Evening star., 1962-01-11
ST. Regis Co.
Out 81 Million,
7 Aides Fired

~. NCSlS HdpeT W. ediu OOudy
it had discovered debts of ap-
proximately 81 million dollars
that were created by credit
operations of two senior Off
GERS of its Brazilian subsidiary.
A spokesman for the COM
pany said the two officials had
been fired as a result and that
the subsidiary, Bates do Brasil.
S.A., was placed in preventive
receivership.
Police Probe Asked
st. Regis also has asked a
police investigation by Brazilian
authorities and planned legal
proceedings in Federal District
Court in New York, he said.
The company confirmed the
81 million debt after both the
New York Times and the
Herald Tribune carried ac-
counts saying discovery Of the
operations had touched off vici-
GUS attacks against st. Regis
by anti-American factions in
Brazil.
The colnpany'S prompt ef-
forts to expose the whole bitter
truth of a purely internal mat
ter has become the focus
for changes in segments of the
Brazilian press and legislature
of an 'imperialist plot against
the proletariat," the Herald
Tribune said.
Fired Men Named
The company would not COM
ment on this phase of the case
but it identified the two fired
officials as John F. McLain
40, the American vice president
in charge Of Bates, and Diler-
mando Machado, a Briziliar
who served as general manager
The two, reported still ir
Brazil, could not be reached
for comment.
The spokesman did not eX.
plain the manner in which the
debts were incurred, but de-
clared they were created by
credit operations which
do not appear on Bates finan'
cial accounts"
What portion Of the money
might be recovered has not
been determined, he said.
Anti-U. S. Outcry Reported
He emphasized, however, thai
Bates operations never hac
been included in St. Regis
earnings and that any loss
would be reflected only or
Bates books.
The Herald Tribune story
said:
Freely twisting fact anc
, logic, anti-American factions
link st. Regis with every recent
and current business scandal.
The papermaker is described
as an American octopus
strangling Brazil. Local anc
Federal officials are tied il
with the fabricated plot anc
the cry to seize all American
interests in Brazil has beer
heard more than once"
McLain was described as
, graduate of the United State
} Naval Academy, the father o
! four children and an officia
, of the Bates concern since join
ing it in 1858.
Background Given
5 The Times gave this accoun
: of what had transpired il
Brazil:
i, Early last summer, St. Regi
aides who were visiting Braz
) on another matter were in
5 formed by bankers that ther
was considerable st. Regi
! paper floating around in tn
money market-the paper il
, that case referring to notes an
other obligations of st. Regis
Brazilian subsidiary. Bates d
Brasil, s. A., which operate
| four paper plants.
: THE aides reported this t
the home office, which wa
unaware Of any heavy debts O
Bates, and ordered an investi
cation.
1t soon developed, the stor
said, that millions of dol
, lars worth of notes had bee
signed in behalf of Bates b
the American vice president il
: charge, John F. McLain, an
y the general manager, Diler
mando Machado.
The various notes were sol
= at discounts to Brazilian bank
: and money lenders, at effectiv
+ interest rates ranging up to 4
per cent, the story sale
When they fell due, they wer
l renewed with the interes
added.