| _ So I think for the last, oh, fifteen, eighteen years, the proprietary management system was on the whole pretty effective fromthe Agency point of view. I think we knew what was going on. I think we were able to get things up for decisions, and if we couldn't resolve them at the staff level, we would take them up to the Director for decisions; . quite different fromthe early days in the early 50's that I described, and the operators at least made the claim that they had the right to call the tune. During this period of time Operations people were getting themselves involved in the acquisition of aircraft and which were getting awfully damned expensive at this time, and separate projects were going after some of this expensive equipment without consideration of what might be available elsewhere to the Agency by contract or old aircraft. And so _the Director of Central Intelligence set up EXCOMAIR, of which I was Chairman, and had representation from both the operation and management and finance out of . the Agency, to try and coordinate the overall control and acquisition and disposition of aircraft. Indeed, a February 5, 1963 memorandum entitled "Establishment of Executive Committee for Air Proprietary Operations," noted that the Committee was "to provide general policy guidance for the man-". agement of air proprietary projects, and review and final recommenda- tions for approval of air proprietary project actions." Houston indicated that EXCOMAIR “was sort of an amorphous group” which tried to focus on the question of whether it reviewed the needs first and then came up with recommendations on the operational solutions, or whether the operators came up with a solution and put it through EXCOMAIR. Houston noted that EXCOMAIR:worked on a very. informal basis because "I knew all these people well, and I said. ‘Let's get together and sort these out.'" He indicated that EXCOMAIR was BW 50955 Docld:3274235532 Page 157
reasonably effective in getting overall coordination. It was re- sponsible for making a thorough inventory of all the equipment ‘that the Agency had in the aviation field, and by and large was able to keep track of who needed what and whether an asset was available that could take care of a problem without the necessity of acquiring a new asset. According to Houston, a general shift in thinking at the Agency occurred between 1968 and 1972 on the desirability of their holding substantial contingent capacity of airlift. The records | seem to indicate that Mr. Houston apparently convinced the Director in the early 1970's that the capacity should no longer should be retained. Houston commented on this assessment as follows: . Through what knowledge I had of the utilization of the various assets, it seemed to me that util- ization, particularly of large assets, that is, heavy flight equipment, was going down to the point where there was very little of it. Consequently, we couldn't forecast a specific requirement. Such re- quirements as you could forecast were highly con-- tingent. But I also remember a couple of times — putting the. caveat into the Director that with a changing world and with the complications in the aviation field, once you liquidate it, you could not rebuild, and so you ought to think very, very carefully before getting rid of an asset that did have a contingent capability. HY 50955 Docld:324233532 Page 156
-129- X:_ISSUES POSED, CONCLUSIONS, AND RECOMMENDATIONS Soares nen eey an anne sndnssahnneansunacangeonape sin nepasensssnsaaenntetnsesnnattns—=ryenevsyvesveve-evsuseuvorseresoessunceewrowecetoevewr—— The preceding sections provide a general picture of the nature, extent, purpose, function and problems of proprietaries. Not unlike © other areas of our inquiry, the issues raised were not simply black and white. They were, rather, grey in nature. During recent years, particularly at the time of the Vietnam War, serious questions were raised about this proprietary capability. Much of the accompanying criticism stemmed from a lack of understanding of their role in the scheme of both United States foreign policy and intelligence. Some of the criticism stemmed from the suspected entrance of some proprietaries into areas where they were in apparent competition with legitimate business interests, such as the airline industry. It is not unusual that there would be misunderstanding since much of what would have explained the proper role of these entities had to remain secret for innumerable reasons. But the Committee has not been stymied by that same embargo and has had a broad look into these operations. In general, these mechanism have been operated with the utmost . concern for legality, propriety and ethical standards. What slippages have occurred were in the field and generally in the area of air opera- tors, not management. Moreover, their use and past expansion was a4 direct result of the demands placed upon the Agency by Presidents, Secretaries of State and the policy mechanisms of government. This is particularly true of the large air proprietary complex which was used to support paramilitary operations in Southeast Asia. The only exception to this is the investment-insurance complex which was established on Agency initiative to fill a pressing need. HW 50955 Docld:32423532 Page 159
-130- A. An Overview Using broad authority under the National Security Act of 1949, the Directors of Central Intelligence have established Government-owned business enterprises, foundations and quasi-busi- ness enterprises ("notionals") to serve a variety of intelligence and covert action purposes. Chief among those purposes have been: 1) Cover for intelligence collection and action projects. Commercial firms established in foreign countries have in the past and continue to provide plausible reasons for the presence of CIA case officers. “Agency-funded foundations (e.g., the Asia Foundation) served as conduits of funds to scholars and groups doing research supporting U.S. foreign policy positions. 2) Extension of Agency influence and information network in overseas business community. The very act of establishing a firm -- e.g., an air or shipping firm -- requires banking, insurance, and other services that entail support, communications, and inti- mate business relationships with the bonafide American and foreign commercial world. In turn, this entails at a minimum the clearance -and access of outside top management into Agency business; the relationship on occasion can entail using the Agency's commercial contacts for information or assistance. 3) Provide supporting services for covert’ operations. In paramilitary operations, airlife and sealift by Agency-owned carriers has many advantages -- flexibility, ability to implant photographic equipment and other sensors, etc. CIA agents, engaged in hazardous business ordinarily uninsurable, can obtain commercial insurance at standard or subsidized rates via MHMUTUAL, a conglomerate HY $0955 Docld:324273532 Page 160
-131- of some 26 CIA-owned companies. In country locations where physical contact with the nearest CIA station is not operationally discreet, proprietaries can provide pay outlets and other adminis- trative services for CIA personnel and agents. On occasion, firms based in locations with permissive corporate laws and regulations | | -- can engage in many activities unrelated to their charters. For example, insurance firms can acquire real estate surrounding targeted embassies on a non-attri- buted basis. 4) Actual conduct of covert action. In establishing the "radios" (Radio Free Europe and Radio Liberty) in the 1950's, CIA acquired a means of directly influencing populations behind the Iron Curtain. These, of course, were eventually disposed of and placed under the aegis of the Department of State, but related enterprises, such as the book distribution program, which had operated under radio sponsorship, continued within the Agency frame- work. | a 5) Outlets for private investment. The Agency would ceny that this is a purpose of proprietaries. Agency officials state that the standing policy. is to prohibit the investment of operational funds of the CIA into private fields without explicit DCI authoriza- tion. Actually, the existence of proprietary enterprises which, on occasion, return sizable profits, affirms that private investment has indeed been a widespread Agency policy. Moreover, the Agency specifically has authorized MHMUTUAL to act as an institutional in-_ vestor for its own and any other Agency proprietary. So the question really is one of definition and shading. HW 50955 Docld:32423532 Page 161
-132- B. Size of U.S. Financial Stakes The size and variety of U.S. Government financial stakes in CIA proprietaries has already been described in great detail. The attached Table I gives an overview of proprietary income and expenditures over the years. Some 450 proprietaries have been created over the years with 20 presently active (See Table II.) The largest sixteen proprietaries received about 80% of U.S. in- vestment (i.e., subsidies). Accordingly, most proprietaries are shown to be small-scale operations. In many cases -- the so-called "notionals" -- the overseas proprietary actually conducts no business at all; it simply has a commercial charter, staff, and cover arrange- ments for Agency collection and action projects. Table I also shows that proprietary income consists of a mixture of CIA subsidy and income. In some cases, the outside income is from sources outside the U.S. Government income -- e.g., Air America has received income for aircraft maintenance of KLM airliners in Southeast Asia. But for the most part, proprietary income is in the form of "cross-orders,'' from CIA and other Government Agencies. For example, the CIA paramilitary project in the Congo placed orders for aircraft engines and pilot services with Intermountain Aviation, Inc. As an example of order placed by other U.S. Government Agencies, AID contracted with Air America to carry rice shipments in Laos. In this sense, many proprietaries are analagous to what are called “intragovernmental funds" or "industrial funds" in traditional U.S. Government budget and accounting terms. Table I shows, and as we remarked previously, that compared with earlier years, the size of proprietary expenditures has markedly declined. The potential for future expansion is nevertheless present. HY 50955 Docld: 32423532 Page 162
-133- Indeed, new proprietaries have. been formed within the last several years. In terms of U.S.. budgetary impact, Table I indicates that proprietaries do not add much new capital to CIA available resources -- i.e., while they have a very large expenditure level and momentum over the years, the "cross-order" phenomenon means that most of these expenditures originated in CIA and other U.S. Government appropriations and that net profits generated by outside business or investment have been relatively small. On the other hand, another way of interpreting the figures is to observe that nearly half the $1.6 billion gross income of CIA proprietaries has been supplied by sources outside CIA. | Table II shows the pattern of income, expense, and net U.S. investment for the twenty largest proprietaries now active, review- ing their financial experience in the twelve months preceding June 30, 1975, or the indicated reference date. The two biggest proprietaries, Air America and MHMUTUAL, are seen to dwarf the others. Air America will be: phased out by June 30, 1976, ending CIA's owned airlift and returning an estimated $20 million to the U.S. Treasury. MHMUTUAL will continue. Today, the CIA operates 45 major proprietaries, of which 25 are in the process of liquidation. The 16 biggest proprietaries did a gross total of $4 million business in 1975, compared with an average volume of $75 million annually in the heyday period of proprietaries, 1967-1973, exclusive of CIA subsidies. On the subsidy front, the contrast is equally striking: no net subsidy in,1975 vs.! $26 million annual subsidy in the 1967-73 period, Put differently, | if these sixteen biggest proprietaries had operated throughout HW 50955 Dethte:3Q49532 1Bdgk period at the level of gross income of all
-134- kinds realized in 1975 ($4 million), the total gross income would have aggregated $116 million. Actually, the CIA reports that for this for this period gross income aggregated at $1,606 million. | By this measure, CIA's biggest proprietaries are shadows of their former selves; their annual gross income of $4 million is about one-fourteenth of the average gross annual income of $55 million during the 29-year span. Shrinkage would be even greater if these figures were adjusted for the effect of inflation. The chief impact is decline of the bigger air proprietaries. The Agency estimates that of some $761 million of outside income, at least $658 million was generated by Air America ($559 million) and Southern Air Transport ($99 million), in the period from incep- to 1975. As late as 1974, these two airlines were garnering some $50 million in outside contracts. With their disposal, total CIA proprietary annual outside income in 1975 therefore shrinks to ~- the cited $4 million level. Most of this residual is represented by MHMUTUAL, the insurance investment complex, where Agency invest - ment are generating an outside income of about $3.5 million annually. In programmatic terms, this contrast of today and yesterday reflects the decline of paramilitary operations in Southeast Asia. Large volumes of outside orders by Defense and AID, along with sizable levies by CIA components and some maintenance and passenger income from commercial operations, had been generated by a covert war. In turn, these operations had their echoes in Agency air ~ support for the Congo, Cuba, and other areas. Looking toward the future, will new air proprietaries be established? The CIA thinks HW 50955 Docld: 327423532 Page 164
-135- not -- but the matter is not resolved as discussion below indi- cates. Ultimately the program question is whether there will be future U.S. involvement in covert wars -- and whether, if so, some substitute for CIA-owned air support can meet the operational requirements of secure, well-maintained local aircraft in place, with responsive schedules and capacity to gather a limited amount of signals and imagery intelligence. The Chief of CSS ventured the possibility that third-country assets could be used. Another possibility is use of U.S. military aircraft, overtly or "sanitized". One thing became clear: CIA sees itself as entering a different era of proprietaries. It has rejected the long-held doctrine of "stand-by" capability --~ i.e., the notion that it is worth investing considerable capital and operating resources in airlift, sealift, and other assets primarily targeted toward contingency requirements. Instead, assert the Agency representatives, CIA is keeping today's and tomorrow's proprietaries strictly centered on current operational tasks. The test of retention is the utility of a proprietary in carrying out assigned roles instrumental in approved Agency projects. This concept can be examined by listing the twenty major proprie- taries which the Agency says will survive into the post-1976 time frame: : Latest 12-mo. Code Name Earned Income “($000) LPBERRY $43 LPROE/PIKE 139 PDPORTAL 5 BASTE ($1,250 subsidy) BASIC ( 1,126 subsidy) PDLEDGER 102 PDDYNAMIC 35 TENURE ($199 subsidy) TERRACE ( 76 subsidy) HY 50955 Docld: 32423532 Page 165
-136~ VWCADENZA ( © 36 subsidy) MHBOUND | ( 432 subsidy) KMJAGUARO/ JAGGERY 809 QRMYSTIC/ CYNIC ( $10 subsidy) WUDIRK : 0 XIPHOID ($ 191 subisdy) BACH ( 50 subsidy) KNOX ( 50 subsidy) LPHOCUS 22 LPBYZAS/B 2 LPPANDA 21 CHAIR/A ( 4 subsidy) REMEDY "21 MHMUTUAL (consolidation of 21 firms) $3,560 LPSUGAR 34 (plus $35 subsidy) The above listing covers only the 20 biggest proprietaries which currently operate and which will survive liquidation. It excludes 25 major proprietaries currently operational but being phased out -- such as Air America and other airlift. What does the whole picture of currently operated proprietaries look like? How many and by what major types? The Numbers of CIA Proprietaries, by type, as of July, 1974 are: . 71 Operating proprietaries ; (includes 21 props. in MUTUAL insurance complex) Non-operating proprietaries 38 Devised facilities 31 Devised facilities/Notionals ("DFN"'s) 61 Subtotal, externally registered 201 Notionals -- no external registration; Identity and financing wholly within CIA control 215 Grand total, current proprietaries 416 HW 50955 Docld:327423532 Page 166
cn oer -137-— Generally, the notionals have increased in number by about ord 30% since the current CCS chief's takeover of Cover operations in 1967. This reflects a policy of increasing the number of | cutout arrangements to increase security -- l.e., reduce likeli- : hood of outside discovery of the identity of agents or case officers working under cover of the end-point notional by intro- ducing intermediate popionats: for payments or identity backstops. What does this ‘emia. cell us about basic distinctions of one type of proprietary from another? First, it indicates that external registration divides the pot in half. Those which have some form of legal standing with U.S. (State, local) and foreign - corporate regulatory and tax authorities are subject to external governmental scrutiny. This oceasions additonal expense and man- power to assure that in all respects this group of proprietaries behaves in accordance with local law and commercial expectations. The second group -- the notionals -- exist only as names on doors and phone directories and stationery, with backstopping for identi- fication provided by Agency switchboards, mailstops, and check | issuance. . . The next level of distinction is within the class of legally. registered proprietaries: those which carry on a commercial in- come ~ producing operation and. those which are simply cover arrange- ments, with at ‘most a bank account and an attorney backstopping calls and mail. The latter are. shown in the table above as "devised faciltiies" and “DFN"'s Within the class of commercial, “income--productive proprietaries, there is a distinction between those which are wholly dependent upon HY 50955 Docld: 324234532 Page 167
-~138- CIA income in the form of orders placed and/or subsidies; and those which have mixed outside and inside income. Even for those with mixed income, it is possible over the years to distinguish those which have outside income wholly within the U.S. Government (i.e., a mix of CIA-derived income and income from other Government agencies) and those which have both U.S. Government income and income from private contracts. C. Visibility in the Budget Accountability to the President and Congress depends in budget review upon the extent to which the Federal agencies' budget review upon the extent to which the Federal agencies' budget re- quests provide enough information to make possible well-formed judgments. Therefore, Circular A-11, issued by the Office of Manage- ment and Budget, prescribes the financial schedules and analytical and explanatory supporting data which all Federal agencies must provide in their budget submissions, consistent with the Budget and Accounting Acts of 1920 and 1950 as amended. The Central Intelligence Agency regards itself as subject to these prescriptions. The Agency limits its application of this principle, however to provision of such A-11 materials as OMB and the Congress ask for. With regard to proprietaries, this policy has resulted in near invisibility of proprietaries in the CIA budget submission. Circular A-ll requires agencies to provide schedules and narrative ' for each public enterprise or intragovernmental fund. The utility of such data is to reveal all sources of funding, purposes and HW 50955 Docld:327423532 Page 168
-139- levels of expenditure, and at least approximate indications of performance through comparisons of past and proposed funding by activity. As applied to proprietaries, the CIA, perhaps, "should have been providing a whole family of schedules for the proprietaries which actually do business (i.e., excluding “notionals.") . Then, there is the question of the program impact of propri- etaries. Table I indicates that proprietaries in fact have been heavily involved in CIA intelligence collection and covert action. None of this is shown in the CIA budget submission. Yet a bona- fide policy review of the budget requires programmatic judgments of the necessity and appropriate use of proprietaries in overseas areas. ° The Angolan. question has brought into sharp focus the role of the CIA's Contingency Reserve. All U.S. aid to forces in Angola came from this fund. The only place in the budgets of CIA where proprietaries have taken on even a limited visibility is in those years when supplemental financing was needed to establish or strengthen a proprietary. The budget then shows, tersely, that for a past year ox for completed portions of the current years that Contingency Reserve drawdowns had been made for such purposes. For example, one past budget showed a certain’ amount for "RFE," meaning a subsidy for Radio Free Europe, but providing no justifica- tion materials. In turn, this practice reflects the unwritten, post-hoc nature of the Contingency Reserve financing process -- in effect, an Executive Branch supplemental in which Congress is in- formed after the OMB has acted. The budget does not normally indi- cate Agency intentions to create or establish a proprietary in the HY 50955 Docld:32423532 Page 169
~ <140- budget year ahead. For any other Federal agency, the notion of establishing a new publicly owned enterprise without advance notice to the Appropriations and substantive committees of Congress would be proscribed. For the small-scale proprietaries, those which require small subsidies to get underway, CIA is able to launch them without supplemental financing -- i.e., within its regular budget -- and, therefore, these remain completely invisible in the Agency budget submission. D. Some General Considerations -a.. The relationship of utility to size: The evidence estab- lished a dilemma faced by CIA planners who recognize that propri- etaries can sometimes be most effective operationally when they are large; indeed, as in Laos, there can be a thrust toward enormity imposed by the very nature of the operation. The dilemma is that large size conflicts with deniability: In areas of the world or types of activity where there is little commercial appeal or few operating commercial firms, where would large-scale enterprises get financing but from the U.S. Government? Laotion operations actually could not be covered in the end. The experience suggests that proprietaries may have limited utility for paramilitary opera- tions in the future. b. The-factor of competition with private enterprises. Do CIA proprietaries of the income-producing. class unfairly compete with private U.S. businesses, both with regard to their Government financing and their secrecy? Is the utility to the Government of HW 50955 Docld: 32423532 Page 176
-141- such a kind and of such magnitude that CIA proprietaries should be retained regardless of their competitive impact? Generally, the CIA believes that CIA operating proprietaries do not compete with U.S. private enterprise because they tend to do things which the latter are not equipped, motivated, or staffed to perform. For example, CIA proprietaries purchase weapons and foreign arma- ments and technical devices; conduct security clearances; purchase real estate; insure uninsurable risks; train foreign policy forces; run airlines in remote areas or on commercially unattractive routes. Would private enterprise do any or all of these things; It is true that private enterprise does a lot of ‘similar activity under contract to the Government, including highly sensitive con- tracts for CIA in technical intelligence collection and research and development. If CIA scrapped its proprietaries and coopted private firms, suitably cleared, would this be more desirable in “policy terms? In economy? In operational flexibility? c. Relative scarcity of commercial and official cover. The continuing push of CIA for notionals reflects the scarcity of U.S. Government official cover in many areas of the world, the develop-_ ing desire of U.S. companies not to cooperate. | Some question concerning profits have been raised. Does pro- prietary profit constitute a significant add-on to the resources available to CIA? How is such profit treated in the budget? How is it controlled? How can the Congress.(or the President, for that matter) be sure that proprietary profits are not siphoned off to! accomplish projects not countenanced by the regular CIA budget? HY 50955 Docld: 324233532 Page i?
