Mrs. KELLY. Without objection, Dr. Re's statement will be made a part of the record at this point.

(The statement referred to is as follows:)

STATEMENT OF DR. EDWARD D. RE, CHAIRMAN, FOREIGN CLAIMS SETTLEMENT COMMISSION

Madam Chairman and members of the subcommittee, it is a pleasure and a privilege to appear before you today as the Chairman of the Foreign Claims Settlement Commission in support of S. 1935 entitled, "A Bill to provide for the timely determination of certain claims of American nationals settled by the United States-Polish Claims Agreement of July 16, 1960, and for other purposes."

GENERAL SCOPE OF S. 1935

The bill, S. 1935, proposes amendments to Titles I and III of the International Claims Settlement Act of 1949, as amended, which directly affect the activities of the Foreign Claims Settlement Commission.

This bill is similar to S. 1987 and H.R. 10712 in the 87th Congress and S. 947 in the 88th Congress, none of which were enacted. With the exception of new Bulgarian, Rumanian, Yugoslav and Italian claims, S. 1935 is workaday legislation that does not engender much appeal. It involves technicalities designed principally to put the business of the Commission in order and constitutes good administration.

The bill, if enacted, would provide further compensation for Americans who have received only partial payments on their awards, provides for the filing of new claims by citizens whose losses occurred after the execution of international agreements or enactment of enabling legislation, and provides compensation for a small group found to have been excluded from coverage under treaties and statutes.

These potential claimants have been corresponding, individually and through their Senators and Congressmen, with the Commission constantly during the past five or more years, urging that the executive as well as the legislative branch support enactment of legislation included in S. 1935.

For the most part, this bill would update the International Claims Settlement Act of 1949, as amended, in light of the recent claims agreements which have been concluded between the United States and the Governments of Poland, Bulgaria, Rumania and Yugoslavia, and, to a certain extent, would reopen the Italian claims program as provided under Title III of the Act.

POLISH CLAIMS PROGRAM

Under the Polish Claims Agreement of July 16, 1960, the Governments of the United States and the Polish People's Republic entered into an en bloc settlement of claims of nationals of the United States against Poland for the nationalization or other taking by Poland of property and rights or interests therein: the deprivation of use or enjoyment of property; and debts of nationalized enterprises. Under this agreement the Polish Government agreed to pay to the United States Government an aggregate of $40 million in twenty equal installments. $12 million have been paid thus far. The next installment of $2 million is due January 10, 1967.

The Commission commenced the Polish claims program on September 1, 1960, under the provisions of Title I of the International Claims Settlement Act of 1949, as amended, which established the procedures for the administration of such a program by the Foreign Claims Settlement Commission.

Section 4 of Title I of this statute authorizes the Commission to receive, examine, and adjudicate claims immediately upon the signing of a claims agreement with any government with which the United States Government was not at war during World War II. In determining such claims the Commission is directed to apply the provisions of the claims settlement agreement and the applicable principles of international law, justice, and equity. However, the time limitations, as contained under this title of the statute, with respect to the completion date of the programs authorized, applied only to claims under the Yugoslav Claims Agreement of 1948. Pursuant to such limitations, that claims program was completed on December 31, 1954.

A total of 10,169 formal claims were filed under the Polish program. In relation to programs previously administered by the Commission this one is more than six times the size of the Yugoslav program, equal to the size of the program under Title III, which provided for certain claims against the Governments of Bulgaria, Hungary, Italy, Rumania and the Soviet Union, and more than twice the size of the Czechoslovakian program under Title IV of the Act. Four years were allowed for the completion of each of those programs. Accordingly, the Commission proposed that the period for processing claims against Poland be no greater than four years from the last day for filing timely claims, which was March 31, 1962.

The bill as originally presented to the Congress in draft form, contained the proposal that the Commission complete its affairs in connection with the program on March 31, 1966 which was, in fact, accomplished on schedule. The bill, however, was amended by the Senate to extend the completion date for an additional 2 years until March 31, 1968.

The Senate amendment, of course, would have the effect of reopening and continuing the program until March 31, 1968. The Commission has committed itself, over the years, both to the Bureau of the Budget and to the Congress through the Appropriations Committees of both Houses, and, through the Foreign Relations and Foreign Affairs Committees in the form of legislative proposals, to close out and terminate this program by March 31, 1966. Accordingly, appropriations, staffing and scheduling were geared to that date.

