Francesco/who-killed-jfk huggingface dataset:
[157-10014-10144.pdf — page 172]
-143-The budgetary presentation and review procedures only partially focus upon proprietary profits. MUTUAL's profits are invisible in the Agency budget; they are taken into account and subject to scrutiny only within CIA; operationally, the DDO annual operational review has the most detailed grasp of MUTUAL at the Agency review levels. A stadard set of public enterprise fund schedules, as prescribed by OMB Circular A-11, would be appropriate for making MUTUAL visible in the Agency budget. Other commercial proprietaries should show these schedules as well. The Agency has indicated that the Comptroller is working with DDO and DDA to develop a new style and content of budgetary presentation and review procedures for CIA proprietaries in future budgets.To what extent can these new procedures prevent abuses of proprietary profits? To what extent do they preclude the need for legislation in this area? What form of Congressional oversight is needed here-- at what point should Congress exert control? Improvement of visibility in the budget of proprietary resources and provision for review of the major proprietaries as a regular part of budget review by CIA, OMB, and Congressional Committees would seem to preclude most of the dangers of abuse. On the other hand, there is one type of abuse for which additional Congressional scrutiny and safeguards may be needed: the possibility of a small-scale, high-risk covert project directed by the President or DCI which is not covered by the regular appropriation but financed by proprietary profits. No foolproof preventives can be designed by law or regulation; nevertheless, the possibility of such abuse or avoidance of Congressional review can be minimized by requiringNW 50955 DocId: 32423532 Page 173
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-144-that all CIA proprietaries have an operational charter approved by Congress which forbids launcing activities by proprietaries or using their funds which are contrary to the charter. This internal CIA standard would probably strengthen the existing requirement that covert action projects be certified by the President and flagged to Congressional Committees. At present, MHMUTUAL has such a charter (not reviewed or set by Congress) which restricts MUTUAL to insurance operations. This charter was established in 1974 (called an "Administrative Plan") and must be formally amended before the Chief of Cover Staff will authorize use of MUTUAL resources for other missions.D. Private Investment by CIA.The authority of the Agency to engage in private investments and its general policy ambivalence on this matter already have been noted. Two types of general as well as budget issues are presented, one the inverse of the other: 1) Could or should CIA engage in investments which could accumulate funds outside the budget process and hence be available for operations that have not public scrutiny outside CIA? 2) Is CIA investment policy too restrictive in regard to bank deposits? Specifically, should CIA place large amounts of money in private banks without charging interest? Some 20% of its annual $1.2 billion of appropriated and advanced funds goes into private deposit here and abroad, with year-end balances of about $150 million and average deposits considerably greater. The banks selected get an interest or investment bonus. Their selection is non-competitive, rooted in historic circumstance, albeit in institutions that have shown themselves flexible and responsive in
[157-10014-10144.pdf — page 174]
-145-providing the Agency services. Much more investigation is needed here and we encourage the new oversight committee to study this issue in greater detail than we have been able. Probably this is one area where exclusion of the General Accounting Office from CIA audits has had an unfortunate effect: Whether or not there has been abuse, there is no outside reviewer of a complex set of financial records and relationships and consequently the question of confidence in the Agency's role in this area may have been eroded.What is the future for proprietaries?Discussion on these questions already has been covered in part. No new proprietaries are in formation or planned. This past fiscal year, 1975, one new proprietary was created to purchase a site for the new location of the New York CIA base; it serves as a real estate holding company or lessor for land and building.The main provison for new growth is the plan of some years standing for establishment in MHMUTUAL of several corporate "shells" -- legally constituted and registered companies that do very little commercial business but which can be adapted to various new CIA missions. To adapt to these new missions, as noted, would require CIA to amend the MUTUAL Administrative Plan. But this could be done quickly; the existence of the shells avoids the leadtime of creating new corporate entities, with all the complications of local laws and risk of exposure.While CIA proprietaries are small today compared with yesterday, they are so largely for administrative reasons-- i.e., responsiveNW 50955 DocId:32423532 Page 175
