GERMANY (KRUPP DECONCENTRATION PLAN) (Hansard, 4 March 1953)

§ The Minister of State (Mr. Selwyn Lloyd)
With your permission, Mr. Speaker, and that of the House, I wish to answer Question No. 104 on the arrangements now concluded with regard to the Krupp organisation.
Since the statement made on 15th October by my right hon. Friend extensive discussions have been proceeding between the three Allied High Commissioners, the Federal Chancellor Dr. Adenauer and representatives of Herr Alfried Krupp. These have now resulted in an agreed plan.
The Krupp organisation has been broken up in the following manner. The former Krupp coal and steel interests, which were separated in 1947 from the rest of the Krupp organisation, are being transferred to three new companies, two for coal and one for steel.
Herr Krupp's share holdings in these companies will be sold. He will thus be deprived of ownership and of any controlling interest. With regard to the proceeds of sale, which he will receive, an undertaking has been obtained from Herr Krupp in the following terms: He will not through the use of the proceeds of the aforementioned sale of securities 389 acquire or own any securities of or any interest in any enterprise engaged directly or indirectly in the steel or iron producing industries in Germany or in the coal mining industry in Germany. He has also undertaken that: He will not, directly or indirectly, acquire or own a controlling interest in, or occupy a controlling position in any enterprise engaged directly or indirectly in the steel or iron producing industries in Germany or in the coal mining industry in Germany. This undertaking has been formally incorporated in the Krupp deconcentration plan, to which legal effect has been given by an order promulgated in Bonn today under Allied High Commission Law No. 27.
The House may also like to know that, under the plan, the special privileged position particularly in the matter of death duties enjoyed by the Krupp family concern since 1943 is abrogated, and that Herr Krupp will be responsible for the payment of pensions to a large number of former Krupp employees. This commitment has been estimated at about £1 million a year.
Under the provisions of the Bonn Conventions, signed last May, the Federal Government undertook to ensure that all deconcentration plans are carried through. The Federal Government will continue to give effect to Allied High Commission Law No. 27 until the whole deconcentration programme for the West German iron and steel industry has been completed. The remaining assets of the former firm of Friedrich Krupp, which include shipyards, engineering works, and miscellaneous trading concerns, are retained by Herr Krupp.
The House will recall that, as my right hon. Friend made clear on 15th October, Her Majesty's Government have had to deal with this problem within the limits set by certain previous decisions. These were:

i. That the decisions taken in August, 1946, about deconcentration had been limited to hiving off the coal, iron and steel interests only.

ii. Herr Krupp had been handed over for trial in the American Zone in November, 1946.

iii. No steps had been taken to confiscate Herr Krupp's property in accordance with the sentence of forfeiture imposed by the American court in June, 1948, 390 during the time in which it would have been lawful for this to be done.

iv. Allied High Commission Law No. 27 of May, 1950, which dealt with the deconcentration of the coal, iron and steel industries not only contained no provisions for confiscation but in fact specifically provided for compensation for dispossessed owners.

v. After January, 1951, when the sentence of forfeiture was rescinded no power remained to confiscate any of Herr Krupp's property.

Her Majesty's Government are satisfied that the present settlement provides in these circumstances the best possible solution of this difficult problem.

Mr. Fletcher
Is the right hon. and learned Gentleman aware that the statement he has just made will do little or nothing to allay the deep-rooted suspicion in this country that Herr Krupp, a convicted war criminal, will again become one of the most powerful and influential men in Germany? I wish to ask the Minister two specific questions. Can he give an estimate of the amount that will be paid to Herr Krupp for the assets he is being required to sell, and, secondly, will he confirm from what he has said, if I understood him aright, that there will be nothing to prevent Herr Krupp from again investing his proceeds of sale in iron and steel industries once Law 27 has taken effect, which will be in two or three years' time?

§ Mr. Lloyd
With regard to the first part of the hon. Gentleman's supplementary, I should have thought that the statement I have made, if it is read carefully, would make it quite obvious that this is in fact the best possible settlement that could have been obtained. With regard to the moneys involved, that is really a matter of guessing how much these securities will raise. I have seen it stated that they might raise something between £20 million and £25 million. So far as the second part of the hon. Gentleman's supplementary question is concerned, Herr Krupp's undertaking is not limited in time at all. So far as Law 27 is concerned, that will take a number of years to be fulfilled, and, of course, during that period there will be legal sanction. The German Government have agreed legally to enforce this undertaking.

§ Mrs. Castle
Is the right hon. and learned Gentleman satisfied that the arrangement he has just announced for the breaking up of Herr Krupp's holdings of coal, iron and steel into the hands of three companies adequately carries out the intention of the Allied High Commission law of May, 1950, which sought to prevent the excessive concentration of industrial power in the hands of any person? What guarantee is there that Herr Krupp may not regain influence in this area of industry through his own nominees?

§ Mr. Lloyd
With regard to the first part of the hon. Lady's supplementary question, yes, we are satisfied that this will give effect to Law 27. With regard to the second part, Herr Krupp has given an undertaking that he will neither directly nor indirectly seek to secure influence again.

§ Mr. Paton
How can the right hon. and learned Gentleman assure the House that paper restrictions of this kind will have any real or lasting effect in view of the complete failure in Japan to make effective the similar restrictions attempted to be imposed on the former leaders of the Zaibatsu?

§ Mr. Lloyd
In this case this undertaking has been incorporated in the agreement reached with the Bonn Government and will be legally enforced by them.

§ Viscount Hinchingbrooke
Am I to understand from what my right hon. and learned Friend said that it will henceforth be the duty of the German Government to observe Herr Krupp's actions, and that if he in any way breaks the terms of the pledge they will take action in a German court against him?

§ Mr. Lloyd
We have no reason to believe that this undertaking will not be kept, but so long as Law 27 is operative it is the responsibility of the German Government to enforce the undertaking.

§ Mr. J. Hynd
Will the right hon. Gentleman confirm that until 1948 it would have been lawful for our authorities to have completely expropriated Herr Krupp's assets—[HON. MEMBERS: 392 "Why did you not do it?"]—and that this situation was only changed by the establishment of the West German Government? As the Minister states that he is restricted by the terms of Law 27 at the present time, may I ask whether he has studied Article 5, which provides that compensation should only be paid consistent with the objectives of this law, which it is specifically laid down in the Preamble should be to prevent Herr Krupp or any other of those gentlemen from ever regaining control of these industries, and, therefore, would legalise any refusal to pay compensation?

§ Mr. Lloyd
On the question of compensation, I should make it quite clear that after the decision of the American court it would have been open to the British Government or the High Commissioner to confiscate Herr Krupp's property in the British Zone. That position continued until 1951 and it is clearly not the fault of Her Majesty's present Government that that did not take place. As to Law 27, we are satisfied that that in fact gives us no option but to pay compensation in this case.

§ Mr. Chetwynd
Does the agreement contain no prohibition against Krupp entering into or carrying on these works in the armament industry? If so, have we no power to ask the West German Government to impose a prohibition themselves?

§ Mr. Lloyd
We hope that the problem of future manufacture of armaments will be dealt with by the European Defence Community. As to other spheres, such as ship building, engineering works and matters of that sort, there is no new restriction on what he may do.

§ Mr. Noel-Baker
Will the Minister suggest to Dr. Adenauer that he should try to find means of preventing Herr Krupp buying up the German Press, as members of the firm of Krupp did after the First World War, with results disastrous to the security of the world?

§ Mr. Speaker
Order.