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SECRETHR 230-8PLANS, PROGRAMS, AND PROJECTS8. ADMINISTRATIVE PLANS, LIQUIDATION PLANS, AND FISCAL   ANNEXESa. GENERAL(1) In the furtherance of some Agency objectives it is necessary to establish, operate and support overt instrumentalities which do not have ostensible affiliation with the U.S. Government. These ostensibly private organiza- tions which may be susceptible to scrutiny by a variety of tax and regula- tory authorities, the press, hostile elements and others, require operational security of a high order. It is essential that they are established and managed in accordance with normal practices and requirements of the type of enterprise concerned, and that they are staffed with qualified personnel whose cover histories are compatible with such employment. It is also essential that there are adequate general management, financial and security controls consistent with both operational effectiveness and the requirements of nonattribution, for the protection of the Agency's interests.(2) The controls and procedures which are applicable to an instrumentality will be specified in a project outline and administrative plan or fiscal annex. Standards and format for administrative plans and fiscal annexes, as well as for liquidation plans to be followed when an instrumentality is to be discontinued, are prescribed in HHB 230-1..b. POLICY(1) The establishment or continuance of an instrumentality is justified only when it contributes to the accomplishment of the Agency's mission and is operationally determined to be the most advantageous means of gaining a particular and necessary objective. The purpose of an instrumentality shall be to conduct secret operations or support such operations under cover of its overt function.(2) No binding commitment with respect to the establishment of any in- strumentality shall be made before the approval required by this regu- lation has been obtained.c. DEFINITIONS(1) PROJECT. A project is a management device through which specific operational activities are undertaken to meet programmed objectives. Budgeting and financial accountability are maintained against the project for funds and resources authorized for it.(2) INSTRUMENTALITY. An instrumentality is a corporation, a foundation, partnership, sole proprietorship, or other legal entity (within the private sector, domestic or foreign) for which specific funds or other assets have been authorized under a formally approved project. Within a project there may be one or more instrumentalities.(a) Proprietary. A proprietary is an instrumentality in which the Agency acquires ownership of a controlling interest, through appropriate nominee or legal entity arrangements. The Agency exercises, through stockholder or other equity arrangements, control of the instru- mentality in terms of the policy, administration, formulation of budgets, and the application of funds.(b) Operational Investment. An operational investment is the acquisition by the Agency of an equity in an instrumentality, through appropriate nominee or legal entity arrangements, of less than a controlling interest, with the expectation of recovering some or all of its invest- ment. Any influence the Agency may exert over budget formulation andRevised: 1 August 1969 (461)OCT 30 1975SECRETGROUP 1Excluded from automaticdowngrading anddeclassification15