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94th Congress
2d Session
] SENATE I ^. ^Z""^^-
GOVERMMENT DOCUMENTS
DEPARTMENT
BOSTON PUBUC LIBRARY
FOREIGN AND MILITARY
INTELLIGENCE
BOOK I
FINAL REPORT
OF THE
SELECT COMMITTEE
TO STUDY GOVERNMENTAL OPERATIONS
WITH RESPECT TO
INTELLIGENCE ACTIVITIES
UNITED STATES SENATE
TOGETHER WITH
ADDITIONAL, SUPPLEMENTAL, AND SEPARATE
VIEWS
April 26 ( legislative day, April 14 ) , 1976
U.S. GOVERNMENT PRINTING OFFICE
-983 O WASHINGTON : 1976
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $5.36
SENATE SELECT COMMITTEE TO STUDY GOVERNMENTAL OPERATIONS
WITH RESPECT TO INTELLIGENCE ACTIVITIES
FRANK CHURCH, Idaho, Chairman
JOHN G. TOWER, Texas, Vice Chairman
PHILIP A. HART, Michigan HOWARD H. BAKER, Jr., Tennessee
WALTER F. MONDALE, Minnesota BARRY GOLDWATER, Arizona
WALTER D. HUDDLESTON, Kentucliy CHARLES McC. MATHIAS, Jr., Maryland
ROBERT MORGAN, North Carolina RICHARD S. SCHWEIKER, Pennsylvania
GARY HART, Colorado
William G. Miller, Staff Director
Frederick A. O. Schwarz, Jr., Chief Counsel
Curtis R. Smothers, Counsel to the Minority
Audrey Hatry, Clerk of the Committee
(n)
LETTER OF TRANSMITTAL
(By Senator Frank Church, Chairman of the Senate Select Committee
to Study Governmental Operations With Eespect to Intelligence
Activities)
On January 27, 1975, the Senate established a Select Committee to
conduct an investigation and study of the intelligence activities of the
United States. After 15 months of intensive work, I am pleased to
submit to the Senate this volume of the Final Report of the Com-
mittee relating to foreign and military intelligence. The inquiry arises
out of allegations of abuse and improper activities by the intelligence
agencies of the United States, and great public concern that the
Congress take action to bring the intelligence agencies under the
constitutional framework.
The members of the Select Committee have worked diligently and
in remarkable harmony. I want to express my gratitude to the Vice
Chairman, Senator John Tower of Texas, for his cooperation through-
out and the able assistance he has given me in directing this most
diificult task. While every member of the Committee has made im-
portant contributions, I especially want to thank Senator Walter D.
Huddleston of Kentucky for the work he has done as Chairman of
the Foreign and Military Subcommittee. His direction of the Sub-
committee, working with Senator Charles McC. Mathias of Mary-
land, Senator Gary Hart of Colorado and Senator Barry Goldw^ater
of Arizona, has been of immeasurable help to me in bringing this
enormous undertaking to a useful and responsible conclusion.
Finally, I wish to thank the staff for the great service they have
performed for the Committee and for the Senate in assisting the
members of the Committee to carry out the mandate levied by Senate
Resolution 21. The quality, integrity and devotion of the staff has
contributed in a significant way to the important analyses, findings
and recommendations of the Committee.
The volume which follows, the Report on the Foreign and Military
Intelligence Activities of the United States, is intended to provide to
the Senate the basic information about the intelligence agencies of
the TTnited States required to make the necessary judgments concern-
ing the role such agencies should play in the future. Despite security
considerations which have limited what can responsibly be printed for
public release the information which is presented in this report is a
reasonably complete picture of the intelligence activities under-
taken by the United States, and the problems that such activities pose
for constitutional government.
The Findings and Recommendations contained at the end of this
volume constitute an agenda for action which, if adopted, would go
a long way toward preventing the abuses that have occurred in the
past from occurring again, and would assure that the intelligence
activities of the United States will be conducted in accordance with
constitutional processes.
Frank Church.
(ni)
NOTE
The Committee's Final Keport has been reviewed and declassi-
fied by the appropriate executive agencies. These agencies submitted
comments to the Committee on security and factual aspects of each
chapter. On the basis of these comments, the Committee and staff
conferred with representatives of the agencies to determine which
parts of the report should remain classified to protect sensitive intel-
ligence sources and methods.
At the request of the agencies, the Committee deleted three chapters
from this report : "Cover," "Espionage," and "Budgetary Oversight."
In addition, two sections of the chapter "Covert Action of the CIA"
and one section of the chapter "Department of State" have been de-
leted at the request of the agencies. Particular passages which were
changed at the request of the agencies are denoted by italics and a
footnote. Complete versions of deleted or abridged materials are avail-
able to Members of the Senate in the Committee's classified report
under the provisions of S. Res. 21 and the Standing Rules of the
Senate.
Names of individuals were deleted when, in the Committee's judg-
ment, disclosure of their identities would either endanger their safety
or constitute a substantial invasion of privacy. Consequently, footnote
citations to testimony and documents occasionally contain only descrip-
tions of an individual's position.
Appendix Three, "Soviet Intelligence Collection and Intelligence
Against the United States," is derived solely from a classified CIA
report on the same subject which was edited for security considerations
by the Select Committee staff.
(IV)
CONTENTS
Page
I. INTRODUCTION 1
A. The Mandate of the Committee's Inquiry 2
B. The Purpose of the Committee's Findings and Recommenda-
tions 4
C. The Focus and Scope of the Committee's Inquiry and Ob-
stacles Encountered 5
D. The Historical Context of the Inquiry 8
E. The Dilemma of Secrecy and Open Constitutional Govern-
ment 11
II. THE FOREIGN AND MILITARY INTELLIGENCE OPERA-
TIONS OF THE UNITED STATES: AN OVERVIEW 15
A. The Basic Issues: Secrecy and Democracy 16
B. The Scope of the Select Committee Inquiry into Foreign and
Military Intelligence Operations 17
C. The Intelligence Process: Theory and Reality 17
D. Evolution cf the United States Intelligence Community 19
E. The Origins cf the Postwar Intelligence Community 20
F. The Response to the Soviet Threat 22
G. Korea: The Turning Point 23
H. The "Protracted Conflict" 24
I. Third World Competition and Nuclear Crisis 25
J. Technology and Tragedy 26
K. Thel970s 27
L. TheTaskAhead 28
III. THE CONSTITUTIONAL FRAMEWORK FOR INTELLI-
GENCE ACTIVITIES 31
A. The Joint Responsibilities of the Legislative and Executive
Branches — Separation of Powers and Checks and Balances.- 31
B. The Historical Practice 33
C. The Constitutional Power of Congress to Regulate the Con-
duct of Foreign Intelligence Activity 38
IV. THE PRESIDENT'S OFFICE 41
A. The National Security Council 42
B. Authorization and Control of Covert Activities 48
C. Providing the Intelligence Required by Policymakers 61
D. Advising the President on Intelligence Issues 62
E. Allocating Intelligence Resources 65
V. THE DIRECTOR OF CENTRAL INTELLIGENCE 71
A. The Producer of National Intelligence 73
B. Coordinator of Intelligence Activities 83
C. Director of the CIA 94
VI. HISTORY OF THE CENTRAL INTELLIGENCE AGENCY.. 97
A. The Central Intelligence Group and the Central Intelligence
Agency: 1946-1952 99
B. The Dulles Era: 1953-1961 109
C. Change and Routinization: 1961-1970 115
D. The Recent Past: 1971-1975 121
E. Conclusion 124
VII. THE CENTRAL INTELLIGENCE AGENCY: STATUTORY
AUTHORITY 127
A. Clandestine Collection of Intelligence 128
B. Covert Action 131
C. Domestic Activities 135
(V)
VI
Page
VIII. COVERT ACTION 141
A. Evolution of Covert Action 143
B. Congressional Oversight 149
C. Findings and Conclusions 152
IX. COUNTERINTELLIGENCE 163
A. Counterintelligence: An Introduction 163
B. Current Issues in Counterintelligence 171
C. Conclusions 177
X. THE DOMESTIC IMPACT OF FOREIGN CLANDESTINE
OPERATIONS: THE CIA AND ACADEMIC INSTITUTIONS,
THE MEDIA, AND RELIGIOUS INSTITUTIONS 179
A. Covert Use of Academic and Voluntary Organizations 181
B. Covert Relationships with the United States Media 191
C. Covert Use of U.S. Religious Groups 201
XL PROPRIETARIES 205
A. Overview 206
B. Structure 207
C. Operation of Proprietaries 234
D. The Disposal of Proprietaries 236
E. Financial Aspects 247
F. Some General Considerations 251
XII. CIA PRODUCTION OF FINISHED INTELLIGENCE 257
A. Evolution of the CIA's Intelligence Directorate 259
B. The Intelligence Directorate Today 265
C. The Relationship Between InteUigence and Policy 266
D. The Limits of Intelligence 268
E. The Personnel System 269
F. Recruitment and Training of Analysts 270
G. The Intelligence Culture and Analytical Bias 270
H. The Nature of the Production Process: Consensus Versus
Competition 271
I. The "Current Events" Syndrome 272
J. Innovation 273
K. Overload on Analysts and Consumers 274
L. Quality Control 276
M. Consumer Guidance and Evaluation 276
N. The Congressional Role 277
XIII. THE CIA's INTERNAL CONTROLS: THE INSPECTOR GEN-
ERAL AND THE OFFICE OF GENERAL COUNSEL 279
A. The General Counsel 280
B. The Office of the Inspector General 289
C. Internal and External Review of the Office of the Inspector
General 303
XIV. THE DEPARTMENT OF STATE 305
A. Origins of the State Department Intelligence Function 305
B. Command and Control 308
C. Support Communications 315
D. Production of Intelligence 315
XV. DEPARTMENT OF DEFENSE 319
A. Objectives and Organization of the Defense Intelligence Com-
munity 320
B. The Defense Intelligence Budget 328
C. Management Problems of the Defense Intelligence Com-
munity 341
D. Agencies and Activities of Special Interest 349
E. Military Counterintelligence and Investigative Agencies 355
F. Chemical and Biological Activities 359
G. Meeting Future Needs in Defense Intelligence 363
VII
XVI. DISCLOSURE OF BUDGET INFORMATION ON THE IN- Page
TELLIGENCE COMMUNITY 367
A. The Present Budgetary Process for Intelligence Community
Agencies and Its Consequences 367
B. The Constitutional Requirement 369
C. Alternatives to Concealing Intelligence Budgets from Congress
and the PubHc 374
D. The Effect Upon National Security of Varying Levels of
Budget Disclosure 376
E. The Argument that Publication of Any Information will
Inevitably Result in Demands for Further Information 381
F. The Argument that the United States Should Not Publish
Information on Its Intelligence Budget Because No Other
Government in the World Does 383
G. Summary and Conclusion 384
XVII. TESTING AND USE OF CHEMICAL AND BIOLOGICAL
AGENTS BY THE INTELLIGENCE COMMUNITY 385
A. The Programs Investigated 387
B. CIA Drug Testing Programs 392
C. Covert Testing on Human Subjects by Military Intelligence
Groups 411
D. Cooperation and Competition Among the Intelligence Agen-
cies, and Between the Agencies and Other Individuals and
Institutions 420
XVIII. SUMMARY: FINDINGS AND RECOMMENDATIONS 423
A. Introduction 423
B. General Findings 424
C. The 1947 National Security Act and Related Legislation 426
D. The National Security Council and the Office of the President- 427
E. The Director of Central Intelligence 432
F. The Central Intelligence Agency 435
G. Reorganization of the Intelligence Community 449
H. CIA Relations with United States Institutions and Private
Citizens 451
I. Proprietaries and Cover 456
J. Intelligence Liaison 459
K. The General Counsel and the Inspector General 459
L. The Department of Defense 462
M. The Department of State and Ambassadors 466
N. Oversight and the Intelligence Budget 469
O. Chemical and Biological Agents and the Intelligence Com-
munity 471
P. General Recommendations 472
APPENDIX I: Congressional Authorization for the Central InteUigence
Agency to Conduct Covert Action 475
A. The National Security Act of 1947 476
B. The CIA Act of 1949 492
C. The Provision of Funds to the CIA by Congress 496
D. The Holtzman and Abourezk Amendments of 1974 502
E. The Hughes-Ryan Amendment 505
F. Conclusion 508
APPENDIX II: Additional Covert Action Recommendations 511
A. Statement of Clark M. Clifford 512
B. Statement of Cyrus Vance 516
C. Statement of David A. Phillips 518
D. Prepared Statement of Morton H. Halperin 520
E. Recommendations of the Harvard University Institute of
Politics, Study Group on Intelligence Activities 524
F. Recommendations of the House Select Committee on Intelli-
gence Concerning Covert Action ^^ 533
G. Article from Foreign Affairs by Harry Rositzke: America's
Secret Operations : A Perspective 534
H. Article from Saturday Review by Tom Braden: What's Wrong
with the CIA? _- 547
I. Recommendations of the Commission on the Organization of
the Government for the Conduct of Foreign Policy (the
Murphy Commission) Concerning Covert Action 554
vm
APPENDIX III: Soviet Intelligence Collection and Operations Against Page
the United States 557
A. Introduction 557
B. Organization and Structure 558
C. The GRU 560
D. The Scope and Methods of Anti-United States Operations by
the KGB and the GRU 561
E. Eastern European Security and Intelligence Services 561
ADDITIONAL VIEWS OF SENATOR FRANK CHURCH 563
ADDITIONAL VIEWS OF SENATORS WALTER F. MONDALE,
GARY HART, AND PHILIP HART 567
INTRODUCTION TO SEPARATE VIEWS OF SENATORS JOHN
G. TOWER, HOWARD H. BAKER, JR. AND BARRY M.
GOLD WATER 571
SEPARATE VIEWS OF SENATOR JOHN G. TOWER 573
INDIVIDUAL VIEWS OF SENATOR BARRY GOLDWATER 577
SEPARATE VIEWS OF HOWARD H. BAKER, JR 594
SUPPLEMENTAL VIEWS OF SENATOR CHARLES McC.
