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24 October 1949

ADSO

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Chief, FDF r-

Activities of Nioolae MALAXA, Rumanian Industrialist

1. Referenoe is made to the memoranduerelative to the activitiesof Nioolae MAULmith attachments, dated 30 April 1949, which wassubmitted to this Division for review. The material contained in thisdocument and the photostatted translated attachments oonstitute a mostuseful addition to this organization's dossier on subject.

2. This MALATAnsmorandum is an excellent example of adroit specialpleading. 'Written for American eyes, it presents MALAX4 as an industrialistin the American sense of that terra and avoids those aspects of Ramanianbueiness in general and NAIAXA's activities in particular that mould in thiscountry throw an =favorable light on his career. It mould be necessary tostudy Rumanian political and economic life in detail from the end of thefirst world war to the seizure of power by the Soviet and Rumanian Communistsin order to uncover the true extent of his influence and the character ofhis political and business activities. NALVA VW the most conspicuouslysuccessful businessman in his country during this period. In Rumania,business and politics have always been closely intertwined; it 'was im-possible to achieve success in business without effecting the necessarypolitical arrangements and bribing the appropriate politicians. Thesemethods of doing business have continued under the Communist regime, to theprofit of the Communist politicians.'

3. There arc presented below, in parallel columns, several interpre-tations of MALAXA's activities as given in his Memorandum and informationon these same activities from several sources in our files. These showthat the document under review cannot be considered, in the light of ourpresent knowledge, as an accurate exposition of NALAXA's career and hisunderlying motivation. The comparisons follow.

MALAXA Memorandum

a. "Mr. Itaalca was not a politicianand did not engage in politics."

(Inge 5)

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"The channel through which lootflowed into the coffers of thepolitical authorities also carriedback a sufficient quid pro quo. Inall matters where Government favorsmere required, the big industrialistsobtained their money's worth.

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Protective tariffs were grantedwith no economic justification.The Nhlaxa Tube Factory is anexample of the application or thetariff for the enrichment of theKing's (Carol) clique rather thanfor the protection of shams industry.A. tariff and quota system had beenarranged several years before Malaxacompleted his plans for the plant.The plans never provided for a self-sustained industry. The billets, thebasics semi-manufactured products out -*of which the tame were made, had to -be imported from Germany. The effectof the protective tariff was not tomake Rumania independent of foreignsources, but only to raise tube pricesfar higher than import prices."

Extract from report prepared byEconomic Warfare Section, WarDivision, Dept: of Justice,dated 21 March 1944, quoted inmeMorandum from Director, FB/, toDCI, file no. 100-341488. dated21 May 1948.

"During the Tatarescu Government(1953-1937) and during King Carol'spersonal dictatorship (1938-1940),Ma'am was able to use his influenceat the Palace, so as to have his menappointed in offices mush as that ofGeneral Manager of State Railwaysand even that of Minister for Communi-cations -- offices which were ofspecial interest to him, as he couldplace his contracts on the termswhich suited him best."

',-;8 19-226, Source:V.::Evaluation: 13-2

"Nicolae Malama, pro-German friendof Hermann Goering and high-pressurefinancial operator, was the individualtoward whom Rumanian business andindustry looked if political dealingswere needed....Re had long established

MA/AXA Memorandum OSO FILES

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close relations with the ministershandling government purchases. Hegenerally had advance information ofprospective appointments and wouldopenly support the candidate in question.The appointee, aware of his obligation,always cooperated with Male= in mattersinvolving contracts for the firms inwhich gala= was interested."

Extract from report prepared byEconomic Warfare Section, WarDivision, Dept. of Justice,dated 21 Maroh 1944, quot6d inmemorandum from Director, FBI, toDCI, file no. 100-S4128B, dated21 May 1948.

b. "Mr. Malaxa has always worked for thecreation, improvement, and enlarge-ment of Rumanian industry, believingthat Rumania can be and should belargely self-sufficient industriallyand that such self-sufficiency wasof primary importance in achievingthe Rumanian ambition of becomingand remaining a free and democraticcountry." (Pages 4-8)

"He (Melaxa) is oonsidered entirelyunscrupulous, turning with the windand like a oat has developed to a highart the knaok of landing on his feet.He is considered to be essentiallya dangerous type of man from the stand-point of being an opponent of a trulydemocratic regime in the country(Rumania)."

