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1952 - REIMBURSEMENT - PENDING LITIGATION CONCERNING WHETHER THE ARMY IS OBLIGED TO REIMBURSE CERTAIN ITALIAN CONTRACTORS FOR TAXES IMPOSED BY THEIR GOVERNMENT BUT NOT REFUNDED AS REQUIRED BY THE DUNN-VANONI AGREEMENT OF MARCH 5. WE HAVE NOW RECEIVED A LETTER FROM THE DEPARTMENT OF STATE EXPRESSING THE VIEWS OF THAT DEPARTMENT IN THE MATTER. A COPY OF THE LETTER IS ENCLOSED FOR YOUR INFORMATION. YOU WILL NOTE THAT THE DEPARTMENT OF STATE STRONGLY OPPOSES REIMBURSEMENT BY THE UNITED STATES GOVERNMENT TO THE ITALIAN CONTRACTORS IN LIEU OF TAX REFUND FROM THE GOVERNMENT OF ITALY FOR REASONS CLEARLY SET OUT IN THE LETTER. WE HAVE BEEN ADVISED INFORMALLY THAT ONE OF THE ITALIAN CONTRACTORS HERE INVOLVED.

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B-133267, JUN 1, 1972

GENERAL GOVERNMENT MATTERS - DUNN-VANONI AGREEMENT OF MARCH 5, 1952 - REIMBURSEMENT - PENDING LITIGATION CONCERNING WHETHER THE ARMY IS OBLIGED TO REIMBURSE CERTAIN ITALIAN CONTRACTORS FOR TAXES IMPOSED BY THEIR GOVERNMENT BUT NOT REFUNDED AS REQUIRED BY THE DUNN-VANONI AGREEMENT OF MARCH 5, 1952. GAO CONSIDERATION AT THIS TIME WOULD BE INAPPROPRIATE SINCE THE JUSTICE DEPARTMENT INTENDS TO DEFEND THE ISSUE IN THE ITALIAN COURTS.

TO MR. SECRETARY:

BY LETTER OF NOVEMBER 10, 1970, THE ASSISTANT SECRETARY OF THE ARMY (INSTALLATIONS AND LOGISTICS), PRESENTED FOR OUR CONSIDERATION SEVERAL QUESTIONS CONCERNING THE REIMBURSEMENT BY YOUR DEPARTMENT TO CONTRACTORS OF THE MILITARY DEPARTMENTS IN ITALY FOR CERTAIN TAXES IMPOSED ON SUCH CONTRACTORS BY THE ITALIAN GOVERNMENT AND NOT REFUNDED TO THE CONTRACTORS BY THE ITALIAN GOVERNMENT AS REQUIRED BY THE DUNN VANONI AGREEMENT OF MARCH 5, 1952 (TREATIES AND OTHER INTERNATIONAL ACTS 2566).

AS WE ADVISED YOU BY OUR LETTERS OF DECEMBER 24, 1970, AND MARCH 15, 1971, B-133267, SINCE THE QUESTIONS PRESENTED INVOLVED THE INTERPRETATION OF AN INTERNATIONAL AGREEMENT, AND IN VIEW OF THE INTERNATIONAL AND DIPLOMATIC IMPLICATIONS OF THE MATTER, WE DEEMED IT DESIRABLE TO OBTAIN THE VIEWS AND COMMENTS OF THE SECRETARY OF STATE THEREON PRIOR TO MAKING OUR REPLY TO THE CITED LETTER. WE HAVE NOW RECEIVED A LETTER FROM THE DEPARTMENT OF STATE EXPRESSING THE VIEWS OF THAT DEPARTMENT IN THE MATTER. A COPY OF THE LETTER IS ENCLOSED FOR YOUR INFORMATION. YOU WILL NOTE THAT THE DEPARTMENT OF STATE STRONGLY OPPOSES REIMBURSEMENT BY THE UNITED STATES GOVERNMENT TO THE ITALIAN CONTRACTORS IN LIEU OF TAX REFUND FROM THE GOVERNMENT OF ITALY FOR REASONS CLEARLY SET OUT IN THE LETTER.

WE HAVE BEEN ADVISED INFORMALLY THAT ONE OF THE ITALIAN CONTRACTORS HERE INVOLVED, MEDIOLI AND SONS OF PARMA, RECENTLY FILED SUIT IN THE ITALIAN COURTS AGAINST THE UNITED STATES FOR REIMBURSEMENT OF THE TAXES HE WAS REQUIRED TO PAY TO THE ITALIAN GOVERNMENT WITHOUT GETTING THE REFUND FROM THE ITALIAN GOVERNMENT AS PROVIDED BY THE DUNN-VANONI AGREEMENT, INVOLVING THE QUESTIONS PRESENTED BY THE LETTER OF NOVEMBER 10, 1970, AND THAT THE DEPARTMENT OF JUSTICE PROPOSES TO DEFEND THE CASE ON THE BASIS THAT THE DUNN-VANONI AGREEMENT IS STILL VALID AND IN FULL FORCE AND EFFECT AND THAT IT IS THE OBLIGATION OF THE ITALIAN GOVERNMENT THEREUNDER TO REFUND SAID TAXES, WITH NO OBLIGATION ON THE PART OF THE UNITED STATES GOVERNMENT UNDER ITS CONTRACTS.

IT LONG HAS BEEN THE POLICY OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO DECLINE TO CONSIDER CASES WHERE THE GOVERNMENT IS INVOLVED WHEN SUCH CASES ARE UNDER CONSIDERATION BY THE COURTS. CONSEQUENTLY, SINCE THE MATTER IS NOW THE SUBJECT OF PENDING LITIGATION, IT WOULD BE INAPPROPRIATE FOR US TO COMMENT THEREON AT THIS TIME.

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