157-10005-10225
2025 RELEASE UNDER THE PRESIDENT JOHN F. KENNEDY ASSASSINATION RECORDS ACT OF 1992
Date: 10/01/93
Page: 1
JFK ASSASSINATION SYSTEM
IDENTIFICATION FORM
AGENCY INFORMATION
AGENCY: SSCIA
RECORD NUMBER: 157-10005-10225
RECORDS SERIES :
AGENCY FILE NUMBER : R891
DOCUMENT INFORMATION
ORIGINATOR: SSCIA
FROM:
TO :
TITLE :
TESTIMONY/REPORT OF PROCEEDINGS WITH EXHIBITS
DATE: 08/12/75
PAGES : 90
SUBJECTS :
TESTIMONY OF HOUSTON, LAWRENCE RE: CIA AND CASTRO
EXHIBITS ARE INCLUDED
DOCUMENT TYPE : PAPER, TEXTUAL DOCUMENT
CLASSIFICATION : T
RESTRICTIONS : REFERRED
CURRENT STATUS : P
DATE OF LAST REVIEW : 10/01/93
OPENING CRITERIA :
BOX 248-02
COMMENTS :
NW 50955
DocId: 32202415 Page 1
[R] - ITEM IS RESTRICTED
Bx 36
NW 50955
WARD & PAUL
Phone (Area 202) 544-6000
TOP SECRET
18
1
22
Niarchos' ship captains named Katopodes brought a libel action
I believe it was, against Onassis for some letter he had written
3 about some activities of Katapodes, I can't remember the
4
details now.
5
We didn't know where this was leading.
the Supreme Court of New York State, and so I went to a fellow
So this was in
7
I knew in the U.S. Attorney's office and asked him if he
8
10
11
12
13
14
15
16
17
18
19
20
21
22
23
could keep track of how this suite was developing to see if
it was leading into some of the connections we had, par-
ticularly with Niarchos.
And he got some of the pleadings and some of the pre-
trial evidence
Mr. Wides. But you don't recall any contacts between
the Agency and the Justice Department resulting in Mr. Yeagley
going up to try and halt some aspects of the grand jury
proceedings in New York growing out
Mr. Houston.
It strikes no valve.
Mr. Wides. Let me ask just one more question in this
area and then we will move on to the document I asked you to
look at before we started.
Mr. Maxwell.
I have just one other question.
Mr. Wides Do you recall the infamous Kilham case involv
ing the alleged wrongful death of a former CAT airline agency
24 employee in Thailand in which it was alleged that two other
agency employees - Mr. Kilham, I believe, had been a CAT
25
410 First Street, S.E., Washington, D.C. 20003
DocId: 32202415
Page 2
TOP SECRET
410 First Street, S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
TOP SECRET
19
1
employee.
And at the time Mr. Joost and the other fellows
2 were CIA employees of the station at Thailand in 1951 they were
10
5
6
7
alleged to have been involved in disposing of Mr. Kilham's
body, and there was a serious question as to whether one or
both of them had been involved in his death And then I believe
in 1955 this was brought to the attention of the Agency through
8
station chief, Justin O'Donnell
the efforts, among others, of Mr. O'Donnell, who was then the
who came back and raised it
9
10
11
12
13
14
15
little earlier than you suggested.
16
with Mr. Wiesner, and then I believe it was raised with
Mr. Kirkpatrick and with yourself.
Do you recall that incident and the eventual denouement
of the affair?
Mr. Houstons I cannot remember the exact chronology.
I had thought they had gotten the report on the problem a
But I can't argue it.
Mr. Wides. Do youknow if any action was taken earlier
17
than the time in 1955 when Mr. O'Donnell
first raised it with
18
Mr. Wiesner?
19
Mr. Houston.