Extract from a memorandum preparedby the Division of Boonomid andSecurity Control, State Dept.,quoting from a report of the •

,,y;rAmerican Consul general at Istanbul,Turkey, (presumably in 1948); quotedin memorandum from Director, FBI,to DCI, file no. 100-541188, dated21 May 1948.

"(Ualaxa) became an engineer in theRailways Administration; in 1919 organizedlocomotive and freight car repair sop;realized such profits a l'arliamentaryinvestigation was ordered of charges ofenormous sums paid for repairs nevermade to rolling stook already in goodcondition; bribes reportedly hushedthe investigation

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M&LANA Memorandum

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"1922, N. Male.= Locomotive Worksformally organized; through extensivegifts to friend of Mole. Lupesou gainedaccess to Lupescu-King Carol innercircle; secured Rumanian state contractto build locomotives, and through statemoney paid in advance built the factoryas his own; the state paid several timesmore for his rolling stock than thatproduced elsewhere in Europe.. (Nalaxa)organized important branohes ofRumanian economy with Carol's assistanceso that each received their commissions."

Confidential biographic data, U. 2.Representative inin &mania, 11 Nay 1945.

••• o. "As a result of a coup d'etatinspired by the Nazis, KingCarol was deposed and IonAntanesou came to power inRumania late in 1940. Effortswere made to induce Hr. Nalaxato sell his works to the Germans.Me refused, and was imprisonedon January 23, 1941, the occupa-tion and barricading of his home(and other neighboring houses)by the Iron Guard during theinsurrection of January,1941,being seized upon as a pretextfor his Imprisonment. (To becloudthe real issue and in typical Nazifashion, the Antonescu governmentset loose a barrage of charges,subsequently investigated andfound without basis, that )fr.Velaxa was aiding the rebelliousmembers of the Iron Guard.)"(Page 5)(Comment: The Memorandum hasnothing to say regardingfinancing of the Iron Guardby lielaxa).

"In January 1941, the extremistIron Guard (which had theretoforeparticipated in a coalition withAntanesou) attempted an armedinsurrection to seize complete

"Beginning in 1937, Male= started toplay the Hitler game and, aided andabetted by Urdareanu (King Carol'sChamberlain), he became one of thechief pro-Nazis in the King's entourage.At the same time, he began givingfinancial support to the Iron Guard,Hitler's fifth column in Pummnia...Gaining Nazi confidence, Nalaxasucceeded in entering into intimaterelations with high German industrialiststo whom he offered his collaborationand gave advice about the best meansof ensuring close cooperation withRumanian industry. He establishedclose connections with Marshal Gosring'sbrother Albert, whom he invited toparticipate in all Rumanian companiesin which be had a financial interest --outstanding amongst them being the big"Resitza" iron and steel works

"Nelaxa's collaboration with the IronGuard became so close that, when theIron Guard unsuccessfully rebelledagainst Antonesou in January 1941, itwas discovered that not only hadMalaxa given them large financial aidbut he had also prooured arms for them.His house in Aloe Alexandra inBucharest had been turned into an IronGuard fortress which had to be con-quered by artillery bombardment.

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parer; Antonesou, however, withArmy rapport, succeeded insuppressing the rebellion alterconsiderable street fighting inBucharest. During the fightingcertain Iron Guardists occupiedMr. Malaxa t s home in Bucharest,as well as other houses in theneighborhood, and used them forcover during the fighting withthe Army. The Antonesou govern-ment seized this incident as apretext, arrested Mr. '4alaxa onJanuary 23, 1941, and placed himin military prison. Hewescharged with aiding the rebelliouemembers of the Iron Guard duringthe uprising. The charge was notonly Wholly trumped up and entire-ly false but on its face ridiculousto those who knew of Mr. Malaxa'spolitical and business interestsend friendships. While subse-quently fully exonerated, as notedbelow, the pretext served thepurpose of putting pressure uponMr. Malaxa to "cooperate".