The Polish claims program was initiated with the signing of the Polish Agreement on July 16, 1960. The Commission extended the original deadline filing date of September 30, 1961 until March 31, 1962 because for varied reasons many potential claimants had not filed claims within the allotted time. For additional compelling reasons, which would excuse the failure to file within the time limit, the Commission further permitted the filing of claims until January 31, 1965 provided that appropriate information and evidence establishing the validity of claims be filed not later than sixty days after such date.

Of the 5,155 claims which were denied, approximately 3,000 claims were denied wholly or in part for failure to meet the burden of proof in support of such claims. The Commission permitted claimants to submit the necessary evidence to establish a claim until December 31, 1965.

These denials were the subject of public testimony before the Committee on Foreign Relations in connection with the consideration of S. 1935 before that Committee. During the course of these hearings testimony was received from a practicing lawyer indicating the need for the extension of the Polish program. It was stated that additional time was required by certain claimants to acquire evidence from the Polish authorities in support of their claims.

Because of the vastly extensive property damage in Poland during World War II, the obliteration of 60 percent of the land records, and the removal of large segments of former residents from given areas, it is impossible for the Polish authorities to furnish some of the information sought by the claimants. The retention of the amendment under S. 1935, by extending the program until March 31, 1968, would not, in the Commission's opinion, warrant the expense and time which would be required to reopen and continue the program for an additional period.

Moreover, the extension of this program would place the new award-holders on a par with those claimants who diligently pursued their claims within the time allotted, and will enable them to share equally in the amounts paid into the Polish Claims Fund in accordance with the payments provisions as contained under section 8(c) of the International Claims Settlement Act of 1949, as amended.

The principal amount of the 5,014 proposed awards, as determined by the Commission at the close of the program on March 31, 1966, was $100,736.781.63 plus $51,051,579.75 interest for a cumulative total of $151,788,361.38, against a fund which will ultimately consist of $40 million. This, of course, assumes that the Polish Government continues to make its annual installment payments of $2 million under the Polish Agreement. A total of $12 million has been paid into the fund by the Polish Government. Therefore, only those awards approved in the principal amounts of $1,000 or less have been paid, and in those awards approved in excess of $1,000, the Treasury Department has made an initial payment of $1,000 (less 5% for administrative expenses).

In view of the foregoing, it would appear that the Senate amendment to S. 1935, which will undoubtedly result in a number of new awardees, is unfair 67-498-662

and discriminatory to those claimants who through their own initiative and diligence were able to acquire the necessary supporting evidence with respect to their claims within the prescribed time.

The amendment would also cause a further delay in additional prorated payments to the present awardees. A number of claimants have been waiting for periods in excess of four years for an additional payment by the Treasury Department on account of their awards.

Moreover, to accommodate the Senate amendment would entail seeking additional appropriations and maintaining a staff to handle an unknown quantity of claims.

For the foregoing reasons the Commission is opposed to the Senate amendment, extending the Polish program until March 31, 1968, and recommends that the language in regard to the completion date of the Polish program as contained in the bill, S. 1935, as introduced be restored.

PROVISIONS FOR ATTORNEYS FEES

With respect to other sections of Title I of the International Claims Settlement Act of 1949, a proposal is made under the bill to amend subsection (f) of section 4 which would have the effect of relieving the Commission of the burden of determining attorneys' fees and of making Title I consistent with the attorney fee provisions of Titles III and IV of the Act.

Section 4(f) presently provides for a limitation on attorneys' fees of 10% of any payment on an award made by the Commission but authorizes the Commission to set the amount of such fee within the 10% limitation. Further provision is made for deduction by the Secretary of the Treasury of the amount of the fee and for payment directly to the attorney. Titles III and IV of the Act simplify this procedure by authorizing a flat 10% fee and leaving the settlement to the attorney and client.

DEDUCTION OF FIVE PERCENT

An amendment is also proposed to change the existing procedures under section 7(b) which presently provides for a direct deduction of 5% of any payment made on an award. This procedure was changed under Titles III and IV by providing for a direct deduction of 5% from each deposit into the respective funds thus eliminating an extensive administrative burden for the Treasury Department.

