NAVY DEPARTMENT COMMUNICATIONS OFFICE, P. R. Official business. JACQUES COvo, Hotel Normandie, San Juan, P. R. Request you return to Washington bringing all personal effects since supply officer position being discontinued. THORON. EXHIBIT NO. 15 On page 227 reference was made to a discussion off the record. Mr. Covo has identified the following letter, dated April 28, 1943, received by him from Mr. Kenfield Bailey, acting administrative officer of the Department of the Interior, as that discussed in his off-the-record remarks. The letter is as follows: [Air mail] UNITED STATES DEPARTMENT OF THE INTERIOR, Mr. JACQUES Covo, San Juan, P. R. MY DEAR MR. Covo: I do not believe that you were approached before you left for Puerto Rico with reference to participating in the 10-percent pay-roll deduction for war bonds that all Government employees are interested in at the present time. In the belief that you may wish to participate in this fashion, there is enclosed for your information some literature justifying such participation, together with an authorization card for you to sign and return. There is indicated in the pamphlet enclosed a suggested table of deductions from pay rolls which will work out satisfactorily in the purchase of various bond denominations. Also indicated on the card in the bottom left hand corner is the date when you wish the pay-roll deductions to begin. Sincerely yours, KENFIELD BAILEY, Acting Administrative Officer. P. S. I read your letter to Fortas and was interested in learning your reaction to some of the people you come into contact with, in so short a time. It agrees with what some of us think about the people in question. Hope things straighten out for you soon.--Bailey. EXHIBIT NO. 16 On page 227 reference was made to a discussion off the record. Mr. Covo has advised that the statements he made then are substantially the same as those shown in exhibit No. 6. EXHIBIT No. 17 The directors of the Development Bank, referred to on page 254 of the hearings are: Rafael Buscaglia, Rafael Carrion, Fernando Rodriguez, Vicente Medina, Cesar Toro, Juan Cabrer, Pedro Juan 88301-44- -6 Rosaly, Esteban Bird, and Jose Castillo. (It was announced on September 1 through the newspaper World Journal of San Juan, P. R., that Jose Castillo had resigned from directorship in the Development Bank Board and that his son, Antonio Castillo, had been named to succeed him.) EXHIBIT No. 18 Act No. 252 approved May 13, 1942, to create the Development Bank of Puerto Rico, referred to on page 258, is as follows: [No. 252] AN ACT AN ACT, To create the Development Bank of Puerto Rico: to prescribe its powers, duties, rights, obliga. tions, privileges, immunities, constitution, and status; to authorize it to accept governmental and private deposits; to loan money and to issue bonds as well as promissory notes and other obligations for the payment of the same; to loan money for industrial and commercial purposes and for agricultural purposes incidental thereto; to regulate the terms and conditions for lending money and making loans, the acquisition, possession, ownership, use, and disposal of property of various kinds, and all other internal and external alairs of the bank; to authorize it to engage in general banking business; to provide funds therefor, authorizing and directing the Governor of Puerto Rico to issue the charter of said bank; to provide that the bank cannot begin operations until it is authorized to do so by the legislature of Puerto Rico, and for other purposes Be it enacted by the Legislature of Puerto Rico: SECTION 1. A public corporation is hereby created which shall be known by the name of Development Bank of Puerto Rico. SECTION 2. The purpose of the Development Bank of Puerto Rico shall be to attain, or to help in the realization of, the complete development of the human and economic resources of Puerto Rico by engaging in general banking business. SECTION 3. The Development Bank of Puerto Rico shall be a nonprofit instrumentality of the Insular Government; the incorporators thereof shall be the members of the Executive Council of Puerto Rico. It shall have such powers, duties, rights, obligations, privileges, immunities, constitution, and status as may be prescribed in the charter that the Governor of Puerto Rico is hereby authorized and directed to issue within sixty days from the date this Act takes effect. Said charter may include, but without limitation, power and authority to accept government and private deposits, to lend money and to issue bonds, as well as promissory notes and other obligations for the payment of the same, to lend money for industrial and commercial purposes and for agricultural purposes incidental thereto, and it may regulate the terms and conditions for accepting deposits, loaning money, and making loans for the acquisition, possession, ownership, use, and disposal of various kinds of property, and all other internal and external affairs of the bank; Provided, however, That when said charter is issued in accordance with the terms of this Act, the bank shall proceed to perfect its internal organization and to ultimate the plans and arrangements necessary for beginning its business, but it cannot accept deposits, borrow or lend money, or in any other way engage in general banking business unless and until it is authorized to do so by the Legislature of Puerto Rico. SECTION 4. In making loans or otherwise extending credit, preference and priority shall be given, when all other factors are equal, to the Puerto Rico Development Company and to enterprises recommended by said company, so that it may effect the most diverse industrial and commercial development of the Island. SECTION 5. The debts or obligations of said corporate entity shall not be debts or obligations of The People of Puerto Rico or of any of its municipalities or other political subdivisions; and neither The People of Puerto Rico nor any of its municipalities and other policical subdivisions shall be responsible