The AIA and IBEC

September 25, 2007

In the months following the end of World War II, Nelson Rockefeller created two new in- ternational "development" organizations, The American International Association for Econ- omic and Social Development (AIA), and the International Basic Economy Corporation (IBEC). The purpose of the first, a "philanthropic organization," was to spur various infrastruc- ture reforms in Latin America, particularly in the fields of agriculture and health -- re- forms essential to building and maintaining a productive labor force. The second organ- ization, IBEC, a profit-making business venture, was established to take advantage of the improved investment opportunities created by the infrastructure reforms and to diversify the family's investments into areas other than oil. 1 Since its creation in 1946, the AIA has concentrated its effort on launching agrarian re- form projects in Brazil and Venezuela, improving seeds and fertilizers, introducing farm machinery, supervising agrarian credit systems, building roads from farms to markets and maintaining health and farming education extension programs. 2 AIA conducts many of its projects in conjunction with local government agencies. This Rockefeller "philanthropy" provides 50 percent of the initial financing and gradually reduces its share of the costs each succeeding year. Such projects channel local government funds into programs which are ultimately beneficial to American investors. To illustrate the way AIA paves the way for IBEC investments, examine how a hybrid seed corn company in Brazil was set up. AIA, nominally a non-profit organization, conducted a market and product survey of the hybrid seed corn industry in Brazil in 1946. It dis- covered that only one domestic company produced hybrid seed corn, Agroceres Limitada. AIA persuaded the Agroceres management to form a new company in which Agroceres would provide the technical knowledge; AIA then organized IBEC as a profit-making venture to provide Agroceres with the necessary capital for expansion. IBEC thus came into control of the formerly indigenously-owned Agroceres and since then has cornered over 45 percent of the Brazilian hybrid corn seed market. 3 As of 1967, AIA had total assets of $500,000; directors included Nelson Rockefeller and his son Rodman. Besides direct Rockefeller family grants, the AIA receives funds from corporations with close ties to the family: Creole Petroleum, Mene Grande Oil, Shell Caribbean, Mobil, International Minerals & Chemicals, and IBEC. IBEC was founded in 1947 with $3 million put up by the Rockefeller brothers (current assets are $160 million); Nelson served as president at that time. The company's world- wide operations (142 subsidiaries and affiliates in 33 countries) are currently presided over by Rodman Rockefeller. The Rockefeller family holds 70 percent of IBEC's stock (New York Post, April 12, 1968). The company's operations are divided into five major groups, with the first two, both in the agribusiness sector, providing about half of IBEC's sales. 4 1) Food: IBEC is the largest supermarket distributor of food products in South America, with 52 American-style supermarkets in Venezuela (31), Peru (5), and Argentina (16). It also raises hybrid corn seed in Brazil (see above), catches and cans tuna in Puerto Rico, processes and distributes milk in Venezuela, produces coffee in El Salvador, and grows and refines sugar cane in Peru. 2) Poultry: In 1964, IBEC acquired a controlling interest in Arbor Acres, one of the principal poultry breeding operations in the world. It supplies breeding stock to chicken farmers in 23 countries, including Argentina, Colombia, Brazil, Mex- ico and Peru. 3) Housing: IBEC has constructed over 14,000 one-family houses (most of them starting at $11,000) in Puerto Rico and smaller numbers in Peru and Chile (where it was-20- backed by AID mortgage guarantees). 4) Industrial: IBEC manufactures a wide range of metal products (many associated with agribusiness) in the United States and overseas, including Argentina, Brazil, Colombia, Mexico and Uruguay. 5) Financial Services and Investment: IBEC manages mutual funds in Argentina, Brazil and Chile and insurance brokerage operations in Argentina, Brazil, Colombia, Peru and Venezuela. The Brazilian fund is the largest in the world outside of the devel- oped countries (New York Post, April 12, 1968). In 1968, IBEC's fund in Brazil combined with the Banco de Investimento do Brasil (BIB) to form one of the coun- try's leading diversified investment banking and credit institutions. IBEC's promotional literature claims the company is helping develop the Third World by providing necessary consumer products while also making a decent profit. But, on closer examination, one uncovers a business enterprise quite similar to the classic Standard Oil model, in which weaker competitors are squeezed out and then prices are raised. For example, IBEC's dairy company in Venezuela undercut its local competition by mixing im- ported powdered milk with water and fresh milk. Once IBEC had cornered the market it then raised milk prices to 32 cents per liter, nearly 50 percent over the U.S. price. 5 Furthermore, IBEC's food marketing network isn't geared to meet the needs of the under- nourished masses of the population; rather it is geared to servicing the middle and upper classes. IBEC'S GEOGRAPHIC DISTRIBUTION U.S., Puerto Rico & Canada Latin America Europe Revenue $101.3 million Revenue $114.2 million Revenue $ 9.8 million Assets $ 91.5 million Assets $ 49.7 million Assets 10.4 million Employees 4,605 Employees 4,890 Employees 619 Africa & Asia Revenue $ 5.5 million Assets $ 8.2 million Employees 959 Source: 1968 Annual Report Note: (1) Largest revenues come from Latin America; (2) Highest rate of return from assets is in Latin America (nearly double that of the nearest competing region, U.S., Puerto Rico and Canada). Footnotes 1 For a description on IBEC, see The Case Study of the International Basic Economy Corporation, by W. Broehl, National Planning Association, 1968. 2 For a description of AIA's credit operations in Brazil, see The Case Study of the Agricultural Program of ACAR in Brazil, by A.T. Mosher, National Planning Association, 1955. 3 Case study of IBEC cited above, p. 8. 4 Information for this section comes from an article in The Baltimore Sun, October 10, 1968 and from IBEC's 1966 and 1968 Annual Reports. Only Latin American operations are listed here. 5 The Empire bf High Finance, by Victor Perlo, International Publishers, 1957, p. 160.

Tags: Nelson Rockefeller, AIA, IBEC, international development, foreign aid

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