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-146-to Executive Branch direction. In this sense, there is noreason in law, although there may well not be another era orset of occasions when CIA will find proprietary expansion tobe operationally desirable. The Congress should be a partnerin the process of reviewing such expansion, if it should occur,by providing for changes in the charter process. Another approachis the setting of substantive guidelines for proprietary operation.This approach is typified by the post-Katzenbach guidelines thatprohibit CIA operation of tax-exempt foundations.Lawrence R. Houston, the former General Counsel of the Agency,was intimately involved with all of the proprietaries for hisentire tenure with CIA. Consequently, his views have been invalu-able to the Committee in reviewing and evaluating the historyand the role of these mechanisms. In the course of a far-ranginginterview with the Committee Houston concluded that proprietaries"should be the last resort for use to backstop Agency activities."He grounded this opinion on the fact that:they are cumbersome. To be properly run they takemany, many man-hours of many, many different parts ofthe Agency, so they are expensive in man-hours. Thereare built-in difficulties in running what appears to bea normal business for operational purposes. There'sreally a built-in dichotomy there that leads to a contin-ual conflict with policies. And due to the number ofpeople involved, there is a security problem on theold grounds that security doesn't go by the mathematicalincrease in the number of people. It goes geometricallyas to the number of people, the security risk.This assessment seems correct based on all the evidence.The current Director of Central Intelligence has insisted onthe streamlining of such operations, and is keenly aware of thepotential for abuse. (See appendix F). It is, for example,
[157-10014-10144.pdf — page 176]
-147-the current written policy of the Agency that "to the degree that domestic proprietary or cover companies are required, a clear justification will be developed as to the relationship of their support of our overseas operations."In the one area of continuing large-scale activity, the investment complex, the Director has moved to insure propriety even in an area where there is no evidence that any illegal conduct has occurred. The current policy, established as of June 1975 is:Project MHMUTUAL will be operated in conformance with appropriate legal restrictions. Arrangements are being made for the briefing of the appropriate Congressional committees. Particular attention will be given to avoiding any possible conflict of interest situations with firms with which the Agency has contracts. Particular concern will also be exhibited over possible improper influence on the stock market or stock dealings through the investments involved in MHMUTUAL.The Committee is mindful of the potential danger inherent in such operations. Therefore, it recommends that the review of this and other similar projects by the appropriate oversight Committees be stringent in the extreme.The disposal of proprietaries has also generally proceeded along legal and ethical lines with more than due concern for conflicts of interest. Most notable in this spectrum of actions was the degree to which the Agency tried and did in fact avoid any conflicts of interest when it sold off Southern Air Transport. Such internal vigilance no doubt should and will continue. Moreover, with the establishment of a permanent oversight committee, the CIA's job in this regard will be made easier because it will be able to report on its dealings on a regular basis and avoid criticism.
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TABLE ISUMMARY CF 16 MAJOR PROPRIETARIES BY YEAR REFLECTING APPROXIMATELY 80% OF TOTAL FUNDS *| DIRECT FUNDING SUBSIDY | OTHER INCOME AGENCY CONTRACTS | OUTSIDE OF AGENCY | GROSS TOTAL    | TOTAL EXPENSES | NET         || ---------------------- | ----------------------------- | ----------------- | -------------- | -------------- | ----------- || Inception through 1964 | $13,298,782                   | $236,372,776      | $628,268,091   | $600,174,573   | $28,093,518 || 1965                   | 7,824,682                     | 35,324,243        | 87,698,357     | 74,697,484     | 13,000,873  || 1966                   | 15,487,306                    | 46,189,505        | 98,594,139     | 94,713,002     | 3,881,137   || 1967                   | 21,476,541                    | 69,625,534        | 139,519,045    | 134,622,493    | 4,896,552   || 1968                   | 21,876,197                    | 61,385,548        | 113,514,671    | 111,330,900    | 2,183,771   || 1969                   | 22,375,362                    | 57,313,623        | 115,074,820    | 110,304,688    | 4,770,132   || 1970                   | 20,134,250                    | 57,214,126        | 110,022,726    | 108,871,504    | 1,151,222   || 1971                   | 23,968,141                    | 48,967,610        | 107,008,783    | 109,535,656    | (2,526,873) || 1972                   | 28,525,628                    | 45,433,428        | 75,171,952     | 70,254,485     | 4,917,467   || 1973                   | 21,124,434                    | 53,480,302        | 76,971,744     | 77,470,477     | (498253)    || 1974                   | 14,240,049                    | 45,524,446        | 60,091,676     | 60,033,050     | 58,625      || 1975                   | 208,527                       | 4,034,699         | 3,967,844      | 4,290,926      | (323,082)   || TOTALS                 | $210.539.809                  | $760,865,840      | $1,615,003.848 | $1,556,299.238 | $59,604,610 |* This information has been extrapolated from a number of sources and represents the best approximation we can make based upon the time and information available.** No Agency funding during 1975; this credit represents miscellaneous accounting adjustments.