MATHIAS, JR 609
ADDITIONAL VIEWS OF SENATOR RICHARD S. SCHWEIKER_ 615
GLOSSARY OF SELECTED INTELLIGENCE TERMS AND LIST
OF ABBREVIATIONS 617
NATIONAL INTELLIGENCE CHARTS 634
SENATE RESOLUTION 21 636
STAFF LIST 649
I. INTRODUCTION
The Senate Select Committee on Intelligence Activities has con-
ducted a fifteen month long inquiry, the first major inquiry into intelli-
gence sinbe World War II. The inquiry arose out of allegations of
substantial, even massive wrong-doin^ within the "national intelli-
gence" system.^ This final report provides a history of the evolution
of intelligence, an evaluation of the intelligence system of the United
States, a critique of its problems, recommendations for legislative
action and recommendations to the executive branch. The Committee
believes that its recommendations will provide a sound framework for
conducting the vital intelligence activities of the United States in a
manner which meets the nation's intelligence requirements and pro-
tects the liberties of American citizens and the freedoms which our
Constitution guarantees.
The shortcomings of the intelligence system, the adverse effects of
secrecy, and the failure of congressional oversight to assure adequate
accountability for executive branch decisions concerning intelligence
activities were major subjects of the Committee's inquiry. Equally im-
portant to the obligation to investigate allegations of abuse was the
duty to review systematically the intelligence community's overall
activities since 1945, and to evaluate its present structure and
performance.
An extensive national intelligence system has been a vital part of
the United States government since 1941. Intelligence information
has had an important influence on the direction and development
of American foreign policy and has been essential to the maintenance
of our national security. The Committee is convinced that the United
States requires an intelligence system which will provide policy-
makers with accurate intelligence and analysis. We must have an early
warning system to monitor potential military threats by countries
hostile to United States interests. We need a strong intelligence system
to verify that treaties concerning arms limitation are being honored.
Information derived from the intelligence agencies is a necessary in-
gredient in making national defense and foreign policy decisions. Such
information is also necessary in countering the efforts of hostile intel-
ligence services, and in halting terrorists, international drug traffickers
and other international criminal activities. Within this country cer-
tain carefully controlled intelligence activities are essential for ef-
fective law enforcement.
The United States has devoted enormous resources to the creation
of a national intelligence system, and today there is an awareness on
the part of many citizens that a national intelligence system is a per-
^ National intelligence includes but is not limited ito the CIA, NSA, DIA, ele-
ments within the Department of Defense for the collection of intelligence through
reconnaissance programs, the Intelligence Division of the FBI, and the intel-
ligence elements of the State Department and the Treasury Department.
(1)
manent and necessary component of our government. The system's
value to the country has been proven and it will be needed for the
foreseeable future. But a major conclusion of this inquiry is that con-
gressional oversight is necessary to assure that in the future our
intelligence community functions effectively, within the framework
of the Constitution.
The Committee is of the view that many of the unlawful actions
taken by officials of the intelligence agencies were rationalized as
their public duty. It was necessary for the Committee to understand
how the pursuit of the public good could have the opposite effect.
As Justice Brandeis observed :
Experience should teach us to be most on our guard to protect
liberty when the Government's purposes are benificent. Men
born to freedom are naturally alert to repel invasion of their
liberty by evil-minded rulers. The greatest dangers to liberty
lurk in insidious encroachment by men of zeal, well-meaning
but without understanding.^
A. The Mandate of the Committee's Inquiry
On January 27, 1975, Senate Resolution 21 established a select com-
mittee "to conduct an investigation and study of governmental opera-
tions with respect to intelligence activities and of the extent, if any,
to which illegal, improper, or unethical activities were engaged in by
any agency of the Federal Government." Senate Resolution 21 lists
specific areas of inqury and study :
( 1 ) Whether the Central Intelligence Agency has conducted
an illegal domestic intelligence operation in the United States.
(2) The conduct of domestic intelligence or counterintelli-
gence operations against United States citizens by the Federal
Bureau of Investigation or any other Federal agency.
(3) The origin and disposition of the so-called Huston
Plan to apply United States intelligence agency capabilities
against individuals or organizations within the United
States.
(4) The extent to which the Federal Bureau of Investiga-
tion, the Central Intelligence Agency, and other Federal law
enforcement or intelligence agencies coordinate their respec-
tive activities, any agreements which govern that coordina-
tion, and the extent to which a lack of coordination has con-
tributed to activities or actions which are illegal, improper,
inefficient, unethical, or contrary to the intent of Congress.
(5) The extent to which the operation of domestic intelli-
gence or counterintelligence activities and the operation of
any other activities within the United States by the Central
Intelligence Agency conforms to the legislative charter of
that Agency and the intent of the Congress.
(6) The past and present interpretation by the Director of
Central Intelligence of the responsibility to protect intelli-
gence sources and methods as it relates to that provision of
the National Security Act of 1947 which provides ". . .
''Olmstead v. United States, 277 U.S. 438, 479 (1928).
that the agency shall have no police, subpena, law enforce-
ment powers, or internal security functions. . . ." ^
(7) The nature and extent of executive branch oversight
of all United States intelligence activities.
(8) The need for specific legislative authority to govern
the operations of any intelligence agencies of the Federal
Government now existing without that explicit statutory au-
thority, including but not limited to agencies such as the
Defense Intelligence Agency and the National Security
Agency.
(9) The nature and extent to which Federal agencies co-
operate and exchange intelligence information and the ade-
quacy of any regulations or statutes which govern such
cooperation and exchange of intelligence information.
(10) The extent to which United States intelligence agen-
cies are governed by Executive Orders, rules, or regulations
either published or secret and the extent to which those
Executive Orders, rules, or regulations interpret, expand, or
are in conflict with specific legislative authority.
(11) The violation or suspected violation of any State
or Federal statute by any intelligence agency or by any per-
son by or on behalf of any intelligence agency of the Fed-
eral Government including but not limited to surreptitious
entries, surveillance, wiretaps, or eavesdropping, illegal open-
ing of the United States mail, or the monitoring of the United
States mail.
(12) The need for improved, strengthened, or consoli-
dated oversight of United States intelligence activities by the
Congress.
(13) Whether any of the existins: laws of the United States
are inadequate, either in their provisions or manner of en-
forcement, to safeguard the rights of American citizens, to
improve executive and legislative control of intelligence and
related activities, and to resolve uncertainties as to the au-
thoritv of United States intelligence and related agencies.
(14) Whether there is unnecessary duplication of expendi-
ture and effort in the collection and processing of intelligence
information by United States agencies.
(15) The extent and necessity of overt and covert intelli-
gence activities in the TTnited States and abroad.
In addressing these mandated areas of inquiry, the Committee has
focused on three broad questions :
1. Whether intelligence activities have functioned in ac-
cordance with the Constitution and the laws of the United
States.
2. Whether the structure, programs, past history, and
present policies of the American intelligence svstem have
served the national interests in a manner consistent with
declared national policies and purposes.
^50 U.S.r. 403rd) (3) : Appendix B, Senate Select Committee Hearings (here-
inafter cited as hearings), Vol 7, p. 210.
3. Whether the processes through which the intelligence
agencies have been directed and controlled have been ade-
quate to assure conformity with policy and the law.
Over the past vo}\r, the Committee and its sfaff have carefully
examined the intelligence structure of the United States. Consider-
able time and effort have been devoted in order to understand what
has been done by the United States Government in secrecy during the
thirty-year period since the end of World War II. It is clear to the
Committee that there are many necessary and proper governmental
activities that must be conducted in secrecy. Some of these activities
affect the security and the very existence of the nation.
It is also clear from the Committee's inquirv that intelligence
activities conducted outside the framework of the Constitution and
statutes can undermine the treasured values guaranteed in the Bill
of Rights. Further, if the intelligence agencies act in ways inimical
to declared national purnoses, they damage the reputation, power, and
influence of the United States abroad.
The Committee's investigation has documented that a number of
actions committed in the name of "national security" were inconsistent
with declared policy and the law. Hearings have been held and the
Committee has issued reports on alleged assassination plots, covert
action in Chile and the interception of domestic communications by
the National Security Agency (NSA). Regrettably, some of these
abuses cannot be regarded as aberrations.
B. The Purpose of the Committee's Findings and
Recommendations
It is clear that a primary task for any successor oversight committee,
and the Congress as a whole, will be to frame basic statutes necessary
under the Constitution within which the intelligence agencies of the
United States can function efficiently under clear guidelines. Charters
delineating the missions, authorities, and limitations for some of the
United States most important intelligence agencies do not exist. For
example, there is no statutory authority for the NSA's intelligence
activities. Where statutes do exist, as with the CIA, they are vague and
have failed to provide the necessary guidelines defining missions and
limitations.
The Committee's investigation has demonstrated, moreover, that the
lack of legislation has had the effect of limiting public debate upon
some important national issues.
The CIA's broad statutory charter, the 1947 National Security Act,
makes no specific mention of covert action. The CIA's former General
Counsel, Lawrence Houston, who was deeply involved in drafting the
1947 Act, wrote in September 1947, "we do not believe that there was
any thought in the minds of Congress that the CIA under [the
authority of the National Securitv Act] would take positive action
for subversion and sabotage." * Yet, a few months after enactment
of the 1947 legislation, the National Security Council authorized
the CIA to engage in covert action programs. The provision of the
Act often cited as authorizing CIA covert activities provides for the
Agency :
"Memorandum from CIA General Council Lawrence Houston to DCI Hillen-
koetter, 9/25/47.
... to perform such other functions and duties related to
intelligence affecting the national security as the National
Security Council may from time to time direct.'**
Secret Executive Orders issued by the NSC to carry out covert action
programs were not subject to congressional review. Indeed, until re-
cent years, except for a few members, Congress was not fully aware of
the existence of the so-called "secret charter for intelligence activities."
Those members who did know had no institutional means for dis-
cussing their knowledge of secret intelligence activities with their
colleagues. The problem of how the Congress can effectively us© secret
knowledge in its legislative processes remains to be resolved. It is the
Committee's view that a strong and effective oversight committee is
an essential first step that must be taken to resolve this fundamental
issue.
C. The Focus and Scope of the Committee's Inquiry and Obstacles
Encountered
The inquiry mandated in S. Res. 21 falls into two main categories.
The first concerns allegations of wrong-doing. The nature of the Com-
mittee's inquiry into these matters tends, quite properly, to be akin to
the investigations conducted by Senate and Congressional committees
in the past. We decided from the outset, however, that this committee
is neither a court, nor a law enforcement agency, and that while using
many traditional congressional investigative techniques, our inquiry
has served primarily to illustrate the problems before Congress and the
countiy. The Justice Department and the courts in turn have their
proper roles to play.
The second category of inquiry has been an examination of the
intelligence agencies themselves. The Committee wished to learn
enough about their past and present activities to make the legislative
judgments required to assure the American people that whatever
necessary secret intelligence activities were being undertaken were
subject to constitutional processes and were being conducted in as
effective, humane, and efficient a manner as possible.
The Committee focused on many issues affecting the intelligence
agencies which had not been seriously addressed since our peacetime
intelligence system was created in 1947. The most important questions
relating to intelligence, such as its value to national security purposes
and its cost and quality, have been carefully examined over the past
year. Although some of the Committee's findings can be reported to
the public only in outline, enough can be set forth to justify the rec-
ommendations. The Committee has necessarily been selective. A year
was not enough time to investigate everything relevant to intelligence
activities.
These considerations guided the Committee's choices:
(1) A limited number of programs and incidents were ex-
amined in depth rather than reviewing hundreds superficially.
The Committee's purpose was to understand the causes for
the particular performance or behavior of an agency.
(2) The specific cases examined were chosen because they
reflected generic problems.
50 U.S.C. 403(d)(5).
6
(3) Where broad programs were closely reviewed (for
example, the CIA's covert action programs) , the Committee
sought to examine successes as well as apparent failures.
(4) Programs were examined from Franklin Roosevelt's
administration to the present. This was done in order to
present the historical context within which intelligence ac-
tivities have developed and to assure that sensitive, funda-
mental issues would not be subject to possible partisan biases.
It is clear from the Committee's inquiry that problems arising from
the use of the national intelligence system at home and abroad are to
be found in every administration. Accordingly, the Committee chose
to emphasize particular parts of the national intelligence system and
to address particular cases in depth. The Committee has concentrated
its energies on the six executive branch groups that make up what
is called "National Intelligence".
(1) The Central Intelligence Agency.