-~142- @ First, profits (defined as net income to a proprietary after coverage of operating expenses ) are relatively small. Even in the days when the most profitable air proprietaries were at full swing, the most that any single firm netted was $3.9 million (Air America in 1967). Over the entire period 1947-1975, total pro- fits have. been $50 million, an average of about $1.6 million annually, for the 16 biggest CIA proprietaries. And in these years, a net loss was sustained three times -- $2.5 million in 1971, $0.5 million in 1973, and $0.3 million in 1975. Looking to the future, after liquidation of the air pro- prietaries has been completed, there is forecast to be only one profitable proprietary: MHMUTUAL a complex of insurance, reinsurance and, and escrow-holding companies which derives most of its pro- @ fit from investment portfolios. MUTUAL's net income in 1974 was $1.8 million and this general magnitude of profit is expected in the foreseeable future. As for treatment in the budget, there is both a policy and ‘procedural aspect. The policy of CIA has changed; in February, 1975 the General Counsel of CIA ruled that profits of proprietaries » and proceeds of liquidation must be returned to the Treasury as miscellaneous receipts and cannot be used to augment the Contingency Reserve or otherwise be applied to CIA operations. This ruling overturned the practice of the past which, on the few occasions where profits were not applied to augment net worth of proprietaries --i.e., plowed back into the enterprise or investment portfolios--, was to apply proprietary net proceeds to the Contingency Reserve - o for later release to operations. HW 50955 Docld:324293532 Page 172
-143- The budgetary presentation and review procedures only par- tially 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 appropri- ate for making MUTUAL visible in the Agency budget. Other commer- cial 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 DCT 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 requiring HY 50955 Docld: 324235352 Page 173
~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 |) 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 insti- tutions that have shown themselves flexible and responsive in HW 50955 Docld:32493532 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 Account- ing 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 conse- quently 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 fis- cal 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., responsive HW 50955 Docld: 3274239532 Page i745
-146- to Executive Branch direction. In this sense, there is no reason in law, although there may well not be another era or set of occasions when CIA will find proprietary expansion to be operationally desirable. The Congress should be a partner in the process of reviewing such expansion, if it should occur, by providing for changes in the charter process. Another approach is the setting of substantive guidelines for proprietary operation. This approach is typified by the post-Katzenbach guidelines that prohibit 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 his entire tenure with CIA. Consequently, his views have been invalu- able to the Committee in reviewing and evaluating the history and the role of these mechanisms. In the course of a far-ranging interview 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 take many, many man-hours of many, many different parts of the Agency, so they are expensive in man-hours. There are built-in difficulties in running what appears to be a normal business for operational purposes. There's really a built-indichotomy there that leads to a contin- ual conflict with policies. And due to the number of people involved, there is a security problem on the old grounds that security doesn't go by the mathematical increase in the number of people. It goes geometrically as 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 on the streamlining of such operations, and is keenly aware of the potential for abuse. (See appendix F). It is, for example, HW 50955 Docld:32423532 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 con- duct 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. Parti- cular 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 con- flicts 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. More- over, 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. HY 50955 Docld:32423532 Page i7??
BT GEGEEPee- PIO’ cosgag Git aheg - gt SEPA TABLE I a SUMMARY CF 16 MAJOR PROPRIETARIES py VEAR REFLECTING APPROXIMATELY 80% OF Toray, FUNDS * DIRECT | | OTHER INCAS | , oe | FURDING AGENCY CUTS IDE GRCSS TOTAL __ SUBSIDY CONTRACTS OF AGENCY TOTAL EXPENSES _ NET Inceztion through 1964 $37 ,596 533 $ 13,268 , 782 $236 372,776 -$ 628,268,091 $ 600,174,573. $28,093,528 | 1965 Wb Slag ,t32 7,82! 682 35,324,283 87,698,357 TH 697, 88 | 13,000,873 ' 1966 36,917,328 15,487,306 46,189,505 98,594,139 9h ,713, 002 3,881,137 - 1967 88,416,970 © ¥ 21,876,541 69,625,534 139,519, 0h5 134,622,493 1, 806,552 168 30,252,626 21,876,197 61,385, 548 113,514,671 111,330,$00 - 2,183,772 35,385,835 22,375, 3€2 57 313,623 115,074,820" 110,30! 688 4,770,132 32,674,350 20,134,250 57,214,125 © 110,022 ,726 108,871,504 1,151,222 3h ,673, 022 | (23,668, 1h1 18 057 ,620 107 , 008 , 783 109,535,656 (2,526,873) 1,212,896 28 525,628 45,433, 28 75,171,952 70,254,485 | 4,917,867 | 1973 2,367,008 21, 12h 13h —. 53,480,362 75,971, 7hb 17,470,477 ; 420.773) 17h 327,182 1b,2ho,ckg 5 52h LG 60,091,676 60,033,050, 58,625 1975 275,282) ** » 208,527 o3k,6c9 + 3,967, 64b b,200,026 ; 323,062) TOTALS © SEER ECR 109 '$220.529.259 $7€0 85 S40 $1,625,003. 243 “81,586 ,269.238 . © 859,608,620 * 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. ry mo . sO ** Mo Agency funding during 1975; this credit represents miscellaneous accounting adjustments. wae aie) . . . . a“ iN \ ‘
BT ZEGESEZE PLIGG oogos 6LT aheg re > “Bebe * beet fee Aides os, LPSERRY/B ASSAYS ~ Cash TaAvesen Ouher Vixad "STAL LIABILITIES AND NET WORTIL ca Randing Income - Other Agency Sources © Income - Outside Commercial Expenses SET VEPY POR TWELVE. NOTES ENDIND $ 26,190 £37,080. (a). Interest’ Income ACTIVE MA : ad t TABLE II. | JOR HEADQUARTERS CONTROLLED PROPRIETART  PINANCIAL CONDITION AND SUMMARY OF FUNDING, INCOM ° AND EXPEN LPROE/ LPPIKE t 3, 67h 13,043 ween 9. 903, hI 220 § 132 5,82 1,408 923 £218,164 16,375) 5,039 f 54,220 43,215 $217,404 (9) ¥XX) ¢ ; _ 3/31/75 _ a : SES FOR TWELVE MONTIT PERIODS SHOWN. TES a PER AuaNeY RECORDS 30 1975 mr Th. cS] Uns (PDPORTAL) Be PDRAS TE PDBASIC PDLEDGER _ $ 319,660 $ 10h, 36 1.59 1), 828 h_ 370, O17, f 60,063 $ 279,887 6,063 ; 7213 $ 068 © 676 » 7,385 : 1.0,286 pee ene Po. P32 JEL we | $ hin, o20 $6,039,344. 4,357,743 39) 5,746,423) (4,047,215 $293,003 h 370,607 “6/30/75 - : 126 » 200 h -O. $ +839 nL, 115,936 ( #x xx) $ 812,365 720,960) b 91,405 10/2 Th ‘h 000 -0-. LO2 , 303 32 250,000 New projects, no financial -statements Consolidated figures not available. _ aint ry ‘ re) : , ____ PPPYNAMTC yO PHTENURE S PDTERRACE — WCADENZA ¢ 9 nna neal &ho,sos $26,288 & 621 ‘ NOY SF TU STATLT ep fOAdU -C- 23,418 8 (762,830) (2314) F 50,018 | 26,088 p61. 552, 6/30/15 pol cee { ‘b 26,288 0/30/75 | 76,000 0. fb 35.093 | 128 sh -O- P190, 526. eee ee $235,726 (23) 213) ot 1,503 th 4) PLOT Miree HN a § 997,960 8 ha, 153 42,575 01,6 Je: he TEE BS Ie iS yt” . » (le Heo GO?) 257 ,¢ do 973,224. Sco c 4 wacyt : _ 6/20/75 erent et seems ah Serre aoe teemtennttenange enh em a le . submitted to date, figures are for Latest period for which financial statements have been sub sek ted. . PDBASTE and PDBASIC are being consolidates: into one (1) entity, PDPOR?. A hN32.718 | 34.718 “Oe o J. One querecr., Ase -
rs Gos60g CESE CT Gammp 1904 fap O8T aheg P om Seay ae Investments Other Assets _ Fixed Assets | Toval Assets © LIASILITIES rary Nowe wee ade ~ “mise fr mpm es Ades aed AN We erener ore, “POTAL LIABILITIES AND NUT WORTH ACLIEVILY FOR IWELVE MONTHS ENDED | Mancang Inceme - Other Agency Sources Inecme - Outside Commercial Taegenses NOTES: - (a) (b) BS LOL aS 11 ACTIVE MAJOR FINANCIAL CONDITION AND gt ~ AND EXPENSES Por TyELyE (PER AGENCY Ruc QRuysrr¢/ QRCYNIC 8 3,974 500 627 hepa = 7S 657 Her $17,757. 2,296 11,074 $ -O- £296,000 ( ) 264.873) : 31.127 sis 9,090 fb 5,l0L = h 32 6/30/75 “$L0 , O00 ha Qe {, .-0- $3,755 J > 230 $ -O- P1990, 800 A RETO Interest ( KKK ) Income WUXIPHOID  WuPAciD’ 7 WUDERK © $50,525 $50,525 6/30/75 © p50, 525 bk -0- $ -0- g -0- —ay- TABLE If MEADQUART EY IMMARV ORDS 30 Sune 1675 WURNOX™ emery $50,000 9.20000 6/30/75 $50,000 $ -0- bh -0- a — -0- ay Includes $423,902.00 in insurance premiums from othe r Agency comp § . ~ CJ onents » CONTRCLLED pro? ‘ OF repre, a8 PARTES INCC™= ppnyens/s § 7,954 335, 9S 37, 8. 1.640 dt. yee B33 9199, -0- 8 ( XX *) 12/31/7! =O 2. fh h__2,289 $12,738 2 LEPANDA LeGKALR/A | LVREMEOY d : : 46 ogy OTE 10,822 3 116,081. (a) pb -O- ay 50,189 New projects, no. financial to date, Ligures are for o 6/30/75 (Consolidated) MINUCUAL a i I) (29,577 ,0'2 PSA) 358,739 yh Guy aa Gh 265 pO 862,619 (xs) (eo C1 Biv. Ge 85 tof OPS ent oe yp 3 » $107,413 oO. ; ROLLS ASS “93 ws $3,560 406(b) # 5.005 f 2,350,522 qeP 7 yesh cadanw . wytaeny i ae fey statements submitted ne quarver. Consolidated figures not available. Latest period for whieh fi submitted. nanns al namci a. ae mm de noes ‘ anaes % - statements have occ PDBASTR anc EDBASIC are teing consolidated into cnc (1) entity, PDPORTAL.
Memorandum of Law ee ne! Legal Authority to Dispose of a Proprietary January 1974 OT en 1975 pocta:sedoado Page 181 -
: eS . pyerng ‘ or ae ye 43 ne pu" i i ‘ ( MEMOR:! ANDUM OF OW: DOES THE CIA POSSESS THE LEGAI AUTE TORITY T.0 SELL A WHOLLY-OWNED GOVERN- MENT AIRLINE WITHOUT RE COURSE TO . a a THE PEDERAL PROPERTY AND ADMINI ISTRATIVE. uP FROM SERVICES ACT OF 1949, AS AMEN: ID? UCT 30.1 Co 1 FACTS CI A - There exist two airline corporatioss wholly owned by the a United States Government, which corporations were purchas ed by, and are under the ditect control of, the Central Intelligence Agency. Ownersh ‘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 o£ the Federal Property and Administrat! ive Sex xvices Act. Both corporations were created by the Agency to assist it in fulfilling its statutory responsibilities and, ever the years, both have engaged in . many sensitive Support activities in the further vance of the national security f5 of the United: States. It has been widely reported: in. unclassif ed media ‘that fete the Central intelligence Agency on behalf ot the United States Government the de ‘facto owner of the corpox rations. “Notwithstanding, that ownership is. still a classified fact. The activities and missions of these corporations in support of the national security of the United Srotes would have been impossible if United States Government ownership had been officially admitted. W rithin: this context - it is the statutory responsibility of O [o) yay ck on GQ hh i+) ! . » of Central Intelligence to protect he overt commercial postur corporations: and the cla assified d nainpe of certain of their activities. Now - HW 50985 Docld:32423532 Page 182 ; OrAntT a «+ *
, i oy nee EN TO TT we are em SE RENN EN OT oe martes eae re Jo tee acy en renee IIIT OF TCT OOM IBM HW 50ps5 Act"), is in general the controlling statut “is procured, used end disposed of: . ‘CCT $0) ist, 2 Docld: Av424532 Page. 163 the Director has determined that the corporations ave no longez vequired n by the Agency in the discharge of its responsibilitics, that they are excess ancl he has directed that they be disposed of *. to Agency requirements, either by sale or liquication. an + Wy STATUTES The Federal Property and Administrative Services Act of 1949,. Fa - as amended, (40 U.S.C.A. A471 et seq., hereinafter referred to as ‘the e insofar as Government propert: By “Jt 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 -s . 6 *) 6 eelated functions such as contracting, inspection, storage, - issue, specifications, property jdentification and classifi- - cation, transportation and traffic management, establish- ment of pools or systeras for transportation of Government personnel and property by motor vehicle within specific |‘ areas, management of public utility sexvices, xepairing ~ and converting, establishment of inventory levels, establish- ment 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 menagement. 40.U.S. C.A. 471.0 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 agenc: jt wag exempted from the’ Act: and activities, Loxempice* aa p YM Congress, departments, agencies, Corporations ~.' TiNGland persons exempted from provisions | * — ~ yo po meee
a, au’ Nothing in this Act shall impair or affect any © - authority of ~ i: ee, - : ve : +e ve : a) : : . .. . _ (17) the Central Intelligence Agency; .-.- 40 U.S.C. 474(17). ce) rs » if) vo yi 1 « a) fu The Act's legislative history provides an insight int of the exemption and, toa limited dégree, Congress’ intent for giving i Special exemptions from the act. —This sud-— ‘ "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, andforeign aid; = procurement procedures under the Armed Services vo Procurement Act of 1947...3 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. a oO 7 a a ae tis not intended by these exemptions that those a . administering the agencies or programs listed shall be free from all obligation to comply with the pro- visions of the act or from all juxisdiction of the et Administrator. On the contrary, it is expected tnat oe 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, , ar as common-use items and adminis~ Bp particularly sof -trative supplies are concerned, Likewise, it is intended L ‘that the Administrator shall have full authority, with. ams mentioned, .to respect to the agencies ox progr REC: 7 oy FRO ake surveys of, and obtain reports on, property and KE eo TRON) onperty-management practices, to C00} exate inthe Ot on 1ST establishment of inventory levels, and to report | . excessive stocking, jn accordance with the provisions ClA - ‘of section 206 (a) (i) and (2). } HW 50955 Docld:32423532 Page 184. . OTPHCT alia ivan 97
i } H i \ if ES. 4 4 In 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’. £ + y 2 ? ere of the several agencies to whicn the subsection applies 4 Boy be £ wep, & ere ew tere at eee :. 3 Fr 33 4. th - - : . act will govern. Any disputes that arise can be sctiled ~~ . +5 oy te 4, at 2 . . . : by the President under the authority to prescribe policies | and directives vested in him by section 205 (a). U.S. Code Ge Congression r mounhasis al Service, 1949, Vol. 2, p- 1504 4, (emphasis added) ; . , seat . Lt ne tet me oe ~ o ence A t fe gx f . a araures ae On SQ Qebes application of the Act would Nimpaix ox affect" is clearly the, > Agency! s_ authority to expend confidential funds. The sums made available ¢ o the Agency may be expended without regard to che provisions of law and regulations relating to the expenditure of Govern- ment funds; and for. objects of a confidential, extra- -. ordinary, or emergency nature, such expenditures to so - 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. Ss. C.A.. 20250) The CIA Act of 1949 (63 Stat. 208, P. Ja. g1- 10) became effective June 20, 1949; the Act (63, Stat. 378, P. Ll 152), suaty 1 “1949. ee ‘The question of law thus presented ist in s selling and disposing must the Ag ency adhere | to the Act and | . ' : . -of the two airline corpozations, submit to the jurisdiction or the Administrator, General Services “Administra ation? .., ‘mmmee a ae : 132493532 Page.185 /\ © OYA
as Ages 2 rete $4955 Docld: expenditure of Government funds; ...- _to dispose. on a confidential basis W ithout recourse. to ‘the Act. ae way of an extreme nypotaetical, suppose the Agency had procure ed as wet. Soe EE ARGUMENT The bra ad authority afforded the Agency by Secti on 8(b), supr: a, “is conclusive—"(¢ yhe sums. made availa able | to the Agency may be expended * - Without. regard to the provisions of law and regulations relating to the © "That authority is enhanced, not. a ; . . . ‘ . . a limited, ‘by the Act—'"(N)oth ing shall impair or aifect the authority of—... a and by the Act's legislative history. Ié the Central Intelligence Agency", follows naturally that the Agency's authority to procure ona confidential basis without recourse to the Act inherently carries with it whe -aushority 1 en0". . Cc . 8 weapons system, without Soviet knowledge. Using Section &(b) authority, . it had expended funds through a secure facility for the procurement and ’ brought the system to this country where it was studied andtested. By virtue of the testing the Government was able to develop electronic counter b ” e measures which would effectively puitity t the system. Upona detexminatio: that the system is of no furtt her use, can it t be seriously araued that its ry -disposition by the Agency shoul be anything other than confidential ? The ry purchase was confidential; possession of it by the United States Governmen! “wag confidential; and, the knowledge gained ana the countermeasures - . developed are confidential. To hold otherwise would render't the intended purpose of Section 8 (b) 2 , nullity. RES. - ) FROM. 0G +0 1975’ PUA wm ‘3 q m3 mt rd See | 32493532 Page 186 , a
pores ay ata eos 2 cee ; -~@ se _ The short expression of Congressional intent found in the Act legislative history supports the view that the Agency's activities in the | , t within the purview of the Act. "As far/as confidential funds. area are no useand disposition should be ".'..in accord wee prac icable. .'! procazemen with the provisions of the Act.. -particularly so far aS common-use items " JE is suggested that a Gover: ‘and administrative supplies are concerned. ' vertly commercial, ‘Sirline used in _ support of foreign 3 aa ment-owned, but ov within a Ncommon-use items and _$ntelligence activities does not fall Similarly, ‘if the last paragraph administrative supplies" categorization. of legislative history (emphasized portion) quoted above is read in the eee (T)he act will. we - (not). . negative, the proposition becomes cleax. _govern.. “W8). oe compliance with the act and submission to the jurisdiction impair or affect the authozity! of the! several of the Administrator will... bsection applies ; as to interfere with the operation agencies to which the § subsectio of their programs. a Were the agency required to to comply ty with t the. i Act and submit to the jux tion of the Administrator in the exercise : | 5 s confidential fands authority, not “only would that autho: rity be secapaixe ox affected, put raany of the Agency s most significant statutory authorit tie na responsiDilst ties would be frustrated vet an 1995 | HW 50655 Docla: 32423543 | Hhee 187