20the one
I didn't know that Justin O'Donnell was
at least I don't recall it, so I don't know exactly
21 how it first came to my attention. But when it did, to the
22
24
25
best of my recollection, Lyman Kirkpatrick and I, and I think
Frank Wiesner was probably involved, tried to assemble all
the facts to find out insofar as possible what had gone on
It was a confused picture. All sorts of interpersonal feelings
NW 50955
DocId: 32202415
Page 3
TOP SECRET
410 First Street, S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
TOP SECRET
20
1
faced
2
10
3
4
5
6
7
that I recall were going on out there. And Ithink one of the
Thai police might have been involved.
Wides.
I don't know if it refreshes your recol-
lection, but believe a Colonel Rack was a local official
who had some knowledge of it.
Mr. Houston. To the best of my recollection I put
this together and talked to Allen Dulles who was much concerned
8
about it. He said, I think we ought to report that to
9
Justice.
10
11
there is nothing we can
And I said, there is no particular problem, because
about it because there is no crime
12
13
14
against the U.S. that I can find in this situation, it is a
crime against the Thai sovereignty.
And Allen said, that well may be. But I still think
15
that
want to report this to Justice.
16
17
classified basis.
18
19
And he asked me to prepare a detailed report on a
hve forgotten the nature of the classi-
fication. I suppose the relations with CAT at that time were
still basically top secret.
20.
So, I did prepare a report and delivered it to
21
22
can't remember-- probably to the Assistant Attorney General,
Criminal Division, who ever it was.
23
They said to the effect, thank you, that is
There
24
is nothing we can do.
Mr. Wides.
25
Was there any discussion of the possibility
NW 50955 DocId: 32202415
Page 4
TOP SECRET
NW 50955
410 First
t, S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
1
N
10
5
6
༡
22
00
8
TOP SECRET
21
of giving information to the Thai authorities so that they
could decide whether to exert jurisdication?
Mr. Houston.
My recollection is that the indications
were that the Thai authorities had as much information as we
did.
I don't remember to the contrary, but a lot of the
information we got came from the Thais.
Mr. Wides. Did Mr. Kirkpatrick go over to Thailand
to talk to some of the people there to find out what they
knew about the situation?
Mr. Houston. I don't recall,
10
11
Mr. Maxwell.
Was any action taken against either
12
of the CAT employees?
13
Mr. Wides.
Dennis Fleming was the other one. And
14
he was recalled.
15
Mr. Houston.
And Kilham?
16
Mr. Wides. Joost and Fleming were
two persons
17
against whom the charges or allegations were raised.
18
Kilham was the victim.
19
Mr. Houston. I remember Joost being a problem, but I
can't remember what the outcome was.
And Dennis
Fleming
20
21
just strikes a very faint bell. I can't remember at this
time.
.
22
23
23
Mr. Wides.
Mr. Maxwell.
24
25
Did you have another question in this area?
I just wanted to say, if you wanted to
continue, you said there were three cases that eliminated the
DocId: #2202415
Page 5 TOP SECRET
TOP SECRET
22
Phone (Area 202) 544-6000
WARD & PAUL
410 First S
S.E., Washington, D.C. 20003
1
kind of cases which CIA had with Justice, and the referrals,
2
and you had gone through one. And I wondered if you wanted
10
3
4
10
5
6
22
m
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
to go through the other two.
Mr. Houston. All right.
The second one was quite an interesting one. If I give
it in too much detail, excuse me.
Mr. Maxwell.
Off the record.
(Discussion off the record.)
Mr. Maxwell. Back on therecord.
Mr. Houston. The staff officer in Italy all of a
sudden disappeared from his post, and there was indication
that he had with him a considerable sum of money, something
in the nature of $30,000, I can't remember the exact amount.
This was promptly reported, and he disappeared into the blue.
The station started looking into it. And I believe we
sent people over to try and look into it, and found that
there had been a serious family problem between himself and his
wife.
Finally, through some sort of source in Mexico we got
word that this fellow was near Mexico City, and he passed word
to the station through a lawyer that he had written all the
operational details of what he had been engaged in in Italy,
which again were very sensitive, sealed them, and put them
in a vault which only thelawyers could get at, with instruc-
tions to his lawyers that if anything happened to him, no
TOP SECRET
NW 50955
DocId: 32202415
Page 6
WARD & PAUL
Phone (Area 202) 544-6000
1
N..
