More on the Fox Empire

Westbrook Pegler

Tampa Tribune/February 3, 1949

The American-Indonesian Corporation, a trading company created by Matthew J. Fox, appears to be a great monopoly which violates professed principles of -the United States and yet. already has been able to command the services of the State Department. Fox, a movie executive, is sensitive about the word Hollywood as a personal description. He thinks he is not a Hollywood type. He is 37 years old. He is reputed to have extraordinary ability, initiative and vision.

Fox winces at the word “promoter” on the ground that it suggests to him a man who uses other people’s money. He says he has put $400,000 into the American-Indonesian Corporation, largely for such homely items as board and room for a few Indonesian politicians in the United States. They may one day come to power. Fox is banking on a hope that they will.

The following are excerpts from a lawyer’s study of the contract which has been made between Fox and four individuals who represent themselves to be the government of the Republic of Indonesia:

“It is fantastic to find in this supposedly enlightened age an arrangement so strongly reminiscent of the 16th century when private companies were authorized under government charter to enjoy monopolistic privileges in colonial exploitation. Indonesia is obviously in a necessitous condition and may be excused for accepting a harsh bargain.

“The agreement contemplates the organization of a corporation with three classes of stock. Two classes are excluded from voting rights. The other class is excluded from participation in dividends or assets. Such limitations on the rights of shareholders are severely criticized by modern writers on corporation practices. The corporation is made the sole and exclusive agent of the government of Indonesia for the exportation to or importation from the United States of all commodities. It is the sole and exclusive agent for the negotiation of developments or financing by American interests.

“The monopoly is contrary to the philosophy of our anti-trust laws. While American anti-trust laws are not applicable to transactions outside the United States, the spirit of these laws has tended to give shape to our foreign policy, particularly in terms of Germany and Japan. For this reason I am greatly surprised at your statement that the State Department has expedited substantial shipments of textiles to Indonesia which were being made subject to this agreement and that the agreement apparently enjoys the tacit approval of the State Department.

“It seems to me that this agreement would bring the corporation within the scope of the foreign agents registration act. If so, the corporation is required to register with the Attorney General and furnish information as to its personnel and activities.”

Fox and Eugene Garey, of New York, a Wall Street lawyer but a Democrat of the Al Smith faction and tradition, who drew up the contract between Fox and’ the individuals claiming to have the authority of government in Indonesia, both deny that the rights granted are exclusive or monopolistic.

As for the deal for textiles, Fox said: “Last October, our State Department was concerned because the Dutch blockade had the people naked. I worked out a credit for five million dollars for twelve and a half million yards of textiles. I wanted native-owned raw materials to pay for this. The State Department wanted to help the republic for the great stand it had taken against Communism.”

The imperial Dutch government claims that the republican government is unable to control its army because some of the army leaders or warlords are Communists who were trained in Russia to take over native soldiers who were trained by the Japanese during the occupation.

Continuing his discussion of the textile deal, Fox said: “The State Department sent for the Dutch trade commissioner and asked him to allow the textiles to go in. This was done by William Lacey of the Indonesian desk. He said, ‘Fox, it is very embarrassing to have to ask the Dutch to do this for an American corporation.’

“I said I would waive any benefits and let it flow straight from the American business interests to the Indonesian Republic. Weeks went by and only four days before Dec. 19, the day of the Dutch attack, the Dutch government said it would approve the United States’ request and let the textiles go in. It never went in The stuff was not even procured. The orders were not given yet.”

The office of the American-Indonesian Corporation is at 40 Wall Street. There are haif-a-dozen rooms and Fox says he is paying the rent, telephone bills, salaries and other expenses out of $400,000 which he provided.

Garev says Fox, individually, is registered as the representative of this foreign power but that the corporation is not. Fox refuses to disclose some of his partners, but the contract specifically says that Fox and the Indonesians were brought together by Max and Robert Delson, lawyers, of New York, and Joseph Borkin, of Washington. Borkin was an assistant of Thurman Arnold when Arnold was chief of the anti-trust division of the Department of Justice. He is now practicing public relations in Washington with offices in the same building where Arnold runs his law practice. The Democratic National committee resides there, too.



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