t i HW 30955 Lf, “In looking at CIA's express authority to procure on a confidenti. .- oe . . . . ; 4 cs . . + . . : . . : basis and examining the nature of its implied authority to dispose, genera statements on the rules of statutory construction are helpful, For’ example: se - Na Docld: 32423532 a Where a statute confers powers or duties in general terms, all powers and duties incidental and necessary to make such lesislation effective are re included by implication. Thus it has been stated, An 9 7 , express statutory grant of power or the imposition of. a a definite duty carries with it by implication, inthe ~-° 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 ofthe ,.«  daty..:. That which is clearly implied is as mucha _ an . part of a law as that which is expressed. ' Se se : = : . og : : . ae ay . oat ra . : The ‘rule whereby ¢ a statute is, by necessary — - implication, extended has been most frequently an . 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 pur~ poses. although the city hada regular salaried attorney. A municipality, empowered by statute to construct sewers for the preservation of the public health, interest an convenience, was permitted to construct a a protectins wall and pumping plant which were unnecessaty for the proper . working of the sewer, but were essential ta > public health. Sutherland Statutory Construction E 5402. ULI 29 1975 | Orn} Page fies fh . —_ oo . ar
Similarly,. _ a a CO , 2. (ijt has been held that an express statutory a 7 ‘grant of a right, power or privilege carries with it by implication, in the absence of a limitation, alk et ‘the means that are usually employed.and that are a necessary and proper to the exercise or enjoy rent of the right, power or privilege granted. In such ae case, the power necessarily implied isapaxtof' . - coe the legislative act. There is even authority in . Cn support of the rule that powér ina statutory g grant may be implied although it is not indispensible. to : Ss the exercise of tne powers g granted. o2, 90 Am. Jur.; a a _ Statutes § 428. oe fo : Cases which speek to the subject of implied statutory oe are abundant. ‘to Schmiedig cenv. Gelebrezze, Judge Holtzoff held t that: ; Mijtisa well established principle of statutory construction that every legislative’ enactment must receive a ‘sensible and reasonable « constructioz . ° ao fe that would ef fectuate its purposes. Tf a strict, Literal intexpretation woul: frustrate the objective of the législative body and vould lead to an absurd it rust be avoided." 245 Fr. | Sopp. "825, a7 a (1965). Ta or fatile re sult, U. S. v. Jones, where a statute gave federal officers the power.t to enforce an ta i nate « but was | silent on the powex to arrest the court 7 8 compliance with the law . stated: So, though the texra arrest is not ‘used in the - - statute, the lenguege employed necessarily implies . NE that s such power was included. wi 5018 . | og SECRET wee HW 50955 Doclda:3 rh “Page 189 Ve
Necessary implication refers to a logical a necessity; it means that no other interpretation © - is permitted by the words of the Acts construed; - ‘and so has been defined as an implication which "* " yesults from so strong a probability of intention. that an intention contrary to that imputed cannot be suppoxted. The term is used where the intention with regard to the subject matter may not be mani- . fested by explicit and direct words, but is- ‘gathered . by implication or necessary deduction from. the. ; a - a circumstances and the general 1 language. rs Consequently that which is implicd in a statute is.” as mucha part of it as. that which is expres sed, for a stal utory grant of a power carries with ut, by implication, everything necessary tocarry = — 7 -_ . ‘out the power and make it effectual and complete. °°. - .204 F.2d 745, 754 (195 3); certiorari denied, SO 98 L. Ed. 368; rehearing denied, 98 L. Ed. 404, Tv. CONCLUSION i | Adherence to the Federal Property and Administrative Services Act in disposing of the two airline corporations would do far more than impair or affect Agency programs. it would endanger the nat tional security “o which the statut tory guthorities available to the Agency were desi sgned to: f ! | - protect. The Central Intelligence Agency, ‘because of the unigue stetutory a a UCL a0 Li , ig se 7: HW 5a} 55 Docld: 32423532 Page 190 C3 327 i |
a (gxant provided it in Section 8(b) of the CIA. Act, dnd because of the unique AY nature of its statutory responsibilities, ‘possesses both the’ ‘express powe: ° » a Aad, to procure property confidentially without recourse to the Act and the ‘ implied power Lo dispose of propexty confidentially without 2 recourse to tk RESPECTFULLY SUBMITTED | Gary M. Breneman _ Assistant General Counsel Centtarintelligenc e Agency Vi ah QEl an 1975 a Be GTA | _ , HY 0945 Docld: 32429532 Page 191 AY Any
! 4 i . : ' i "HR 230-8'and HHB 230-1 . Concerning Regulation and Administration of . Agency's Proprietaries Ubi sn 15 | . | mag , ; , : Docldad: 32423532 Page 192 2
SECRET = 5 6 (A. ee ‘PLANS, PROGRAMS, AND PROJECTS HR 230- 3 8. ADMINISTRATIVE PLANS, LIQUIDATION PLANS, AND FISCAL ANNEXES : . GENERA (1) In the ‘furtherance of some Agency objectives it is necessary to establish, affiliation with the U.S. Government. These ostensibly private, organlza- tions which may be susceptible to-scrutiny by a variety of tax and regula- 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 8 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 GHB 230-1. : b. POLICY an | when it contributes to the accomplishment of the Agency's mission and is operationally determined to be the most advantageous means of gaining hall be to conduct secret operations or support s such operations under an cover of its overt function. “2 (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. . ¢. DEFINITIONS y (1) PROJECT. A project is a management device through which specific operational activities are undertaken to meet programmed objectives. Budgeting and financial accounta bility 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 have been authorized under a formally approved Project. Within a project there may be one or more instrumentalittes. em (3) Proprietary. ‘A proprietary is an instrumentality in which ‘the Agency -acquirés 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 buegets, 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 ment. Any influence the Agency may exert over budget formulation and Rev ised: k ‘Aude £ 1969 (464) GIOUP Y Eadluded from automatic downgrading aad declasiSeation ULI 30 1875 re BO { | MW we soaks” pootd s4apiss32 Page 193 | mi so oo i SECRET operate and support overt Instrumentalitics which do not have ostensible - tory authorities, the press, hostile elements and others, require operational (1) The establishment or “continuance of an instrumentality is justified only a & partiouer and necessary objective. The purpose of an instrumentality -. sector, domestic or foreign) for which: specific ;funds or other assets — nominee or legal entity arrangements, of less than a controlling | interest, with. the expactation of recovering some or all of its invest-_
| | A “SEORET | ot HR 230-8c(3) Y PLANS, PROGRAMS, AN).-2ROJECTS | the application of funds Isa matter of negotiation. (NOTE: Operational loans shall be handled in accordance with provisions of HR 30-9 . and chapter IX of HHB 30-1.) Bo, ; ° (c) Subsidy. A subsidy is the contribution of funds or materiel to an: instrumentality by the Agency, with the Avency acquiring no equity in the assets nor right of participation in either the income or. the profits of the entity. (Payments to foreign liaison services are _ excluded from this definition.) There are two types of subsidy: , (1) Controlled. A controlled subsidy involyes support of an instru- mentality whose income is primarily derived ‘from Agency funds . and which is therefore largely dependent upon such support. To the extent that the Agency is able to exercise control if does so. a through the formulation of budgets, the requirement for financial : -.- accountings, and the application of funds. Where a project consists . of a combination of separate subsidy and proprietary instrumen- — talities, proprietary regulations will be applied to the proprietary ., instrumentality. . ae a, (2) Noncoritrolled. A noncontrolled subsidy involves Support of an. instrumentality to which negotiated fixed-sum incentive. pay- ae (os). ments of Agency funds are made, but budget formulation and . oe toca tna, he exercise of discretion over! expenditures are at a point es- ON sentially beyond Agency control, Evaluation of performance is re a roatter of operational judgment, not: necessarily related to the ee amount of the fixed-sum payments. m, ":*¥ (a) Funding and Payrolling Instrumentalities. A funding or payrolling - “i I* .  Instrumentality is used to fund or payroll Agency activities when, for . reasons of security or cover, funding or payrolling must be accornplished > - “through an overt mechanism. The Agency has legal or beneficial owner- vue 7" ship of a funding or payrolling instrumentality through appropriate | “--" =" nominee or Jegal entity arrangements. Although these instrumentalities ol": --are proprietaries, they operate under special authorizations that may : a _ vary substantially from the requirements of this regulation and . “. "(33 PROJECT OUTLINE. A project outline is a written plan for accomplishing , . programmed operational objectives. Upon approval by appropriate au- thority it becomes the framework within which the project is implemented ° * oe : Ad. te ee ip: . . : . - HE ee TO beats 06 CaP tO anlage nya ae eee - oo eee fre Py ers - - and its effectiveness initially evaluated. - . -. . ' (4) PROJECT RENEWAL. A project renewal is the approval after evaluation : “py appropriate authority for continuation of a project beyond the period -. = s"eovered by ils initial approval or previous renewal. ‘The renewal may. a -'.*.° ypdate or supersede certain provisions of the project outlines ~ 7° © . “(5) ADMINISTRATIVE PLAN. An administrative plan is a supplement te -  .the project outline which upon approval by appropriate authority consti- -.. tutes the administrative framework within which the instrumentality is -to operate. To that extent it replaces all Agency regulations, except this . i pegulation and HR 230-9,.in the management of project instrumentalities, >. their internal activities and non-Agency employees... An administrative | . plan is required for all projects establishing and utilizing proprietaries, | _ operational investments, funding and payrolling ‘instrumentalities, and controlled subsidies. — ve co : TERMINATION. Termination is the discontinuance of a project or an : {nstrumentality, upon written approval of the Deputy Director or Head - - of Independent Office concerned.. . an 2) LIQUIDATION. Liquidation is the settlement of accounts of an instru- : mentality, the final disposition of its remaining assets, and dissolution of the instrumentality. i : : ! pas FO ‘ ‘ A : ( po MA grorer Subhen wis “Revised: 1 August 1959 (454) HW 509$5 Docld: 32423532, Phdd ist. re ae 7
re PLANS, PROGRAMS, AND PROJECTS a | AR 230-8d or “(ey DEACTIVATION: Deactivation Is the ‘discontinuance of. the. functioning fe! . Of an instrumentality, with the charter or franchise retained but in an “s - dnactive status, pertding determination as to liquidation or " reactivation of the instrumentality. . . e”. (9) LIQUIDATION PLAN. A liquidation plan prescribes the’ procedures tor ‘ implementing ‘a properly authorized operational decision to terminate . _ the Agency’s active use of a specific instrumentality and to dispose. of yt, the. Agency’s portion of the assets. An approved plan is required for . a liquidation of all proprigtaries, operational investments, and controlled . subsidies with proprietary aspects. No liquidating | action will hegin until the liquidation plan has been approved. (10) FISCAL ANNEX. A fiscal annex is a supplement to the project outline | that sets forth funding arransements, specific accounting control, ‘fi. ; nancial reporting requirements, and writeoff provisions, A fiscal annex re ‘is required for all noncontrolled subsidies. , 7 po ‘a. AUTHORITIES AND RESPONSIBDATIES - - rn rs (Q) AUTHENTICATION OF ADMINISTRATIVE PLANS, LIQUIDATION PLANS, | eT . AND FISCAL ANNEXES, (HEREAFTER CALLED SUPPORT SUPPLU- rae (a) The joint approval ot the Deputy Director haying 2 jurisdiction over . the project and the- ‘Deputy Director for Administration is required for (z) establishment, deactivation, or reactivation of an instrumentality; (2) all support sudplements and amendments thereto, including spe- “4 cific deviations because of unforeseen or emergency conditions; £3) transfer between projects of any instrumentality and remalning he ce assets. . r (») Advances of funds toan n instrumentality before approval of the related ; ; ~ - administrative plan or fiscal annex require the approval of the oe 4 ie “Deputy Director concerned, the Deputy Director for Administration, . : a pe ’.“ and the Comptroller. ee ce _(c) All liquidation plans require the approval of the Deputy Director con- oe L . “ cerned and the Deputy Director for Administration. pe, (2) ‘PREPARATION . (a) The Cperating Official having jurisdiction over the ‘project is re-. . ; sponsible for the preparation and coordination of the administrative ~~ ta plan or fiscal annex, and, when required in connection with termina- an . tion of the instrumentality, the liquidation plan. . mo oC Bete r’- (b>) Administrative plans require the concurrences of designated repre- , eT “sentatives of the General Counsel; the Director of Finance; the Comptroller: the Dircctor of Security; and the Chief, Cover 2 and Commercial Staff. Liquidation plans require the concurrences of the designated representatives of the General Counsel; the Director of Finance; the Chief, Cover and Commercial Staff; and in addition, the Comptroller for those liquidation plans involving the disposition of assets with an estimated market value in excess of $50,600. Tne assistance and counsel of other offices will be obtained when their -functional responsibility is involved. - (c) Fiscal annexes require concurrence of the Director of Finance and the “h _ Chief, Cover and. Commercial Statf. | amtevised: 29 October 1974. (840) es rane - 16.1 re peo, ' SECRET CL By: 059437 . L co HY 509 15 peord:32429502.-1 Page 195 ad
SECRET -, _ HR 230-8d(3) 7: PLANS, PROGRAMS, "AND PROJECTS . 8) PERIODIC REVIEW AND “-REAFFIRMATION. The Operating Oftclal © _ responsible for the project will review each approved administrative plan or fiscal annex at least once each year, coincident with considera- - tion of renewal of the project and will either (a) affirm in writing to the responsible Deputy Director that the previously ; approved provisions remain adequate and valid; or. ; - (b) Initiate appropriate revision when changing circumstances aletate the need. _—— Poe oo Revised: 29 October 1974 (840) eg fF 50955 Docld:32423532 : Rage 196 ee
HW 50955 BDoold: 324249532. PLANS NLA -Rescission: -16 March 1973 ; “ROGRAMS, AND PROJECTS FOREWORD - -HHB 230-1 dated 1 fugust 1969, 10 January 1973, and This handbook incorporates the Agency procedures pertai to the administration of project instrumentalities that will be followed in carrying out policies prescribed in HR 230-8. - FOR THE?* DIRECTOR OF CENTRAL INTELLIGENCE: DISTRIBUTION: SPECIAL uul a Revised: 29 October LO74 Page i97 JOHN F. BLAKE ‘Deputy Director oO for ' Administration E2  IMPDET S-E-C-R-E-T CL BY: 059687
- uch on 1975, UIA. Revised: 29 October 1974 Docld: 32493432 Page 198 ‘plans procs, A “AND PROJECTS ‘CONTENTS Paragraph 1. PURPOSE. 2 2 ee ee eh ew ee ee ee ee ee: . 2. GENERAL... ..- ew eee as Lk ee ee : 3. _ ADMINISTRATIVE PLAN PRESENTATION wee ee ee . a STANDARD PROVISIONS AND REQUIREMENTS OF ©. ADMINISTRATIVE PLANS wee et ke ‘eee es a. BUDGETING. .... rere es b. FUNDING. . 2.2 2 6 6 ee ee te we ww ew ee c. REFUNDS. ... « e015 2 © © © © ee eee d. AGENCY CERTIFICATION AND APPROVAL. . 2. 6 « "e@. ACCOUNTING IN AGENCY RECORDS . - - es eee f, PROTECTION OF U.S. GOVERNMENT INTEREST . . ges PERSONNEL POLICY ..- + +++ es h. INSURANCE COVERAGE . . - 2 2 © © © 2 ce i. CASUALTY PROVISION. - 2 - + eee eee -k.. SECURITY POLICY. - - 2 eee ees ee ww ew we 1. Not used - re . om, AUDIT. 2. 00206 8 ee ee ee te a ee n. FINANCIAL ACCOUNTING AND REPORTING . wee 0. . BORROWING, LENDING, AND PLEDGING OF ASSETS . - p. INVESTMENT POLICY. . . - + + se ee ee tes a _qe REAL PROPERTY AND OFFICE FURNISHINGS ... a yr. LIMITATION ON INDIVIDUAL DISBURSEMENTS AND CONTRACTUAL ARRANGEMENTS . . ct ee ww ee S- SPECIAL ADMINISTRATIVE EXPENSE POLICY. we ee Le , TERMINATION AND LIQUIDATION. - . «es + ee ale 5... CONTINGENCY CASUALTY PLAN. 2-0 eo elec ue le ee. 6. LIQUIDATION PLAN «2 ee ew ee ee eet te wees 7. | FISCAL ANNEXES . 2.0. + = ee ee ee kw ew le ° “ g. GENERAL. . 2. 6 ee 2 eo ee ee ee ee ee es -b. ACCOUNTING PRINCIPLES ce ee hee ea we we > ©, FINANCIAL STATEMENTS 2 2 2 ee 2 ee se ee 8 ee -d. USE OF CERTIFICATION AS EVIDENCE OF FULFILL? (ENT . , OF THE PURPOSES FOR WHICH FUNDS WERE ADVANCED .. OS -@, USE OF CERTIFICATION FOR OPERATIONAL REVIEW. 2) eo o£. FINANCIAL DATA FOR OPERATIONAL PURPOSES. ..... -_ ROM g. . REIMBURSEMENT FOR OPERATIONAL DEFICITS eet ee a h. | FORMAT OF FISCAL ANNEXES... 2. 6 2 ee ee ee ee os B2 _INPDEI e 9 @ @ a a e r 4 (OW RDONADANUUNY re nararacw
“le ok “ . sae Pees | ee pensnnees 100 sn saraciad iba tte ome er” en dee Set eee sete tc “1 FROM Ma ay 1975 Hv 50 55 Docld: 3242308 ‘Page . ( '  S-E-C-R-E-T PLANS, PROGRAMS, AND PROJECTS = " UHB 230-1. - - SUPPORT SUPPLEMENTS FOR AGENCY INSTRUMENTALITIES _This handbook sets forth mridance for developing support supplements: (administrative plans, fiscal annexes, and liquidation plans) governing Agency instrumentalities, as required by. HR 230-8. P 2. GENERAL: BF an re pee LoS Properly approved support supplements modify or waive specific provisions of Agency regulations except HR 230-9 and, in lieu thereof, set forth the provisions for special authorizations and management control Of - instrumentalities in the conduct of their affairs. They are designed’ to promote wo , a a a a. the most éffective ‘management, to include staffing of eacht mentality with personnel qualified to manage it in accordagce with? Agency objectives, under sound personnel policies and prac#ices; ‘. b.- ‘the. establishment of an effective budgeting, accounting, and re- porting system that will produce accurate, timely, and useful re- ports of financial status and financial results (OF "the operations of each’ instrumentality no. rr Te ‘c.. the ‘establishment of an accounting system for ‘the instrumentalities that is compatible and reconcilable’ with Agency financial records; d.: the highest degree ‘of cover and security compatible with’ the overt _- character of each instrumentality and its operation or support . objectives; . the effective Agency control of funding to, and 5 assets held by, the. instrumentalities; the orderly deactivation or Liquidation Of. any instrumentality that has ceased to be of operational value to the Agency. 3. ADMINISTRATIVE PLAN PRESENTATION The administrative plan presentation should consist of (a) a memorandum requesting approval of the administrative plan by the Deputy Director having jurisdiction over the project and the Deputy Director for Admini- stration; (b) the administrative plan (usually drafted by the support. ~ element in the operating component concerned); and (c) a concurrence sheet evidencing concurrence in applicable. provisions of the adninistra- tive plan by the designated representatives of the General Counsel; the Comptroller; the Director of Finance; the Director ‘of Security; the . ft vised: 189 October 1974 ; | | | os "2 TAMA?