S. 1935 proposes to incorporate the provisions comparable to those of Title IV to apply (1) to the undisbursed balance of the Polish Claims Fund as of the date of enactment and to the future payments received from the Polish Government under the terms of the Agreement to be completed in 1980; (2) to payments into the fund contemplated by the new Yugoslav Claims Agreement of November 5, 1964, which calls for five annual payments of $700,000 to be completed in 1970; and (3) to payments into any other similar fund.

The Treasury Department has deducted from each Polish payment of up to $1,000 already made on account of the principal of awards, 5% for administrative expenses. Under the present priority of payments, holders of awards in the principal amount of $1,000 or less have not, therefore, received payment in full. The amendment would authorize the Treasury Department to make payment of the amount previously deducted.

PRO RATA PAYMENT ON AWARDS

Unlike the Yugoslav Agreement of 1948, whereby a lump-sum settlement was made, the Polish Agreement of 1960 provided payment in installments. Therefore, the present provisions of section 8(b) which deals with payment priorities were geared to the Yugoslav settlement by providing for additional payments up to 25 per centum of the unpaid principal of awards in amounts in excess of $1,000 after awards in the amount of $1.000 or less have been paid in full. Money thus far received for transfer into the Polish Claims Fund has only been sufficient to pay awards less than $1,000 in full and an initial payment of $1,000 in those cases where the award exceeded $1,000. As indicated previously, payments have been reduced by the 5% deduction for administrative expenses.

The bill proposes to retain the present language of section 8(c) in the event future prorated payments are made under the Yugoslav Claims Agreement of 1948 and to add a new subsection (e) to apply to the Polish Claims Agreement of

1960, the Yugoslav Claims Agreement of 1964, and any other similar agreements made subsequently with respect to payment priorities. The new subsection is similar to the language of Title III of the Act which provides payment in the amount of $1,000 or in the principal amount of the award, whichever is less, and thereafter, payments on a prorated basis on account of the unpaid principal balance of each remaining award. After payment in full of the principal amount of awards, payment is authorized on account of the unpaid balance of each award of interest under the same prorated basis.

PAYMENT TO LEGAL REPRESENTATIVES

The bill further provides for an amendment to paragraph (1) of subsection (c) of section 7 of Title I which deals with payments to a legal representative where the person to whom any payment is made is deceased or is under a legal disability. This section presently provides that where the award does not exceed $500, requirements with respect to the appointment of a qualified executor or administrator are waived and payment may be made to the person or persons found by the Comptroller General to be entitled thereto. This amendment raises the limit from an award not in excess of $500 to any payment not in excess of $1,000. A similar change was made regarding claims under Title IV of the Act against the Government of Czechoslovakia.

BULGARIAN AND RUMANIAN CLAIMS PROGRAMS

The bill contains certain amendments to Title III of the International Claims Settlement Act of 1949 with respect to claims against Bulgaria, Rumania and Italy.

The first amendment to Title III relates to section 302 by adding subsection (b). This new subsection permits the transfer into the Rumanian and Bulgarian Claims Funds of money derived from the Rumanian Claims Agreement of March 30, 1960, and the Bulgarian Agreement of July 2, 1963. The statute now provides that the Rumanian and Bulgarian Funds shall be comprised only of sums blocked and vested and transferred by the Attorney General. The additional funds realized from the respective agreements cannot be transferred into these Funds unless the Act is amended. S. 1935 proposes such an amendment. The additional net amount available to be transferred into the Rumanian Fund is $2.5 million. Under the Bulgarian Agreement the Bulgarian Government agreed to pay $400,000, of which $200,000 was paid on July 1, 1964 and the balance was paid on July 1, 1965.

Certain technical changes are also proposed under section 303 to permit the disposition of a small number of claims against Rumania, included within the Agreement of March 30, 1960, and against Bulgaria included within the Agreement of July 2, 1963. These claims, which have arisen since August 9, 1955, are based upon the nationalization, compulsory liquidation, or other taking of property of nationals of the United States by those countries. Claims of this nature, arising prior to August 9, 1955, were disposed of by the Commission in a previous program completed on August 9, 1959. An amendment is also proposed to permit a six month filing period for these new claims and a two year settlement period. Also included under the bill is an amendment to revamp the award payment provisions with respect to claims against Rumania and Bulgaria in order to insure that the new awardees will not obtain a pecuniary advantage over previous awardees. Awardees under the Rumanian program have received approximately 35 cents on the dollar in payment on their awards. Awardees under the Bulgarian program have received approximately 50 cents on the dollar in payment on their awards. This amendment would limit payments on new awards to a like extent, and then permit the residual balance to be distributed proportionately among all awardees.

