Evening star., 1937-06-18
hamas Co., Ltd. capitalized at $780,.

owned by Wenonah Development Co.
To the Bahamas company, he said,
stock in the Domes Mines, Ltd. Of
Canada, which was owned by Weno-
nah, was transferred.
Trey said he did not know why the
second corporation was formed, and
Undersecretary Magill interrupted to
say he could see no Immediate i'd
vantage, other than having two for
eign corporations to deal through"
Trey said that Groves, by an arrange
ment for sales of stock between Mas
sau Securities and General Investment
Corp, sold the stock Of the latter at 4
profit Of $l4.50 4 share, or 4 total Of
about $356,000.
S. E. G.. interested.
He added that the Securities Com
mission was attempting to determine
whether the transaction was 4 fraud
on the stockholders Of the General
Investment Corp. The Internal Reve-
nue. Bureau, Trey said, was not con-
cerned with that, but with methods
used to free" the profits on the
transaction from an income tax in
this country.
Magill told the committee he be-
lieved Bache's operations were AL
legal"
In response to questions, however,
he said he considered the De Ronde
case clearly fraudulent"
"As get the facts In the De Ronde
case" Magill said, "he plainly lied to
us under oath Is to what his assets
were"
Magill reiterated he experienced
considerable ditnculty in drawing the
line" between what was illegal or
Just immoral"
Senator La Toilette, Progressive,
OF Wisconsin made \ motion, agreed
to unanimously, that the Treasury
be instructed to furnish instances
other than those already reported
In which taxpayers had resorted to
foreign corporations.
Discriminat ton Seen Otherwise.
He asked that the information be
furnished as rapidly as the evidence
had been checked thoroughly.
After talking 4 moment with Trey,
Magill said the evidence did not
Justify going into other cases At
this time.
Unless the cases we're turned over
to the committee, La Toilette re-
marked. the Treasury and the COM
mittee might be charged with dis
elimination for mentioning only 4 few
names.
He asked on what basis the Treasury
supplied some names and not others
and received word from MaRill that
some studies had not progressed far
enough and that the Treasury wanted
to supply only those that had been
fully documented"
Representative Cooper. Democrat. Of
tennessee. asked at the conclusion of
Hey's testimony whether the Treasury
thought effective legislation" could be
orawn to tax the owners Of foreign
holding companies.
Executive Session Held.
Subsequently. the committee ended
todAy's hearing and held a brief ex-
ecutive session. It was announced the
next open hearing would be held at
10 am. Tuesday.
Discussing the possibility of new
legislation, Magill told the commit.
tee: We can't sue these foreign
companies.
Hence, our only recourse Is against
our citizens personally.
I'VE need provisions to compel
American owners Of foreign CORPORA.
tions to report what stockholdinps
they have, under penalties. All theee
corporations are apparently used to
avoid taxes"
Magill said the Treasury had ex-
plored the possibility Of making re-
ciprocal agreements with other coun-
tries for the exchange Of tax in
formation, but that few countries
are interested because they are re-
ce1ving immediate profits"
Canada and France have indicated
an interest" he added.
Lichtenstein Thought Much Used.
Trey told the committee the pr,n.
cipality Of Lichtenstein was believed
to be used extensively by Americans
for creation Of personal holding COM
panies. He added great difnculty had
been experienced in gaining accurate
information as to the extent of the
practice there.
On May Is, he said, the American
Consul at Lichtenstein reported ON
c1als OF the principality had de-
clined to furnish any information con.
oerning formation Of corporations
there.