10
3
4
5
6
7
00
8
9
TOP SECRET
29
The SEC, as a result has raised some questions with Justice
between our justice and our statutory problems. This is
before Justice now.
Mr. Wides. Is there a file in the OGC office generally
regarding, not necessarily every one, but many of your
which would contain many or most of OGC contacts with
Administrative agencies over the years?
Mr. Houston. No, because they weren't
there probably
is a substantial file on relations with Internal Revenue.
But those were to a large part either working out our own
10
11
tax equations on our own personnel with cover problems which
you probably know about, or the CAT situation, or Southern
12
13
Air Transport, and not interferring with IRS prosecutions,
although several times we were involved
here is the type of
14
case I guess you are talking about.
15
What is the fellow out in the Philippines
I think his
16
17
name is Stonehill - who had one of the biggest tax assess-
ments made against an individual made against him, I think,
18
19
$2 million? And Stonehill very definitely tried to involve
us in his defense. There was some connection with Stonehil
20
410 First S, S.E., Washington, D.C. 20003
21
22
23
23
in the Philippines, you couldn't be in the Philippines without
some connection with them. And yet gave IRS the full in-
formation, and said, don't bother with us, we are not
concerned.
Mr. Wides. What about such things as the contacts with
24
25
NW 50955
DocId: 32202415 Page 7
TOP SECRET
Phone (Area 202) 544-6000
5
4
3
1
2
TOP SECRET
Mr. Houston.
It was a memo of DITEL's that I saw.
55
I think it was dated after I left. I saw it in draft after-
ward.
It had to do, I recall, with operations in the Trust
Territories.
Mr. Wides.
In other words, the first category of issue
that I mentioned?
7
8
that
9
Mr. Houston.
Yes.
Mr. Wides. With regard to MH MUTUAL, which is a topic
obviously don't have time to discuss fully today, and
10
we have not yet seen the files, I wonder
11
12
give me a rough
was going to pursue this, and I may be back
during the period when it was under your
and Mr. Maxwell
if you could ·
WARD & PAUL
13
stewardship of the organizational chart,
It were, for the
14
15
16
17
policy committee, the investment committee, and so forth, how
were the questions of what investments could be made with the
pension fund and the insurance fund and the like, how was that
policy developed, and whowas involved and so forth?
18
Mr. Houston. The lawyer running the actual operation
reported directly to
19
Mr. Wides.
20
ANVIL?
21
22
410 Fir
, S.E., Washington, D.C. 20003
23
24
25
Mr.Houston.
unofficial cover.
Mr. Wides.
Meaning that he was in a law firm tha
essentially a proprietary.
NW 50955 DocId: 32202415 Page 8 TOP SECRET
WAS he in the OGC office?
part of
He was ANVIL, a staff official but under
410 First
S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
8
7
00
6
TOP SECRET
56
1
2
1
Mr. Houston.
Not entirely a proprietary.
We supported
part of it, and part of it was a legitimate law firm, they
worked together and shared the firm.
4
who that is,
5
Wides. Is it possible for you to indicate
is that someone whom you would not like to
disclose.
Mr. Houston)
can't do that.
Mr. Wides. How would we refer to him in terms of his
position if we were trying to ascertain his identity, or
9
if we were negotiating with the Agency, as it were? What
10
was his title vis-a-vis the mutual management?
Was he the
11
project officer?
12
Mr. Houston.
He was certainly
let's call him the
13
project officer for MM ANVIL
14
15
Mr. Wides. And that was for a good many years, one
particular person?
16
17
Mr. Houston. Yes. He was there from pretty near the
start until he retired by, about two years ago, three years
18
19
20
ago. So, he was there all through the sixties, I would say,
or the seventies.
Mr. Wides. This is not John Keaney, is it?
23
2 2 2 2
21
Mr. Houston.
No.
22
24
Wides. Was John Keaney's role more in terms of
setting up proprietaries and incorporating them?
