The letter to the manager of Gulf Minerals Canada was a polite request from the Canadian government - it wanted a Gulf marketing executive to serve as one of Canada's two representatives on the operating committee of a secret international uranium cartel.
"I would like to confirm," wrote G.M. McNabb, senior assistant deputy minister for energy, in 1974, "that it is deemed to be in the public interest that Mr. L.T. Gregg should be one of the two Canadian representatives on the Operating Committee of the international uranium producers group."
Yesterday, testifying before a House subcommittee, Lawrence T. Gregg acknowleged that he and his boss at Gulf drafted the letter themselves. They sent it to McNabb at the Ministry of Energy, who promptly sent it back to them requesting Gregg's services on the cartel committee.
This small episode from Gulf's three-year participation in the foreign cartel is one of the reasons why some members of the House Commerce Oversight Subcommittee are skeptical of Gulf's claim that the Canadian government compelled Gulf's uranium subsidiary to participate. They believe Gulf was a willing partner and used directives from the foreign government as a shield to protect itself against U.S. antitrust prosecution.
Gregg insisted in his testimony yesterday that theletter-drafting was a normal business courtesy, not a subterfuge. However, in previous testimony in a pending federal lawsuit, Gregg mentioned an additional reason for the letter:
"We were trying to be consistent with the recommendations that had appeared in the legal opinion . . . which was that, in essence, the things that we did in Canada should be done at the direction of the government."
A legal memorandum written by Gulf attorney Roy D. Jackson in 1972 asserted that "the fountainhead of our antitrust defense" would be that the government of Canada compelled Gulf to take part in the price-fixing "club" which divided up world uranium sales outside the United States. The cartel - sponsored by Canada and three other foreign governments - operated secretly for three years in a period when uranium prices soared.
Gregg's testimony yesterday gave the House subcommittee chaired by Rep. John E. Moss (D-Calif.) a nuts-and-bolts description of how the "club" worked. A federal grand jury has also been investigating it for possible criminal antitrust violations.
Meanwhile, the government of Canada is vigorously protesting the House investigating, particularly the committee's disclosure on Thursday of secret cartel documents, including some from Canadian government files. The documents were subpoenaed from American-based corporate files.
Finance Minister Donal MacDonald said in Ottawa that the "American administration is exceeding the proper conduct between friendly states in permitting this to go on."
Canada, which has acknowleged its role in fostering in "marketing arrangement," contends that it was only protecting Canada's uranium industry against the damaging effectsof a U.S. embargo, imposed in the 1960s, which effectively closed U.S. domestic sales to foreign producers.
"They go beyond what is reasonable conduct between nations," MacDonald asserted, "when they say that while we, as Americans, are entited to exclude foreign uranium, we (Americans, are entitled to engage in predatory practices for uranium around the world but you, as Canadian and the rest, are not entitled to protect yourselves from us."
The Canadian position does not quite explain Gulf's status in the cartel, however. The Pittsburgh-based corporation was developing uranium mines both in Saskatchewan and in the United States. The Gulf's governments reveal that Gulf's sales officials - both inside and outside the United States - were trading information on prices and possible sales obtained in part through the cartel's secret information system.
Subcommittee chairman Moss said, he has no intention of stopping the investigation because of the Canadian government's complaint. He noted that the Carter administration has no power to intervene either.