(2) The counterintelligence activities of the Federal Bu-
reau of Investigation.
(3) The National Security Agency.
(4) The national intelligence components of the Depart-
ment of Defense other than NSA.
(5) The National Security Council.
(6) The intelligence activities of the Department of State.
The investigation of these national intelligence groupings included
examining the degree of command and control exercised over them
by the President and other key Government officials or institutions.
The Committee also sought to evaluate the ability and effectiveness of
Congress to assert its oversight right and responsibilities. The agencies
the Committee has concentrated on have great powers and extensive
activities which must be understood in order to judge fairly whether
the United States intelligence system needs reform and change. The
Committee believes that many of its general recommendations can
and should be applied to the intelligence operations of all other
government agencies.
Based on its investigation, the Committee concludes that solutions
to the main problems can be developed by analyzing the broad patterns
emerging from the examination of particular cases. At the same time,
neither the dangers, nor the causes of abuses within the intelligence
system, nor their possible solutions can be fairly understood without
evaluating the historical context in which intelligence operations have
been conducted.
Individual cases and programs of government surveillance which the
Committee examined raise questions concerning the inherent conflict
between the government's perceived need to conduct surveillance and
the citizens' constitutionally protected rights of privacy and dissent. It
has become clear that if some lose their liberties unjustly, all may lose
their liberties. The protections and obligations of law must apply to all.
Only by looking at the broad scope of questionable activity over a
long period can we realistically assess the potential dangers of intru-
sive government. For example, only through an understanding of the
totality of government ejfforts against dissenters over the past thirty
years can one weigh the extent to which such an emphasis may "chill"
legitimate free expression and assembly.
The Select Committee has conducted the only thorough investigation
ever made of United States intelligence and its post World War II
emergence as a complex, sophisticated system of multiple agencies
and extensive activities. The Committee staff of 100, including 60 pro-
fessionals, has assisted the 11 members of the Committee in this in-
depth inquiry which involved more than 800 interviews, over 250
executive hearings, and documentation in excess of 110,000 pages.
The advice of former and current intelligence officials, Cabinet mem-
bers, State, Defense, and Justice Department experts, and citizens
from the private sector who have served in national security areas
has been sought throughout the Committee's inquiry. The Committee
has made a conscious effort to seek the views of all principal officials
who have served in the intelligence agencies since the end of World
War II. We also solicited the opinions of constitutional experts and
the wisdom of scientists knowledgeable about the technology used by
intelligence agencies. It was essential to learn the views of these sources
outside of the government to obtain as full and balanced an under-
standing of intelligence activities as possible.
The fact that government intelligence agencies resist any examina-
tion of their secret activities even by another part of the same govern-
ment should not be minimized. The intelligence agencies are a sector
of American government set apart. Employees' loyalties to their or-
ganizations have been conditioned by the closed, compaitmented and
secretive circumstances of their agencies' formation and operation. In
some respects, the intelligence profession resembles monastic life with
some of the disciplines and pereonal sacrifices reminiscent of medieval
orders. Intelligence work is a life of service, but one in which the
norms of American national life are sometimes distressingly distorted.
Despite its legal Senate mandate, and the issuance of subpoenas, in
no instance has the Committee been able to examine the agencies' files
on its own. In all the agencies, whether CIA, FBI, NSA, INK, DIA,
or the NSC, documents and evidence have been presented through
the filter of the agency itself.
Although the Senate inquiry was congressionally ordered and
although properly constituted committees under the Constitution have
the right of full inquiry, the Central Intelligence Agency and other
agencies of the executive branch have limited the Committee's access to
the full record. Several reasons have been given for this limitation. In
some instances, the so-called doctrine of executive privilege has been
asserted. Despite these assertions of executive privilege, there are no
classes of documents which the Committee has not obtained, whether
from the NSC, the personal papers of former Presidents and their
advisors, or, as in the case of the Committee's Report on Alleged Assas-
sination Plots Involving Foreign Leaders, all classes of documents
available in the executive branch. The exception, of course, involves
the Nixon files which were not made available because of court order.
It should be noted that in some highly important areas of its in-
8
vestigation, the Committee has been refused access to files or docu-
ments. These involve, among others, the arrangements and agreements
made between the intelligence agencies and their informers and
sources, including other intelligence agencies and governments. The
Committee has agreed that in general, the names of agents, and their
methods of conducting certain intelligence activities should remain
in the custody of a few within the executive branch. But there
is a danger and an uncertainty which arises from accepting at face
value the assertions of the agencies and departments which in the past
have abused or exceeded their authority. If the occasion demands, a
duly authorized congressional committee must have the right to go
behind agency assertions, and review the full evidence on which agency
responses to committee inquiries have been based. There must be a
check: some means to ascertain whether the secrets being kept are,
in fact, valid national secrets. The Committee believes that the burden
of proof should be on those who ask that a secret program or policy
be kept secret.
The Committee's report consists of a number of case studies which
have been pursued to the best of the Committee's ability and which the
Committee believes illuminate the purposes, character, and usefulness
of the shielded world of intelligence activities. The inquiry conducted
over the past 15 months will probably provide the only broad insight
for some time into the now permanent role of the intelligence commu-
nity in our national government. Because of this, and because of the
need to assure that necessary secret activities remain under constitu-
tional control, the recommendations set forth by the Committee are
submitted with a sense of urgency and with the admonition that to
ignore the dangers posed by secret government action is to invite the
further weakening of our democracy.
D. The Historical Context of the Inquiry
The thirty years since the end of World War II have been marked
by continuing experimentation and change in the scope and methods
of the United States Government's activities abroad. From the all-out
World War between the Axis powers and the allies, to the Cold War
and fears of nuclear holocaust between the communist bloc and West-
ern democratic powers, to the period of "wars of liberation" in the
former colonial areas, the world has progressed to an era of negotia-
tions leading to some easing of tensions between the United States
and the Soviet Union. In addition, the People's Republic of China
has emerged as a world power which the United States and other
nations must consider. The recognizable distinctions between declared
war and credible peace have been blurred throughout these years
by a series of regional wars and uprisings in Asia, the Middle East,
Latin America, Europe, and Africa. The competing great powers
have participated directly or indirectly in almost all of these wars.
Of necessity, this country's intelligence agencies have played an
important role in the diplomacy and military activities of the Jnited
States during the last three decades. Intelligence infomiation has
helped shape policy, and intelligence resources nave been used to carry
out those policies.
The fear of war, and its attendant uncertainties and doubts, has
fostered a series of secret practices that have eroded the processes of
open democratic government. Secrecy, even what would be agreed by
reasonable men to be necessary secrecy, has, by a subtle and barely
perceptible accretive process, placed constraints upon the liberties of
the American people.
Shortly after World War II, the United States, based on its war-
time experience, created an intelligence system with the assigned mis-
sion at home and abroad of protecting to protect the national security,
primarily through the gathering and evaluation of intelligence about
individuals, groups, or governments perceived to threaten or poten-
tially threaten the United States. In general, these intelligence func-
tions were performed with distinction. However, both at home and
abroad, the new intelligence system involved more than merely ac-
quiring intelligence and evaluating information ; the system also un-
dertook activities to counter, combat, disrupt, and sometimes destroy
those who were perceived as enemies. The belief that there was a need
for such measures was widely held, as illustrated in the following re-
port related to the 1954 Hoover Commission Report on government
organization :
It is now clear that we are facing an implacable enemy whose
avowed objective is world domination by whatever means
and at whatever cost. There are no rules in such a game.
Hitherto acceptable norms of human conduct do not apply.
If the U.S. is to survive, long-standing American concepts
of "fair play" must be reconsidered. We must develop ef-
fective espionage and counterespionage services. We must
learn to subvert, sabotage and destroy our enemies by more
clever, more sophisticated and more effective methods than
those used against us. It may become necessary that the
American people w^ill be made acquainted with, understand
and support this fundamentally repugnant philosophy.
The gray, shadowy world between war and peace became the natural
haunt for covert action, espionage, propaganda, and other clandestine
intelligence activities. Former Secretary of State Dean Rusk described
it as the environment for the nasty wars "in the back alleys of the
world."
Although there had been many occasions requiring intelligence-
gathering and secret government action against foreign and domestic
national security threats prior to World War II, the intelligence com-
munity developed during and after that war is vastly different in
degree and kind from anything that had existed previously. The sig-
69-983 O - 76 - 2
10
nificant new facets of the post-war system are the great size, techno-
logical capacity and bureaucratic momentum of the intelligence ap-
paratus, and, more importantly, the public's acceptance of the necessity
for a substantial permanent intelligence system. This capability con-
trasts with the previous sporadic, ad hoc efforts which generally
occurred during wars and national emergencies. The extent and mag-
nitude of secret intelligence activities is alien to the previous American
experience.
Three other developments since Woi'ld War II haA^e contributed to
the power, influence and importance of the intelligence agencies.
First, the executive branch generally and the President in partic-
ular have become paramount within the federal system, primarily
through the retention of powers accrued during the emergency of
World War II. The intelligence agencies are generally responsible
directly to the President and because of their capabilities and because
they have usually operated out of the spotlight, and often in secret,
thev have also contributed to the /growth of executive power.
Second, the direct and indirect impact of federal programs on the
lives of individual citizens has increased tremendously since World
War II.
Third, in the thirty years since World War II, technology has made
unparalleled advances. New technological innovations have markedly
increased the agencies' intelligence collection capabilities, a circum-
stance which has greatly enlarged the potential for abuses of personal
liberties. To illustrate, the SALT negotiations and treaties have been
possible because technological advances make it possible to accuratelv
monitor arms limitations, but the very technology which permits such
precise weapons monitoring also enables the user to intrude on the
private conversations and activities of citizens.
The targets of our intelligence efforts after World War II — the
activities of hostile intelligence services, communists, and groups asso-
ciated with them both at home and abroad — were determined by
successive acbninistrations. In the 1960's, as the civil rights movement
grew in the countrv, some intelligence agencies directed attention to
civil rights organizations and groups hostile to them, such as the
Ku Klux Klan. From the mid-1960's until the end of the Vietnam war,
intelligence efforts were focused on antiwar groups.
Just as the nature of intelliflrence activitv has chansred as a result of
international and national developments, the public's attitude toward
intellifirence has also altered. During the last eight years, beginning
with Ramparts magazine's exposure of CIA covert relationships with
non-governmental organizations, there has been a series of allegations
in the press and Conoq-ess which have provoked serious questions about
the conduct of intelligence a<rencies at home and abroad. The Water-
gate disclosures raised additional questioTis concerninq: abuse of power
by the executive branch, misuse of intelligence agencies, and the need
to strenjirthen le.ofal restraints aoainst such abuses.
While the evidence in th^ Committee's Report emphasizes the mis-
guided or improper activities of a few individuals in the executive
branch, it is clear that the growth of intelligence abuses reflects a more
general failure of our basic institutions.
See the Select Committee's detailed report on "Intelligence and Technology."
11
Throughout its investigation, the Committee has carefully inquired
into the role of presidents and their advisors with respect to particular
intelligence programs. On occasion, intelligence agencies concealed
their programs from those in higher authority, more frequently it was
the senior officials themselves who, through pressure for results, created
the climate within which the abuses occurred. It is clear that greater
executive control and accountability is necessary.
The legislative branch has been remiss in exercising its control over
the intelligence agencies. For twenty-five years Congress has appropri-
ated funds for intelligence activities. The closeted and fragmentary
accounting which the intelligence community has given to a desig-
nated small group of legislators was accepted by the Congress as ade-
quate and in the best interest of national security. There were occa-
sions when the executive intentionally withheld information relating
to intelligence programs from the Congress, but there were also occa-
sions when the principal role of the Congress was to call for more intel-
ligence activity, including activity which infringed the rights of citi-
zens. In general, as with the executive, it is clear that Congress did not
carry out effective oversight.
The courts have also not confronted intelligence issues. As the Su-
preme Court noted in 1972 in commenting on warrantless electronic
surveillance, the practice had been permitted by successive presidents
for more than a quarter of a century without "guidance from the Con-
gress or a definitive decision of the Courts". Of course, courts only con-
sider the issues brought before them by litigants, and pervasive se-
crecy — coupled with tight judicially imposed rules of standing— have
contributed to the absence of judicial decisions on intelligence issues.
Nevertheless, the Committee's investigation has uncovered a host of
serious legal and constitutional issues relating to intelligence activity
and it is strong proof of the need for reform to note that scarcely any
of those issues have been addressed in the courts.
Throughout the period, the general public, while generally excluded
from debate on intelligence issues, nevertheless supported the known
and perceived activities of the intelligence agencies. In the few years
prior to the establishment of this Committee, however, the public's
awareness of the need to examine intelligence issues was heightened.
The series of allegations and partial exposures in the press and the
Congress provoked serious questions about the conduct of intelligence
activities at home and abroad. The Watergate affair increased the pub-
lic's concern about abuse of governmental power and caused greater
attention to be paid to the need to follow and to strengthen the role of
law to check such abuses.
Against this background, the Committee considered its main task
as making informed recommendations and judgments on the extent
to which intelligence activities are necessary and how such necessary
activities can be conducted within the framework of the Constitution.
