Lisa Pease Reports on Freeport Sulphur:
In the September 12, 1960 issue of The New Republic, Professor Samuel Shapiro wrote an article about Cuba, Castro, and American business involvement. Shapiro wrote that the former U.S. Ambassador to Cuba, Earl E. T. Smith, owing his apppointment largely to the support of John Hay Whitney (by that time former Chairman of Freeport but still a large stockholder), negotiated a substantial tax reduction for the Moa Bay Mining Company with Cuban President Fulgencio Batista. Smith wrote a belligerent letter back, published in the October 3, 1960 issue, stating:
This is a clear and grave charge that I employed my official position and influence as US Ambassador to Cuba for the private profit of the Moa Bay Mining Company. This is utterly untrue.
Smith then went on to cite a State Department release from 1959 that had stated that:
neither the State Department nor the American Embassy ever intervened during the negotiations of the new industry concessions granted by the Cuban Government to Moa Bay Mining Company in August 1957. Negotiations were completed in July 1957, before Ambassador Smith's arrival in Cuba, and the subsequent decree granting the concessions was published in August, 1957.
One of Freeport's vice presidents, John C. Carrington, added:
This tax treatment . . . came under a principle of law predating Batista and honored by Castro. . . . Ambassador Smith had nothing whatever to do with the matter and in fact did not even come to Cuba until July 1957.
In his rebuttal also published in the October 3, 1960 issue, Shapiro responded:
Neither the Batista Government nor Moa Bay officials ever made public the details of the special tax treatment granted the company. In view of the extremely cordial relations that existed between Ambassadors Gardner and Smith and the dictatorship, documented at great length in such books as Jules Dubois' Fidel Castro, it is most difficult to believe that the subject was never brought up. As Mr. Carrington himself indicates, the tax reduction was held up for over a year, and though approved "in substance" in July, 1957, the month of Ambassador Smith's arrival in Havana, did not actually go into effect until some time later; furthermore, the tax cut could have been withdrawn at any time. The specific charge that Ambassador Smith used his influence on behalf of Moa Bay was made in a special number of Bohemia, something of a Cuban equivalent of Life, in January, 1959. Ambassador Smith resigned on January 10 after seeing an advance copy but before the issue went on sale. The statement Ambassador Smith and Mr. Carrington quote was thus made after Ambassador Smith's departure from Cuba.
In my article I did not intend to single out the Freeport Sulphur Company as particularly reprehensible in its dealings with the dictatorship. Every businessman in Cuba had to get along by the use of influence and bribes. If Moa Bay really got its tax reduction without political or diplomatic pressure, and without the distribution of money in the right places (and Carrington does not say that it did), this was an example of generosity almost without parallel in the history of Cuba.
In his response to Shapiro's parenthetical comment, published a month later, Carrington wrote:
I now state, for Mr. Shapiro's future reference, that Moa Bay obtained its new industry tax exemption without the distribution of money, and I repeat that it did so without political or diplomatic pressure. . . In sum, there is no ground for Mr. Shapiro's accusation-by-innuendo against our company. . . and I request that a proper retraction be made.
Shapiro had the last word in his final response to Carrinton:
I am happy to accept Mr. Carrington's assurance, but as both he and Ambassador Smith have denied that the Ambassador used political or diplomatic pressure to secure the grant of new-industry tax status to the Moa Bay operation, it may be pertinent to quote the notice that appeared in The New York Times on August 17, 1957:
"Work on a project for mining and refining nickel and cobalt at Moa Bay in Oriente Province will start immediately, the Presidential Palace said today. The announcement was made following talks by Earl E. T. Smith, United States Ambassador, L.M. Williams, President of Freeport Sulphur Company and other officials of the enterprise with President Fulgencio Batista.
"About $75,000,000 will be invested in the Moa Bay project, officials said. The way was cleared for the start of construction when President Batista granted the project a classification as a new industry with tax exemption. Production is scheduled to begin within two years." [. . . ]
I believe it should be said that Mr. Smith showed poor judgement in interceding with the dictator on behalf of an American company seeking a tax concession. But then, Mr. Smith was a political appointee with no previous diplomatic experience. He had contributed $3,800 to the Republican campaign chest in 1956. . . .
In 1956, John Hay Whitney, Freeport's then Chairman and significant investor as well as Ambassador Smith's promoter, was Chairman of the United Republican Finance Committee.