADE WITHIN 30 DAYS FROM THIS DATE THE MATTER WILL BE REFERRED TO THE DEPARTMENT OF JUSTICE FOR NECESSARY ACTION TO EFFECT COLLECTION.