'File 82/34 II (F 94) APOC Concession' [‎81r] (152/362)

I f
PPem 11
Appendix IV.
Persian Government Royalty Arbitration.
at of |
•H Messrs. The Anglo-Persian Oil Co. (Ltd.),
n u H Britannic House, Finsbury Circus, E.C. 2.
greemt:
Shipji 98, Lexham Gardens, London, W. 8.,
ieTei "' Dear Sirs, . May 9, 1928.
WITH reference to outstanding questions, I beg to draw your attention to
to| these facts.
Cartel On the 22nd December, 1926, I sent a private letter to Sir John Cadman
'isclai askino- his kind intervention in bringing about an early settlement of all points
igs m undei^dispute pertaining to the years ended March 1924 and 1925, 1926 now being
included and, in the near future, 1927. Our interests being identical, I remarked
mi then on the distastefulness to me of having recourse to arbitration, and expressed
the wish that things might be settled amicably. In Sir John's reply of the
tweeat 23rd December he promised to do all in his power to bring about such a
settlement, since which date one year and five months have elapsed and we have
nM made no material advance. . _ , _
iddaii The company making no movement towards a settlement, m February 192/
epu® I curtailed my holiday in the South, of France, returning to London, and took the
searcl initial steps necessary towards having the matter submitted to arbitration. In
;rsiar your letter of the 29th September of that year, you say: " The difference m
in aim opinion .... should appear to be incapable of adjustment. Arbitration,
jmaif therefore, would seem to be the only course." In your further letter of the
lanvifi 18th October you say in the last paragraph : "We appreciate that it is because
i fc you believe it to be a rightful claim that you are adopting the procedure agreed
on; it is because we do not believe it to be a rightful claim that we have adopted
i a ron the same procedure as the only means for the resolution of the difference between
(wit us " However, after all this loss of valuable time, you did not pursue this course,
lo-Pes but, through Mr. Spens, vour accountant, made some overtures to Sir William
subsi McLintock, hoping thereby to render the arbitration unnecessary. Though of all
q Li outstanding questions requiring adjustment the one most disputed contention
ggoftK concerns refining allowances, yet all are so essentially linked up that, finding your
a suggestions inadequate, I made counter-proposals through S ir William
anM McLintock, who, through Mr. Spens, wrote to the chairman on the 11th April
JLl last, which proposals were briefly turned down by Sir John Cadman m his reply
of the 25th April, no further counter-proposals being offered
I In the course of conversation with me the day before his departure ±01 r i ance
! on the 25th April, Sir John said that acceptance of my demands would be
II tantamount to tearing up the agreement, to which I replied that, unfortunately,
* that was a course adopted by the company when their interests were served to the
detriment of the interests of the Persian Government, who, it seems to me, have
, L also a say in the matter. Article 10 of the alleged agreement decrees that the
company agrees that '' it will not enter into any fictitious or artificial transaction
which would have the effect of reducing the amount of royalty fay abler Also, in
1(1 paragraph 7 of the instructions given to Mr. Armitage-Smith, which appear m
the Blue Book of which you have a copy, in Appendix III, p. 20, we read
" Le point de vue du Grouvernement est done le maintien du pouicentage
\0 actuel, tout en adoptant les moyens necessaires pour empecher la compagnie
de manier ses comptes de fa^on a diminuer la part de 1 Etat persan, soit en
soustrayant certains profits ou pourcentages, soit en inscrivant au compte de
I'Etat certaines depenses indues, soit en vendant le petrole a pnx reduit.
A case in point of the flagrant breach of these obligations is the method
adopted by you regarding refining allowance. \ ou will admit that, if the
company sold all its oil at 14 .9. 3d. a ton, which costs more than 15s'. to produce
not only would there not be a penny of profit to the company, and therefore no
royalty to the Persian Government, but it seems to me that, under such circum
stances, the company would soon cease to exist. ^ . _
I have frequently said, and now repeat, that Mr. Armitage-Smith was not
instructed or authorised to draw up an agreement affecting changes m the terms
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