"While in prison Mr. Malaxareceived various suggestionsand requeste for his coopera-tion with the German-Antonesoueconomic program, among othersbeing a massage from Baron vonKillinger, the German Ministerto Rumania, threatening Mr.Malaxa with deportation andeventual execution unless heconsented to the transfer of hisplants to the Hermann GeeringWerke. His answer was a flat"no?. li0 was taken undermilitary guard to Antonescuand there "ordered" to sign. Herefused; and the process wasrepeated with variationsseveral times, and with thesame result."

(Page 15)

080 Piles

"For this reason, Malaxa was arrestedby Antonesou after the rebellion hadbeen crushed. He was in prison fora few days, then kept under housearrest for several months. Hisfactories were oonfisoated.

"Again, using to good effect hisamazing power of corruption, Malaxaeuoceeded in coming to terms withMihai Antonescu, General Antonesoutsclosest collaborator. .be was liberatedand some of his factories were re-turned to him. Negotiations for thereturn of the other factories werealmost completed when the Antonesouregime was overthrown."

.Et 194226, Source: , c: :aEvaluation: B-2

"When the Iron Guard staged its openrevolt on January 21, 1941, Ualaxawas arrested, inasmuch as he hadsupplied the Iron Guard with weaponsand had turned over to them his taremansion in Bucharest for use as afortress. When the revolt seemeddoomed to failure, Malaxa tried todisguise his partioipation in it byleaving his house by the back doorand by telephoning Premier Antonesouthat his home had been seized by theIron Guard... /telex°, was tried ancharges of complicity in the revolu-tion and of defrauding the government.He sought to extricate himself bydonating halt of the shares of hiscompanies to the Rumanian Government.However, this act of appeasement wasof no avail and in February, 1941,the Government seized the other halfof Malaxa's holdings semen."

E4Lract from report of EconomicWarfare Section, War Division, Dept.of Justice, 21 March 1944, quotedin memorandum from Direetor, FBI,to DCI, file no. 100-87286,. dated9 March 1949

d. "On November 10, 1944, a proposalwas made, in the name of theInter-Allied Control Commission,by the Russian General Vinogradov,to the Rumanian Commission forArmistice Enforcement that theMalaxa tube mills be handed overto the Soviet Union under Article11 (mentioned above) of theArmistice Convention".

(Page 22)

"Mr. Malaxa's tube mill was theonly industrial plant takenout of Rumania by the Russiansunder Article 11 of the Armis-tioe Convention. The RrvmnianGovernment was given a creditin respect of the plant in theamount of $2,460,000."

(Page 23)

"Mr. Malaxa endeavored in everyway available to overt:some their(Note: the Rumanian Conammists)active or passive resistance tothe restitution. An indirectapproach was utilized by theretention, for a substantialfee, of one Miroea Solacolu(then Rumanian Foreign TradeCommissioner), who was believedto be persona grata and ongood terms with influential

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• MAIAXA Memorandum

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"Because of inadequate personalarrangements (Malaxa) refused to signthe agreement for Hermann Goering Werke'control of properties. The State...signed the convention with the Germans,leasing them all plants... Maim= wasthen released from mild protectivecustody.... In February 1942, the Stateby decree formally-expropriated Malamainterests after investigations Charginghe had made fantastic profits upon statebusiness; in October, 1943, restoredhalf of Malaxa's ownerships and shares."

-Confidential biographic data, U.S.Representative in Rumania, 11 May 1946.