a i Se agg ae iN S-E-C-R-E-T a, a ——- fo 7 HHB 230-1 LA | PLANS PRUSRAMS, AND PROJECTS ° Chief, Cover and Commercial Staff; and such other Agency components whose functional responsibilities are involved. The memorandum should state the project's operational objectives, the reason why it is believed that an instrumentality is the most advantageous means for attaining the objective, the type of instrumentality to be used, funds approved for the current year, funds programmed for the ensuing fiscal year, and, in the case of a revised plan, a statement as, to the need for the revision and funds expended for the past two years. coe : 4. STANDARD PROVISIONS AND REQUIREMENTS OF ADMINISTRATIVE PLANS ° » Standard provisions and requirements of administrative plans are listed . below. A single reference may be made in each administrative plan that the provisions of HHB 230-1 are applicable. . Substitute or additional . . . provisions may be included in each plan to the extent necessary wherever ‘the standard provisions and requirements are not applicable. — :-. DGETING a co Work is . we Carlet i Boss be (2) . Purpose « : . _ : we ; . . os a ae wa : nde pee 7 oo “OD eae ise ‘The “approved annual operating budget’ for a project provides |” “the means td integrate it into the planning and budgeting “septs wv. system of the Agency. .The process for the. annual renewal of a “project permits the appropriate Deputy Director, through his _ review, evaluation,. and formal approval of the project and its . operating budget, to authorize the continuation of the activity, Coke under which funds may be advanced, controlled, expended, and accounted for, within the terms of the approved operating budget of the project. The approved operating budget of the - project provides a basis for an objective evaluation of the real (total} cost of the activity, to include: . = » Clear identification of funds either available or presumed --to be available to the project (or instrumentality) from all sources during the period of the proposed .operating -- '... budget, which will include = ee QQ) any prior-year funds (beginning cash balance, in- | “ - eluding liquid assets); . Se (2) other U.S. Government (non-CIA) funds; ony @ other CIA funds; Te ~ (4) all other income; el an 18S oo ee ae need : . oo (5). the new funds requirement of the projec* (from G iy | . current appropriation). — mt 90945 Docld:32423532 Page. 200 . oo ‘Revised: 29 < .cot... 1974
_ PLANS, PP RAMS, AND PROJECTS i oe | a 2 cr - See HEB 230-2 A (b) Proposed Expenditures . Clear identification of all proposed expenditures 1 re~ quiring cash, broken down in sufficient detail to separate @ fixed expenses (overhead) ; and @ “operating expense. tc) Estimated Cash Balance at the End of the Fiscal Year (2) _ Preparation bee (a) Operating budgets are : to be prepared annually for. each .. | approved project, with a detailed breakdown for each - instrumentality. The budget will cover the past year ‘(estimated obligations), the current year (propos a forecast for at least the next year's operationg rin’: “(4% U2" agreement with the limitations contained in the reevant,. FoL97 22 operational program. The categories of expense wi#l be iG. ivesuc consistent for.all years and, will follow the general .° = wid vsvclassification of accounts in.its prescribed accounting '- reports, to facilitate comparison and: justify increases’ ~ or decreases (overhead: vs. operational; stateside vs. 2) - overseas ;. salaries, travel, etc. 5 as 2pplicable). | Scheduling of approvals of operating budgets will conform . with the schedules established by the appropriate Deputy ‘Director for. annual project renewals, , 4 a. om ere -(c) ‘The Office of. the Comptroller is to be provided a “copy Of _ the approved operating budget for the project pamediately - following formal approval by the appropriate Deputy Director. .. This requirement also ‘pertains to any subse- quently approved revision of the project operating budget. @ Instrumentalities generally should be provided with cash not in excess of three months' normal operating cash requirements. (BOM Further funding of any instrumentality should be deferred 7 mre whenever available funds exceed this limitation.. If substan- | . oe . tial amounts above this limitation are. on hand, the instreen- wt 301915 - tazity should be required to return the excess to the Agency. ~ | ( Revised? 29 October 1974 ce | 7 as EQ IMPDET -S-E-C-R-E-T. CL BY: 059687 HW io Bocld: 32423532 Page 201 .
HHB 230-1 . \Y PLAN. FnUGRAMS , AND. PROJECTS Se (2) Funds in any instrumentality that are in’ excess of normal operating requirements may be held for operational purposes when justified by the appropriate Operating Official and when- approved by the Deputy Director concerned and the Deputy Director for Administration in the following circumstances: (a) In order that the instrumentality may present periodic — financial ‘statements reflecting substantial cash balances _and- investments for the purpose of strengthening cover ° . and providing the appropriate stature in the commmity of its operations _ a oe oe . a (b) To permit the instrumentality to make investments for the -ate. «#1: purpose of providing income in such amounts that will “0, :: slend the appearance for cover purposes of not having to + +o.; : rely solely on periodic contributions throughout’ the year (Agency funding) © «-. 5. a: often gy i 3 ‘ tea canteen corey Artec vas Te 0 Df hen Pores : a +. -(é)...To provide the instrumentality with fumds for any aft "1. sty rusually large. anticipated disbursement(s) in order to - “>. asiypreclude undue attention which might be created by in- RD Eas rt &.jectioh of a large amount of: funds and.their immediate Oe Cgesatton fe withdrawal Jtgter.: ege. flepkogo jefieret ol: ae wee ree . af oe > .. oo wy , wet Pte Funds, as needed, will be made available to an instrumentality _ - + through various appropriate funding mechanisms in coordination .— ee Jhre, . with the Cover. and Commercial Staff and the Office of Finance. its bank account(s) whose use and authorized signatories have _ been approved by the Operating Official responsible for the . project. Dual signatories are preferred on all bank accounts. (4) “All bank accounts established by instrumentalities will be. “a... veported to .the Office of Finance when opened, or notice | -’ thereof will be included as a part of the first financial report submitted by the instrumentality covering the period in which the bank account is established. Data reported will dnclude the name and address of the bank; names and titles of © signatory authorities; the reason why an accoumt is operable _ only by a Single signatory, if-such is the case; and whether the signatories will be covered by a fidelity bond. Bank © accounts normally will be in the name of the instrumentality umiless deemed operationally inadvisable by the responsible Operating Official, reported and explained concurrently to the ‘ Director of Finance for review. If the bank account is to be m -.% "in some other name, appropriate protective control documents “‘swill be executed. Los. ks GI en 1975 4 of, . - Revised: 29 October 1974 uw 50p55 Docld:$244$3532 Pa " : e 202 : ‘ 9 5 -E-C-R-E-T Ai funds received by the instrumentality will be deposited in © .
S-E-C-R-E-T a PLANS, PROGRAMS, AND PROJECTS = an HB 230-1. (5) Requests for advances of funds to instrumentalities must <indi- cate (a) the specific purpose of the advance; (b) the identity - . 1. Of any intermediate instrumentalities used to introduce the -.. funds; and (c) the accounting treatment to be given the funds in each receiving instrumentality,. as well as any other infor- mation that will assist in the clear identification of Agency funding on overt records and statements. . hee - -'(6) ‘The concurrence of the Director of Finance and the Comptroller .: ‘and the approval of the Deputy Director concerned. are required oo) un: for a transfer of funds to be.made between instrumentalities © 2 sn “ref different projects. Excepted from this requirement are © st .-transfers involving payment for actual services rendered, slcuta-: . reimbursement of expenditures made in behalf of the trans-. mitting instrumentality, _ ‘or accommodation funding. | ta wets rae ‘o> we -Q): or “refunds ‘from Gnstrumentalities: to “the “Agency ; whet x ae ? permanent or temporary, must be explained by a memorandum ‘ey oolFistating :the purpose of the refund and the effect of the refund on the overt records and statements of the instrumentality. ier te -,°(2) - In the ‘event funds are to be returned to the Agency under | wt ‘paragraph 4b(1) above, the Operating Official having juris- ” of, . diction over the project will.devise the method of repayment Seer in coordination with the Director of Finance and the Cover and ut ‘Commercial Staff. Co eet tats d. “AGENCY CERTIFICATION AND APPROVAL a: .- The project: case . officer will review financial statements submitted '. by the instrumentality (see pa aragraph 4n(3) below) and attach his _.locertification that ''to the best of my knowledge and belief the — ' \ statements are true and correct and the reported expenditures are - within the scope of the project authorization." .In addition, the ' financial statements will be approved by an appropriate Agency. approving officer and forwarded to the Proprietary Systems Branch,. Office of Finance, at the earliest possible date and not later than sixty days after the close of the accounting period; extensions of time will be granted by the Director of Finance upon appropriate ‘and reasonable request. Approval procedures for the writeorf of . _ assets are outlined in HHB 30-1 chapter VIII for cash and receivables EDA ana HR 45-6 for inventory or property items. A copy of the financial ra statements will, be forwarded to the Office of the Comptroller. UO an as When the instrumentality is funded by more than one Agency component, the case officer certification and approving officer approval o£ - Cj such components also will be obtained. im NW 50955 Docta:32a2PesdS@dye AB™DCtober 1974 _ “ E2 IMPDST >
| Ge el | at HW 50955 DocId:3 HHB 230-1. Ae e. £. apo , ov srg? classified, and will be: prepared by the Office of the Genek “$-E-C-R-E-T . 7 \ , | PLANS? ACCOUNTING IN “AGENCY RECORDS The Office of Finance is authorized to accept the. financial state-— “ments referred to in paragraph d above, for appropriate recording in the Agency's system of accounts. — co, PROTECTION OF U.S. GOVERNMENT INTEREST” “(1 In the case of a stock-issuing instrumentality, all purely -nominal stockholders (as specifically differentiated from SRE EL Agency-controlled holding companies or non-Agency connected .. | BLE “= beneficial :shareholders) either will endorse in. blank at time — “,.¥o£ issue the stock certificates. issued in their names or (2), In the case of a nonstock-issuing instrumentality, control - documents protecting the equity or other interests of the } " Agency will be executed. Those documents may be overt or ; ° “x Counsel. . The classified documents will be executed on behdl£ +: 6£ the Agency by.the Special Contracting Personnels! fe tleivissn AEA sl aot PES Soe Ee wer (3) / The executed stock. certificates, irrevocable stock powers, ‘+ > - declarations ‘of trust, memoranda of understanding or other . “control documents evidencing Agency equity or interest in instrumentalities will be forwarded promptly to the Propri-. © etary Systems Branch, Office of Finance, for recording and custody. . When such documents need to be retained by an in- strumentality, the reasons that necessitate such retention . - will be reported to. the Proprietary Systems Branch, Office of Finance, by the Operating Official responsible for the project. “This report will detail the documentation retained and the lo- cation and type of safekeeping facility in which.it is held, - and: include a signed statement of the custodian acknowledging --: responsibility for the doaments. When possible, copies of “1. the documents will accompany this report. 22 0. 2. say vet ig. PERSONNEL POLICY (1) Unless covered in the project outline, certain personnel data must be included in the Administrative Plan. This should set forth a table of organization, salary scales, benefits and allowances to be provided, and a statement of key personnel selection procedures. Such data will be reviewed and approved 8 £ MS byjthe Director of Personnel. | oy Be J | . 7 i VEL oA 1975 | 7 es i 4 LebPo Page 204 Revised: 29 October 1974 TLC -R-B-TL PROGRAMS, AND PROJECTS - : execute an irrevocable stock power covering the stock issued... Officer, Office of
(2) (4) (5). UT 30 iS HW 50955 Docld:32423532 Page PLANS, PROGRANS, AND PROJECTS EB 230-1 (3) ‘have been reviewed and approved by the Deputy Director con- 2 be subject ‘to approval by the Director of Finance. . ye aye NCE COVERAGE a - OS og En eo K. WLLL be. coordinated with the Cover and Commercial Staff for "implementation through MIMUTUAL facilities or through an . 204 4h. Neither salaried employees of instrumentalities nor persons engaged by instrumentalities in other than an employee status» will receive pay in excess of the maximm rate of a GS-15 unless approved by the Director of Central Intelligence. © No commitment regarding benefits or insurance coverages will be made to personnel of an instrumentality’ until such proposals . cerned and the Director of Personnel. If cover employment is to be provided Agency personnel, such . action requires prior coordination with the Cover and Commercial _ Staf£ on an individual basis. . The employment of an individual who will be responsible for the maintenance of the instnmentality accounting records will The insurance program required by proprietary instrumentalities ~ ‘alternate method agreed upon by the responsible directorate and the Cover and Commercial Staff. Insurance coverages provided through NHMUTUAL include, but are not limited to, .. workmen's compensation, aviation, marine and other equipment — ‘coverages, property damage, liability, fire and extended coverages as well as those personnel coverages referred to — below. — OS All staff and contract employees as well as detailed civilian - and military personnel assigned to a proprietary instrumentality. are entitled to the statutory or contractual insurance bene- - fits applicable to them by reason of their Government employ- ment status. All personnel directly hired by a proprietary — instrumentality are entitled to. the following: (a) Life insurance and commitments for death and disability | ‘benefits in the performance of duty in. accordance with HR 20-49. Fo Ts SO "(b) Retirement pension and annuity benefits if approved by the Director of Personnel. (c) Medical and hospital insurance benefits if approved by the Director of Personnel.. MIMUTUAL does not normally either directly underwrite or reinsure these coverages, ‘put the Cover and Commercial Staff will provide advice’ and assistance upon. request. : : . .
Ok SECURITY POLICY. , . a; eae oe “1. Not used m. | AUDIT | PLANS “PROGRAMS, AND PROJECTS i. . CASUALTY PROVISION See paragraph 5 below. : oe a js. LEGAL SERVICES ee “The Office of General Counsel at all times will: be kept advised of ‘the current status of the legal requirements of the jnstrumentality | and will be responsible for accommodating its legal problems and . |. for approving the use and the fee of. outside counsel. Any attorney ‘used by an. instrumentality will be selected or approved by the . Office’ of General Counsel. rr ee ay to . statement in the Administrative Plan outlining the securl requirements. This should include the types of operationalg¥se- 5! curity approvals; physical and document security controls; BL Wy. :. © contact and commimications procedures between the instrumentality . “sisi Vand the Agency; security indoctrination of personnel; procedures ety 8 for periodic review of operational security and related matters “* by CI Operations; emergency procedures, if applicable; and ' ‘requirements for storage of classified or sensitive material. a me (1) ‘Unless covered in the project outline, there should be ook ple .. (2) An instrumentality will be managed in a manner consistent with ‘" -  -its overt purpose to avoid disclosure of its true nature and “the Agency's connection with it. No non-Agency person will be made witting of the true nature of an instrumentality without prior approval by both. the Operating Official concerned and _ the Director of Security. All persons considered for em- “ ployment. in an unwitting capacity also will be reported for . approval, with appropriate biographic- information. The respon- “sible directorate may establish additional requirements and ‘procedures ‘as required. So ae wey ee — An audit program will be developed and implemented in accordance » with the requirements of HR 31-1. -The prior approval of the Chief, ‘Audit Staff is required for the employment of either witting or un- ‘witting public accountants for audit: puvposes. - ULE 89 ITS vo mo Revised: 29 October 1974 ee rr HW 50955 DocId:32423532 tage /An6
re 7 8 PLANS, PROCS, od PROTECT | ON MHB 230-1 : en Fs — mo 4n n. FINANCIAL ACCOUNTING AND REPORTING (1) The, instrumentality will maintain an accounting ‘and a financial '  yeporting system consistent with the dictates of cover and security and approved.by the Director of Finance. (2) The accounting system will provide . (a) full- recording of the financial. operation of each instrumen- a tality. | ; . (b): “control over and accountability for all funds, "property, -- .. and other assets for which each, instrumentality is re- Bhai: Sponsible;. , a ns ae Perea ~~» (e) information required for integration of. instrumentality Tete accountings into the accounting records of the Agency; “any other. Financial or cost information required Sr Loy _effective management of the instrumentality by. the Te- a sponsible Operating Official. oO ©), The instrumentality will submit ‘the following financial "State “ments, and related data on. at least a quarterly basis: (@) Balance Sheet. cS i . ans ca . - we (b) Statement of Incone and ‘Expense. . (ce) ‘Summary Statement of Cash Receipts. (d) Summary statements of each transaction in Certificates a of Deposit and interest- bearing accounts. an (e) Schedule of salaries paid to Agency staff and contract ae personnel. ce, Doo, : -(D. Schedule of salaries ‘and expenses, classified by general . '+  eategories, paid to directors and principal executives of -the instrumentality. . ; (g) Schedule of cash in bank accounts with certification that - reconciliation with instrumentality accounts has bee made and reviewed. “FROM (h) “TE an asset has been written : off during the reporting _period, a schedule also will be included with the fi- —-Oet an 815. os nancial report describing the item(s) written off and the. a "circumstances that support the writeoff action. | Write- ( 7 (| FN = . off action is subject to the approval procedures in ws oo HEB 30-1 chapter VIII and HR 45-6. ‘poeta: 3242 Revd Sakis tober 1974 a : 9. HW 50955 Docld:3242Re¥a Sa@dge 29,,0cte oS ps parr |