E. The Dilemma or Secrecy and Open Constitutional
Government
Since World War II, with steadily escalatina: consequences, many
decisions of national importance have been made in secrecy, often by
the executive branch alone. These decisions are frequently based on
12
information obtained by clandestine means and available only to the
executive branch. Until very recently, the Congress has not shared
in this process. The cautions expressed by the Founding Fathers and
the constitutional checks designed to assure that policymaking not be-
come the province of one man or a few men have been avoided on nota-
ble recent occasions through the use of secrecy. John Adams expressed
his concern about the dangers of arbitrary power 200 years ago :
Whenever we leave principles and clear positive laws we are
soon lost in the wild regions of imagination and possibility
where arbitrary power sits upon her brazen throne and gov-
erns with an iron scepter.
Recent Presidents have justified this secrecy on the basis of "national
security," "the requirements of national defense," or "the confidential-
ity required by sensitive, ongoing negotiations or operations." These
justifications were generally accepted at face value. The Bay of Pigs
fiasco, the secret war in Laos, the secret bombing of Cambodia, the
anti-Allende activities in Chile, the Waterp-ate affair, were all instances
of the use of power cloaked in secrecy which, when revealed, provoked
widespread popular disapproval. This series of events has ended, for
the time being at least, passive and uncritical acceptance by the Con-
gress of executive decisions in the areas of foreign policy, national
security and intelligence activities. If Congress had met its oversight
responsibilities some of these activities might have been averted.
An examination of the scope of secret intelligence activities under-
taken in the past three decades reveals that they ranged from war to
conventional espionage. It annearsthat some United States intelligence
activities may have violated treaty and covenant obligations, but more
importantly, the rights of Uni<"ed States citizens have been infringed
upon. Despite citizen and congressional concern about these programs,
no processes or procedures have been developed bv either the Congress
or the executive branch which would assure Congress of access to secret
information which it must have to carry out its constitutional respon-
sibilities in authorizing and flfivinflf its advice and consent. The hind-
sight o^ historv suffo-ests that many secret operations were ill-advised
or might have been more beneficial to United States interests had they
been conducted onenly, rather than serretly.
What is a valid national secret? What can properly be concealed
from the scrutiny of the American people, from various segments of
the exeputive branch or from a duly constituted oversight body of
their elected representatives? Assassination plots? The overthrow of
an elected democratic government? Drua: testin,q- on unwitting Ameri-
can citizens? Obtaining millions of private cables? Massive domestic
spving bv the CIA and the military? The ille.qral opening of mail?
Attempts by an agency of the government to blackmail a civil rights
leader? These have occurred and each has been withheld from scrutiny
by the public and the Congress by the label "secret intelligence."
In the Committee's view, these illegal, improper or unwise acts are
not valid national secrets and most certainly should not be kept from
the scrutiny of a duly-constituted congressional oversight body.
The definition of a valid national secret is far more difficult to set
forth. It varies from time to time. There is presently general agree-
13
ment that details about military activities, technology, sources of
information and particular intelligence methods are secrets that should
be carefully protected. It is most important that a process be devised
for agreeing on what national secrets are, so that the reasons for nec-
essary secrecy are understood by all three branches of government and
the public, that they be under constant review, and that any changes
requiring the protection of new types of information can be addressed,
understood and agreed on within a framework of constitutional con-
sensus.
The Committee stresses that these questions remain to be decided by
the Congress and the executive jointly :
— What should be regarded as a national secret ?
— Who determines what is to be kept secret ?
• — How can decisions made in secret or programs secretly
approved be reviewed?
Two great problems have confronted the Committee in carrying
out its charge to address these issues :
The first is how our open democratic society, which has endured
and flourished for 200 years, can be adapted to overcome the threats
to liberty posed by the continuation of secret government activities.
The leaders of the United States must devise ways to meet their respec-
tive intelligence responsibilities, including informed and effective con-
gressional oversight, in a manner which brings secrecy and the power
that secrecy affords within constitutional bounds.
For the executive branch, the specific problem concerns instituting
effective control and accountability systems and improving efficiency.
Many aspects of these two problem areas which have been examined
during the Committee's inquiry of intelligence agencies are addressed
in the recommendations in Chapter XVIII. It is our hope that intelli-
gence oversight committees working with the executive branch will
develop legislation to remedy the problems exposed by our inquiry and
described in this report. The Committee has already recommended
the creation of an oversight committee with the necessary powers to
exercise legislative authority over the intelligence activities of the
United States.
It is clear that the Congress must exert its will and devise procedures
that will enable it to play its full constitutional role in making
policy decisions concerning intelligence activities. Failure to do so
would permit further erosion of constitutional government.
This Committee has endeavored to include in its final public report
enough information to validate its findings and recommendations.
Most of the inquiry and the documentation obtained by the Committee,
particularly that concerning foreign and military intelligence, is of
a highly classified nature. Determining what could and should be re-
vealed has been a major concern.
In a meeting with President Ford at the outset of our inquiry in
February 1975, the Committee agreed not to disclose any classified in-
formation provided by the executive branch without first consult-
ing the appropriate agencies, offices and departments. In the case of
objections, the Committee agreed to carefully consider the Executive's
reasons for maintaining secrecy, but the Committee determined that
final decisions on any disclosure would be up to the Committee.
14
The Select Committee has scrupulously adhered to this agreement.
The Interim Report on Alleged Assassination Plots Involving Foreign
Leaders, the report on CIA activities in Chile, the report on illegal
NSA surveillances, and the disclosures of illegal activities on the part
of FBI COINTELPRO, the FBI's harassment of Dr. Martin Luther
King, Jr., and other matters revealed in the Committee's public hear-
ings, were all carefully considered by the Committee and the executive
branch working together to determine what information could be de-
classified and revealed without damaging national security. In those
reports and hearings, virtually all differences between the Committee
and the Executive were resolved. The only significant exception con-
cerned the release to the public of the Assassination Report, which the
executive branch believed would harm national security. The Com-
mittee decided otherwise.
Some criteria for defining a valid national secret have been agreed
to over the past year. Both the Committee and the executive branch
now agree that generally the names of intelligence sources and the
details of sensitive methods used by the intelligence services should
remain secret. Wherever possible, the right of privacy of individuals
and groups should also be preserved. It was agreed, however, that the
details of illegal acts should be disclosed and that the broad scope of
United States intelligence activities should be sufficiently described
to give public reassurance that the intelligence agencies are operating
consistent w^ith the law and declared national policy.
The declassification working procedures developed between this
Committee, the CIA and other parts of the intelligence community
constitute the beginnings of agreed, sound and sensible methods and
criteria for making public matters that should be made public. This
disclosure process is an important step toward achieving the national
consensus required if our intelligence system is to enjoy essential public
support.
There is a clear necessity, after thirty years of substantial secret ac-
tivities, for public debate and legislative decisions about the future
course of our intelligence system. This report is intended to assist the
Senate, the Congress, and the country in making the vital decisions
that are required to be made in the coming years.
This section of the Final Report focuses on the departments and
agencies engaged in foreign and military intelligence. The Commit-
tee's findings, conclusions, and recommendations in these areas can
be found in Chapter XVIII.
II. THE FOREIGN AND MILITARY INTELLIGENCE
OPERATIONS OF THE UNITED STATES : AN OVERVIEW
Permanent institutions for the conduct of secret foreign and mili-
tary intelligence activities are a relatively new feature of American
government. Secure behind two oceans and preoccupied with the set-
tlement of a continent, America had no pennanent foreign intelligence
establishment for more than a century and a half. In times of crisis,
Americans improvised their intelligence operations. In times of peace,
such operations were not needed and were allowed to lie fallow.
Despite the experience of the First World War, Americans believed
they could continue this pattern well into the Twentieth Century. The
military services developed important technical intelligence capabil-
ities, such as the breaking of the Japanese code, but the American
public remained unaware of the importance of effective intelligence for
its security. As a world power, the United States came late to intelli-
gence. It came on December 7, 1941, when Japan attacked Pearl
Harbor.
That searing intelligence failure led to the Congress' first effort to
deal with the necessity and complexity of modem intelligence. The
Joint Committee on the Pearl Harbor Attack, after a sweeping in-
vestigation, recommended in 1946 a unified and permanent intelli-
gence effort by the United States — concepts ultimately embodied in
the basic charter for American intelligence. The National Security
Act adopted by the Congress in 1947. However, neither the Pearl
Harbor Committee, nor the National Security Act addressed some
of the fundamental problems secret intelligence operations pose for
our democratic and constitutional form of government and America's
unique system of checks and balances.
The Senate Select Committee on Intelligence Activities represents
the second major effort by the Congress to come to grips with intelli-
gence problems, in particular the basic constitutional and structural
issues arising from a permanent secret intelligence establishment.
While these problems were the subject of the investigation and are
the focus of this report, the Select Committee wishes to emphasize that
it found much that was good and proper in America's intelligence
efforts. In particular, the capacity and dedication of the men and
women serving in our intelligence services is to be commended.
This inquiry was not brought forth by an individual event such as
a massive intelliafence failure threatening the nation's security. Rather
it is the result of a series of occurrences adversely affecting the liberties
of individual Americans and undermining the lonsr-term interests and
reputation of the I"''nited States. In effect, the Select Committee was
created to deal with the question of whether our democratic system has
effectively governed in the crucial area of secret intelligence.
(15)
16
Mr. Clark Clifford, one of the authors of the National Security
Act of 1947, told the Committee that :
The law that was drawn in 1947 was of a general nature
and properly so, because it was the first law of its kind. We
were blazing a new" trail. ^
It has been the responsibility of the Select Committee to consider
where this eecret trail has taken the nation, and with this as prologue,
to begin the task of charting the future.
A. The Basic Issues: Secrecy and Democracy
The task of democratic government is to reconcile conflicting values.
The fundamental question faced by the Select Committee is how to
reconcile the clash between secrecy and democratic government itself.
Secrecy is an essential part of most intelligence activities. However,
secrecy undermines the United States Government's capacity to deal
effectively with the principal issues of American intelligence addressed
by the Select Committee :
— The lack of clear legislation defining the authority for permis-
sible intelligence acti\'ities has been justified in part for reasons of
secrecy. Absent clear legal boundaries for intelligence activities, the
Constitution has been violated in secret and the power of the executive
branch has gone unchecked, unbalanced.
— Secrecy has shielded intelligence activities from full account-
ability and effective supervision both within the executive branch
and bv the Congress.
— Reliance on covert action has been excessive because it offers a
secret shortcut around the democratic process. This shortcut has led
to questionable foreign involvements and unacceptable acts.
— ^The important line between public and private action has become
blurred as the result of the secret use of private institutions and in-
dividuals by intelligence agencies. This clandestine relationship has
called into question their integrity and undermined the crucial
independent role of the private sector in the American system of
democracv.
— Duplication, waste, inertia and ineffectiveness in the intelligence
community has been one of the costs of insulating the intelligence
bureaucracy from the rigors of Congressional and public scrutiny.
— Finally, secrecy has been a tragic conceit. Inevitably, the truth
prevails, and policies pursued on the premise that they could be plaus-
ibly denied, in the end damage America's reputation and the faith
of her people in their government.
For three decades, these problems have grown more intense. The
United States Government responded to the challenge of secret intel-
ligence operations by resorting to procedures that were informal,
implicit, tacit. Such an approach could fit within the tolerances of
our democratic system so long as such activities were small or tem-
porary. Now, however, the permanence and scale of America's intelli-
gence effort and the persistence of its problems require a different
solution.
^ Clark Clifford testimony, 12/5/75, Hearings, vol. 7, p. 50.
17
B. The Scope of the Select Committee's Inquiry into Foreign and
MiiiiTAKY Intelligence Operations
The operations of the United States Government in the field of
intelligence involve the activities of hundreds of thousands of individ-
uals and the expenditure of billions of dollars. They are carried out
by a complex "community" of organizations whose functions interact
and overlap. Because of their scope, the Select Committee could not
deal in depth with all aspects of America's intelligence activities.
Instead the Committee focused on the principal organizations, their
key functions and the major issues confronting the United States in
the field of foreign and military intelligence. In doing so, the Com-
mittee sought to uncover the truth of alleged abuses by the intelligence
agencies and to ascertain the legitimate needs and requirements
of an effective future intelligence system for the United States that
can function within the boundaries established by the Constitution
and our democratic form of government.
The Select Committee focused on five institutions :
— The National Security Council (NSC), which on behalf of the
President, is supposed to direct the entire national security apparatus
of the United States Government, including the intelligence commu-
nity. As the senior policymaking body in the executive branch in the
field of national security, the NSC is also the ultimate consumer of the
nation's intelligence product.
— The Director of Central Intelligence (DCI) , who is charged with
producing intelligence which reflects the judgments of all of the in-
telligence organizations in the executive branch. He is also supposed
to "coordinate" the activities of these organizations.
— The Central Intelligence Agency^ which houses the government's
central analytical staff for the production of intelligence, but which
devotes its major efforts to developing new means of technical collec-
tion and to operating America's clandestine intelligence service
throughout the world. In the latter capacity it carries out covert action,
paramilitary operations and espionage.
— The Department of State^ which is the primary source of intelli-
gence on foreign political and economic matters, and as such is both a
competitor in the collection and evaluation of intelligence and a po-
tential source of external control over clandestine intelligence activities
of the Central Intelligence Agency.
