GERMANY’S TRICKS.

Star (Christchurch), Issue 17352, 17 May 1924, Page 9

GERMANY’S TRICKS.

SMUGGLING WEALTH ABROAD. HOW LAWS ARE EVADED. Newspaper readers (writes Francis Gribble in tho Sydney “£iun”) aro familiar with the statement That practice fly all the wealth of all the wealthy Germans has been smuggled out of tne . country, and that a Reparations Committee is now engaged trying to locate it. It is a perfectly true statement, but, to most people, a very puzzling one—especially puzzling n they happen to know that tho exportation of capital from Germany is forbidden by stringent regulations. How is it that the businesses of men like Stinnes, Thyssen, and Krupp von Bohien can still flourish in Germany, while all the profits, as fast as they are earned, take flight to foreign countries ? Before, and for some time after, the Armistice, German capital was wanted in Germany for German purposes. Its transference to Switzerland, Holland, or Scandinavia, was regarded as dishonest and unpatriotic. Every possible precaution to prevent its removal was taken. The actual smuggling of notes and securities was not. indeed, possible ou a very large scale. PAYING ALLEGED DEBTS. A far more effective device has been the paymeint of alleged debts. As the normal result of international trade, a certain number of Germans did, of course, owe money to banks and merchants in neutral countries; and many of these foreign banks and businesses were, in fact, German companies. registered abroad in the names of Dutch or Swiss men of straw. x'ermission to send money abroad for the purpose of paying debts could not [ very well be refused by ch© German ! Government. Refusal would have been ajn unfriendly act towards a friendly country. But the door was wide open to collusion — particularly so in the numerous cases m which the same men held the controlling interests in the debtor firm in Germany and in the creditor firm in Switzerland or Holland. Bills could be given, and exorbitant charges agreed to for their renewal, ! with the result that a small debt became a large one before permission to export securities to meet it was applied for. That trick, however, covered only a part of the ground. It remained to defeat the provision that, when German exports were sold abroad, the price received for those exports should not remain abroad, but should return to Germany. In order to enforce this prescription the German Government required that invoices for all goods destined for exportation should be produced in a Government department before the goods wore sent away. In order to defeat it, the German manufacturers elaborated a scheme for deceiving the department by means of fictitious invoices. Collusion, for this purpose, with innumerable clients scattered all over the world, was, of course, impossible. Even if the clients had been willing to join in tho deception, the fraud would have come to light through the postal censorship. But a method of perpetrating it was nevertheless discovered . Circulars were dispatched to all the clients, informing them that tho firm had entrusted the business of receiving and transmitting orders for its goods to its agents, Messr So-and-So. of Zurich or Amsterdam. AGENTS MHO ARE NOT AGENTS. These Swiss or Dutch agents, however, were agents in name only, and their function as intermediates was to take a hand in this great game of fictitious invoices

The German firm made out its invoice to its Swiss or Dutch agent at an absurdly low price ; and the agents, on receiving them, made out lor the clients fresh invoices, on the real prices appeared. The difference between the two prices broadly represented the profits on the transaction; and the trick enabled the manufacturer to keep the whole of his profits abroad without let or hindrance. Of all the schemes here passed in review this has been tho most important. It has been worked on a colossal scale by practically large firm in the country. The precise amount of that, wealth cannot be calculated; but it is known to be immense. It has vanished from Germany, but it is still in the hands of Germans, fructifying for their benefit, while their Government declares that it cannot pay because it has nothing but paper marks