Mr. Houston. John Keaney?
25
NW 50955
DocId: $2202415
Page 9
TOP SECRET
Phone (Area 202) 544-6000
2
اوم
7
8
9
10
TOP SECRET
Mr. Wides.
Yes, a Washington attorney
Houston.
57
or Kenney.
Kenney. He must have been one of the cen-
tral cover projects. He was not an OGC project that ☐ recalled.
Mr. Wides. He was not prominently involved in establish-
ing proprietaries or their incorporation?
Mr. Houston. He might have worked in some of the central
cover situations but I don't recall him being involved in any
of the proprietaries I worked on.
Mr. Wides. With regard to MH MUTUAL, as you can read-
ily understand, we are interested in exploring its dimensions
WARD & PAUL
410 First S.E., Washington, D.C. 20003
NW 50955
on it.
Without taking you through all of its multi-faceted
aspects, which would take some time, let me ask you one
in nature, and are really beginning to get access to materials
11
12
13
14
15
16
17
18
19
20
21
22
2 2 2 2 2
23
24
25
or two questions with regard to concerns that have been raised
by the committee.
Do you recall at any time questions arising about the
conflict of interest or any questionable aspects of the invest-
ment decisions of the MH MUTUAL program of any part of it?
And by that I do not mean an individual who obtained intelligence
information and was trading on his own, or an investment club
within the agency, or that kind of thing, but questions in-
volving either the Agency using insider information if you
will, obtained through its intelligence activities of
otherwise in making investment decisions or buying stock or
debentures, or making other investments to assist the person
DocId: 32202415 Page 10 TOP SECRET

410 First
S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
8
7
5
10
1
2
TOP SECRET
or the corporation or country whose securities were being
invested in?
58
Mr. Houston.
There were about two or maybe three recom-
mendations rom the Investment Counsel we had at the time we
were turned down
Mr. Wides
Excuse me. Was the Investment Counsel the
person you were referring to?
Mr. Houston.
No, this was an outside investment
9
10
11,
counsel we retained for advice for a period of time.
Mr. Wides. Was it a firm or an individual?
Mr. Houston. It is a well-known firm. And they made at
least two or three recommendations to invest in stock of
12
i
13
companies which we questioned rather extensive contractual
arrangements, and in view those contractual arrangements,
14
15
16
17
18
19
20
21
22
23
23
24
25
I recommended that we reject the recommendations.
And we did.
Mr. Wides. Do you recall any instances where invest-
ments were made and it was then learned or there was
adversion to the fact that there were contractual relation-
ships, or whether they were known in advance and it was weighed
and the decision was made to go ahead with the investment?
down.
Mr Houston. No. The only ones I recall were turned
Since there was ample room to investigate, there was
no need to get in a position of possible implication of
conflict of interest. So, we erred on the side of turning down
NW 50955
DocId:
$2202415 Page 11
TOP SECRET
Phone (Area 202) 544-6000
H
2
10
3
TOP SECRET
rather than going ahead.
59
And incidentally, the outside investment counsel would
not know why we turned it down.
Mr. Wides Were all of the investment decisions for
4
the assets of MH MUTUAL
wwww wwww
and you use that in the broad
5
sense, I don't fully understand the relationships among all
WARD & PAUL
6
the aspects of the complex
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
but were all
the investment
decisions, the Eurodollars and the small amount of stock and
the like made by outside counsel or were there some invest-
ment initiatives which originated within the Agency?
Mr. Houston. For a while almost all of them were made
by this outside counsel. It was not too happy a relationship,
not because of his fault. I think he was doing his honest
best. But we took too long processing his recommendations and
often lost a market by taking too long through our own in-
ternal controls.
So, finally, we decided that while we had gone to him
for a good reason, that is, so we could show that we had
relied on outside counsel of known stature, that it was
not fair either to him or to us to be in circumstances where
we were really secondguessing him through our own internal
proçedures and our own invetment sort of Board of DirectorS
So we left, I hope, on friendly terms.