wep ceo eel 20 1955, ahhh eS ES ee 2S PLANSy-PROGRAMS, AND PROJECTS @ Any other financial reports required by the Office of - Finance and concurred in by the Agency component re- ° . ' sponsible for the project. as, ms (4) The statements will be certified as true and correct by the - principal agent of the instrumentality. The statements will clearly reflect Agency funding for the period covered, or such funds will be identified in a covering memorandum signed by ° the appropriate Agency approving officer transmitting the _ statements to the Office of Finance, including specific identi- — fication of the manner in which the fimding. is recorded on the : books of the instrumentality. In addition, the. covering memo- --randum will identify all fictitious accounts and amounts in-- ' cluded in asset, liability, capital, income, or expense accounts, fois the balances of which are distorted to cover present or antici- “+. pated Agency funding or interproject transfers of funds or .. equipment. If overt records must be deceptive for cover a4 purposes, supplemental reporting should give complete and - 243 is accurate information for internal. Agency records. Me "— spaneseatle agus gi 7 | * BORROWING, LENDING, AND PLEDGING OF ASSETS... eeets oo i GH ep Gd oad ply iPee yygiede Susvseith oat “The prior: concurrence of the Director of Finance: and approval of the Deputy Director having jurisdiction over the instrumentality | _* are required, for borrowing or lending funds or pledging any asset by an instrumentality, -Bank overdraft: privileges will be con- ' sidered as borrowings and require the same concurrence and ap- proval as stated above. Notional borrowing or lending in order to | pass Agency funds: between instrumentalities for approved funding purposes does not require the above concurrence and approval. wig 22 7. Shs Dw AD we Re INVESTMENT POLICY 2) When an Operating Official wishes to invest funds that, have _ been approved for retention in accordance with paragraph 40(2) above or funds that are a portion of the three months normal. . operating cash requirements, he will forward to the )irector --..9£€ Finance for his approval a niemorandum recommending the investment of funds. The memorandum recommending the in- vestment of funds will provide the following data: (a) Reason for the investment. ariel Types of investment recommended, restricted. to the following: LOWE Ss = . So - (1) U.S. Government securities. | . . (2) Interest-hearing accounts or Certificates of Neposit in member banks of the Federal Reserve System only. e Docld: 32403532 Page..208 7 . Revised: 29 October 1974
OCT en 195 PLANS, PRO S, ‘ND PROJECTS | HB 230-1 . / AG @) [ a9 ‘Y. A { (3) Non-U.S. Government securities; list specific issues recommended for purchase. - oo, - . (c) Maximum amount recommended for’ investment, in each. ‘type. _(d) Length of time investment of funds is anticipated. —(e) ‘In the event of investménts insecurities, state the name | . 2 in which they will be registered and the type and location of safekeeping facilities to be used for the securities. After initial approval of the Director of Finance, the instru- .. mentality may, at its discretion, make continuing investments . .: in U.S.. Government securities or in interest-bearing accounts : or Certificates of Deposit of approved bank{s) having maturities @ - The lease oF real property, requires “approval of the ‘aesignated . Agency approving officer for the project concerned. Purchase,’ of one year or less. Each purchase of Certificates of Deposit having maturities of greater than one year and each investment - a: in non-U.S.. Government securities must have prior approyal of xf the Director of. Finance and the Comptroller. yn. e- PROPERTY AND OFFICE FURNISHINGS. eo. 7 a4 : . construction, improvements, or alterations of real property (except improvements or alterations included in approved -operating budgets) require approval of the designated approving officer for the project concerned and, in appropriate cases, the technical authorization of the Director of Logistics. (The component responsible for the project will maintain a ‘record of real property held by the instrumentality, including” . the following information as applicable: country or state of location; type, i.e:, purchased or leased; Size, l.e., square footage of building and acreage of land; purchase price; - permanent improvements or alterations totaling $1,000 or more; annual rental and term of lease, unless the property is acquired _. for less than 12 months and the rent does not exceed $250 per. “+ month. This information will be made available to the Director (2) of Logistics upon. request.) The ‘pr rocurement of office furnishings. not included in approved “operating budgets requires the prior written approval of the. Operating Official responsible for the project. Hsnnxrtos ON INDIV IDUAL, DISBURSEMENTS AND CONTRACTUAL ARRANGEVENTS _ Except. for funding transactions, any disbursement in excess of $5,000 or contractual arrangement of more than 12 months’ duration requires the prior approval of the designated Agency approving officer for the project concerned. 7 Revised: ds 32495532 29 October 1974 a Co oY nt - E2 IMPDET Paye 209 . > O-R-C-R-ReT CE PY: NSaKR7. *
ot | °°) HEB 230-2 , 4s a Po @ - ol, (2) _ MEL ag 1975 ee | u | A : > instrumentality. “-Qperational entertaimnent expenses incurred by ao above personnel will be reimbursed on an-actual cost basis} in ©. ./. “- operational objectives. Be, cP eas a spy the project or a part thereof. operations cease. | Wo 5. SPECIAL ADMINISTRATIVE EXPENSE POLICY Travel and. subsistence expenses incurred in behalf of the 7 instrumentality by authorized representatives will be paid on the basis of actual and necessary expenses. When actual and “necessary expenses exceed the maximum allowable rate established - for reimbursement for actual expenses undér. HR 22-7, the claimant will provide detailed justification. Authorized —. _ representatives may include stockholders, officers, directors, . . employees, any individual retained in a professional or inde- pendent contractor capacity on a fee basis, and staff agent or “ - contract personnel wholly integrated into the project. Air - transportation less costly than first-class will be used to- the extent practicable. When first-class fares are paid, such © payment will be justified in writing in the files of the vany of ue! wo the ® . 2. accordance with HHB 30-1 chapter IX, to the extent that such expenses are reasonable and necessary to the accomplishment of art Teo Lote etd ook : “ . LE ave oD eee, te - Directors of instrumentalities may be paid upto $50 per aay, -and travel and subsistence expenses for their attendance at directors! meetings, except that the payment of $50 per day ‘will not be allowed to directors having an employment. re- a jationship with the Agency or with the instrumentality... Expenditures authorized in paragraphs s(1), (2), and (3) above - will be reviewed at periodic intervals by the responsible case . officer to evaluate the necessity for such expenditures and: - their reasonableness. --- - - 8 ee re ~" t. TERMINATION AND LIQUIDATION co ey The Administrative Plan will provide that when a proprietary. project or part thereof ceases to have operational value or - will cease to have such value in the immediate future, the . responsible Operating Official will prepare and submit to the - Deputy Director concemed for his approval a proposal to SC The proposal will set forth any conditions or considerations that have a bearing on the decision to discontinue the project or a part thereof and include the date that it is recommended The. liquidation plan will be prepared in accordance with the provisions of paragraph 6 below. — ee ee ae . . Ls HW 50055 DocId: 32433532 Page 210 . so a Revised: 29 October 1974
“SePE CER ! PLANS, PROC {S, AND PROJECTS HEB 230-1 (4) ‘If the proposal includes deactivation of any project instru- ' Mentality, together with a disposition of a’portion of its assets, the memorandun will set forth, in an attachment, in- formation concerning planned disposition, after settlement of - obligations, of cas h and noncash assets of the instrumentality. The plan for partial disposition of assets requires the same approvals as a liquidation plan. Se CONTINGENCY CASUALTY PLAN A contingency. ‘casualty plan should be prepared for instrumentalities if. | required by HR 20-49. ; 6. LIQUIDATION PLAN an ogee ok a Sa ae Ak ee begat. T neee aaa “aes _ When the Deputy Director concerned has. approved Liquidation ‘and dis- a solution of a project instrumentality, a liquidation plan will be developed by the responsible Operating Official to cover liquidation of the assets ~ and liabilities of the instrumentality as required by HR 230-8 and in, _ accordance with the format and substance set forth below. It will be = | . forwarded for approval. as provided in, HR. 230-84. “al “Pdeatd fication of instrumentality(s) to be liquidated | - bd. __ Approval for termination (cite approved proposal as required in , ‘Paragraph 4e(1) above) ob c. in concurrence sheet showing concurrences in the applicable pro- _. visions of the liquidation plan by the designated representatives of the General Counsel; the Director of Finance; the Chief, Cover and Commercial Staff; the Director of Logistics, when real ‘and personal property holdings are involved; other Agency components. when their functional responsibilities are involved; and the _Comp- troller when assets of an estimated market value. in excess of © $50,000 are involved _ ae _ de: Financial ‘Statements Furnish a current statement of assets and liabilities, and.a pro- _jected statement of assets and liabilities at date of termination to include terminating expenses. os RECT oper rpy Method of Liquidation te _ ' (1) Party responsible for actual Liquidation. Explain how Liquida- OCI an 1975 tion of the instrumentality will be handled, such as by princi- Ae pal agent, Cleared and witting attorney, etc. a ( UL i hh . : a . : Revised: 29 October 1974 SF 13 . . E2 Ite PDET. S-B-C-R-E-T™ cr By: 059687 : | | HW so955 Docld: 32423532 Page 211
atts het cet “i HEB 230-1 a oo, PLANS, PROGRNS, ANU PROJECTS. i i are a ° ( . SR Se , ; a (2). How will the instrumentality be disposed of? (a) Will it be disposed of intact? If so, by bid, negotiation, . gift, etc.; or BS oe (b) Will the instrumentality shell be ‘transferred | to another. Agency project; or ae “2 Prat Fas ae FORT cia Bae sere SE 9 Ren rset mtemartn O s (c) Will the charter be terminated; or. ' (d) Will the instrumentality continue to operate without ~ Agency participation; or : So ae J EET OT oe att _ (e)- Will ‘the instrumentality be deactivated: but retained i in a I. So dormant state for future possible use? | Hos fe Requirement , “ie any , ‘for additional funds to ‘cover Liquidation and “2 estimated date of financial liquidation ee es . : oe g."” Disposition of ASsets and Liquidation | (1) If the instrumentality is not to be sold intact, how will” ; mnoncash assets be disposed of? By bid, ‘negotiation, transfer to another Agency project, ‘gift, etc.? - OS ~ (2) Include a positive recommendation to be developed in “consulta- tion with the Director of Finance for the disposition of all _ cash assets including funds recovered or realized through the : liquidation process. : h. | Final ‘Audit The plan should provide for a final audit before the instrumentality is liquidated or sold. : 7 4. Authorization for adjustnent of Agency ginancial records’ for profit :or loss_ LO oo, , ee | A positive statement ‘that the Office of Finance is authorized to . _ Make necessary adjustments to the instrumentality's investment ~ account based on the final Liquidation financial Statement “9. FISCAL ANNEXES a. GENERAL “Use of the Fiscal annex is based on the principle ‘that account ing requirements should be determined by the nature of the relationship - between the instrumentality and the Agency, the degree of control | RECS pee: 0H Oo, Pieja 8. JAY Wi Revised! 29 October 1974 OU 8A ts , Gf-CeR-E-T HF 50955 Docld: 32423532 Page 212 SECRET
- PLANS, PROGR/ oo PROJECTS NB 230-2 _ ar Ne se 7b mS exercised by the Agency and, finally, the availability of meaningful -accounting data within the instrumentality: In -this light, fixed, pro forma aécounting requirements are not sought; rather, each case will be approached. individually through the fiscal annex With a ‘view to establishing accounting requirements: that will assure that ‘use of Agency funds is controlled and adequately documented to a depree consistent with the nature of the instrumentality. and its relationship with the Agency: A fiscal annex 1S: ‘Tequired for all noncontrolled ‘subsidies. y See Det oy b. ACCOUNTING PRINCIPLES _ | The purpose of the fiscal : annex 1s to ‘document the particular Fiscal . realities of an individual noncontrolled subsidy (HR° 230-8c(2)(c) (2)). ' The’ fiscal annex may authorize appropriate deviation -from normal » Agency accounting requirements. . It: ‘should establish. funding arrange- > iments, Specific accounting controls, financial reporting ‘requirements, | oss “and writeof£. provisions. consistent. both with the fiscal realities | “and with the.Agency's responsibilities for proper use of. funds’. "Accounting control should be established through the use of Agency -. advance accounts, intransit accounts, and memorandum accounts to _ follow the. flow of. funds From the case officer to the ultimate ey My LOLs a “Provision 1 should be nade in the ‘Fiscal amex for. ‘Financial state- ‘ments to be‘used as the final element of accounting control through use of Agency memorandum accounts ° ae, os “STE a), when: financial statements are ‘the normal practice ‘of an instru- mentality; ; a (2) ‘when’ they are ‘available ‘to ‘the ‘Agency within ‘the operational on _.Telationship; | and — ae Ot, when. the Agency contribution 4 is s identifiable Gewin | d. USE OF CERTIFICATION AS EVIDENCE. OF FULFILLMENT OF THE PURPOSES: FOR WHICH FUNDS WERE ADVANCED a nN — ‘When, meaningful financial statements are not ‘available and ‘the nena vans nature of the operation is such that insistence upon financial ey RON is inadvisable, it is considered appropriate and con- istent with Agency practice to provide for documentation of ue an 1975 "services rendered" in the form of a certification signed by an appropriate case officer and approved by the designated Agency are approving officer for the project concerned. . Such certification. : yb executed on requests for advance subsequent to the initial advance ( . should read substantially as follows: Revised: 29 October 1974 a HW 50955 Docld:32423532 Page 213 . a “EB? IMPpe
a0 “HEB 7e 230-1 -PLAtte/ PROGRAMS, AND PROJECTS «-_ J cortigy that to the best. of my “Knowledge | and belic£. funds advanced to this project have been or are being used for the purposes for which they were drawn and further advances are warranted. : In these instances appropriate éviderce of receipt of funds by the o. instrumentality or its representatives normally will constitute oo . full accounting for use of the funds and no memorandum Y accounting procedure need “be used. + a me _ USE OF CERTIFICATION FOR OPERATICNAL ReviEW eo “In addition to the use. of ‘certifications to ‘support + ‘use of funds, Hn Operating Officials occasionally desire to use this procedure to 7 ensure. that appropriate periodic review of the financial aspects of ‘the. instrumentality is accomplished by responsible officers. In .- the basis. for recording and clearing the memorandum account even = though accounting requirements are. satisfied prior to such. re- . cording and. clearing. : Cory ene QED ee. a ulead oe : “ ty she tals : 2: foe ify oasgdy at pepe ste : 7 wo ee ‘FINANCIAL DATA FOR OPERATIONAL PURPOSES a a -.Such’cases the fiscal annex may provide that certifications will be. ‘Occasionally operational interest in projects requires that, certain / financial information be obtained from the instrumentality. This * information ordinarily consists of data regarding the use of funds that ‘indicates that such use is, in general, consistent with the - purpose of the project. Although these data are of accounting Significance, the format, arrangement, and. objective of the reports may be in a form that is not susceptible to technical treatment and- recording in the accounts of the Agency. In such cases the fiscal ‘annex should indicate: that the financial report is ‘required: for 8, operational but not accountability PUTPOSES- g. _ REIMBURSEMENT FOR OPERATIONAL DEFICITS © If ‘the amount ¢ of = Agency support - is determined by ‘the operating - deficit of an instrumentality, payments must be supported by finan- ‘cial statements or other satisfactory evidence establishing the , . amount of, the deficit. ch FORMAT OF FISCAL ANNEXES ‘Although the format is not rigid, the sections described below are _ the minimum requirements of a “fiscal annex. Other sections may be added as necessary. — OOM. pe eg. be eet ane, | vate ; Revised: 29 October 1974 ls Docld:324 UL 2n 4 1815 Se an 243532 Page ata , 7 : S-E-C-R-E-T al
(2) (3) ; 1 i. HY 50955 Docld: 32423532 Loe PLANS, PROC_S, () _ DISTRIBUTION: Revised: Page 215 HHB 250-1 “AND PROJECTS oo 7hQQ) Purpose and Instrumentality 7 : Lo = Furnish a brief, sterile statement of the nature and purpose of the project and instrumentality to be used. Include a ~ brief description of the Agency's relationship with the in- - strumentality, showing the degree of control that the Agency can exercise over the facility in its use of and accounting for funds. Funding Describe the , basis for advances to the instrumentality, and — the mechanisms to be used in introducing funds into the activi- ty; state whether it will be funded by headquarters or specified field stations. Any special or unusual requirements should be set forth in this section. Accounting and Writcofe So el wo a rrr Define the accounting requirements applicable to the instru- © “ mentality and prescribe the documentation required to permit certification and writeoff by the authorized certifying officer. ~The use of memorandum accounts’ should also be described in this section. SPECTAL 29 October 1974 | ee! E2 IMPDET’ S-E-C-R-E-T. CL BY: 059687