— The Department of Defense^ which is the major collector of in-
telligence, the largest consumer, as well as the principal manager of
the resources devoted to intelligence. It houses the largest intelligence
collection organization, the National Security Agency (NSA), and
the largest intelligence analysis organization, the Defense Intelligence
Agency (DIA).
C. The Intelligence Process : Theory and Reality
These organizations, and some of their offshoots, constitute the
United States intelligence community. In theory at least, their opera-
tions can be described in simple terms by the following cycle :
18
— Those who use intelligence, the "consumers," indicate the kind
of information needed.
— These needs are translated into concrete "requirements" by senior
intelligence managers.
— The requirements are used to allocate resources to the "collectors"
and serve to guide their efforts.
— The collectors obtain the required information or "raw
intelligence."
— The "raw intelligence" is collated and turned into "finished in-
telligence" by the "analysts."
—The finished intelligence is distributed to the consumer and the
intelligence managers who state new needs, define new requirements,
and make necessary adjustments in the intelligence programs to im-
prove effectiveness and efficiency.
In reality this pattern is barely recognizable.
There are many different consumers, from the President to the
weapons designer. Their needs can conflict. Consumers rarely take
the time to define their intelligence needs and even if they do so there
is no effective and systematic mechanism for translating them into
intelligence requirements.
Therefore, intelligence requirements reflect what intelligence man-
agers think the consumers need, and equally important, what they
think their organizations can produce. Since there are many managers
and little central control, each is relatively free to set his own
requirements.
Resources therefore tend to be allocated according to the priorities
and concerns of the various intelligence bureaucracies. Most intelli-
gence collection operations are part of other organizations — the De-
partment of Defense, the Department of State — and so their require-
ments and their consumers are often the first to be served.
Collecting intelligence is not an automatic process. There are many
different kinds of intelligence, from a radar return to an indiscreet re-
mark, and the problems in acquiring it vary greatly. Information that
is wanted may not be available, or years may be required to develop
an agency or a technical device to get it. Meanwhile intelligence agen-
cies collect what they can.
In the world of bureaucracy, budgets, programs, procurement,
and managers, the needs of the analyst can be lost in the shuffle. There
has been an explosion in the volume and quality of raw intelligence but
no equivalent increase in the capacity of analytical capabilities. As a
result, "raw" intelligence increasingly dominates "finished" intelli-
gence; analysts find themselves on a treadmill where it is difficult to
do more than summarize and put in context the intelligence flowing
in. There is little time or reward for the task of providing insight.
In the end the consumer, particularly at the highest levels of the
government, finds that his most important questions are not only
unanswered, but sometimes not even addressed.
To some extent, all this is in the nature of things. Many questions
cannot be answered. The world of intelligence is dominated by uncer-
tainty and chance, and those in the intelligence bureaucracy, as else-
19
where in the Government, try to defend themselves against uncer-
tainties in ways which militate against efficient management and
accountability.
Beyond this is the fact that the organizations of the intelligence
community must operate in peace but be prepared for war. This has
an enormous impact on the kind of intelligence that is sought, the way
resources are allocated, and the way the intelligence community is
organized and managed.
Equally important, the instruments of intelligence have been forged
into weapons of psychological, political, and paramilitary warfare.
This has had a profound effect on the perspective and preoccupa-
tions of the leadership of the intelligence community, downgrading
concerns for intelligence in relation to the effective execution of
operations.
These problems alone would undermine any rational scheme, but
it is also important to recognize that the U.S. intelligence community
is not the work of a single author. It has evolved from an interaction
of the above internal factors and the external forces that have shaped
America's history since the end of the Second World War.
D. Evolution of the TjNrrED States Intelligence Community
The evolution of the United States intelligence community since
World War II is part of the larger history of America's effort to
come to grips with the spread of communism and the growing power
of the Soviet Union. As the war ended, Americans were torn by hopes
for peace and fear for the future. The determination to return the
nation promptly to normal was reflected in demobilization of our
wartime military establishment. In the field of intelligence, it was
clear in President Truman's decision to dismantle the Office of Stra-
tegic Services, scattering its functions to the military departments and
the Department of State.
The Second World War saw the defeat of one brand of totalitarian-
ism. A new totalitarian challenge quickly arose. The Soviet Union, a
major ally in war, became America's principal adversary in peace. The
power of fascism was in ruin but the power of communism was mobil-
ized. Not only had the communist parties in France, Italy, and Greece
emerged politically strengthened by their roles in the Resistance, but
the armies of the Soviet Union stretched across the center of Europe.
And, within four years, America's nuclear monopoly would end.
American military intelligence officers were among the first to per-
ceive the changed situation. Almost immediately after the fall of Ber-
lin to the Red Army, U.S. military intelligence sought to determine
Soviet objectives. Harry Rositzke, later to become chief of the CIA's
Soviet Division, but at the time a military intelligence officer, was
despatched to Berlin by jeep. Although the Soviet Union was still an
ally, Rositzke was detained, interrogated, then ordered expelled by
the Soviet occupying forces. He managed, however, to escape his So-
viet "escort" and arrive in Berlin. He described his experience to the
Committee :
We got on the outskirts of Berlin and yelled out "Ameri-
kanski," and were highly welcomed. And as we went over the
Autobahn the first basic impression I got, since I had known
20
Germany well before the war, was a lon^ walking 2^oiip of
German males under 16 and over 60 who were being shep-
herded to the east by four-foot-ten, five-foot Mongolian sol-
diers with straw shoes.
The Russians also had been looting. With horses and farm
wagons they were taking away mattresses, wall fixtures,
plumbing fixtures, anything other than the frame of the
houses.
We then made our way throuofh the rubble of Berlin — most
were one-way streets — identifvinsr every shoulder patch we
could, and passed the Siemans-Halske works, in front of
which were 40 or 50 lend-lease trucks, on each of which was a
larjre shiny lathe, drill press, et cetera.
When we had seen enoucfh and were all three extremely
nervous, we headed straight west from Berlin to the British
Zone. When we arrived we had an enormous amount of ex-
uberance and a real sense of relief, for the entire 36 hours had
put us in another world. The words that came to my mind
then were, "Russia moves west." ^
At home, the Truman Administration was preoccupied by the tran-
sition from war to an uncertain peace. Though dispersed, and in some
cases disbanded, America's Dotential capabilities in the field of intelli-
gence were considerable. There were a large number of well-trained
former OSS operation officers ; the military had developed a remark-
able capacity for cry otologic intelli<Tence (the breaking of codes) and
communicntions intelligence (COMINT') ; there was also a cadre of
former OSS intelligence analysts both within the government and in
the academic community.
E. The Origins of the Postwar Intelligence Community *
With the experiences of World War II and particularly Pearl Har-
bor still vivid, there was a recognition within the government that,
notwithstandino- demobilization, it was essential to create a central-
ized body to collate and coordinate intelligence information. There
was also a need to eliminate frictions between competing military
intelligence services. Although there was disagreement about the struc-
ture and authoritv of the Dostwar i^telli.o-ence service. President Tru-
man and his senior advisers concluded that, unlike the OSS, this
centralized body should be civilian in character.
The military resisted this judgment. Virtually all of America's
competing intelligence assets were in the armed services. Then, as
now, the military considered an intelligence capability essential in
wartime and equally imnortant in time of peace to be prepared for
military crises. Thus, the services were strongly opposed to having
their authority over intellifrence diminished. In contrast, factions
within thp State Department were reluctant to accept any greater
responsibility or role in t^ho field of clandestine intellificence.
Six months after V-J Day, and three months after he hnd dis-
banded OSS, President Truman established the Central Intelligence
^ Harry Rozitzke testimonv, 10/31/75. p. 7.
* For an organizational history of the CIA, see Chapter "VI.
21
Group (CIG). CIG was the direct predecessor of the CIA. It re-
ported to the National Intelligence Authority, a body consisting of
the Secretaries of State, War and Navy and their representatives. CIG
had a brief existence. It never was able to overcome the constraints
and institutional resistances found in the Department of State and
the armed services.
The National Security Act of 1947 ' was passed on July 26, 1947. The
Act included, in large part, the recommendations of a report prepared
for Secretary of the Navy James Forrestal by New York investment
broker Ferdinand Eberstadt. Though largely concerned wnth the crea-
tion of the National Security Council (NSC) and the unification of the
military services within the Department of Defense, the Act also
created a Director of Central Intelligence (DCI) and a Central
Intelligence Agency (CIA). The powers of the DCI and the CIA
were an amalgam of careful limits on the DCI's authority over the
intelligence community and an open-ended mission for the CIA itself.
The power of the DCI over military and diplomatic intelligence was
confined to "coordination." At the same time, however, the Agency
was authorized to carry out unspecified "services of common concern"
and, more importantly, could "carry out such other functions and
duties" as the National Secui-ity Council might direct.
Nowhere in the 1947 Act was the CIA explicitly empowered to col-
lect intelligence or intervene secretly in the affairs of other nations.
But the elastic phrase, "such other functions," was used by successive
presidents to move the Agency into espionage, covert action, para-
military operations, and technical intelligence collection. Often con-
ceived as having granted significant peacetime power's and flexibility
to the CIA and the NSC, the National Security Act actually legislated
that authority to the President.
The 1947 Act provided no explicit charter for military intelligence.
The charter and mission of military intelligence activities was estab-
lished either by executive orders, such as the one creating the National
Security Agency in 1952, or various National Security Council di-
rectives. These National Security Council Intelligence Directives
(NSCID's) w^ere the principal means of establishing the roles and
functions of all the various entities in the intelligence connnunity.
They composed the so-called "secret charter" for the CIA. However,
most of them also permitted "departmental" intelligence activities,
and in this way also provided the executive charter for the intelligence
activities of the State Department and the Pentagon. However, the
intelligence activities of the Department of Defense remained with
the military rather than with the new Defense Dei^artment civilians.
At the end of the war, the Joint Chiefs of Staff decided to continue
the inter-Service coordinating mechanism — the Joint Intelligence
Committee— which had been created in 1942. With the 1947 Act and
the establishment of the Joint Chiefs of Staff, a working level intelli-
gence operation was created in the Joint Staff, known as the Joint
Intelligence Group, or J-2.
The structure created by the 1947 Act and ensuing NSCID's was
highly decentralized. The task of the CIA and the Director of Central
See Chapter VII for an analysis of the 1M7 Act.
22
Intelligence was to "coordinate" the intelligence output of all the vari-
ous intelligence collection programs in the military and the Depart-
ment of State. The CIA and its Director had little power to act itself,
but the potential was there.
F. The Response to the Soviet Threat
Immediately after its establishment, the CIA and other elements
of the intelligence community responded to the external threats fac-
ing the United States.
— The threat of war in Europe. Following the Avar there was a dis-
tinct possibility of a Soviet assault on Western Europe. Communist
regimes had been established in Poland, Hungary, Romania and Bul-
garia. Czechoslovakia went Communist in 1948 through a coup sup-
ported by the Russian Army. There was a Russian-backed civil war in
Greece. And, above all, there was the presence of the Soviet Army in
Eastern Europe and the pressure on Berlin.
In light of these developments, IT.S. policvmakers came to the con-
clusion that outright war with the Soviet T^nion was possible. The U.S.
intelligence commuiiity responded accordinglv. The CIA assumed the
espionage task, running agents and organizing "stay-behind networks"
in the event the Soviets rolled west. Agents, mostly refu<Tees, were sent
into the East to report on Soviet forces and, in particular, any moves
that signalled war. The U.S. went so far as to establish contact with
Ukrainian guerrillas- — a relationship that was maintained until the
guerrillas were finally wiped out in the early 1950s bv Soviet security
forces. CIA activi^^ies. however, were outnumbered bv the clandestine
collection operations of the military, particularlv in Western Europe,
where the Army maintained a large covert intelligence and paramili-
tary capability.
— Turmoil in the West. Tl^e Soviets had poAverful political resources
in the West — the Communist parties and trade unions. Provided with
financial and advisory support from the Soviet Union, the Communist
parties sought to exploit and exacerbate the economic and political
turmoil in postwar Europe. As the elections in 1948 and 1949 in Italy
and France approached, the democratic parties were in disarray and
the possibilitv of a Communist takeover was real. Coordinated Com-
munist political unrest in western countries combined with extremist
pressure from the Soviet ITnion, confirmed the fears of many that
America faced an expansionist Communist monolith.
The ITnited States res^^onded with overt economic aid — the Truman
Doctrine and the Marshall Plan— and covert political assistance. This
latter task was assigned to the Office of '^pe'^ial Proiects, later renamed
the Office of Po^icv Coordination (OPC). The Office was housed in the
CIA but was directly responsible to the Departments of State and
Defense. Clandestine support from the TTnited States for European
democratic parties was rejrarderl as an essential response to the threat
of "international communism." OPC became the fastest growing ele-
ment in the CIA. To facilitate its onerations. as well as to finance CIA
espionage activities, the Con.q-ress passed the Central Intelligence
Agency Act of 1949, which authorized the Director of CIA to spend
funds on his voucher without havine; to account for disbursements.
23
— Nuclear weapons. The advent of nu'clear weapons and the Soviet
potential in this field led to efforts to ascertain the status of the Soviet
Union's nuclear program. By the time of the Soviet's first atomic explo-
sion in 1949, the U.S. Air Force and Navy had begun a peripheral
reconnaissance program to monitor other aspects of Soviet nuclear
development and Soviet military capabilities. As the Soviet strategic
nuclear threat grew, Ainerica's efforts to contain it would grow in
scale and sophistication until it would overshadow the classic tools of
espionage.
