HC Deb 02 May 1932 vol 265 cc793-5
12. Lieut.-Colonel SANDEMAN ALLEN

asked the Secretary of State for Foreign Affairs if he will ascertain from the League of Nations what measures the International Finance Commission pro pose in order to insure fulfilment of the Greek Government's obligations to British subjects in respect of the loan issued under the supervision of the League of Nations; and, if they are not in a position to insure fulfilment, will he take steps to protect British subjects from investing in loans on the strength of the support given to the loans by the League of Nations?


In reply to the first part of the Question, I would refer my hon. and gallant Friend to the reply given to him on 25th April. As regards the second part of the Question, in the opinion of my right hon. Friend matters of this kind should continue, in the future as in the past, to be left to the discretion of the market.


asked the Secretary of State for Foreign Affairs in what way the League of Nations safe guards the interests of investors who sub scribe to loans stated to be issued under the supervision of the League of Nations; and what protection is available to investors in the case of the recent defaulting Greek and Bulgarian loans?


asked the Secretary of State for Foreign Affairs if he is aware that as a result of the recent defaults of loans issued under the supervision of the League of Nations British investors have suffered loss; and will he accordingly take steps to ensure that such investors, who subscribe to these loans in the belief that the League of Nations is responsible for them, are protected from similar future losses?


The conditions on which these loans were issued were stated in the contracts drawn up and the prospectus published before the issue of each loan. The documents enumerate the safeguards provided, which include, in the case of Greece, the payment of assigned revenues to the International Financial Commission. His Majesty's Government recognise that it is a matter of the greatest regret that the Greek and Bulgarian Governments should find them selves unable to transfer in full the ser vice of the loans issued under the auspices of the League of Nations. I understand that negotiations are likely to be initiated by these two Governments with the bond holders, who are of course not confined to this country, and His Majesty's Government are watching the situation with a view to taking any action that may be possible or appropriate.


Is the hon. Member aware that many British investors have invested considerable sums of money in these loans owing to the misleading nature of the prospectuses, and does he attach any importance to the guarantee and authority for loans issued by the League of Nations?


I cannot accept the hon. Member's description of the prospectuses as misleading. If he will study them he will find that they are clearly set out.


Has it not recently been stated by a former official of the League of Nations, Sir Arthur Salter, that these loans ought never to have been granted.


That is a matter of opinion.


Is it not the case that both Greece and Bulgaria are bankrupt, and that if they have to pay these loans they will have to borrow more money?


If the League of Nations lends itself to the issue of company prospectuses, can they be brought into court in the same way as company directors?


I recommend the hon. and learned Member to study the prospectuses.