HW 90955 ~ , . eee panes _ flow. from this decision. Our congressional committees need to be appro- ‘priately informed, the Comptroller will need to work out certain adjustments: Oras # ib ddressee po, — .  OGC K)-0331 | 3 February 1975 a “MEMORANDUM FOR: Director of Central Intelligence SUBJECT: Proprietary Withdrawals and the Contingency Reserve - ‘1, Iam attaching a memorandum of law entitled "Proprietary Withdrawals and the Contingency Reserve. " This was discussed with: you . last week.. 2. It is obvious that a number of policy decisions and actions will | with OMB, and I also believe there are certain policy decisions that the Comptroller will have to work out with Finance with respect to Pens transactions which would have placed returns from proprietaries in th Reserve. I shall send copies of. this memorandum of law to all interested components and will assist them in any way they wish. SOHN S. “WARNER i ! General Counsel Attachment DDO. - ae ne -OLC ’ Comptroller ~ PP ERON cou. SW: sin ER via Ex Sacty w/att De 7 —_ “ae Ch 1 mn OGC Sudj: APPROPRIATIONS w/ ate IPOET . _ CU BY 000276. lL - Chrono | renee ies Wadia shan he ° 73427 (ft o ete Fae @ Docld: 32423532 Page 216 |. WOT
i i i ‘ i) be -*, eecenyeD FROM + * Neo ue HW 50955 ‘pocld:32423532 Page 217 3 February 1975 MEMORANDUM OF LAW SUBJECT: Proprietary Withdrawals and the Contingency Reserve ” REFERENCES: A. Memo to DCI fr C/CCS, dtd 8 Jan 74, subj: : oo Project MHMUTUAL Policy a B. Memo for the Record fr Comptroller, dtd 19 Aug 74, same subject i, _. 1, Reference A recommended that there be returned to the Agency Reserve starting with calendar year 1973 that portion of MHMUTUAL annual profits not required for Project needs. ‘The Director approved the basic _ ‘paper on 8 February, but noted "surplus funds from MHMUTUAL earnings _ . will be returned to the Treasury rather than the Agency Reserve." -, Reference B recorded a telephone decision by the Director that "/w7hen . ‘funds are withdrawn from proprietaries, they will be transferred to the. Contingency Reserve...." - 2, .The purpose of this paper is to examine the legal aspects of these policy decisions. The concept of the Reserve was established in 1952 asa _means by which the Agency would have flexibility to fund projects or. activities which had not been contemplated in the normal appropriation _request. Its purpose was.to create a mechanism to provide funds for: unforeseeable requirements which would be-more rapid and secure than the supplemental appropriation procedure employed by other Government agencies. The Reserve has been funded by direct appropriation and by transfer of unobligated appropriations at appropriate times after the close \ of the fiscal year. Funds were and are released from the Reserve only with | the approval of OMB with subsequent notice of each Reserve withdrawal furnished. in writing to the two appropriations committees. : ° Yr \. 130 BET a { 4 1 ay ‘4 t A E-2 IMPDET - oy jaw CL BY 000276 tae OL an
3. In Heu of a specific annual appropriation act for the Agency, OMB by letter notifies the chairmen of the two appropriations committees "- that the Agency budget of a specific number of dollars is contained in the DOD appropriation request. The letter also specifies the accounts in which ‘these funds are located. Ih the past where there were appropriations to the - Reserve, that letter would specify the amount of the operating budget and the amount to. be applied to the Reserve. After committee action, appropriate letters, sometimes separately. and sometimes jointly signed by the chairmen of the two committees, are sent to OMB specifying what has been approved for the Agency budget and confirming the accounts in which they are located. . Thereafter, the necessary transfers to the Agency are accomplished pursuant to the. authority of Section 5 of the CIA Act of 1949, which was specifically _ worded so as to permit appropriations for the Agency to be placed in the . - accounts of other agencies and then transferred to the Agency free of all ‘ limitations and restrictions on the appropriation from which transferred. The effect of this was to. permit those funds to be expended under the authori- ties of the CIA Act of 1949, ra ther than the authorities of the appropriation acts from which transferred. A transfer under other authority such as the Economy Act would require that the funds be spent in accordance with . _. limitations of the appropriation from which transferred, both as to purpose * and annuality. Unlike any other agency, our "appropriation act" is the = process described above and consists of the following principal elements: a. the OMB letter; b. the chairmen letters; es the DOD appropriations act appreved by the whole . Congress and signed by the President; and _d, the transfers to the Agency approved by OMB and authorized by Section’5 of the CIA Act of 1949. — 4. The question then arises whether a return of money from a previously established proprietary can be placed in the Reserve and later expended by the Agency under the law. There are several provisions of law based on Article I, Section 9 of the Constitution, which states that "no ‘money may be drawn from the Treasury, but in consequence of appropriations | made by law," Twenty years after the Constitution was ratified, the act. from which present law derives was enacted. That law is section 628 of ‘Title 31 of the U.S, Code which states: Except as otherwise provided by law, sums appropriated — for the various branches of expenditure im the public service shall ail por be: applied solely to the objects for which they are respectively made, - RECE! ‘ and-for no others. _ , , JUN SD 1315 132423532 Page 218
HW 50955 ' Bocld: 5, Illustrative of the uniformly strict interpretation given to 31 U.S Cc. - 628 is a decision rendered by the Comptroller General to the Secretary of the Treasury and. reported at 37 Comp. Gen. 732 (1958). In this case © Congress had authorized an appropriation for payment of inequitable losses’ in pay sustained by military officers under emergency economy legislation, but did not thereafter include funds for this purpose when it enacted appro- priations for the Treasury. The Commandant of the Coast Guard had advised a subcommittee of the House Committee on Appropriations during appropriation hearings that, unless the Committee had an objection, it was intended to pay . such claims for losses in pay from the Coast Guard appropriation for "Operating | Expenses." Thereafter, the General Accounting Office Claims Division deter~ mined that over $30,000 in such claims were allowable, but the Comptroller _ General was forced to conclude that no claims could be certified for payment - because there was no available appropriation earmarked for their payment. Citing 31 U.S.C. 628 and stating the rule that "the appropriations provided by Congress to the Federal agencies may be used only for the objects for ’ which they are made and no others, " the Comptroller General decided that - the statement made by the Commandant before the House subcommittee did not oo. have the effect of making funds appropriated as "Operating Expenses" available -"? for payment of the special claims. ‘The Comptroller General held that the A appropriate recourse was to submit a request for appropriation to the Congress. 7 6. In 1849 the Congress sought to buttress the appropriation principle. set forth in the Constitution by passing a law from which is derived 31 U.S.C. 484, which provides in part: . The gross amount of all moneys received from whatever source for. the use of the United States,... shall be paid by the officer or agent receiving the same into the Treasury, at as early a day as practicable, without any abatement or deduction on account of salary, fees, costs, charges, expenses, or claim of any description whatever. 7 Also, Section 487 of 31U.S.C. (originally passed i in 1877) provides specifically that all proceeds of sales of public property of any kind, (with certain excep- tions not relevant here) shall be deposited and covered into the Treasury as " Miscellaneous Receipts and shall not be withdrawn or applied, except in consequence of a subsequent appropriation. “7. Where the Agency makes funds available to establish a proprietary | or to add additional investments, the funds are recorded on Agency books: _as having been expended « and the Director certifies to the expenditure mc FROM - Ww 20H oe O, 3 32493532 Page 219 rere a= - UPR rey ae
under.section 8(b) of:the CIA Act of 1949. I am informed that when an expenditure of this type is recorded on Agency books; nevertheless, a memorandum account is maintained so that the Agency has a record of the precise amount of Government funds invested in.the proprietary. I am also informed that, if a proprietary were to be fully liquidated with the proceeds scheduled to go to the Reserve, but the funds returned are in excess of the investment, the excess would not be placed in the Reserve, but would be | credited to Miscellaneous Receipts. Where funds are returned to the Agency from a proprietary, the current procedure is for the Agency to "reverse" the original expenditure entry and, for those funds which are to go into the Reserve, the Reserve account on the Agency books | is credited, with notifi~ cation to OMB. 8. Let us take. a hypothetical situation where 20 years ago the 2 Agency a expended $1 million to establish a proprietary. At that time the $l million | would have been recorded as experided, ‘certified under the Director's authority for purposes contemplated by the appropriation of 20 years ago. _ . In the meantime, that $1 million would have been spent by the proprietary a [ for salaries, purchase of equipment, or for other purposes. The Agency ~ either supplemented its original expenditure with additional monies oy the . proprietary might have made a profit during these years. This pr oprietary, at Agency direction, now liquidates its activities, including the selling of assets. Under. the Constitution and the laws cited above, it is my opinion | that the law requires all such return of funds to the Agency to be covered ‘into the Treasury as Miscellaneous Receipts. 9. The Agency may not legally expend these funds once again without the approval of the Congress, and by that I mean the full appropriations process and not merely the approval. of OMB and notification to our two appropriations committees. The essential element missing in this latter _ procedure is that there has not been an appropriation bill approved by the © Congress as a whole and signed by the President. In effect, the Agency would have had its appropriation supplemented without the full appropriation process. / son 3. WARNER Us General Counsel ok fs me tn oy PS . \ . ‘ a eases * \ a te om’ Yo “at a0957 DoclId: 32493532 Page 220 — , / SS, ; . i 3)
% 4a r) _ &~ | . . co ; te, oe of "Common Stoc . | a Acs - oe, OC | . Purchased at 31 December 1971 ZEGEZEZE PIO: soeog' wn Date of Purchase Stocks Shares Per Share Amount Per Share | ‘Amount P/E Rai. ‘Electrical Equipment - "3/31/71 Combustion Engineering | 1000 61-3/4 62,201.18- 62-1/8 62,125 4/ 5/71 Combustion Engineering 500 61-3/4 31,115.90 62-1/8 31,062 4/ 5/71 Combustion Engineering 500 - 61-5/8 - °31,038.30 62-1/8 - 31,063 2 4/23/71 Combustion Engineering 100 69-3/4 . . F,020.38 62-1/8 ' 6,212 é 4/23/71 Combustion Engineering 2900 69-7/8 203,810.21 62-1/8 180,163 ie . Total and Average Price. 3000 genta 335,186.57 62-1/8 310,625 - 18 nN oe . 7 ™ 6/ 9/71 McGraw Edison - 3500 43 ; 151,597.50 34-1/4 ~ 119,875 6/10/71 McGraw Edison 1000 43-1/4 © 43,496.30 34-1/4 34,250 6/10/71 McGraw Edison oo "500 42-3/4 21,576.96 34-1/4 17,125 : Total and Average Price 5000 43 a . 216,670.70 34-1/4 171,250 ‘14 ' Insurance 10/21/71 Crum and Forster 5000 29-7/8 149,375.00 31-1/2. 157,500 ll 11/ 1/71 Hanover Insurance 1000: 36-7/8 36,800.00 41-1/4— 41,250, 12/ 7/71 Hanover Insurance 10006 oe .38,650.00 - 41-1/4 41,250 ‘Total and Average Price 2000 37-3/4 — 75,450.00 - . 41-174 82,500 7 : LL/ 1/71 ‘ohio Casualty . 1000 43-3/4 43,750.00 48 48,000 "43 \ Office & Business Equipment 6/19/70 IBM | -. 400 (275° «220,281.00 336-172 134,600 | 36 7/11/69. Texaco . 4000 37-1/3 149,365.60  34-3/8 . 137,500 10 . 7 a Ls ee Cc> . . , Oo . ~ " g <= rom] : are = 6~ Ste 7 8 - ‘ C2. oe e Sadar are |
s ee ; . oO: .. 3 7 gte of ; an No. of Purchased at 31 December 1971 tr chase .. Stocks ". - Shares - A Per Share "Amount Per Share Amount P/E Ratic 8 Utilities - a . | | 11/64 VEPCO oo oe 533 oe 32~-3/8 - 17,241.07 - 20-1/2 10,926 . 800 — . - 3215/16 ' 26,331.94 ee 16,400 . 1333 32-11/16 43,573.01 20-12. 27,326 , ii /18/66 — VEPCO _ otal. and ‘Average Price \ . f eae aheg $ 1,123,651.88 $ 1,069,301 fot shown above are stock options to buy 7,500 shares of: ‘Arabian Shield Development Company stock @ $.25 per share.. The option is good until April 3, 1975. December 31, 1971,. prices on Arabian Shield are 1-5/8 -~ 2-1/8. © . om
8/21/72 ie oS 1/28/72 3/ 6/72 3/ 8/72 6/ 9/72 o 1/72 LI/ 2/72. 8/21/72 11/10/72’. Stocks Automotive Supplies — _ Irvin Industries © Javelin Corporation Broadcasting i - Metromedia Incorporated Conglomerates — ‘WLR. Grace W.R. Grace “W.R. Grace Total and Average. price Electrical Eguipment.- - McGraw Edison Food ‘and Beverage - "Quaker Oats Quaker Oats - : Total and Average Price Food Services Servomation Corporation Servomation Corporation Total and Average Price . No. of ° Shares 5000 6000 5500 ‘5000 2006 1000 6600 5000 3066 1000 q00 .. COMMON ‘OCcK Purchased at Per Share 13-5/8 © . 22-5/16 38-174 29~15/16° 29~1/16 28-1/16- 39-172 43-1/4 - 40-1/2 - 40-7/8 0-5/8 28-5/8 > Stk Div - 38-178 Amount 67,929.63 133,875.00 210,218.00 145,683.16 58,121.08 28,093.80 535,858.08 (216,670.70 121,389.50 40,864.00 162,253.50. 214,765.80 214,765.80 Per Share 9-1/8 10-1/2 32-1/2°- 26-1/2. 26-1/2 26~-1/2 26-172 . 40-3/8 Pla uur un 25-5/8 © 25-5/8 352878 ae RECEIV Amount 45,625 63,000 178,750 132,500 53,000 26,500 212,000 201,875 - -29 December 1972 P/E Ratic: 15 13 19° 7 16 24 14
ezezelp food o ° La] é 9/14/72 719/72 PY20/72 Sea 5/18/72 0/23/72. of27/12° Lf 8/72 2/24/72 3/15/72 COMMON STOCK No. of Purchased at - Stocks Shares '' Per Share Amount Housing | | Shapell Industries — 5000 “25<1/2 127,859.50 insurance woe ye ee . ‘Hanover Insurance 1000 82 52,000.00 Hanover Insurance - 2000 7 ° 51-3/ 103,575.00 Hanover Insurance Fe 200 52. 10,400.00 ‘Total and Average Price 3200 51-7768 - 165,975.00 Leasco oo 5000 20-1/2 -102,731.20 Monarch Capital Corporation 5000 ome ae a | 84,925.00 . Office and Business Equipment | v IBM ggg -“3g0=1716——-— “TY4,020.00 IBM | 500 378-5/8 | 188,925.00 Total and Average Price. 80 78-5 , 362,945.00 Retail Clothing . Associated Drygoods 1600 _ 54-7/8 - 87,826.00 Associated Drygoods 2000 .§8-1/8 116,266.60 3600 7 ave) 204,092.60 Total and Average Price 29 December 1972 Per Share * Amount P/E Ratio. MOV 1-7 an, a 189,000 rey -20-5/8 103,125 12 54-1/4 54,250 54-1/4 “108,500 54-1/4 10,850 | 54-174 173,600 10 19-1/8 95,625 _ 7 18-1/4 91,250 16 402 120,600 — - 402 201,000 402 331,600 37 52-1/2 84,000 52-1/2 105,000 = 18
oq cceoc AN 3/72 22/72 ri NKETEZE 1/64 sire 748/64. ate of — narchase | Stocks utilities ’ American Tel & Tel. American Tel & Tel | Total and Average Price. _ VEPCO VEPCO Total. and Average Price _ COMMON . oCK Purchased at Per Share _ 43-9/16 52° 46-376 32-3/8 — 32-15/16 tae Amount 435,545.00 | | 260,147.00 695,692.00 17,241.07 26,331.94 43,573.01 29 December 1972 Per Share: ; Amount P/E Ratio 52-3/4 527,500 52-3/4 - 263,750 53-378 751,250 12 22-3/8 11,926 22-3/8 17,900 33-378 25,826 1 986 $ 2,969,403.98 § 2,872,557 fot shown above are stock options. to buy 7,500 shares. of Arabian Shield Development Company stock @ $.25 per share. The option is good until July 28, 1975. December 29, 1972, prices on Arabian Shield-are 2-1/4 to 2-5/8. ; 8 ao a a a Fs. ai 6S OSE : SoS e = ? Sj 8S ©&
, 2 Co60G AN ry et a ’ COMMON STOCK a Seemann bo ic ; | Hate of Bo ' No. of Purchased at 31 Dec 1973 Rarchase . ; Stocks — . ‘ Shares . Per Share Amount Per Share Amount B/E Ratio ee —_—c one rr — — re _ Automotive Supplies =. . oO ; : 1 ‘Irvin Industries | 5000 _ 13~5/8 67,929.63 3 15,000 4 ADs : . : of ot . . - . ‘ ; . wy6/72 Javelin Corporation. | ; — 6000 22~-5/16 - 133,875.00. 2 12,000 . 2 Broadcasting , ; 8/72 ; Metromedia Incorporated §500 36-1/4 210,218.00 7-3/4 42,625 - 4 Electrical Equipment. , —_ . : . ; - _ 6/72. McGraw Edison 5000... = 43/4: 226,670.70 «9-5/8 98 125 7 Food and Beverage an 11/72 Quaker Oats oo 4000 : -. 4095/8 —- 162,253.50 * 28-7/8 - 115,500 _ ur Food Services ~/ 5/72 Servomation Corporation . 7650 .. .—-28-1/8. «= 214,765.80 = 1-1/2, 87,975 Ss SS Cy & as. Ls ~~ ges gy
‘ coeoc, al ’ COMMON S'TOCK gy 3 a a a i . oo, : a Ss Bate of mo 7 No. of Purchased at — , 31 Dec 1973 ; Burchase Stocks . Shares Per Share - Amount Per Share Amount P/E Ratic bi Housin , oo ‘ , Do, ” . . te, | ; 4 mousing Co a oe , — . 7 a hy 2/72. Shapell Industries ~~ =... 5 §o00. i 25-1/2 127,853.50 7-3/4 |. 38,750 . 3 Insurance — 7 on 7 ae oe W773 American Reinsurance <1. 42-3/8 — "342,850.00 24—1/4 194,000 4/73' . American Reinsurance. “20005 |; “-38-1/2 .° °° 77 000.60 «© 24-1/4° -° 48,500 . Total and Average Price. . 106646 a ~~ FS, 850.00 SaTge 242,500 93 1/73 Gulf Life Holdings © «24,000 17-3/4 «426,572.95 10 240,000 . 85 9/72 Hanover Insurance 2000 | | 26 52,000.00 12 - 24,000 _ 10/72 Hanover Insurance a 4000 25-7/8 103,575.00 12 * ©6488, 000 L1L/?2 Hanover Insurance - - + 400 . 26 °° 10,400.00 . 12 mc 4,800 ‘ Total and Average Price 6400 ee 25-776 a 765,975.00 . 12 a 76,800 n:) 5/72.‘ Reliance Group 5000 «Ss L/D 102,731.20 10-1/8 ~~. 50,625 2/73, Reliance Group. , 2000... 12-5/8 . = _25,332,00 | 10-1/8 20,250 . Total and Average Price 7006 = | TE-L/74 © 128,063.20 .,. 10-178 70,875 4 *0/72 | Monarch Capital Corporation 5000. oo ap 84925.00 | 9-374 48,750 6 ( eS a eee - pO “ , ee ' 1/73 : U.S. Fidelity and Guaranty .. 1100, , 40-174 : 44,280.94 36-1/8 39,737 - 10 ~  & xO a
a. e SS6QS aH p wate of urchase RS Eerce  Plood 2/72 ° ‘3/72 eC 66a Zz 5/64 6/64 Not shown above are stock options to buy. 7,500 8 The option is good until July 21, 1974. December 31, uw Stocks Retail Clothing’ Associated Drygoods Associated Drygcods '. Potal and Average Py utilities . VEPCO _. VEFCO ioe | & Total and Average price ‘ COMMON STOCK Purchased at ‘Per Share | Amount 54~-7/8 87,826.00 ae 116,266.66 o= . 204, oe 32-15/16 _ 26,331.94 32-3/8 47,241.07 32-1L1/16 43,573.01 - § 2,650,904.83 31 Dec 1973 . Per Share Amount P/E Rat 26-3/8 42,200 26+3/8 - §2,750 ~3/76 ay wet) 9 14-1/2 11,600 . 14-1/2 7,728 {4-1/2 19,328 6 & .$§ 1,242,915 . hares of Arabian Shield Development Company stock @$.25 per share. 1873 prices on Arabian shield gre 1-3/4 - 2-1/4.
