Compensation Provided to American Claimants through Foreign Claims Settlements

Claims for losses arising from a foreign government's nationalization, expropriation, or other takeover of the property of United States nationals are administered under provisions of the International Settlement Claims Act of 1948. This Act has served as the authority for adjudication and payment of claims resulting from American property losses in nine foreign countries, and has provided authority for determining the validity and amounts of U.S. claims against the Governments of Cuba, the People's Republic of China, and East Germany. The Foreign Claims Settlement Commission is solely responsible for receiving and determining the validity of the claims. Upon the Commission's certification, the claims are paid by the Treasury, using funds obtained from the foreign governments.

Tax savings attributable to the deduction of foreign expropriation losses by claimants are not considered in computing compensation payments made by Treasury. If payments were adjusted for tax benefits, net losses would be spread more equitably among the claimants, but tax revenues would decline. It is felt that payment adjustments for tax benefits should be made only to preclude the availability of windfall profits to claimants as a result of tax rate changes. The usual provision of authorizing initial payments of up to a maximum of $1,000 per award is not sufficient to discharge many of the smaller awards. Under the Cuba program, awards in the $1,001 to $5,000 range were about 50 percent more frequent than those of less than $1,000.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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