. G. Korea : ttie Turning Point
The Communist attack, feared in Europe, took place in Asia. The
Korean War, following less than a year after the fall of China to the
Communists, marked a turning point for the CIA. The requirements
of that war, the involvement of China, the concern that war in Europe
might soon follow, led to a fourfold expansion of the CIA — ^particu-
larly in the paramilitary field. This period was characterized by efforts
to infiltrate agents into mainland China, which led to the shoot-
down and capture of a number of Americans.
The CIA's activities elsewhere in Asia also expanded. Instrumen-
tal in helping Ramon Magsaysay defeat the communist Hukbalahaps
in the Philippines, the CIA also assisted the French in their losing
struggle against the Viet Minh in Indochina.
The failure to anticipate the attack on Korea was regarded as a
major intelligence failure. The new Director of the CIA, General
Bedell Smith, was determined to improve CIA's estimating and fore-
casting capabilities. He called on William Langer, formerly chief of
the Research and Analysis section of the OSS, to come to Washington
from Harvard, in 1950, to head a small staff for analysis and the pro-
duction of intelligence. An Office of National Estimates (ONE) was
established to produce finished intelligence estimates. ONE drew on
the intelligence information resources of the entire U.S. intelligence
community and was aided by a Board of National Estimates composed
of leading statesmen and academic experts.
Bv the end of the Korean War and the naming of Allen Dulles as
DCI, the powers, responsibilities and basic structure of the CIA were
established. The Agency had assumed full responsibility for covert
operations in 1950, and by 1952 covert action had exceeded the money
and manpower allotted to the task of espionage — a situation that
would persist until the early 1970s.
Paramilitary actions were in disrepute because of a number of fail-
ures during the Korean War. However, the techniques of covert mili-
tary assistance in training had been developed, and the pattern of CIA
direction of Special Forces and other unconventional components of
the U.S. Armed Forces in clandestine operations had been estab-
lished.
In the field of espionage, the CIA had become the predominant, but
by no means the exclusive operator. Clandestine human collection of
intelligence bv the military services continued at a relatively high
rate. The militarv also had a large stake in clandestine technical
collection of intelligence.
24
Major structural changes in tlie intelligence community were
brouo^ht about by the consolidation of cryptanalysis and related func-
tions? Codebreaking is a vital part of tpchnical intelligence collection
and has had an important role in the history of U.S. intelligence
efforts The American "Black Chamber" responsible for breaking
German codes in WAVI was abolished in the 1920s. As WWII ap-
proached, cryptanalysis received increased attention in the military.
Both the Army and Navy had separate cryptologic services which had
combined to break the Japanese code. Known as ''the magic" this in-
formation signalled the impending attack on Pearl Harbor but the
intelligence and alert, system as a whole failed to respond.
In order to unify and coordinate defense cryptologic and communi-
cations security functions. President Truman created the National
Security Agency by Executive Order on November 4, 1952. Prior to
this tirrie, U.S. cryptological capabilities resided in the separate agen-
cies of the Army.Navy, and Air Force. The very existence of still the
most secret of all U.S. intelligence agencies, NSA, was not acknowl-
edged until 1957.
H. The "Protracted Conflict"
With the end of the Korean conflict and as the mid-1950s ap-
proached, the intelligence community turned from the desperate con-
cern over imminent war with the U.S.S.R. to the long-term task of
containing and competing with communism. In the "struggle for
men's minds," covert action developed into a large-scale clandestine
psychological and political program aimed at competing with Soviet
propaganda and front organizations in international labor and stu-
dent activities. Specific foreign governments considered antithetical
to the United States and its allies or too receptive to the influence of
the Soviet Union, such as Mosedegh in Iran in 1958 and Arbenz in
Guatemala in 1954, were toppled with the help of the CIA. Anti-
communist parties and groups were given aid and encouragement such
as the Sumatran leaders who, in 1958, sought the overthrow of Presi-
dent Sukarno of Indonesia.
At the same time, the CIA was moving into the field of technical
intelligence and reconnaissance in a major way. The U.S. military
had recognized the value of aerial reconnaissnnce within a few short
years after the Wright brothers' successful flight in 1903 and had
borne major responsibility for reconnaissance against Communist
bloc countries. But it was the CIA in 1959 thnt beo-an work on the U-2.
It proved to be a technical triumnh. The U-2 established that
the Soviet Union was not. as had been feared, about to turn the
tables of the strategic balance. It gained more information about
Soviet military developments tl^an had been acquired in the previous
decade of espionage operations. But there were risks in this oper-
ation. Despite the effort to minimize them with a special system of
high-level NSC review and apnroval, Francis Garv Powers was shot
down in a U-2 over the Soviet Union on the eve of the Paris summit
conference in 1960. President Eisenhower's acceptance of responsi-
bility and Nikita Khrushchev's reaction led to the collapse of the
conference before it be.fjan.
Nonetheless the U-2 proved the A^alue of exotic and advanced tech-
nical means of intelligence collection. It was followed by a transfor-
25
mation of the intelligence community. As the 1950s gave way to the
1960s, large budgets for the development and operation of technical
collection systems created intense competition among the military
services and the CIA and major problems in management and
condensation.
To support the Director of Central Intelligence's task of coordinat-
ing the activities of the intelligence community, the United States
Intelligence Board (USIB) was established in 1958. Made up of senior
representatives of the State Department, the Department of Defense,
the military services. Treasury (since 1973) and the FBI, USIB
was to coordinate the setting of requirements for intelligence, approve
National Intelligence Estimates and generally supervise the operations
of the intelligence agencies. However, the real power to set require-
ments and allocate resources to intelligence programs remained de-
centralized and in the hands of the principal collectors — the military
services, the Foreign Service and the clandestine service of the CIA.
As collection programs mushroomed, USIB proved unequal to the
task of providing centralized management and eliminating duplication.
I. Third World Competition and Nuclear Crisis
While the United States' technical, military and intelligence capa-
bilities advanced, concern intensified over the vulnerability of the
newly independent nations of Africa and Asia to communist sub-
version. And in the Western Hemisphere the establishment of a com-
munist Cuba by Fidel Castro was seen as presaging a major incursion
of revolutionary communism to the Western Hemisphere.
At his inauguration in January, 1961, President Kennedy pro-
claimed that America would "pay any price and bear any burden" so
that liberty might prevail in the world over the "forces of communist
totalitarianism." Despite the catastrophe of the CIA-sponsored Bay
of Pigs invasion only four months later, the covert action and para-
military operations staffs of the CIA were to shoulder a significant
part of that burden. In Latin America the Alliance for Progress, the
overt effort to help modernize the southern half of the hemisphere, was
accompanied by a significant expansion of covert action and internal
security operations aimed at blocking the spread of Castro's influence
or ideology. This was accompanied by an intense paramilitary cam-
paign of harassment, sabotage, propaganda against Cuba, and at-
tempted assassination against Castro.
Nearby, in the Dominican Republic, the United States had already
supported the assassins of Dictator Raphael Trujillo in order to pre-
empt a Castro-type takeover. In Africa, significant paramilitary aid
was given in support of anti-Soviet African leaders. In Asia, American
intelligence had been involved for a long time in the Indochina strug-
gle. The CIA, along with the rest of the United States government,
was drawn ever deeper into the Vietnamese conflict.
Early in the decade the United States faced its most serious post-
war crisis affecting its security — the Cuban Missile Crisis of October
1962. It illustrated a number of important facts concerning the nature
and structure of American intelligence.
During the summer of 1962 overhead reconnaissance confirmed agent
intelligence reports that some form of unusual military installation
was being placed in Cuba. By October 16 it was clear that these were
26
medium and intermediate-range ballistic missile sites capable of han-
dlino; nuclear weapons that could strike targets throughout significant
areas of tlie T^nited States.
As the United States moved towards a confrontation with the So-
viet Union, U.S. intelligence played a significant role at every turn.
Overhead reconnaissance of the Soviet strategic posture w^as vastly
superior to that of the Russians. Reports from Col. Oleg Penkovsky,
the U.S. agent in the Kremlin, kept the United States abreast of the
Soviet military response to the crisis. U.S. tactical reconnaissance of
Cuba not only prepared the United States for possible invasion but
signalled the earnestness of our intention to do so should the situation
deteriorate. Naval reconnaissance kept close tabs on Soviet ships bear-
ing ballistic missile components. As the crisis neared its showdown
with a quarantine, the President demanded and received the most de-
tailed tactical intelligence, including the distance in yards between
American naval vessels and the Soviet transport ships.
This crisis dramatized the importance of integrated intelligence
collection and production in times of crisis. It also clearly illustrated
the difficulty in distinguishing between national and so-called tactical
intelligence. This distinction has been a central feature of the struc-
ture of the American intelligence community with the military serv-
ices maintaining control over tactical intelligence and the so-called
national intelligence assets subject to varying degrees of control by
the Director of Central Intelligence or the Secrtary of Defense and
the National Security Council. Cuba proved that in time of crisis
these distinctions evaporate.
J. Technology xVNd Tragedy
During the 1960s the U.S. intelligence community was dominated
by two developments: First, the enormous exnlosion in the volume of
technical intelligence as the research and development efforts of the
previous period came to fruition; second, the ever-growing involve-
ment of the United States in the war in Vietnam.
The increase in the quantity and quality of technically acquired
information on Soviet military forces, in particular strategic forces,
made possible precise measurement of the existing level of Soviet
strategic deployments. However, it did not answer questions about
the ultimate scale of Soviet strateqic deployments, nor did it provide
fi]-m information on the quality of their forces. While it provided an
additional clue as to Soviet intentions, it did not offer any definitive
nnswers.
In the Pentaoon disparate estimates of future Soviet strateo'ic power
from each of the Armed Services led Secretary Robert McNamara to
establish the Defense Intelligence Agency. The Secretary of Defense
Avas in the ironic position of being responsible for the bulk of American
intelligence collection activity but lackino- the means to coordinate
either the collection programs or the intelligence produced. The DIA
was to fulfill this need, but in a compromise with the military services
the DI;V Mas made to renort to the Secretary of Defense through the
Joint Chiefs of Staff. The DIA has never fulfilled its promise.
In the CIA the analysts confronted bv the new mass of technical
intelligence information underestimated the ultimate scale of Soviet
27
dployments wliile tending to overestimate the qualitative aspects of
Soviet weapons systems. Previously, intelligence analysts had to build
up their picture of Soviet capability from fragmentary information,
inference and speculation, particularly as to Soviet purposes. Con-
fronted with the challenge to exploit the new sources of intelligence on
Soviet programs, the analysts in the intelligence community turned
away from the more speculative task of understanding Soviet purposes
and intentions, even though insight into these questions was central to
a greater understanding of the technical information being acquired
in such quantity.
The war in Vietnam also ])Osed serious problems in the analysis and
production of intelligence. In effect, the analysts were continually in
the position of having to bring bad news to top policymakers. The re-
sult produced some serious anomalies in the nature of intelligence
estimates concerning the Vietnam conflict. For example, the CIA con-
tinually flew in the face of the Pentagon and the evident desires of
the White House by denigrating the effectiveness of the bombing cam-
i:)aig7is over North Vietnam, but as American involvement deepened
from 1965 onward, the CIA was unwilling to take on the larger and
more im]Dortant task of assessing the possiljility for the success of the
overall U.S. effort in Vietnam.
The increase in technical collection capabilities of the United States
were also brought to bear on that conflict, creating in its turn important
questions about the application of such resources to tactical situations.
As one intelligence officer ])ut it, local military commanders in Viet-
nam "were getting SIGINT (signals intelligence) with their orange
juice every morning and have now come to expect it eveiywhere." This
involves two problems : first, whether "national" intelligence re-
sources aimed at strategic ])roblems should be diverted to be used for
local combat application and, second, Avhether this might not lead to a
compromise of the technical collection systems and the elimination of
their effectiveness for broader strategic missions.
K. The 1970s
Together, the advent of increased technical capabilities and the Viet-
nam War brought to a climax concerns within the Government over
the centralized management of intelligence resources. This coincided
with increased dissatisfaction in tlie Nixon Administration over the
quality of intelligence produced on the war and on Soviet strategic
developments.
In the nation as a whole, the impact of the Vietnam War destroyed
the foreign policy consensus which had under])inned America's in-
telligence activities abroad. Starting with the disclosures of CIA in-
volvement with the National Student Association of 1967, there were
a series of advei-se revelations concerning the activities of the Central
Intelligence Agency and the military intelligence agencies.
Concern over the secret war in Laos, revulsion at the Phoenix pro-
gram which took at least 20,000 lives in South Vietnam, army spying
on IT.S. civilians, U.S. "destabilization" efforts in Chile, and finally
the rcA'elations concerning Operation CHAOS and the CIA's domestic
intelligence role created a climate for a thorough Congressional
investigation.