ae & ? wt a io cn « a i COMMON STOCK © 5 one * oa ate of mo, . :No. of Purchased at _ 31 December 1974 ugchase ' Stocks _. oo, Shares . - Per Share Amount Per Share Amount P/E Ratic a Automotive Supplies OO oe . 7” Irvin Industries —— oo 5000 7 : (13-5/8 67,923.63 1-1/2 _ 9,800 2 6/72 ' Javelin Corporation oe 6000. 22-5/16 133,875.00 | L 6,600 4 = _ Electrical Equipment — . — 6/72, «McGraw Edison $000 (Q3-1/4 216,670.70 = 11-3/8 = 86 87S . 6 Food and Beverage ae LL/f72- Quaker Oata co ' £000 . 7 40-5/E 162,253.30 . 23 . 52,000 | .  & Food Services _ . 8/72. Sexrvomation Corporation - . 7650 BB RL/B. 214,765.80 “5-1/2. 42,075 . 3 La
. & % @ ~ by. | Ao cal CH c~) fa] = i] a * COMMON STOCK 3 a Hen Date of oe - No. of - Purchased at 31 December 1974 Purchase ‘Stocks — ' Shares | ; - ' Per Share Amount Per Share ‘ Amount .. P/E Rati 2/72 _ Shapell Industries .. = = 5000 25-1/2 = 127, 859.50 - 5-1/2 27,500 30 -- Insurance 2/73. American Reinsurance - “gggg sss S342, 850.00 13. - 104,000 a 4/73 American Reinsurance “+ 2000 ; 38-1/2 _ «77,000.00 13. 26,000 an Total and Average Prics: T6qo00 ae 42 419,850.00 13 130,000 Def 1/73 Gulf Life Holdings | 24,0000 — LIH3/4 426,572.95 6-3/8 153,000 4 6/72 ' Hanover Insurance oe 2000 oe 26 ne 52,000.00. 5-3/4 - 41,500 10/72 Hanover Insurance ~ _  €000 © - 25-7/8. - 103,575.00 5-3/4 23,000 11/72. | Hanover Insurance . 400 26 10,400.00 | 5-3/4 _ 2,300 ‘ Total and Average Price : 6400 © ~ 25-1/8 . 165,975.00 5-3/4 36,800 5 5/72 Reliance Group» "5000 20-1/2 102,731.20 5-3/4 . ‘28,750 , 473 . Reliance Group — . 2000 io. ' 12=5/8 . 25,332.05 -§-3/4 .. » 11,500 Mo otal and Average Price *  Fo00 18- - 128,663.20 5-374 . 40,250 . _ 9 i_/? . Monarch Capital Corporation: §000 a i? 84,925.00 ; 8-3/4 $3,750 6 1/73. U.S. Fidelity and Guaranty  . 1100 | 80-1/4 = 44,280.94 = 35-3 /4 28, 325>. 9 At 3 La 2 & = >
- ke @ ‘3 ‘: | Me Ct . : om ‘COMMON STOCK Lr] te of | No. of - Purchased at oe “ 31 December 1974 prchase Stocks — “s+ Shares --—i(c(‘é#’”sCy’:sS@éP@er’'«WSS hare - Amount Per Share Amount P/E Rati. a Retail Clothing. 7 st 2/72 © Associated Drygoods - “3660 54=7/8 87,826.00 17-7/8 28,600 mo /72 Associated Drygoods - 2000 | ee «2226 266.60 | 17-7/8 35,750 G “Total and Average Price 3600- - a ' ‘ Li-778 | 64,350 6 tay he . Utilities — 5/64. _ VEPCO oo 00 3285/26 26,331.94 G=1/4 6,600 6/64 . VEPCO oo - 8 8330 CC { 3a~3/E “EP 24.07 ° 8-1/4 °' 4,397 . Total and Average Price - S335 2. Sb «FE, S7S TOL g= WO,537 = 6 | | "" § 2, 440,696.83 «$699,422 \ . Son, NY SS a Ses
a = _ 2 : on oe 7 COMMON STOCK ar a! : a Lo OS , mo - — , wDate of § — , - Noe OF Lo . Purchased at’ — “+ 30 September 1975 ePurchasa - . Stocks Se Shares =. ~= Per _ Share Amount Per Share _._.. Amount _. P/E Rat | Automotive Supplies . re re oo . hal Gu aA = 2/72 Irvin Industries = 8000, 35/8 67,929.63. 4 , 20,000 —- 5 i . ae _ oe . oe, : | & 3/72... Javelin Corporation =|... 000 | 22-5/16 «133,875.00 Lh ——  6,000—C—ssi( (ss wo _. Electrical Equipment: _ oo So, 6/12. McGraw Edison (OOD BLL 216,670.70 . 18-3/4 93,750 15. Food and Beverage 11/72 Quaker Oats. si‘ Ct*~*<“‘<=«K COB 1G 2,253.50, 8 72,0007 12 . _ Food Services . . 8/72 Sexvomation Corporation «== 7650. | 2e-1/8°° 214,765.80. 8-5/8 65,981 "6
A 2 x & COMMON STOCK PIOOG sc60c AH ate of Tee coe No. of . . Purchased at ~ ‘30 September 1975 Rprchase oo Stocks Shares” . 7 _ Per Share Amount Per Share | Amount P/E Rat’ an Housing ; rll Shapell Industries === === —-—s- $000—t; — 25-1/2 . 127,859.50 8-1/8 . 40,625 - . 6 Insurance 2/73. |. American Reinsurance : _ . 8000 — 42-7/8 . 342,850.00... 13-374 * 110,000 4/73 American Reinsurance ©. - (2000 .- - 38-1/2 - 77,000.00 13-3/4- - 27,500 oo "ss ¥otal and Average Price To000 - 2 . .. 419,850.00 13-3/4 ; 137,500 | Def 1/73 Gulf Life Holdings - 24,000 =. 3/4 -426,572.95 | 6-7/8 ~- 165,000 . 7 9/72 ° Hanover Insurance : 2000 ~ 26 —  §2,000.00 6-3/8 - «12,756 10/72 ° Hanover Insurance . Loe 4900 ©: | . | 25-7/8 © 103,575.00 6-3/8 25,500 Lil/72 Hanover Insurance - ct 400 oe 26 10,400.00 — 6-3/8 . 2,550 , Total and Average Price 6400 25-778 165,975.00 6-3/8 - 40,800 ' Def 5/72 Reliance Group . - 5000 -  * ag-2/2-. «102,731.20 = 6-1/8 30,625 — 2/73 Reliance Group . ~ 2000 OE. 22=8/8 | 25,332.00 6-1/8 7 12,250 ~ Total and Average Price 7 7000 18-174 | 128,063.20 - 6-1/8 . 42,875 ’ Def 79/72. Monarch Capital Corporation’ 5000 4? a 84,925.00 9-1/4 7 ‘46,250 8 || "73° ‘U.S. Fidelity and Guaranty. - 1100 40-1/4 «44,280.94 29-778 © —s«32, 863 t—=~—SiODk c - a AD. iN S&S c ae oN ~ oS es ge
f sot o eo “ COMMON STOCK a . =] Lr] . : : . ne — Date of .— oo ae .. No. of © : Purchased at. - 30 September 1975 rpurchase . Stocks mo oe Shares _. Per Share Amount Per Share Amount ‘P/E Ra fa Seneca —* . : il [FRR tt Le : Ng ., oe Retail Clothing a 2/72 . Associated Drygoods . . > 2660 - 54-7/8 87,826.00 27 ‘ 43,206 mg 3/72 = ‘Associated Drygoods .  . - 2000. | 58-1/8 116,266.60 27 54,000. . 'B oc Total and Average Price - 3600 56-5/6 204,092.60 yy - 97,200 - Al h - Utilities a | | 15/64. -VEPRCO, BOD 32-15/16  . 26,331.94 11-3/4 = *—s« 9, 400 - 6/64 VEPCO. — . 533 . 32-3/8- 17,241.07. 11-3/4 “6,263 | a - '. . Potal and Average Price 1333 © °° g2-21/i6 | $3,573.01 ° 1li-3/4 15,663 | 6 - | : | . oO $°2,440,686.83 . ~  gg76,507 - . - : . & a “m7 My Lens, i - S a e oo
gt “NOTES ON THE SCHEDULES OF GAIN OR LOSS ON THE SALE OF MHMUTUAL INVESTMENTS Note #l The MHMUTUAL. portfolio, from which the attached schedules of gain or loss on the sale of investments were taken, is not an accounting document in the sense that it is used to account for funds handled by the Activity. The purpose of the portfolio is to provide. management with a picture of the investments held by the complex at any point in time. The portfolio is not audited per se, and ‘in past years no attempt was made to insure that each presentation tied directly - back to the previous portfolio; that has been done in recent years. Due to the | lack of audit, certain errors were not discovered, and they were carried forward to the present. One example is on the 1970 presentation of the sales of stocks ' to date. The total sale price of $2,226,883.29 when subtracted from the total ‘HW 50955 Note 3 purchase price of $2,246,793.93 results in a loss of $19,910.64 instead of the — loss of $27,802.99 as shown under tne colum marked gain or (loss) on sales. The total gain.on sales to date should therefore be $177,437.51. For some un- known reason, the balance carried forward to the 1971 schedule of gain on the sale of equity is stated as $206,314.47 which involves an overstatement in the cumulative gain on the sale of equity in the amount of $28,876.96. This error has been carried forward to the present. ; Note #2 The portfolio figures cannot be directly tied in with the financial state-~ ments for MHMUTUAL in the case of bonds since the statements reflect an average | cost for all the bonds of a particular issuer, and the appreciation on a dis- counted bond is recorded as income > each year with a commensurate increase in the book value of tha bond. The only bond transaction during 1970 was ‘the sale of $50, 000 of U.S. Treasury bonds. This transaction is found on the schedule titled "Debenture Investments." a : SEGRE! Docld: 324235532 Page 236
scan aieneeieeetheneateaemeenenianenemmetammentemenenentanmete eee erence ELL 2 fasatdlesprrrn, . a . oe 3, i} info . aria 0 —— RORTFOL..O SALES OF STOCKS TODATE ta. me mw Date of os , “No, of Total ‘Date of . Ret Coin of afurch: se Stocks oe Shares Purchase Prlee Sale | Sale Price  f{losden Stew = L/22/64 Burlington Industries, Inc... 300 $ 13,817.93 Gf 8/65 20 4465.70 ~$ 6,053.77 4/22/64 Kotfonal Steel Corporetton mot 300 16, 55422 W/7 &766 * 41,697.11 (4 6e7.8t) R PVC Scott Poper Co. pony ‘ ; 1109 - 49,556.77 Lis 4/66 26,013.79 - (8,0°2.65) aan foe 64) 2 : miles afi . J.C, Beany Comps my. , 250 16,274.71 Vs NGG 1B.112.15 bef PA Calustia Crocdeast ing System - . 108 ‘WG6,609.52  ° WS N/OG 8 85S m4 / LO seg Scott -Fore.sran & Company . . 606 90, 97G,EO | obaets/06 23, FI, ts & 733704 North Accrtean Avictton oO _ gon ; 16,352.75 ; VAG/67 716,652.45 er abreee ne - ., , be hate) Corn Proatuets to any , : 500 2G,GU1. 99 Of ON/G7 92,279,483 ~l Be 7 Getwrod Pubtie Uebtitios - $660 RG, 753.63 © OfV/GT by 3h A? iy - Kewcit tbe dag Corporation : 7 OES br, 7)2.46 VAs G7 8G Sg hs ste) ‘Freeport Sulphur Cocrany a 1700 | 37,G13.52 > bf 5/08 GB,217.2 Bf 6468 Che Peal Beak EY. Trust Co “pany "900 Oo, 40,653.48 UN 27/68 GN 991516 VIE), 116/56 7 oe Gf te Beene § Co gery "00 V5,50N.76 MA? I/C3 22,379.93 PAGES} Gerera) Foinsererce Corporat fon : Wo A ONE. Ga V7 770% | Sh O17 45 Bh ya ty Drterestio . an oe & Che: beats 77) 1730 ; ; aaheaees ; 11/29/68 75 760.0% 2 3¢f5 ae ich Dian ical Cee pany G0. th, gn7 by | Vase /CS 26,277.46 BAVAELS . Gortyoar Tire ‘t fulter Coapany , - 2030 101,334.37 2/75/69 TEL 416.05 Mesicys 0128/ C6). wate 7 ee ‘ _. ; ; of th GUE CH Corporation . 690 15,54". 92 PPOEOD PONT. 05 Lsbalty  OULS, Sepa . Co pny ; . 709 IB €91.by PPEEICY 135.07 io aan Viper bee Ces fany : . 1690 © ; B37 AG PP PCL EY 79, 798.09 j 7 wy . : . , Woe Belouth ‘Steel Corporation e106 165 ,E91.76 © 1/30/69 154,955.62 Te ‘); W508 aq} oo ot ACA MTAE Searle, (C: vb, de Co: apny 2050 TO ,059.62.. 4/30/69. -B2,959.7% ' “4 at . . . ™ . . , . . Veh © Union Coop Corporation — 4000 166 084 fo h/3I/69 9. FOR aeh ad Ava . Aecrican Usvpitul Sursly 0. O09 150,725.24 Ws 1y/6a DAY ase 2 Tyireey! Neorthaes torn Life Insurance , 3090 _ 35.819, val 11/7/69 153,332.50 C/7O E05) oo, oe —— . gi 2Of GEE. ae . SA Gree Paeere | *& The forcign= based companhes are not subject to WS, ayes an cuphiol guins, tet Net dividends reported are net eeu Te ceived after ceduct ions af 39 per cont Federal Wit thhoteing . Ot ee ro Mees er eee masa mntt sa Diate castes ob somata om ana beste Ot hactmite, Su careh hed att sulin ndE ome anata ubons oo 8 Herd mtorw see Deniae # rod wie GaN ANOte neces Ben teers oats OMe abe we Sino Ad a Got ot hehed ne baynuge an tba b erates der omemaes § wah RE cbade totee del im poandy Pont dure wed. Ot FOE A Ae oben em tae en ae
CGé60¢ AH HT290 Bre she J GEGEGPEE - Ploeg bfge fy a ar are Vis 4/473 aed Vf oar if G7 WIG Hala. ne, eer Vis 3/75 metas Fy B/VEl ya if} i APY AsIG SET Ys 3/75 a Pare oot PP ifr o hiftes if Ao “Cintenestb pt oO Generab Oy Stacks Soles Through 1969 Avevicun rate Products Avwetcen Narural Gas Mardinetuo bedusiries: Hilbing Mas Cucu Cola Be. Peoria: Cymer es Gerersal Foods Petetts Peckard: phe Liver ty Rabtorée KoA ; Stelly OF) Products Ter pak U.S. Fidellay, & Guararty aatiaaal Life 1 Cesh Register Yaron Totel Sales 1979 Sabes to date “  Faratgoetused ¢ompanios ’ are noe SuNject 1G U.S, taxes on capital qein, . . Na. al Seared s wteies Se N90 hry wo MO 2099 6700 2070. 1909 Ao no ME PIBLATO) 500 4090 nasi) hao 3290 5ya0 foral fe Pore ets AREics BL ies, 484 re sna er tp a ane é 702,287.99 108 097,93 75.329, 54 Wh Pod, £2 1h 655, “7 Drarevaers 94,750.51 77,216.89 nares Brea 11 949,55 132 009.96 216,999.00 168,426 85" 69,459.00 36, 742,66 104,356.00 W75. iG, au 42,286, 102.93 hae omen wth $3,613. 774.21 BRR as os sae. \ i a) one & ‘ 4 ° le, Py : bate eee ARLE LS Sake ! SI bE, 4 HA Kha d we te § 166,655.75 135,429.55 iS4 097 89 Si aFL Vo PeP STS. 15 Pop, PES Sy NP, 1a 35 84 234.60 PFC .3°3.3 Myke 1Z3T7OnL99 oo G43 75 Ansa. 09
9 rh eHpo0d SGé0g AH EGPS ” 12.) 36 ]1 Stocks Sales ‘through 1970 “ Abbott Laboratories. American Tel. & Tel. ‘American Electric Powex Ampex Bankers National Life Bankers National Life.’ Bankers National Life Central & Southwest Control Data Coca Cola . Continental Telephone Chubb Corporation Dr. Pepper Eastman Kodak Emerson Electric Fleetwood Enterprises Ford Motor “Gillette - Hardee Foods ; Houston Natural Gas Johns Manville Liberty National Life MMM National Cash Register Peps ico Pillsbury Reynolds Metals Scott Paper Shappell Industries Southern Company Sterling Drug EQUITY SALES .TO DATE “No. of |. Total Net Gain or Shares . Purchase Price Sale Price (Loss) on Sale “$ 3,584,897.25 -$-3,791,211.72 $ 206,314.47 & ee Ne ge S 4000. $ 257,534.86  $ 278,083.99 $ 20,549.13 4000 . - 200,373.50. ° .193,615.88 (6,757.62) 5000 st — - 185,594.44 | 141,819.03 . (43,775.41) 4000 146,568.14 + 89,542.58 _ (57,025.56) 1000 : 29,750.00 33,500.00 . : 3,750.00 1500. 44,625.00 50,550.00 ‘- 5,925.00 3000 | — 29,750.00 34,250.00 4,500.00 1000 "48,229.01 46,509.06 (1,719.95) 1000 143,370. 36 37,429.84 (105,940.52) 5000: 317,479.10 394,210.53. - 76,731.43 8000 , 206,557.89 166,917.41 (39,640.48) ~ 2000 . 121,500.00 131,750.00 10,250.00 2000 33,357.50 63,383.59 (30,026.09 3000. .  198,656.73-- 218,339.70 ° 19,682.97 . 2500. 186,467.44 185,489.51 (977.93) 1000 oo 38,219.13 _ 46,260.26 8,041.13 3000: 154,237.41 181,127.95 26,890.54 3000 : . 165,947.09 133,250.78 (32,696.31) 5000 60,000.00 69,224.35 9,224.35 60 3,124.15 z,905.16 (218.99) 6000 236,419.64 - 256,064.24 19,645.80 6000 _ "-4131.279.00: 178.200.00 46,921.00 2000 163,032.52 230,733.41 67,700.89. 2000 106,738.00 _ 78,830.54 (27,907.46) - 4000 - ; 238,440.41 255,933.19 17,492.78 2000 94,178.57 107,153.84 “12,975.27 1000 55,407.47. 21,025.77 (34,381.70) ‘5000 166,649.10 117,592.02 (49,057.08) 4000 . 129,643.25 137,822.01 8,178.76 ~ 10000 281,317.00 - 197,966.00 3,351.00) 4000 121,807.73 172,658.95 59. 851. 22 < oe
Stocks ‘U.S. Fidelity & Guaranty U.S. Fidelity & Guaranty Universal O11 Products Warner Lambert Western Casualty & Surety Western Casualty & Surety Western Casualty & Surety ~ XC rox : “Total Sales .1971° Total Sales to Date EQUITY S+. 3S TO DATE amen No, of ' Shares 3500 3500 4000 2500 400. L400 | 2200 2000 Total Purchase Price 127,361. 80 154,000.00 ~ 113,444.75 ° 102,928.50 25,000.00. 93,400.00 139,975.00 161,652.30 Net Sale Price. (160,076.64 172,835.59 102,221.53 105,513.66 31,180.00 112,150.00 174,900.00 223,942.48 Gain or (Loss) on Salo wlohe at ALO 32,714.04 10,935.59 (11,223.22) 2,585.16 6,180.00 18,750.00 34,925.00 60,290.18 $ 118,943.90 ° ‘steerer athtnerrertcn ‘§ 325,258.37 © Wome cnprmrammenetaenneteperrneemetepaateseh
GS69S AH 1 L - . S EQUITY =| ake of mo , ' No. of ° ‘Total Net Gain or fale Stocks Shares Purchase. Price ' Sale Price (Loss) on Sale wo ; i ; Sales Through 1971 $ 325,258.37 lf 1/72 American Reinsurance 8000 $ 331,687.49 386,350.00 $ 54,662.60 8/72 Ashland Oil 8000 220,314.00 235,986.93 15,672.93 id 5/72 Combined Insurance Company | 5000° 122,500.00 131,375.00 8,875.00 ~2/72 ' Combustion. Engineering oy 5000 ' 335,186.57 364,278.67 -29,092.10 W¥21/72 _ Crum & Forster ‘ * 2000 59,750.00 60,712.50 962.50 | 8/18/72 Crum & Forster _ 3000 89,625.00 99,000.00 - 9,375.00. 2/11/72 Dean Witter 300. . 6,900.00 | 8,196.36 1,296.36 1/ 6/72 -Gulf Life Holdings - 2700 137,927.17 151,531.74 13,604.57° l/ 9/72 Gulf Life Holdings . 1200 , 60,574.92 66,958.65 © 6,383.73 1/10/72. Gulf Life Holdings . 2100 ccwem . a 104,372.42 119,390.69 15,018.27 1/18/72 ' Hanover Insurance . 2000 75,450.00 98,750.00 23,300.00 3/ 7/72 IBM , ; 400 110,281.00 159,316.80 49,035.80 4/ 3/72 International Tel & Tel. 7000 433,870.42 . 394,861.05 (39, 009. 37) B/17/72° John Deere 5000 321,474.10_. ...-...358,647.16---__ °37,173.06 Ly 2/72 Life Insurance of Georgia ~" 2500 . 83,125.00 93,000.00 9,875.00 3/ 7/72 Nationwide Corporation 10600 110,000.00 ‘130,875.00 20,875.00 lf 7/72: Ohio Casualty 1000 43,750.00 49,000.00 5,250.00 B/ 9/72 ‘Old Line Life Insurance Company 500 16,925.00 21,875.00 ' 4,950.00 8/10/72 Old Line Life Insurance Company 6000 203,115.88 262,500.00 59,384.12 9/14/72 Texaco 4000 149,365.60 (15,430.30) ( Total Sales 1972 | Total Sales to Date. SALES TO DATE 133,935.30 $ $ & 310,346.37 635,604.74 =e oe &S s Ss ret id f
a FZE:pIUCG Gceps aH cBurity aes through 1972. m@rican Tel and Tel merican Tel and Tel mrican Tel and Tel mérican Tel and Tel -S. Fidelity and Guaranty ngersoll: Rand ontinental Corp - . R. Grace -S. Fidelity and ‘Guaranty hio Casualty hio Casualty afeco Corp -S. Fidelity. & Guaranty ‘Total Sales 1973 Total Sales to Date He ‘No. of * Shares 10000 50600 “800 1000 9000 - 2000. 4000 ‘5000 8000 - 1000 1000 4000 4000 2900 - BQUITY SALES TO DATE Date of ’ Purchase TS 4/72 12/72 11/72 2/73 - 2/73 1/73 1/73 2/73 4/72 1/73 2/73 . 2/73 © 2/73. 1/73 Date of Sale 1/73 43/73 2/73 5/73 6/73 7/73 10/73 10/73 10/73 ‘11/73 11/73 11/73 11/73 “11/73 4 a Purchase Price -— i Sales Price 53-1/2 53-7/8 430-7/8 51-1/4 50-7/8 41-7/8 72-1/2 40 28 ‘A0-1/4 44-3/4 44-1/2 49-1/8 -39-3/8 Gain or {Loss) on $635,604. 99,609. 9,450. 41,772. 264. (1,123. 3,162. 91 (3,549. (11,136. 24, 375. 500, (7,000. 20,544 Sale 74 74 35 09 99 68) 80 37) 53) Ol 00 00 00) (2,447. $150,447.03 28) $786,051.77
GG6O0G sh i= Hp TOO’ He ro tie through 1973 ry eG CL dee media re) Pe Sir ® cals EPG an Shield Devel. Co. No. of Shares 5,610 7,500 EQUITY SALES TO DATE Date of Date of Purchase - Sale 8/72 °° V/74 4/74 . 10/74 Purchase Price oe ‘ 37-1/2 | 1/4 Sales . Price| 5=7/8 . 13/16 Gain or {Loss) on Sale - $786,051.77 (176,996.04) | 4,200.00 $613,255.73 ae ee
Pee et COé60ag¢ AH urit zee Fre -abed e es through 1974 ~— ‘ 9 at No. of Shares “* 6 EQUITY SALES TO DATE Date of. "pate of ‘Purchase _ "Sale $613,255.73 Purchase "Sales Gain or price | + Price 1. . ans ~~ on oa & “{Loss) on Sale
CIA Domestic Real Property Holdings* CIA has a variety of real property holdings in ‘the United States ranging from the major, overt Headquarters complex in McLean, Virginia, to small leased "safehouse" apartments in many cities. Real property holdings also include seven CIA-controlled installations used as training sites, supply depots, research and development . centers, and communications transmitting and receiving facilities. ‘The 237 domestic real property holdings are summarized for.this report as. follows: a. Overt or nominal properties (overt properties are identified as CIA; nominal properties as Executive Office of the President, but CIA control is admitted upon request) of which there are sixty- two (62); b. Official cover properties (identified as under the control of other U.S. Government agencies and CIA rela- tionship is classified from. CONFIDENTIAL through TOP SECRET) of which there are fifty- -three (53); c. Safehouses (properties, generally apartments or resi- dences and generally leased, acquired for covert meetings) ‘of which there are eighty-one (81); * The information contained in this section has extreme sensitivity as a grouped data package. It lists the entirety of CIA real property holdings and personnel assets in the United States as of 13 January 1975; accordingly, release, unauthorized disclosure, or loss of this information would have severe operational impact on the activities of CIA. HW 50955 Docld:32493532 Page 245