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Annex AMemorandum of LawLegal Authority to Dispose of a ProprietaryJanuary 1974REC FROMOCT 30 1975NW 50955 DocId: 32423532 Page 181
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# SEGRETMEMORANDUM OF WDOES THE CIA POSSESS THE LEGAL AUTHORITY TO SELL A WHOLLY-OWNED GOVERNMENT AIRLINE WITHOUT RECOURSE TO THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED?RECEIVED FROMOCT 30.1975CIAI. FACTSThere exist two airline corporations wholly owned by the United States Government, which corporations were purchased by, and are under the direct control of, the Central Intelligence Agency. Ownership of the corporations was acquired by means of appropriated funds expended by the Agency under its confidential funds authority, the procurements thus being made outside of the Federal Property and Administrative Services Act. Both corporations were created by the Agency to assist it in fulfilling its statutory responsibilities and, over the years, both have engaged in many sensitive support activities in the furtherance of the national security of the United States. It has been widely reported in unclassified media that the Central Intelligence Agency on behalf of the United States Government is the *de facto* owner of the corporations. Notwithstanding, that ownership is still a classified fact. The activities and missions of these corporations in support of the national security of the United States would have been impossible if United States Government ownership had been officially admitted. Within this context it is the statutory responsibility of the Director of Central Intelligence to protect the overt commercial posture of these corporations and the classified nature of certain of their activities.NW 50955 DocId:32423532 Page 182REPORT
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# SECRETthe Director has determined that the corporations are no longer required by the Agency in the discharge of its responsibilities; that they are excess to Agency requirements, and he has directed that they be disposed of either by sale or liquidation.## II. STATUTESThe Federal Property and Administrative Services Act of 1949, as amended, (40 U.S.C.A. 471 et seq., hereinafter referred to as "the Act"), is in general the controlling statute insofar as Government property is procured, used and disposed of:It is the intent of the Congress in enacting this legislation to provide for the Government an economical and efficient system for (a) the procurement and supply of personal property and nonpersonal services, including related functions such as contracting, inspection, storage, issue, specifications, property identification and classification, transportation and traffic management, establishment of pools or systems for transportation of Government personnel and property by motor vehicle within specific areas, management of public utility services, repairing and converting, establishment of inventory levels, establishment of forms and procedures, and representation before Federal and State regulatory bodies; (b) the utilization of available property; (c) the disposal of surplus property; and (d) records management. 40 U.S.C.A. 471.As an executive agency, the Central Intelligence Agency is within the purv of the Act (40 U.S.C.A. 472; 481), but along with a number of other agencies and activities, it was exempted from the Act:> [Figure: A handwritten note partially illegible. Contains the words FROM, Congress, departments, agencies, corporations and persons exempted from provisions.]> ![handwritten note]
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SECRETNothing in this Act shall impair or affect any authority of-(17) the Central Intelligence Agency; ...40 U.S.C.A. 474(17).The Act's legislative history provides an insight into the breadt of the exemption and, to a limited degree, Congress' intent for giving it.Special exemptions from the act. -This sub- section exempts from operations under the act a number of activities requiring special treatment. Chief among these are programs for price support, stabilization, grants to farmers, and foreign aid; procurement procedures under the Armed Services Procurement Act of 1947...; the stock-piling of critical materials; the national school lunch program; the Housing and Home Finance Agency with respect to the disposal of residential property; the Atomic Energy Commission; and the Central Intelligence Agency.It is not intended by these exemptions that those administering the agencies or programs listed shall be free from all obligation to comply with the provisions of the act or from all jurisdiction of the Administrator. On the contrary, it is expected that they will as far as practicable procure, utilize, and dispose of property in accordance with the provisions of the act and the regulations issued thereunder, particularly so far as common-use items and administrative supplies are concerned. Likewise, it is intended that the Administrator shall have full authority, with respect to the agencies or programs mentioned, to make surveys of, and obtain reports on, property and property-management practices, to cooperate in the establishment of inventory levels, and to report excessive stocking, in accordance with the provisions of section 206 (a) (1) and (2).