for the same. SECTION 6. For the purpose of carrying out the provisions of this Act, the sum of five hundred thousand (500,000) dollars is hereby appropriated from any funds in the treasury not otherwise appropriated, which sum shall be transferred on order of the Government, to the Development Bank of Puerto Rico. SECTION 7. The object of this Act is not to repeal, nor shall be interpreted as repealing, any law in force relative to the establishment of a bank for the Insular Government. Nor shall such law be interpreted, in its turn, as amending or in any way affecting this Act. SECTION 8. If any provision of this Act or its application to any person or circumstance is declared null, it shall not affect the rest of the Act or the application of said provision to persons or circumstances different from those with respect to which it was declared null. SECTION 9. This Act shall take effect ninety days after its approval. EXHIBIT No. 19 Act No. 188 approved May 11, 1942, to create the Puerto Rico Development Company, referred to on page 258, is as follows: [No. 188] AN ACT Creating the Puerto Rico Development Company; providing for its powers and duties: authoriz ing it to conduct research and experimentation, make plans and designs, acquire, operate, and improve industrial and commercial enterprises; authorizing it to make loans and encourage the development and fullest usage of the economic and human resources of Puerto Rico, form and hold interests in subsidiary corporations and enterprises; authorizing it to accept grants, borrow money, and issue bonds on such terms and conditions as it may decide; transferring all rights and interests of the people of Puerto Rico in the Puerto Rico Cement Corporation to it; making an appropriation and providing for allocation of part of the income tax revenues and the issuance of development certificates, and for other purposes Be it enacted by the Legislature of Puerto Rico: Section 1. That this Act may be cited as the "Puerto Rico Development Company Act." DEFINITIONS SECTION 2. The following terms, whenever used or referred to in this Act, shall have the following meanings, except where the context clearly indicates otherwise: (a) The term "Company" shall mean the Puerto Rico Development Company created by this Act. (b) The term "Board" shall mean the Board of Directors of the Corporation. (c) Words importing the singular number shall include the plural number and vice vesra, and words importing persons shall include firms, partnerships of all kinds, and corporations. CREATION AND COMPOSITION OF THE COMPANY SECTION 3. (a) The Members of the Executive Council of Puerto Rico are hereby created a body corporate and politic constituting a public corporation and governmental instrumentality of The People of Puerto Rico by the name of the "Puerto Rico Development Company." Said Members of the Company shall be entitled to no compensation for their services as Members. (b) The Company hereby created is and shall be a governmental instrumentality subject, as provided herein, to the control of certain officers of the Insular Government, namely the Members of the Executive Council, acting in their capacity as Members of said company, but it is a company having legal existence and personality separate and apart from that of the government and officers so controlling it. The debts, obligations, contracts, bonds, notes, debentures, receipts, expenditures, accounts, funds, ndertaking, and property of the Company, its officers, agents, or employees shall be deemed to be those of said government-controlled company and not to be those of the Insular Government or any office, bureau, department, commission, dependency, municipality, branch, agent, officer or employee thereof. BOARD OF DIRECTORS SECTION 4. (a) The powers of the Company shall be exercised by a Board of Directors consisting of five (5) persons acting as a board. Within sixty (60) days after this Act becomes effective, the Members of the Company shall meet and organize and shall at that time by majority vote elect the five (5) Directors who shall hold office for terms of one, two, three, four, and five years, respectively, as determined by said Members, from the date of their election and until their successores are elected and qualified. Annually thereafter the Members shall meet and elect the successors of said Directors for terms of five (5) years. Vacancies on the Board shall be filled for the unexpired term in the same manner. Within thirty (30) days after their election, the Board shall meet and organize and shall at that time appoint a General Manager of the Company and a Secretary, neither of whom shall be a Director. The General Manager shall be authorized to attend all meetings of the Board but shall not be entitled to vote. (b) Three Directors shall constitute a quorum of the Board for all purposes, and action shall be taken only by a vote of majority. The bylwas of the Company may provide for the delegation to its General Manager or to its other officers, agents, or employees of such of the powers and duties of the Company as the Board may deem proper. GENERAL MANAGER Section 5. The General Manager shall be appointed by the Board exclusively upon the basis of merit as determined by technical training, skill, experience, and other qualifications best suited to carrying out the purposes of the Company. The General Manager shall be removable by the Board but only for cause and after he has been given notice and an opportunity to be heard. RESEARCHES SECTION 6. (a) In addition to the other powers herein granted, the Company is authorized and empowered: (1) To examine, investigate, conduct experimentation and research in, and make known the resources of Puerto Rico, and the possibilities and effective methods for promoting their proper utilization, through the establishment of industrial, mining, commercial, and cooperative enterprises, and educational training programs; (2) To examine, investigate, and conduct research and