410 First S, S.E., Washington, D.C. 20003
23
24
Mr. Houston.
25
NW 50955
DocId: 32202415
Page 12
TOP SECRET
Mr. Wides. About when was that?
Let me guess at around 1969, something
WARD & PAUL
Phone (Area 202) 544-6000
7
TOP SECRET
1
like that.
Mr Wides.
Up until then as far as you know there
60
2
5
6
was no investment of Agency funds that were made as a result
of any decisions or implications within the CIA which might
then have been run by him for his independent advice but might
have originated on prompted within the Agency?
Mr. Houston.
There may have been those You see,
8
on our Board of Directors to which we referred all basic in-
vestment decisions we had three of our top economists, and
Ј
at least one of them was a member of a couple of college
investment boards, so that they had the benefit of the advice
to those university investment counsel.
Mr. Wides. Was he a consulting economist or a member--
Mr. Houston. A member of the staff.
Mrs. Thunberg?
9
10
11
12
13
14
Mr. Maxwell.
15
Mr. Houston. Yes.
16
Mr. Wides.
17
18
19
20
21
And her relationship wit the university
22
23
23
24
25
board was what, as an alumni?
Mr. Houston. As an alumni. She was called as a
consultant on their investment program.
We also had the advice of a couple of friendly banks,
and at least a couple of insurance companies would freely
give us the benefit of their investment policies.
Mr. Wides. What was the relationship between yourself
and the banks and the insurance companies, the CIA?
410 First
et, S.E., Washington, D.C. 20003
NW 50955 DocId: 32202415 Page 13
TOP SECRET
410 First SS.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
1
2
10
3
4
5
6
8
TOP SECRET
Discussion off the record.)
Mr Houston.
already been told
61
To go back to the start it may have
back in the last fifties we found in
the OGC office that the hardest thing to cope with were bene-
fits for death or disability insured under covert circumstan-
ces, particularly when, as so often happened, no prior planning
Even the prior planning is diffi-
had been made for this
cult, because if you are going to put an agent into certain
circumstances, and say you will get him insurance through
Mutual of Omaha, if the circumstances
the Department are
10
later known to Mutual of Omaha, they might say, well, that
11
12
is not a risky cover, and continually you wouldn't have
your insurance.
13
14
15
16
17
18
19
20
21
22
23
in-
So, we came to the conclusion that we needed our own
surance business, and we started by buying two very small
off-shore insurance companies, and started writing death and
health policies. NOW,
the business grew quite rapidly to
cover all sorts of covert operations. And we went to two
large outside insurance companies and asked if they would
cooperate and take some of the policies either on a fully pro-
tected basis from us, or if they saw fit, for their own account.
And both of them did both. They would take some risks for
their own account, and the only thing we would ask is that
NW 50955 DocId: 32202415 Page 14 TOP SECRET
they protect the investigation in case it got into sensitive
24
fields.
25
Phone (Area 202) 544-6000
1
2
ان
TOP SECRET
others they would ostensibly take the risk and we
would stand behind them.
Mr. Wikes. So that was indemnification?
62
4
10
Mr. Houston Complete indemnification. And
and
large this arrangement worked
extremely well.
WARD & PAUL
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Mr. Wikes. So those were the kinds of insurance companies
were were talking about that would give us the benefit of
their investment?
Mr. Houston. Both of them had large investment portfolios
of their own, and feel I gave us acces to their investment
manager, who were most cooperative in what they were invest-
ing.
Mr. Wikes. And what was the point of contact in the
Agency during that period for the insurance companies?
Mr. Houston. I went in both cases to set up the ori-
ginal contact, and then this project officer was the
primary.
Mr. Wikes. And he would have been the point of contact
for receiving their investment views?
Mr. Houston. He or his office.
Mr. Wides.
And you mentioned also a bank as an out-
410 First
, S.E., Washington, D.C. 20003
23
33
side source.
Mr.
Houston.
particularly.
There were a couple of banks, but one
We kept some of the money on deposit with th
And we had some offshore assets that were ostensibly
24
bank.