28
During this same period, the Executive moved to initiate certain
management reforms. Beginning as early as 1968, there were cutbacks
in the scale of the overall intelligence community. These cutbacks
deepened by 1970, both in the size of the overall intelligence budget in
real terms and in the manpower devoted to intelligence activities. CIA
covert acti\dties were sharply reduced with a few notable exceptions
such as Chile. The internal security mission in foreign countries was
dropped. There was a re-emphasis on collecting covert intelligence
on the Soviet Union. Terrorism and narcotics were added to the list
of intelligence requirements for our clandestine espionage services.
In 1971 James Schlesinger, then serving in the Office of Management
and Budget, was asked to do a sweeping analysis of the intelligence
community. That study led to an effort to increase the authority of the
Director of Central Intelligence over the management of the intel-
ligence community. However, President Nixon limited the scope of
reform to that which could be accomplished without legislation.
Congress also took an increased interest in the activities of the in-
telligence connnunity. The role of the CIA in the Watergate affair was
examined in the Senate Watergate Committee's investigation. At the
close of 1974 a rider, the Hughes-Ryan amendment, was added to the
Foreign Assistance Act which required the President to certify that
covert actions were important to the national interest and directed that
the Congress be fully informed of them. In this connevtion, the respon-
sibility to inform the Congress was broadened beyond the traditional
Armed Services and Appropriations Committees of the Congress to in-
clude the Senate Foreign Relations Committee and the House Foreign
Affairs Committee. However, the first real effort of the Congress to
come to grips with the challenge posed to the American democratic
form of government by necessarily secret foreign and militaiy intelli-
gence activities came with the establishment of the Senate Sekvt Com-
mittee on Intelligence in January of 1975. The results of its inquiry
are set forth in the following chapters of this report.
L. The Task Ahead
The American intelligence community has changed markedly from
the early postwar days, yet some of the major problems of that period
persist. The intelligence community is still highly decentralized; the
problem of maintaining careful command and control over risky
secret activities is still great. There is a continuing difficulty in draw-
ing a line between national intelligence activities, which should be
closely supervised by the highest levels of government, and tactical
intelligence, which are the province of the military services and the
departments.
The positive steps undertaken by President Ford in his recent Exe-
cutive Order have not diminished the need for a new statutory frame-
work for American intelligence activities. Only through the legisla-
tive })rocess can the broad political consensus be expressed which is
necessary for the continuing conduct of those intelligence activities
essential to the nation's security and diplomacy.
Clark M. Clifford, who was one of the authors of the 1947 National
Security Act that established the present legislative framework for
America's intelligence activities, made these comments in open session
before the Committee:
29
As one attempts to analyze the difficulty and hopefully offer
constructive suggestions for improvement, he finds much con-
fusion existing within the system. It is clear that lines of
autliority and responsibility have become blurred and indis-
tinct.
The National Security Council under the Act of 1947 is
given the responsibility of directing our country's intelligence
activities. My experience leads me to believe that this function
has not been effectively performed. . . .
The 1947 law creating the CIA should be substantially
amended and a new law should be written covering intelli-
gence functions. We have had almost thirty years of expe-
rience under tlie old law and have learned a great deal. I be-
lieve it has served us reasonably well but its defects have be-
come increasingly apparent. A clear, more definitive bill can
be prepared that can accomplish our purposes by creating
clear lines of authority and responsibility and by carefully
restricting certain activities we can hopefully prevent the
abuses of the past.
And Mr. Clifford concluded :
We have a big job to do in this country. Our people are
confused about our national goals and cynical about our in-
stitutions. Our national spirit seems to have been replaced by
a national malaise. It is my conviction that the efforts of this
committee will assist us in regaining confidence in our nation-
al integrity, and in helping to restore to our nation its repu-
tation in the world for decency, fair dealing, and moral lead-
ership.*^
That is the spirit in whicli the Select Committee sought to pursue
its inquiry and that is the spirit in which the Committee puts forward
the following analysis of the intelligence community and the operation
of its constituent parts.
Clifford, 12/5/75, Hearings, p. 53.
III. THE CONSTITUTIONAL FRAMEWOEK FOR
INTELLIGENCE ACTIVITIES
A. The Joint Responsibilities or the Legislative and Execu-
tive Branches — Separation of Powers and Checks and Bal-
ances
While the Constitution contains no provisions expressly allocating-
authority for intelligence activity, the Constitution's provisions re-
garding foreign atfairs and national defense are directly relevant.
From the 'beginning, U.S. foreign intelligence activity ^ has been con-
ducted in connection with our foreigii relations and national defense.
In these areas, as in all aspects of our Government, the Constitution
provides for a system of checks and balances under the separation of
powers doctrine. In foreign affairs and national defense. Congress and
the President were both given important powers. The Constitution, as
Madison explained in The Federal ist, established "a partial mixture of
powers.'' - Unless the branches of government, Madison said, "be so far
connected and blended as to give each a constitutional conti'ol over
the others, the degree of separation which the maxim requires, as
essential to a free government, can never in practice be maintained." ^
The f ramers' underlying purpose, as Justice Brandeis pointed out, was
"to preclude the exercise of arbitrary power." "*
This pattern of checks and balances is reflected in the constitutional
j:)rovisions with res])ect to foreign affairs and national defense. In
foreign affairs, the President has the ])ower to make treaties and to
appoint Ambassadors and envoys, but this power is subject to the
"advice and consent" of the Senate."' While the President has the exclu-
sive power to receive ambassadors from foreign states," the Congress
has important powers of its own in foreign affairs, most notably the
power to regulate foreign commerce and to lay duties."
** A definition of the term "foreign intelligence activity" is necessary in order
to properly assess the constitutional aspects of foreign intelligence activity. For-
eign intelligence activity is now understood to include secret information gather-
ing and covert action. Covert action is defined by the CIA as secret action designed
to influence events abroad, including the use of political means or varying degrees
of force. The political means can range from the employment of propaganda to
large-scale efforts to finance foreign political parties or groups so as to influence
elections or overthrow governments ; covert action involving the use of force
may include U.S. paramilitary operations or the support of military operations
by foreign conventional or unconventional military organizations. (Memoran-
dum from Mitchell Rogovin, Special Counsel to the Director of Central Intel-
ligence, House Select Committee on Intelligence, Hearings, 12/9/7.5, p. 1730.)
^ The Federalist, No. 47 (J. Madison).
•'' The Federalist, No. 48 (J. Madison).
* Meyers v. United States, 272 U.S. 52. 292 (1926).
^ United States Constitution, Article II, Section 2.
"Ibid., Sec. 3.
' Ibid., Art. I, Sec. 8.
(31)
32
In national defense, the President is made Commander-in-Chief,
thereby having the power to command the armed forces, to direct
military operations once Conoress has declared Avar, and to repel
sudden attacks.^ Cono^ress, however, has the exclusive power to declare
wai', to laise and support the armed forces, to make rules for their
government and reo;ulation, to call forth the militia, to provide for
the common defense, and to make appropriations for all national
defense activities.^
JSIoreover, under the Necessary and Proper clause, the Constitution
s})ecifies that Conjjress shall have the power "to make all laws necessary
and proper for carrying into execution'^ not only its own powers but
also "all other powers vested by [the] Constitution in tlie Government
of the United States, or in any Department or Officer thereof." ^°
This constitutional framework — animated by the checks and bal-
ances concei)t — makes clear that the Constitution contemplates that
the judgment of both the Congress and the President will be applied
to major decisions in foreign affairs and national defense. The Presi-
dent, the holder of "tlie executive power," conducts daily relations
witli otlier nations tlirough the State Department and other agencies.
The Senate, through its "advice and consent" powder and through the
work of its appropriate committees ])articipates in foreign affairs.
As Hamilton observed in The Fe(JeraH>it^ foreign affairs should not be
left to the "sole disposal" of the President :
The history of human conduct does not warrant that exalted
opinion of human virtue which would make it wise to commit
interests of so delicate and momentous a kind, as those which
concern its intercourse with the rest of the world, to the sole
disposal of a magistrate created and circumstanced as would
be a President of the United States.^^
Similarly, in national defense, the constitutional framework is a
"partial mixture of powers," calling for collaboration between the
executive and the legislative branches. The Congress, through its ex-
clusive power to declare war, alone decides whether the nation shall
move from a state of peace to a state of war. "\Vliile as Commander-in-
Chief the President commands the armed forces. Congress is empow-
ered "to make rules" for their "government and regulation." ^^
INIoreover, in both the foreign affairs and defense fields, while the
President makes executive decisions, the Congress with its exclusive
power over the purse is charged with authority to determine whether,
or to what extent, government activities in these areas shall be
funded. ^^
Tlie Constitution, while containing no express authority for the con-
duct of foreign intelligence activitv, clearly endowed the Federal
Government (i.e.. Congress and the President jointlv) with all the
])ower necessary to conduct the nation's foreign affairs and national
' Ihid.. Art. IT, Sect. 2.
° ma.. Sect. 8.
" Ihid.
" The F^dprnlisf. No. 75 (A. Hamilton).
" TTnited S*-ate« Constitution. Article I. Section 8.
"76frt., Art. II, Sect. 8.
33
defense and to stand on an equal basis with other sovereign states. ^^
Inasmuch as foreign intelligence activity is a part of the conduct of
the United States' foreign affairs and national defense, as well as part
of the practice of sovereign states, the Federal Government has the
constitutional authority to undertake such activity in accordance with
applicable norms of international law.^^*
We discuss below the manner in which Congress and the Executive
branch have undertaken to exercise this federal power, and the con-
sistency of their action with the Constitution's framework and system
of checks and balances.
B. The Historical Practice
The National Security Act of 1947 "'' was a landmark in the
evolution of United States foreign intelligence. In the 1947 Act,
Congress created the National Security Council and the CIA, giving
both of these entities a statutory charter.
Prior to 1947, Congress, despite its substantial authority in foreign
affairs and national defense, did not legislate directly with respect to
foreign intelligence activity. Under the Necessary and Proper Clause,
and its power to make rules and regulations for the Armed Forces,
Congress might have elaborated specific statutes authorizing and regu-
lating the conduct of foreign intelligence. In the absence of such sta-
tutes. Presidents conducted foreign intelligence activity prior to the
1947 National Security Act on their own authority.
In wartime, the President's power as Commander-in-Chief provided
ample authority for both the secret gathering of information and
covert action. ^^ The authority to collect foreign intelligence informa-
tion before 1947 in peacetime can be viewed as implied from the Presi-
"As the Supreme Court has declared, "the United States, in their relation
to foreign countries . . . are invested with the powers which belong to independ-
ent nations " [Chinese Exclusion Case. 130 U.S. 581. 604 (1889).]
"a There are a number of international agreements which the United States
has entered into which prohibit certain forms of intervention in the domestic
affairs of foreign states. The Nations Charter in Article 2(4) obligates all U.N.
members to 'refrain in their international relations from the threat or use of
force against the territorial integrity of any state." The Charter of the Organiza-
tion of American States (OAS) in Article 18 provides:
"No State or group of States has the right to intervene, directly or indirectly
for any reason whatever, in the internal or external affairs of any other State.
The foregoing principle prohibits not only armed force but also any other form
of interference or attempted threat against the personality of the State or against
its political, economic, and cultural elements."
Under the Supremacy Clause of the Constitution (Art. VI, Sec. 2). treaty
obligations of the United States are part of the law of the land. While the
general principles of such treaties have not been spelled out in specific rules of
application, and much depends on the facts of particular cases as well as other
principles of international law (including the right of self-preservation, and
the right to assist states against prior foreign intervention) it is clear that the
norms of international law are relevant in assessing the legal and constitutional
aspects of covert action.
"" .50 U.S.C. 430.
^In Totten v. United States, 92 U.S. 105 (1875). the Supreme Court iipheld the
authority of the Pre.sident to hire, without statutory authority, a secret agent for
intelligence purposes during the Civil War. Authority for wartime covert action
can be implied from the President's powers as Commander-in-Chief to conduct
military operations in a war declared by Congress. Compare, Totten v. United
States.
34
dent's power to conduct foreicrii affairs.^^ In addition to the more or
less discreet oratlierinff of information by the reoiilar diplomatic serv-
ice, the President sometimes used specially-appointed "executive
agents" to secretly gather information abroad.^' In addition, executive
agents were on occasion given secret political missions that were simi-
lar to modern day political covert action.^^ These, however, tended to
be in the form of relatively small-scale responses to paiticular con-
cerns, rather than the continuous, institutionalized activity that
marked the character of covert action in the period after the passage
of the 1947 National Security Act. There were no precedents for the
peacetime use of covert action involving the use of armed force of the
type conducted after 1947.
1. Foreign Intelligence and the Presidetifs Foreign Affairs Power
Although the Constitution provides that the President "sliall ap-
point ambassadors, other public ministers and consuls" only "by and
with the advice and consent of the Senate," beginning witli Washing-
ton Presidents have appointed special envoys to carry out both overt
diplomatic functions and foreign intelligence missions.^^ The great
majority of these envoys were sent on overt missions, such as to nego-
tiate treaties or to represent the United States at international con-
ferences. Some, however, were sent in secrecy to carry out the near
equivalent of modern-day intelligence collection and covert political
action. For example, in connection with IT.S. territorial designs on
central and western Canada in 1869, President Grant's Secretary of
State sent a private citizen to that area to investigate and promote
the possibilitv of annexation to the United States.^"
Presidential discretion as to the appointment of such executive
agents derived from the President's assumntion of the conduct of
foreign relations. From the beo:inning, the President represented the
United States to the world and had exclusive charge of the channels
and processes of communication. The President's role as "sole orrran"
of tlie nation in dealing with foreign states was recognized bv John
Marhall in 1816 ^^ and reflected the views expressed in The Federalist
"Compare, Unite<J States v. Bntcnko 494 F.2d 593 (3(1 Cir. 1974) : "Decisions
affecting the United States' relationship witli other sovereign states are more
likely to advance our national interests if the President is apprised of the inten-
tions, capabilities and possible responses of other countries."