ITALIAN CLAIMS PROGRAM

The most significant difference in the present measure and those bills introduced in prior Congresses deals with the residual balance in the Italian Claims Fund.

For background information concerning these claims, the attention of the Committee is invited to the provisions of Article 78 of the Treaty of Peace with Italy under which the Italian Government was required to restore all rights and interests to property within the territorial limits of Italy belonging to United

t

Nations nationals. If the property could not be returned, or if, as a result of the war, a United Nations national had suffered a property loss, he was entitled to compensation in lire to the extent of two-thirds of the sum necessary, at the date of payment, to purchase similar property or be indemnified for the loss suffered. In 1947, under the Lombardo Agreement, the Italian Government paid the United States the sum of $5 million, to be utilized in such manner as the Government of the United States might deem appropriate, to be applied to claims of United States nationals arising out of the war with Italy and for which no other provision had been made. Subsequently, Public Law 285, 84th Congress, was enacted on August 9, 1955, which authorized the settlement of those claims against Italy for which no provision had been made under the Treaty of Peace with Italy. By August 8, 1958, it was apparent that the Italian Claims Fund would be more than sufficient to pay anticipated awards against the Government of Italy. On that date the statute was amended by Public Law 85-604, section 2, to permit awards to persons who were nationals of the United States on August 9, 1955, the date of enactment of Title III of the Act, even though their claims were based upon property losses occurring at an earlier date. The amendment, in effect, broadened the international law principle requiring continuous United States nationality of a claim from the date of loss to the date of filing. Thus all claims previously denied under the original provisions of section 304 of the Act because of failure to qualify under the international law principle, but which would be eligible for awards under the amendment, had to be reconsidered. Under this amendment over 100 claims were reconsidered and the amounts of the awards totalled $606,464.00. In order to permit the Commission to complete its determinations with respect to these claims, the time limitation under section 316 was waived and the program was completed on May 1, 1960. No amendment, however, was made to section 306 or any other section of the Act providing for the filing of new claims.

The bill, S. 1935, would reopen and extend the Italian claims program to cover claims under section 304 of the Act, not previously compensable because of late filing, and claims of persons who had become nationals of the United States on or before August 9, 1955 who had not filed under the original statute.

The proposal would also include claims arising in territory ceded pursuant to the Treaty of Peace with Italy, including the Dodecanese Islands which were heretofore excluded under the provisions of the Act. Excluded from consideration are claims of persons who have received compensation previously pursuant to section (a) of section 304, section 202 of the War Claims Act of 1948, as amended, or under the Treaty of Peace with Italy. Any balance remaining in the Italian Claims Fund after payment of claims as proposed under these amendments is to be transferred into the War Claims Fund created under section 13 of the War Claims Act of 1948, as amended. The present balance in the Italian Claims Fund is approximately $1,088,000.

YUGOSLAV CLAIMS PROGRAM

Unlike the Rumanian Claims Agreement of March 30, 1960 and the Bulgarian Agreement of July 2, 1963, which permit the residual balance to be distributed proportionately among all awardees after the disposition of the new claims as provided under the Agreements, the Yugoslav Agreement of November 5, 1964 provides money only for the payment of new claims of American nationals arising between July 19, 1948 and November 5, 1964. Awardees under the first Yugoslav Agreement cannot receive additional prorated payments after the disposition of awards to the new claimants. Moreover, the Government of Yugoslavia is required under the 1964 Agreement to pay the United States Government the sum of $3.5 million to be payable in 5 equal installments of $700,000 each, due on January 1st of each year starting in 1966.

Since it was not certain whether the first installment would be paid on January 1, 1966, the Commission was reluctant to commence the program until such time as the initial payment had been made. This payment was, in fact, made by the Yugoslavian Government on the date due. Appropriations for the administrative expenses of this program have been included in the Commission's budget request for fiscal year 1967.

In view of this payment the Committee may wish to consider additional amend ments to the bill regarding the filing and completion dates of this program.