d. Non-official properties (identified as private firms which may be wholly or partially controlled by CIA and housing CIA employees) of which there are forty- one (41). Attachment 1 lists CIA domestic real property and provides Specific addresses for all overt and nominal CIA real property holdings. Official cover properties, safehouses, and non-official properties are listed by general location. Numbers of personnel - and utilization purpose are shown for each category of real property. This report is developed as a real property summary ; therefore, personnel data supplied are predominantly based on CIA “space utili- zation reports, and slight variation may exist. in some instances. A limited number of CIA | personnel are located in non-CIA- controlled space -- for example, in the Pentagon, in private residences, or in commercial companies -- and these properties are not listed in this. real property summary. Non- official properties not occupied by CIA staff or contract employees are not listed. Attachment 2 is a sum- mary sheet of all the previous figures. HY 50955 Doclda: 32473532 Page 246
Location SECRET: DOMESTIC REAL PROPERTY LISTING Street Address Washington, D. C. § Suburbs. AL Pak feed bet pod fad ped fe Ot Overt §& Nominal Properties Langley, Va - Route 123 (CIA) Washington, D. C. | Central Bidg. 2430 E St. N.W. (CIA) _ Washington, D. C.- East Bldg. 2430 E St. N.W. (CIA): Washington, D..C. ‘South Bldg. 2430 E St. N.W. (CIA) Oxon Hill, Md 10550 Riverview Rd. (FBIS) Washington, D. C. Navy Yard, Bldg. 213, 1st § M, S.E. (EOP) Washington, D. C. Navy Yard, Bldg. 159E, lst §& M, S.E. (EOP). Washington, D. C. Navy Yard, Bldg. 202, lst § M, S.E. (EOP) Rosslyn, Va Ames Bldg., 1820 N. Ft. Myer Dr. (EOP) Rosslyn, Va Key Bldg., 1200 Wilson Blvd. (EOP) Rosslyn, Va - Magazine Bldg. . 1815°N. Lynn St. (EOP) Franconia, Va McLean, Va Arlington, Va Alexandria, Va 901 Columbus Rd. (EOP) Washington, D. C. | | Arlington, Va Official Cover Properties Locations Locations Location Location Lecation Location Location. - Location SECRET . EOP — — —_ a — (EOP) - ‘Personnel 364 18 22 48 15 62 Pur pose Technical labs § offices - Storage ‘Hqs. admin. offices “Has. trng. offices FBIS photo & printing ~ Attachment 1 Hgs. admin. offices § printing bldg, Technical labs § offices Technical labs § offices Counter-audio training § FBIS antenna field ; Photo development § analysis Map storage Has. admin. offices Has. admin. offices Supply depot & R&D shops Elint § tech. admin. offices Technical training area U.S. resident contact Research § operational support Translation & operational support Foreign intell. collection Supply depot § ELINT training Counter audio lab’& office Document research analysis Training lab §& office Field investigation office E2 CL By 029557
SECRET _ DOMESTIC REAL PROPERTY LISTING | Location Street Address ‘Personnel Purpose -C. Safehouses . 37 Locations me, N.A. Covert meetings ~ D. Non-Official Properties 1 Location 13. Manages agent accounts & cover backstop - 1 Location | 1 Operational support (dormant) I Location . 1 Foreign intelligence collection 2 Locations 13. :Human source assessment I Location . 6 3 Debriefing site “ 1 Location 3 Mgt. services for proprietaries r ‘I Location 2 Research & operational support fe ‘1 Location 2 Public opinion analysis a 1 Location .- ; ; . 16 Research admin. office 2 1 Location ; ; 1 Travel support i 1 Location 3. Translation “4 1 Location 3. Airline,’ foreign operational supp. 4 1 Location 9 “Airline, covert admin. travel x 1 Location 3 Covert procurement, general % ; 1 Location : .4 Covert commercial audit o Arizona 1 Non-Official Installation. 11 Aviation equip. R&D and procure. ° ¥ California . ; : _ A. Overt § Nominal Properties . Los Angeles, Ca 13. U.S. resident contact San Francisco, Ca 14. ~+4U.S. resident contact San Diego; Ca 2 U.S. resident contact Hawthorne, Ca . 1 Personnel § recruiting office SECRET : : ae E2 CL By 029557 jy moebmae Docld: 32423532 Page 246 HW 50955:
SECRET: ~ DOMESTIC REAL PROPERTY LISTING Street Address “SECRET Location Personnel California B. Official Cover Properties 2 Locations 38 2 Locations 14 1 Location 14 1 Location 8 . 1 Location - ‘1 1 Location 22 1 Location 3 1 Location 1 C. Safehouses 12 ‘Locations N.A. D. Non-Official Cover 1 Location 9 4 Locations 4 1 Location - 19 3 Locations . 13 Colorado’ A. Overt §& Nominal Properties 7 1 Connecticut A. Overt § Nominal Properties . 3 ican nae te Ae A EA AEE SS COTTE Purpose Field investigation office Foreign intelligence collection Paper plant Field procurement office Field supply office : ‘Gen. admin. support to sensitive projects Air logistics support Audit of covert operations Covert meetings Covert Commercial investigation Foreign. intelligence collection Management § admin. of sensitive projects Contractor liaison, sensitive - projects 9 v “Page 24 U.S. ‘resident contact Field recuriting office U.S. resident contact E2 CL By 029557 Han ae weer: ; Rasa 4
‘SECRET DOMESTIC REAL PROPERTY LISTING Street Address Location Florida ‘A. Overt § Nominal Properties Key West, Fl U.S. Naval Base (FBIS) Coral Gables, Fi _B. Official Cover Properties 2 Locations 1 Location 1 Location C. Safehouses 2 Locations D. Non-Offical Cover 1 Location 2 Locations 1 Location Georgia A. Overt _& Nominal Properties Atlanta, Ga B. Official Cover Properties 1 Location Hawaii A. Overt § Nominal Properties Honolulu, Hi | SECRET ™o ram) to Dae: Personnel 25 -16 NLA. - Purpose Foreign broadcast station U.S. resident contact Foreign intelligence station Foreign commo. center Field investigation office Covert meetings Administers survivers' benefits - R&D and procurement, aviation _ equipment . Cuban propaganda operations U.S. resident contact. Foreign intelligence ‘collection U.S. resident contact E2 CL By 029557 $c) Bw Mee Docld: 32423532 Page 250 HW 450955
ae choo cine . i eae Cy eet te So ware tee SECRET DOMESTIC REAL PROPERTY LISTING Location Street Address : Personnel Purpose Hawaii B. Official Cover Properties a, . : — 7 a | Location _§ Field liaison CINCPAC | 1 Installation . 7 oo: , 9 Commo’ relay station Illinois | | A. Qvert § Nominal Properties | ‘Chicago, T11 , 1 Field recruiting office Chicago, Iil ; (16 «U.S. resident contact B. Official Cover Properties | . | 1 Location . : .22. Field Investigation office 1 Location ° _ 11 Foreign intelligence collection C. Safehouses . 2 Locations | — , . _ NA. . Covert meetings Indiana . “A. Overt § Nominal Properties Indianapolis, In | | oe 2 U.S. resident contact Louisiana | | . A. Overt §& Nominal Properties - _ New Orleans, La’ | : oo 2 U.S. resident contact SECRET © - .. . _ E2'CL By 029557
§ 4 | — "SECRET DOMESTIC REAL PROPERTY LISTING 3 _ Location , Street Address — ; Personnel - Purpose Massachusetts A. Overt § Nominal Properties Cambridge, Ma a 12 (U.S. resident. contact Boston, Ma - . 1 Field recruiting office B. Official Cover Properties 1 Location . . 13 Field investigation office 1 Location os o 7 Foreign intelligence collection C. Safehouses . . . 2 Locations , N.A. Covert meetings Maryland A. Overt §& Nominal Properties Highland Pk; Md . se (7 U.S. resident contact - Baltimore, Md ° 2 U.S. resident contact B. Official Cover Properties . 1 Location . . ; 11. Maritime research § training ' 1 Location So se ; “| Security liaison 1 Location mt . 6 Training facility Safehouses 1 Location oo ae — "NAA. Covert: meetings SECRET ae £2 CL By 029557 aa a Hay HW 50955 Docld:32423532 “Page 252
Minnesota A. Overt §& Nominal Properties SECRET DOMESTIC REAL PROPERTY LISTING Location — Street Address Minneapolis, Mn ‘St. Paul, Mn. Missouri A. Overt §& Nominal Properties “St. Louis, Mo Overland, Mo. Kansas City, Mo Nevada A. Overt § Nominal Properties None ; . B. Official Cover Properties "1 Location New York A. Overt § Nominal Properties _ New York, NY- New York, .NY _ Niagara, NY Schenectady, NY Syracuse, NY — SECRET Personnel Purpose. hp cA 35 wi a) Fo OO U.S. resident contact Field recruiting office U.S.. resident contact Field investigation office Field recruiting office Training §& R&D installation U.S. resident contact Field recruiting office U.S. resident contact U.S. resident contact U.S. resident contact E2 CL By 029557 HW 50955 Docld:32473532 Page 253
Location New York B. Official Cover Properties 1 Location ‘ 1 Location 1 Location C. Safehouses 23 Locations D. Non-Official Properties 1 Location 2 Locations 2 Locations 3 Locations 1 Location North Carolina . ‘1 Offical Cover Installation Ohio © -A.. Overt §& Nominal Properties SECRET. DOMESTIC REAL PROPERTY LISTING Street Address Cleveland, Oh Cincinnati, Oh B. Official Cover Properties 1 Location SECRET Personnel 30 22 N.A. Purpose ‘Foreign intelligence collection Field investigation office Photo procurement, foreign persons Covert meetings Foreign newspaper service’ Foreign intelligence collection Proprietary management services Overseas book distribution Contractor's Liaison Field training facility U.S: resident contact U.S. resident contact Foreign intelligence collection E2 CL By 029557 Page 254 1324295532 BDocld | HW, 40955:
Location Oklahoma - A. Overt § Nominal Properties Tulsa, Ok | Oregon Portland, Or Pennsylvania A. Overt _§ Nominal Properties - Philadelphia, Pa Philadelphia, Pa Pittsburgh, Pa Pittsburgh, Pa Tennessee - “i Non-Of ficial Installation . Texas A. Overt § Nominal Properties Austin, Tx Austin, Tx Dallas, Tx Houston, Tx B. Official Cover Properties 1 Installation bo fi C Of (C (2) Re 08 DOMESTIC REAL PROPERTY LISTING Street Address AL: Overt § Nominal Properties pot OO bet ‘(47 Company) ‘aN e e Purpose U.S. resident contact Field recruiting office U.S. resident contact Field recruiting office ¢ U.S. resident contact Field recruiting office Aviation equipment procurement § R&D Field recruiting office U.S. resident contact U.S. resident contact U.S. resident contact Ordnance depot E2 CL By 029557 e 255 ge Fa 132493532 HY 50955 Docld
SECRET DOMESTIC REAL PROPERTY LISTING Location Streét Address Personnel Purpose Texas Ce aR CR iti! vac ete RA ak: 4a a C. Safehouses 1 Location Utah A. Overt & Nominal Properties . ‘NLA; Salt Lake, Ut Virginia A. Overt & Nominal Properties Richmond, Va B. Official Cover Properties q Installation (4 Stations) 1 Installation . - 1 Location 1 Installation 1 Location Washington - A. Overt & Nominal Properties 286 76 72 Seattle, Wa : B, Official Cover Properties _1 Location 24 SECRET 00 code 8) Ooo Covert meetings U.S. resident contact U.S. resident contact Records Center, Training, R&U, Commo Facilities Field Training Site Technical R&D ; R§D project 7 Minor ordnance storage U.S. resident. contact Foreign equipment analysis E2 CL By 029557 | HW 50955 Page 256 Docld: 32493532
SECRET. DOMESTIC REAL PROPERTY LISTING : Street Address Non-Official Properties A. Overt §& Nominal Properties Milwaukee, Wi Purpose | Covert meetings Contractor liaison - U.S. resident contact
Attachment 2 © SECRET: CIA Domestic Real Property Summary Sheet Overt §& ae mc ; Location ~ . Nominal Official Safehouses Non-Official Washington, D. C. and- os oo . Suburbs 13 37 16 Arizona : . Sh. ol Califormia 10; 12 9 Colorado . Connecticut .. Florida Georgia Hawaii Illinois Indiana Louisiana Maryland ‘Massachusetts Minnesota - issouri Nevada New York ; North Carolina Ohio. Oklahoma Oregon Pennsylvania a . Tennessee oo ; ‘1 Texas : Utah Virginia ‘Washington Wisconsin i ~~ Nm mre & how OW ANNE ENE ENE hb & Ne 23 9 md ped Gad pe BER Dp k= 00 > 1, 2 2 3 6 1 1 : 6. 6. 2 3. 1 40 3 1 i 1 1 6 1 9 4. 1 Ppt pl pet bt fe an Bh TOTALS 53 res
29 AUG 1973 ; | MEMORANDUM FOR: Deputy Director for Science and Technology ' Deputy Director for Intelligence . Deputy Director. for Management and Services. Deputy Director for Operations ae INFO Inspector General SUBJECT : Questionable Activities: 1. As an aspect of the allegations of improper CIA activity _in connection with the Watergate and associated matters, the - Inspector General was directed to assemble all information avail~ — able in the Agency on any such| activities. Certain specific matters. were provided to him, and the Director by memorandum of 9 May 1973. - directed all employees to report any activities, current or past, "which might be construed to bé outside the legislative. charter of this Agency." This information was assembled and consolidated by | the Inspector General in a-memorandum of 21 May 1973 and certain individual memoranda thereafter supplementing it. This material was used in a detailed, page-by-page review of all such information with Senator Symington and Congressman Nedzi, as Chairmen of the Senate and the House Armed Services Intelligence Subcozmittees, respectively. In addition, I undertook very specific commitments in my confirmation hearings to ensure that the Agency will remain transcripts of those hearings to be circulated throughout the Agency for compliance, and at that time will reaffirm the specific ~ direction made by_Dr. Schlesinger in his memorandum of 9 May 1973. - This will also be incorporated ,into appropriate regulations. - 2. With respect to the specific questionable activities which were reported as a result of the search made throughout the Agency, hovever, I believe it essential to take specific action in order _ that these not seem to be condoned or overlooked. I have therefore » developed specific instructions on each reported activity. These ' . are included in the attachments to this memorandum, and have the force of specific direction to you to pass on to appropriate @ubordinates the instructions outlined. Separate packages of such ‘instructions are being developed for each Directorate in order to _ _:ing those which are deemed quite appropriate within CIA's charter. ' JUN 5 1975 ran Bote HW 50955 DocId#242359? Page 259 = + 8 ceemrmemmarencOEDD | 6 MED SECTOR sSaNS BEES aEAeE een _within its legislative charter.’ I am arranging for the published. =" - respect the sensitivity of some of the activities discussed, includ- PD AM il Vs ba. e.at_mpoer cv py see /
Similarly, each activity is placed on @ separate page so that the. Deputy Director concerned may most easily forward it to the office or offices directly concerned without distributing it more broadly. 3. In the event that these instructions raise substantial difficulties of implementation or compliance, I would appreciate your raising such cases with me directly, with whatever recommenda-~ tions you may have for modification to carry out the spirit of the action undertaken here but to avoid undue disruption of legitimate | activities. In the absence of such notice, I will expect full , compliance with the instructions outlined herein. . 4. Each: addressee Deputy-Director is instructed to recommend to the DDM&S modification or addition to Agency regulations of | appropriate language to reflect the. direction included in this — .memorandum and attachments addressed to him: DDM&S will be responsible for consolidating such recommendations and making an overall report to the Director through the IG,. coordinating with _ General Counsel. . Attachments PCiyde (27, August 1973) Lreetoution, Orginal - 1G l= Mr, Colb l= poser” l= ppr So 1 = domes a oe y 1 . i . . ~ OCC ~ w/o atts | ~1- Ole ~ w/o atts (w/o. atts =~ being held ‘ in ‘Ic file) = Qe fe SEORET-EVES ONLY Nw 50955 Dockd:32423532 Page 2600S Co JUN 25, 1975 iA OG
” MEMORANDUM SUBJECT: Domestic Proprietary Companies ° _ Corporate cover, as managed by the Cover and Commercial Start is an appropriate support for our overseas: operations. 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. fun 25 145 SteRET_ OCIA Docld: 324293532 Page 261 . co . . . Dy
“MEMORANDUM ne | a “< SUBJECT: Project MHMUTUAL a oy oo | 1 priate legal restrictions. Arrangenents are being nade briefing of the appropriate Congressional comittees. - influence on the stock market or stock dealings through ] I \ on 4 1 4 i 1 = oy soois bye ‘pane 262 SUI EES 6 ay BW. 50955 —RDocld: 324273532 Page 262 ~ | * particular concern will also be exhibited over possible “vestments involved in MHMUTUAL. | ne Project MHMUTUAL will be overated in conformance with appro- for the ‘Particular "attention ¥: will be given to avoiding any possible conflict of in- _ terest situations with firms with which the Agency has leontracts. improper I the in- ea pen ; 7 4 “YUN 25 1975, GIA ‘TOM. oes er
MEMORANDUM SUBJECT: Suggested addition: | our overseas operations. operations. fv Page 263. FY ab Doold: 32423532 Great ats Pe Givens EVES . WY Domestic Proprietary Companies 7 Corporate cover, as managed by the Cover and Commercial by the Cover and Commercial Staff, is, an appropriate supp To the degree that domestic prop or cover companies are. required, a clear justification will } developed as to the relationship of their support of our overseas wb a " | | t | { 7 To the Corporate cover, including notional companies, as managed ort ; for ietary e- a — 4
as ean atest oe wera fb it Roun a one g ‘ c meet 7 ails Rey ue) Crary) “sa 1 Para a (MEMORANDUM = So Project MHMUTUAL appropriate legal restrictions. Arrangements are being made ihe briefing of the appropriate Congressio i t ry P articular concern will also be exhibited over possible impro Project MHMUTUAL will be operated in conformance w nal committees. ° ; Docld:324293532 fl SS) €