25
NW 50955
DocId: #2202415
Page 15
TOP SECRET
410 First
S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
1
5
7
8
9
TOP SECRET
63
held by an offshore subsidiary of the bank. The bank at our
request gave us a flat guarantee of repayment no matter what
on these assets. So, we felt well protected on this. And also,
when we deposited with them the certificates of deposit we
got the normal prime rate on our deposits. And here again
they particularly in the field of Eurobonds had some good
advice, and we also went to another brokerage house in
New York who had investment advisory staff hat specialized in
Eurobonds.
So far as I know, they did not know the Agency
was involved, but they gave advice on ie best interest rates
10
in Eurobonds and certificates.
It was a highly specialized
11
field.
12
Mr. Maxwell. Who was going
the investment house, the
13
project officer?
14
15
16
17
18
19
20
21
22
23
23
pany?
Mr. Houston. The project officer
Mr. Wides. Do you recall any dealings with Suydam and Com-
Mr. Houston.Noo I have been asked time and time again
about Suydam Company, and the only thing I knew was from
. personal knowledge going back to a trust my sister has an
interest in in the Guaranty Trust. They had one of these hold-
ing companies which I think was called Suydam and Company. But
you never heard
who was it? I know. One of our directors
of Southern Air Transport told me that he was continually
24
being asked by contact with Suydam and Company.
And he sai
25
NW 50955
DocId: 32202415
Page 16
TOP SECRET
410 First S, S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
6
TOP SECRET
64
that
the only one he knows, was the Guaranty Trust.
There
1
2
เก
5
was someone else, I don't know about it.
Mr. Wides.
GEtting back to the question I alluded
to while we were off the record, did any questions arise about
whether the people on the board, the investment board, or manag-
ing board of Mutual who were from within the Agency, would
have access to economic intelligence or political intelli-
7
8
9
10
11
12
13
gence relevant to their own thinking on investments, and
where there was any question of a proprietary involved?
Mr. Houston. The members of the board were always free
to bring up their ideas for investments, particularly in the
stock field, until more recent years. But mainly we were
consulting the economic experts for their general economic knowl-
edge on trends and any input they could give on basic invest-
ment policies.
14
15
16
Mr. Wides. That would include, I assume, economic in-
telligence regarding, for example, the trend of whether there
17
was likely to be a copper shortage, or the trend of
18
19
20
21
22
23
24
whether there was likely to be more nationalization of rubber
plantations or oil?
How would you differentiate that from economic intelli-
gence except that it would be
Houston. Because our investments, except for the
Eurobonds, were almost entirely in U.S.investments. And
while these were trained economists, their main professional
25
NW 50955 DocId: 32202415 Page 17
TOP SECRET
410 First
Gt, S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
TOP SECRET
65
1 interest was in the foreign field. And I don't remember them
2
5
6
7
8
9
staying for instance, let's get into copper, it is going to
be in very short supply in Peru or whatever. I don't remember
any discussion of that sort.
Mr. Wides
Do you recall any policy papers or reviews
generally as to the use of Agency knowledge in the broadest
sense of its intelligence fund in regard to the investment
decisions as distinct from decisions that were generated wholly
by outside?
Mr. Houston. There were various basic general policy
usually I would prepare them and put them before
the board in which this may have been touched on. I don't
recall it specifically.
10
11
papers
12
13
14
15
16
Mr. Maxwell. The source of funds invested under the
auspices of the board were what?
Mr.Houston.
The initial source of funds was usually
17
18
19
20
21
22
23
24
25
reprogrammed at the year's end available for operational use.
And this was regarded as an operational use necessary to
support operations because of the need for the basic insurance
function.
In other words, all these companies that we had in
this insurance complex appeared to have the substance an
insraance company would be expected to have.
Actually,
whole fund for all of them was managed as a central fund under
this one project officer. On the design and organizational
NW 50955 DocId: 3220 15 Page 18
TOP SECRET
410 First Street, S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
TOP SECRET
66
chart it looked very complicated. In operation it was quite
was handled really as one entity with various faces
1
simple.