"Yellowing armistice in the fall of 1944,he (Malaxa) failed in offers of con-trolling interest in enterprises to Ameri-can capital and in offers to Americanagents of enormous bribes to effect this;turned to Rumanian Communists and politi-cians, and on arrangement for large sunsto party war chest and personnel; bribessuch as houses to Communist CommUnica-ti°312_M-1-11=7,2g4ma,Aa-gro311#then viemvainr-v—otootmcil orMinisters, secured favorable approvalto annul Rogifer setup and restore allproperties fully to Malaxa."

_Confidential biographic data,U. S. Representative in Rumania,U. May 1946

Luoretziu Patrasoanu, a Communist, atthat time Minister of Justice, gave thefollowing account of Party disoussionsrelative to ualaxa to Constantin Visoianu,Foreign Minister in the Radesou Govern-ment:

"The day before the meeting of theEconomic Committee of the Government,we discussed the matter in the CentralCommittee of the Communist Party. Oteof the members was against backing Ma'am,but Ana Pauker and Gheorrhiu-Dej spokeveri-RMSEIrria his favor, and 11 wasdecided that Male.= would have our fullsupport.

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KUM Memorandum

Russian elements and with pertainCommunist Ministers, to endeavorto expedite the completion of thorestitutiaa...Ne. Malaxa did nototherwise retain the services of,or make any payment to, any personwho might be oonsidered aCommunist collaborator...."

( Page 27)

"Pursuant to the law of April 13,1946, restoring to Mr. oalaxa hisplants, a "leansaction and Act ofCompromise'...was entered intounder date of April 17, 1945. Theagreement also provided (Article3) in part that 'As a eountervalue to the 14" rolling milland of the machines in the pipefactory which the State handedever to the Soviet High CommandIn part payment of its war damage,the Rmnflnian State acknowledgesthe debt and lays at the disposalof H. :ma-laxa Pipe and Steel Worksabroad the sum of 2,460,000 USAdollars....,"

(Page 27)

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2!haa_lhaMILhas disclosed to some of usthat one-half of the indemnity grantedto Malcom would be paid by him to theCommunist Party.

"Colonel Finoghenov, head of the SovietEconomic Mission has told one of themost important members of our Partythat Malexa mist be backed because heis ready to give the whole of Rumaniato Soviet Russia so long as he can makea profit out of it."

rH 19-225, Source: L-Evaluation: 13-2

(Page 5)

"Malaxa is lavish in his bribes tothe politicians he needs. One giftto Groza (Premier Petro Grout) wasthe same house Malaxa had once givenNihai Antonescu."

-Confidential biographiodata, U.S. Representativein Rumania, 11 May 1946.

Mircea SOLACOLU, references to whom in the Malaxa Memorandum are quoted above,was a member of the dissident Liberal Party of Gheorghe %TARES= Viben theCommunists led by V/SHIRSKY installed Petru GR IM as Fein* Minister on 5 March1945, TATARESCU accepted the post of Foreign Minister, thus avoiding prose-cution as aver oriminal., , Members of his political party, which supportedthe Communist-dominated ocia.lition government, held important economic postsand were active in sending Nada abroad for private individuals. UnderRumanian practice there was nothing unusual in Malaxa retaining SOLACOLU inorder to make use of his influence. It is noteworthy, however, that he admitsusing SOLACOLU after earlier denying that he had involved himself In politicsand made use of politicians.

e. "...in April 1945, Mr. Malaxaretained a certain Col. Grady C.MaoGlasson, who had been aprominent member of the USMilitary Mission to Rumania afterthe war, to return to the UnitedStates se- his agent to bring aboutsome form of collaboration betweenthe Male.= industries and a first-rate American industrial concernor banker.... Col. MacGlasson was

"The Soviet authorities soon decidedto make use of Malexa abroad. Thefirst indication in that respect wasa statement made privately byGheorghe Tatarescu (then ForeignMinister) to Conetantin Visoianu(former Foreign Minister) when re-turning from an official visit toMoscow:

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SECRENALAXA Memorandum

also to investigate thepossibility of creating a Rumanianbreath for an American automobilemanufacturer."

(Page 32)

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'The Russians have authorizedMalaxa through me to build anautomobile factory in Bucharestwith the help of Americancapital.'"

