Sugar Swindle

A grave and dignified little man is M. Leon Pollier, Chairman of La Societe Franciase de Sucrerie. Only a short while ago he was Professor of Economic Law at the University of Lille.

He was one of the few men who completely understood the highly complex method of transferring Reparations "in kind" from Germany to the Allies. Last week Parisian gendarmes clapped M. Pollier into jail. People' said he had used his unusual knowledge to cheat the French Government out of some 80,000,000 francs worth of German sugar paid as Reparations in kind.

Reduced to simplest terms such payments take place in three steps: 1) A German sugar-seller contracts with a French buyer for so many thousand pounds at the current price and the sugar is shipped; 2) The seller collects his money in marks from the German Treasury, and the Reparations Commission then credits Germany with the amount of the payment, just as though it had been made to the Commission in gold; 3) Meanwhile the French dealer who received the sugar sells it and makes payment to the French-Government in francs, whereupon the Reparations-Commission certifies that France has received the German payment, just as though it had been made directly from Berlin to Paris in gold.

The advantage of the system is that no cash has to be shipped, and therefore the value of the franc and mark are not disturbed on international exchange. The disadvantage is that, in practice, prodigious complexities arise, out of which not a few crooks have profited. Exactly a year ago another set of international sharpers cheated the Great Powers concerned out of $12,000,000 worth of German hops, coal, seed (TIME, Jan. 23, 1928).

Last week it appeared that Professor Leon Pollier's modest little $3,000,000 sugar swindle had turned principally on the fact that only 15 overworked clerks are employed by the French Treasury to handle the staggering minutiae of "payments in kind."

These toil-numbed minions apparently failed to investigate sufficiently the fiscal backing of a succession of corporations which the Professor founded to deal in Reparations sugar.

When payments for the first lot fell due, the first Pollier company was declared unable to meet its obligations to the Treasury, but a second and ostensibly stronger company was formed to assume the debt and contract for still more sugar. This procedure was repeated several times. Meanwhile the sugar was sold, mostly in England, and the profits were salted away outside of France.

Last week the last Pollier corporation was found to possess only a rented office, some hired furniture and not a sou in the bank. Friends of Professor Pollier sent bouquets and potted flowers to brighten his cell, declared that he is innocent, the mere dupe of a master swindler in London, one "Michael Neutski, a Russian."