2
10
appearing. And the complications of those whereby maintaining
your directors
who took no part in the operation, your companies
directors, and things, and keeping your letterhead straight
5
for your writing
the different companies.
6
Mr. Maxwell. Were there other sources
7
profits made by proprietaries in stock or bond transactions that
went back into the investment fund?
funds,
9
Mr. Houston.
They would all go into the central in-
10
vestment fund, and in the initial stages, particularly where
11
there was income from funds and dividends
until the stock
12
13
14
the interest rate went up,
15
market broke there were some capital gains registered.
the investment policy went more and more, particularly as
the Eurobonds and certificates
of deposit, where for a while you were getting I think we
Then
16
got a weighted average of over 11 percent. And then those
17
would go back into the fund against the insurance loss account-
18
ability. The most difficult thing we had was trying to
19
20
20
21
22
23
24
decide what was enough, because there was no actuarial exper-
ience such as in a nominal insurance company.
Mr. Wides. You mean the capitalization of particular
companies against insurance?
Houston. Exactly.
Mr. Wides. What about proprietary profit, was that
25
NW 50955
DocId: 32202415
Page 19
TAD CECDET
Phone (Area 202) 544-6000
TOP SECRET
one source of funds that went into the total
1
2
3
disposed
4
5
00
6
Houston.
67
capital fund?
No. If you reorgnized a proprietary or
it, the proceeds identified as the proceeds of
that might go into this fund until their eventual disposi-
tion back into the Treasury, or whatever was decided.
Mr. Wides. What about prior to dissolution, just the
annual operating profit, were any not left in the proprietary
WARD & PAUL
7
but taken out in part and put into the fund
8
Mr. Houston.
In e first place this wasn't a frequent
9
occurence in propriataries
In fact MH MUTUAL and Air America
10
were the only substantially profitable operations.
There were
11
minor profits in others, but by and large as far as I know
12
13
14
15
16
17
18
19
20
21
2 2 2 2 2
•
they were left in the companies until they were dissolved.
And toward the end of Air America I believe we let off some
of the profits before the final dissolution and then took the
rest of them over, and they eventually turned them into the
Treasury.
Mr. Wides. With regard to the investment, in the case
of certificates of deposit abroad I take it that is what you
are referring to as the weighted average, when you weighted
Eurodollars Eurobonds and certificates of deposit. Whatever
the form were some of the investments in foreign countries made
22
in any way in consultation with the operating divisions*
23
410 First S
S.E., Washington, D.C. 20003
regard to the non-investment aspects of the loan, if you will,
the possible use of them for covert assistance in the broadest
25
NW 50955 DocId: #2202415 Page 20
TOP SECRET

410 First Street, S.E., Washington, D.C. 20003
WARD & PAUL
Phone (Area 202) 544-6000
2
1
TOP SECRET
sense of that term?
Mr Houston. No.
10
3
<+
5
30
6
7
8
9
10
Let us get one thing straight.
The certificate of depo-
sit were domestic.
Mr. Wides Were there any foreign loans?
Mr. Houston. There were no foreign loans that I recall.
The Eurodollar bonds were in the case those which were guaranteed
by a U.S. company.
Mr. Wides. You don't recall any investment in obliga-
tions of a foreign country?
Mr. Houston. Not of a foreign country as such. I
11
believe there were a couple in foreign companies.
12
13
14
14
15
16
17
18
19
I can't even be sure of that, but my recollection is by and
large of subsidiaries of US. companies which do not guarantee
their subsidiary bonds
Mr. Wides. Thank you.
Mr. Maxwell., I wouldlike to go through some of the
material in the Olsen case. And I have marked as Houston
Exhibit 5 the excerpts from the IG's diary which I showed you
before.
20
20
21
22
2 2 2
23
(The document referred to was
marked Houston Exhibit No. 5
for identification.)
NW 50955
24
25
DocId: 32202415 Page 21 TOP SECRET