experimentation in, the marketing, distributing, advertising, and exporting of all products of Puerto Rico and the needs and desires of consumers of the products of Puerto Rico, and make known the results of such activities; (3) To establish and maintain, as one of its departments, a laboratory of design the duty of which shall be to prepare plans, specifications, and models of products suitable for manufacture (either for use by persons who manufacture them or for commercial exploitation) in Puerto Rico or from raw materials available in Puerto Rico and industrial devices, equipment, plants and systems useful for such manufacture, and to collect, compile, and disseminate information conerning the same. (b) It is the intent of the Legislature that the activities of the Company in the above-mentioned respects are to benefit the inhabitants of Puerto Rico by discovering and developing to the fullest possible extent the human and economic resources of the Island. The Company may, in its discretion, make charges for surveys and services rendered to private organizations and persons interested in such surveys and services for the purposes of this Act. The activities of the Company shall be self-liquidating except to the extent that funds for the payment of expenses thereof are made available from sources other than the revenue from the economic activities of the Company. LOANS SECTION 7. In addition to the other powers herein granted the Company is authorized and empowered to make loans to any person for the establishment, maintenance, operation, construction, reconstruction, repair, improvement or enlargement of any industrial mining or commercial enterprises in Puerto Rico or any agricultural enterprise incidental thereto. In making such loans, preference and priority shall be given, where other factors are equal, to enterprises governed by cooperative, governmental or other nonprofit organizations or to enterprises which give the greatest return in terms of human welfare in Puerto Rico. The interest rate, maturity, and other terms of loans made by the Company and the character and value of the security to be required for granting them, shall be determined and fixed by the Company. No loan shall be made unless from business experience and the facts and circumstances of each case, the Company can reasonably predict that the enterprise which is to receive the loan shall be able to repay the same, and that the said loan shall be repaid. INDUSTRIAL PROMOTION SECTION 8. In addition to the other powers herein granted, the Company is authorized and empowered upon its own account to establish, maintain, operate, and engage in any enterprise for the purpose of exploiting and distributing products manufactured from the following raw materials: Silica sands, clays, leather, bamboo, sugarcane fibers, cocoanuts, fish, fruit and vegetables for canning, hogs, minerals, waste and such other materials as may from time to time be designated by the Legislature of Puerto Rico. SECTION 9. In addition to the other powers herein granted the Company is authorized to take such steps and carry on such activities as shall tend to promote the engagement in industrial enterprise of capital owned by residents of Puerto Rico and to avoid the evils of absentee ownership of large scale capital and to that end (but without limitation) may make requirements in connection with loans, may permit the acquisition by owners of local capital of minority stockholdings in its subsidiary corporations, and may, when all other factors are equal, grant preference and priority to resident persons in the granting of loans, and take such other steps as it may deem appropriate. GENERAL POWERS SECTION 10. The Company shall have and may exercise the following general powers in addition to those elsewhere conferred by this Act: (a) To have perpetual existence as a company; (b) To adopt, alter, and use a seal which shall be judicially noticed; (c) To prescribe, adopt, amend, and repeal bylaws governing the manner in which its general business may be conducted and the powers and duties granted to, and imposed upon it by law may be exercised and performed; (d) To have complete control and supervision of any and all of its property and activities, including the power to determine the character of and necessity for all its expenditures and the manner in which they shall be incurred, allowed, and paid without regard to the provisions of any laws governing the expenditure of public funds and such determination shall be final and conclusive upon all officers of the Insular Government, and to prescribe, adopt, amend, and repeal such rules and regulations as may be necessary or proper for the exercise and performance of its powers and duties; (e) To sue and be sued; (f) To make contracts and to execute all instruments, necessary or convenient in the exercise of any of its powers; (g) To acquire in any lawful manner, including, but without limitation, acquisition by purchase, lease, bequest, devise, gift, and to hold, maintain, use, and operate any property, real, personal, or mixed, tangible or intangible, including but without limitation securities and other personal property or any interest therein, deemed by it to be necessary or desirable for carrying out the purposes of the Company; (h) To appoint such officers, agents, and employees and vest them with such powers and duties, and to fix, change, and pay such compensation for their services as the Company may determine; (i) To borrow money and make and issue bonds of the Company for any of its corporate purposes or for the purpose of funding, refunding, paying, or discharging any of its outstanding or assumed bonds or obligations, and to secure payment of its bonds and of any and all other obligations by pledge of all or any of its contracts, revenues, income, or property; (j) To accept grants or loans from, and enter into contracts, leases, agreements, or other transactions with, any Federal agency, The People of Puerto Rico, or |