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SECRETIn other words, to the extent that compliance with the act and submission to the jurisdiction of the Administrator will not so *impair or affect the authority* of the several agencies to which the subsection applies as to interfere with the operation of their programs, the act will govern. Any disputes that arise can be settled by the President under the authority to prescribe policies and directives vested in him by section 205 (a). U.S. Code Congressional Service, 1949, Vol. 2, p. 1504. (emphasis added)One authority of the Central Intelligence Agency which complete application of the Act would "impair or affect" is clearly the Agency's authority to expend confidential funds.The sums made available to the Agency may be expended without regard to the provisions of law and regulations relating to the expenditure of Government funds; and for objects of a confidential, extra-ordinary, or emergency nature, such expenditures to be accounted for solely on the certificate of the Director and every such certificate shall be deemed a sufficient voucher for the amount therein certified. Sec. 8(b), CIA Act of 1949, as amended; 50 U.S.C.A. 403j(b).The CIA Act of 1949 (63 Stat. 208, P. L. 81-110) became effective June 20, 1949; the Act (63 Stat. 378, P. L. 81-152), July 1, 1949.The question of law thus presented is: In selling and disposing of the two airline corporations, must the Agency adhere to the Act and submit to the jurisdiction of the Administrator, General Services Administration?![D FROM](D FROM)4![OCT 30 1975](OCT 30 1975)NW 50955 DocId:32423532 Page 185 CIA SECRET
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SECRET## III. ARGUMENTThe broad authority afforded the Agency by Section 8(b), supra, is conclusive-"(t)he sums made available to the Agency may be expended without regard to the provisions of law and regulations relating to the expenditure of Government funds; ....". That authority is enhanced, not limited, by the Act-"(N)othing shall impair or affect the authority of-- the Central Intelligence Agency", and by the Act's legislative history. It follows naturally that the Agency's authority to procure on a confidential basis without recourse to the Act inherently carries with it the authority to dispose on a confidential basis without recourse to the Act. By way of an extreme hypothetical, suppose the Agency had procured a Soviet weapon's system, without Soviet knowledge. Using Section 8(b) authority, it had expended funds through a secure facility for the procurement and brought the system to this country where it was studied and tested. By virtue of the testing the Government was able to develop electronic counter measures which would effectively nullity the system. Upon a determination that the system is of no further use, can it be seriously argued that its disposition by the Agency should be anything other than confidential? The purchase was confidential; possession of it by the United States Government was confidential; and, the knowledge gained and the countermeasures developed are confidential. To hold otherwise would render the intended purpose of Section 8 (b) a nullity.
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# SECRETThe short expression of Congressional intent found in the Act':legislative history supports the view that the Agency's activities in the confidential funds area are not within the purview of the Act. "As far as practicable..." procurement, use and disposition should be "...in accord with the provisions of the Act...particularly so far as common-use items and administrative supplies are concerned." It is suggested that a Government-owned, but overtly commercial, airline used in support of foreign intelligence activities does not fall within a "common-use items and administrative supplies" categorization. Similarly, if the last paragraph of legislative history (emphasized portion) quoted above is read in the negative, the proposition becomes clear. "...(T)he act will...(not)... govern...(if)...compliance with the act and submission to the jurisdiction of the Administrator will...'impair or affect the authority' of the several agencies to which the subsection applies as to interfere with the operation of their programs...." Were the Agency required to comply with the Act and submit to the jurisdiction of the Administrator in the exercise of its confidential funds authority, not only would that authority be impaired or affected, but many of the Agency's most significant statutory authorities and responsibilities would be frustrated.FROMOCT 30 1975SECRET
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SECRETIn looking at CIA's express authority to procure on a confidenti basis and examining the nature of its implied authority to dispose, genera statements on the rules of statutory construction are helpful. For example:Where a statute confers powers or duties in general terms, all powers and duties incidental and necessary to make such legislation effective are included by implication. Thus it has been stated, 'An express statutory grant of power or the imposition of a definite duty carries with it by implication, in the absence of a limitation, authority to employ all the means that are usually employed and that are necessary to the exercise of the power or the performance of the duty.... That which is clearly implied is as much a part of a law as that which is expressed.'* * *The rule whereby a statute is, by necessary implication, extended has been most frequently applied in the construction of laws delegating powers to public officers and administrative agencies.... Thus where the power to create an office is granted, the power to abolish it will be implied, and where an administrative body is given power to enact regulations or exercise quasi-judicial power, the power to provide for internal rules of procedure will be implied.... The power of a municipality to sue and be sued was held to imply the power to employ special counsel for those purposes although the city had a regular salaried attorney. A municipality, empowered by statute to construct sewers for the preservation of the public health, interest and convenience, was permitted to construct a protecting wall and pumping plant which were unnecessary for the proper working of the sewer, but were essential to public health. Sutherland Statutory Construction § 5402.
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Similarly,SECRET...(I)t has been held that an express statutory grant of a right, power or privilege carries with it by implication, in the absence of a limitation, all the means that are usually employed and that are necessary and proper to the exercise or enjoyment of the right, power or privilege granted. In such case, the power necessarily implied is a part of the legislative act. There is even authority in support of the rule that power in a statutory grant may be implied although it is not indispensible to the exercise of the powers granted.... 50 Am. Jur., Statutes § 428.Cases which speak to the subject of implied statutory powers are abundant. In *Schmiedigen v. Celebrezze*, Judge Holtzoff held that:"(I)t is a well established principle of statutory construction that every legislative enactment must receive a sensible and reasonable construction that would effectuate its purposes. If a strict, literal interpretation would frustrate the objective of the legislative body and would lead to an absurd or futile result, it must be avoided." 245 F. Supp. 825, 827 (1965). In *U. S. v. Jones*, where a statute gave federal officers the power to enforce compliance with the law but was silent on the power to arrest the court stated:So, though the term arrest is not used in the statute, the language employed necessarily implies that such power was included.RECENTROMOCT 30 1975CIA8SECRET