-If 19-226, Source: 47Bval: B-2(Page 7)

f. Comment: Nowhere in the Memorandumis there any detailed discussion ofMalaxa's relations with theRumanian Legation following hisarrival in the United States in 1946.

"& reliable, confidential informantof the FBI Who is familiar 1,41.thRumanian activities advised that bathRadu Stoichita, Third Secretary ofthe Rumanian Mission (in the U.S.) and(Pemfil) Riposanu, former Counselorof the Rumanian Legation, have indicatedthat a separate sum is available tothe Legation for salaries over andabove the stated allowance, made by theRumanian Government, and that this fundwas maintained by malaxa....

"Special agents of the Washington FieldDivision of the FBI interviewed anOctober 31, 1947, Pamfil Riposanu...mho stated at the time of the inter-view that be had heard from reliableRnmanian sources in New York thatNioolae Male= was financing theCommunist members of the RrmanianMission In the United States, andthat all financial negotiations be-tween Metaxa:and the Communist membersof the Rumanian uovernment in theUnited States were on B. cadh basis.Riposanu stated that while he was aneMber of the Legation In Washingtonhe personally knew' of cash gifts madeby Melaxa to members of the RumanianMission and added thathe has sinceunderstood"thatMelaxa contributesin cash sums of money to the RumanianMinister Mihai Rasa (note: Rale& hassince returned to Rumania).. Thesecontributions are amounts whichapproximate $4,000 monthly."

-Memorandum from Director, FBI,to DOI, file no. 100-344488,dated 21 May 1948. (Page 5)

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"During January of 1948, an informant.of the FBI, who is reliable and whois considered an excellent source ofinformation with regard to Rumanianaotivities, particularly concerningthe Rumanian Mission in the UnitedStates and who is not In sympatbarldththe present Rumanian Government, advisedthat he had been placed in a very em-barrassing "spot" with the ArmenianLegation by the fact that RiceleeMalaxa, a-wealthy Rumanian nationalLathe United States, had reported tothe Rumanian Minister Ralea that he,the informant, was an American spy.The informant stated that this Chargewas made by Mile= because he, theinformant, would not compromise himselfin any way in the dealings which Malaxawas engaged in here in the UnitedStates...."

-Memorandum from Director, FBI,to DCI, file no. 100-341188,dated 21 May 1948.

(Pages 5-6)

4. Nalaxa admits by implication that the rivalry between himself andMax AUSNITT, the Rumanian !-Jewish industrialist presently in the United States,is sufficiently heated to be termed a "feud" (page 47). In the Memoranduman attempt is made to demonstrate in some-What oblique fashion that AUSNITTwas a collaborator with the Communists and derived financial benefit fromthem. The MAIAXA-AUSNITT quarrel is a well-known fact and apparently hasbeen pursued vigorously by both parties in the United States. Without'holding any brief for AUSNITT, Who used the same techniques as MALALkinbuilding up his industrial empire in Rumania, it maybe noted in passingthat a report of the Eecaomic Warfare Section, War Division, Department ofJustice, dated 21 March 1944, states thatIAIAXA cooperated with theRumanian-and German Governments in forcing ADSNITT out of his Resita companyin 1959. A confidential biographical report of the Department of Statedeclares that MALAXA and Xing Carol II had AUSNITT imprisoned. An FBIreport in our files states that the United States Minister to Rumania,Franklin Mott GUNTHER, was of theopition that KLAYA and Carol II "framed"=HITT on a charge of defrauding his can Resit& company. AUSNITT partici-pated in the Soviet-Rumanian-Lunber Corporation (Sovromlema) as did RaduXENOFOL, another Rumanian industrialist, in Sovramtransport, the jointtransportation company.

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5. In view of the information in our files relative to MAL= and •his activities, a portion of vAmich has been cited above, it is believedthat the Memorandum submitted in behalf of MAIAXA should not be acceptedas a truthful and accurate account of his career, associations, activities,and motivation.

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