"Henry Wriston, Executive Agents in American Foreign Relations, (1929,
1967).
" Tbid., pp. 693, et. seq.
^* The first such specially-appointed individual was Governeur Morris, sent by
President Washinst<^n in 1789 as a "private ag:ent" to Britain to explore the
possibilities for openins: normal diplomatic relations. Morris was appointed in
October 1789 because Washington's Secretary of State, .Jefferson, was not yet
functio'iing. The mission was not I'eported to the Cnneress nntii Fehninrv ]79l.
He'iry Wriston. "The Special Envoy," Foreign Affairs, 38 (1960), pp. 219, 220)
""Wriston. Extent ire Agents in American Foreinn Relations, p. 7.39.
"^ Marshall spoke, not as Chief Justice in an opinion of the Supreme Court,
but rather in a statement to the House of Representatives. The House of Reii-
resentatives was engaged in a debate as fo whether a dem-^nd bv the Briti';h
Government for the extradition of one Robbins was a matter for the courts
or for the President, acting unon an extradition treaty. Marshnll argued that
the case Involved "a national demand made upon the nation.'' Sinf^e the Presi-
dent is the "sole organ of the nation in its external relations " Mnrslmll snid.
"of consenuf^noe, the demand en only be made upon him." [10 Annals of Con-
gress 613 (1800), reprinted in 5 Wheat, Appendix, Note 1, at 26 (U.S. 1820).]
35
that the characteristics of the Presidency — unity, secrecy, decision,
dispatch — were especially suited to the conduct of diplomacy,^- As a
consequence, historical development saw the President take charge of
the daily conduct of foreign affairs, including the formulation of much
of the nation's for-eign policy. But "sole organ" as to communications
with foreign governments and historical practice did not amount to
"sole disposal" in a constitutional sense over foreign affaire; as Hamil-
ton declared, the Constitution did not grant that degree of power to
the President in foreign affairs.-"* Moreover, Marshall's reference to
the President as "sole organ" did not purport to mean that the Presi-
dent w^as not subject to congressional regulation, should Congress
wish to act. For Marshall, in addition to speaking of the President as
"sole organ," went on to point out that "Congress, unquestionably, may
prescribe the mode" by which such power to act was to be exercised.-*
Congress, with its own constitutional powers in foreign affairs, its
power over the purse, and under the authority contained in the Neces-
sary and Proper Clause, had the option of regulating the practice of
using executive agents on foreign intelligence missions, as well as the
conduct of foreign intelligence activity by other means.-^
2. The Use of Force in Covert Action
Covert action may include the use of armed force. In modern times,
the President's authorization of the CIA-financed and directed in-
vasion of Cuba at the Bay of Pigs and paramilitary operations in
Laos are examples of this type of covert action.
^^ Nor did Marshall intend to say that "sole organ" meant the power of "sole
disposal." As the eminent constitutional expert Edward S. Corwin wrote,
"Clearly, what Marshall had foremost in mind was simply the President's role
as instrument of communication with other governments." (Edward S. Corwin,
The President's Control of Foreign Relations, p. 216.)
^ The Federalist, No. 75 (A. Hamilton).
'* Citing Marshall's expression, the Supreme Court has recognized the Presi-
dent as "sole organ" of communication and negotiation in foreign affairs. [United
States V. Curtiss-W right Export Corp., 299 U.S. 304 (1952).] Although dicta of
.Justice Sutherland in the Curtiss-W right opinion put forward a broad view of
"inherent'' Presidential power in foreign affairs, the case and the holding of
the court involved, as .Justice .Jackson stated in his opinion in the Steel Seizure
case, "not the question of the President's power to act without congressional au-
thority, but the question of his right to act under and in accord with an Act
of Congress." [YonngHoiim Steel d Tube Co. v. Saicyer, 343 U.S. 579, 635-636
( 1952 ) ( consurring opinion ) . ]
In Curtiss-W right a joint resolution of Congress had authorized the Presi-
dent to embargo weapons to countries at war in the Chaco, and imposed criminal
sanctions for any violation. After President Franklin D. Roosevelt proclaimed
an embargo, the Curtiss-Wright Corporation, indicted for violating the embargo,
challenged the congressional resolution and the President's proclamation,
claiming Congress had made an improper delegation of legislative power to
the President. Speaking for six justices, .Justice Sutherland sustained the in-
dictment, holding only, as .Ju.stice .Jackson later noted, "that the strict limita-
tion upon Congressional delegations of power to the President over internal
affairs does not apply with respect to delegations of power in external affairs."
(343 U.S. at 636.)
^ In 1798. for example, Congress established a procedure for the financing of
secret foreign affairs operations. It enacted a statute providing for expenses of
"intercourse or treaty" with foreign nations. The Act required the President to
report all such expenditures, but granted him the power to give a certificate in
lieu of a report for those payments the President deemed should be kept secret
(Act of February 9, 1973, 1 Stat. 300.
36
The executive branch relies in lar^e part on the President's own
constitutional powers for authority to conduct such covert action.-*^
After the failure of the Bay of Pigs operation in 1961, the CIA asked
the Justice Department for an analysis of the legal authority for
covert actions. In its response, the Justice Department's Office of
Legislative Council stated :
It woidd appear that the executive branch, under the direction
of the President, has been exercising without express statutory
authorization a function which is within the constitutional
jjowers of the President, and that the CIA was the agent
selected by the President to carry out these functions.^^
The Justice Department memorandum jiointed to the President's
foreign relations power and his responsibility for national security.-^
Ai'guing by analogy from the President's power as Commander-in-
Chief to conduct a declared war, the memorandum contended that
the President could conduct jieacetime covert actions involving armed
force without authority from Congress. The memorandum argued
that there was no limit to the means the President might employ in
exercising his foreign affairs i^ower :
Just as "the power to wage war is the power to wage war
successfully," so the power of the President to conduct foreign
relations should be deemed to be the power to conduct foreign
relations successfully, hy any means necessary to combat the
measures taken by the Communist bloc, including both open
and covert measures.'^ [Emphasis added.]
In view of the Constitution's grant of concurrent jurisdiction to the
Congress in foreigTi affairs and Congress' exclusive constitutional au-
thority to declare war. there is little to support such an extravagant
claim of Presidential power in peacetime. The case which prompted
the Justice Department's argument — the invasion of Cuba at the Bay
-"In September 19-17, the CIA General Counsel expressed the opinion that activ-
ity such as "black propaganda, ranger and commando raids, behind-the-llnes sabo-
tage, and support of guerrilla warfare" Avould constitute "an unwarranted ex-
tension of the functions authorized" by the 19-^7 Act. (Memorandum from the
CIA General Counsel to Director, 9/25/-17.) And. in 1969. the CIA General Coun-
sel wrote that the 1947 Act provided "rather doubtful statutory authority" for
at least those covert actions — such as paramilitary operations — which were not
related to intelligence gathering. (Memorandum from CIA General Counsel to
Director, 10/30/69.) Tlie Agency's General Counsel took the position that the
authority for covert action rested on the President's delegation of his own con-
stitutional authority to CIA through various National Security Council Direc-
tives. (Ibid.)
"• Memorandum, Office of Legislative Counsel, Department of Justice, 1/17/62,
p. 11.
"^ Ihi(J., p. 7. The memorandum stated :
"Under modern conditions of 'cold war,' the President can properly regard the
conduct of covert activities ... as necessary to the effective and successful con-
duct of foreign relations and the protection of the national security. When the
Ignited States is attacked from without or within, the President may 'meet force
with force" ... In wagering a worldwide contest to strengthen the free nations and
contnin the Communist nations, and thereby to preserve the existence of the
I'nited States, the President should be deemed to have comparable authority to
meet covert activities with covert activities if he deems such action necessary
and consistent with our national objectives."
^'^ Ibid.
37
of Pigs — illustrates the serious constitutional questions which arise. In
that operation, the President in effect authorized the CIA to secretly
direct and finance the military invasion of a foreign coinitry. This
action approaclied, and may have constituted, an act of war. At the
least, it seriously risked placing the United States in a state of war
vis-d-vis Cuba on the sole authority of the President. Absent the threat
of sudden attack or a grave and immediate threat to the security of
the country, only Congress, under the Constitution, has such authority.
As James Madison declared. Congress' power to declare war includes
the "power of judging the causes of war." ^^ Madison wrote:
Every just view that can be taken of the subject admonishes
the public of the necessity of a rigid adherence to the simple,
the received, and tlie fundamental doctrine of the constitution,
that the power to declare war, including the power of judging
the causes of war, is fullj^ and exclusively vested in the legis-
lature. . . ."31
This view was also affirmed by Hamilton who, although a principal
exponent of expansive Presidential power, wrote that it is the
exclusive province of Congress, when the nation is at peace, to
change that state into a state of war ... it belongs to Congress
only, to go to war.^^
Nor is there much support in historical practice prior to 1950 for the
use of ai'med force to achieve foreign policy objectives on the sole
authority of the President. The 1962 Justice Department memorandum
argued that the practice of Presidents in using force to protect Ameri-
can citizens and pi'operty abroad was authority for covert action
involving armed force. ^^ Before the post -World War II era, Presidents
on occasion asserted their own authority to use armed force short of
war, but as the Senate Committee on Foreign Relations noted in 19Y3,
these operations were for "limited, minor, or essentially non-political
purposes." As the Foreign Eelations Committee stated :
During the course of the nineteenth century it became ac-
cepted practice, if not strict constitutional doctrine, for Presi-
dents acting on their own authority to use the armed forces
for such limited purposes as the suppression of piracy and the
slave trade, for "hot pursuit" of criminals across borders, and
for the protection of American lives and property in places
abroad where local govei-nment was not functioning effec-
tively. An informal, operative distinction came to be accepted
between the use of the armed forces for limited, minor or
essentially nonpolitical purposes and the use of the armed
forces for "acts of war" in the sense of large-scale military
operations against sovereign states.^*
That these operations were, as the Committee on Foreign Relations
noted, for "limited, minor, or essentially non-political purposes" is also
""Letters of Helvidius (1793), Madison, Writinffs, Vol. 6, p. 174 (Hunt ed.).
'' It)i(I.
'^Hamilton, Works, Vol. 8, pp. 2-^9-250 (Lodge ed.)
'^ Ju.stice Department Memorandum, 1/17/62, p. 2.
'* Senate Report No. 220, 93d Cong., 1st Sess. (1973) .
38
affirmed by the eminent authority on constitutional law, Edward Cor-
win. Prior to the Korean AYar, the "vast majority" of such cases,
Corwin wrote, "involved fig^hts with pirates, landin<is of small naval
contino;ents on barbarous coasts [to protect American citizens], the
dispatch of small bodies of troops to chase bandits or cattle rustlers
across the ]\Iexican border." ^^
To stretch the President's foreign relations power so far as to au-
thorize the secret use of armed force against foreign states without
congressional autliorization or at least "advice and consent," appears
to go well beyond the proper scoi)e of the Executive's power in foreign
affaii's under the Constitution. Moreover, where Congress is not in-
formed prior to the initiation of such armed covert action — as it was
not, for example, in the Bay of Pigs operation — the constitutional sys-
tem of checks and balances can be frustrated. Without prior notice,
thei'e can be no effective check on the action of the executive branch.
Once covert actions involving armed force, such as the invasion of
Cuba at the Bay of Pigs or paramilitary operations, are begun, it may
be difficult if not impossible for practical reasons to stop them. In
such circumstances, covert action involving armed intervention in the
affairs of foreign states may be inconsistent with our constitutional
system and its principle of checks and balances.
C. The CoxsTrruTioxAL Power or Congress To Regulate the
CoxDUCT OF Foreign Ixtelligence Activity
Prior to the 1047 National Security Act, Congress did not seek to
ex])ressly authorize or regulate foreign intelligence activity by statute.
Congress' decision not to act, however, did not reduce or eliminate its
constitutional power to do so in the future. The Necessary and Proper
Clause and its power to "make rules for the government and regula-
tion" of the armed forces, along with Congress' general powers in
the fields of foreign affairs and national defense, were always available.
In this light, the question of the legal authority for the conduct of
foreign intelligence activity in the absence of express statutory au-
thorization can be viewed in the manner set forth by Justice Jackson
in the Steel Seizure case. He wrote :
When the President acts in abpence of either a congressional
grant or denial of authority, he can only rely upon his own
independent powers, but there is a zone of twilight in which
he and Congress may have concurrent authority, or in which
its distribution is uncertain. Therefore, congressional inertia,
indifference or quiescence may sometimes, at least as a prac-
tical mattei", enable, if not invite, measures on independent
Presidential responsibility.^*^
Foreign intelligence activity, particularly political covert action not
involving the use of force, can be seen as Iving in such a "zone of twi-
light" in which both the Pres'dcnt and the Congress have concurrent
authority and responsibilities. (As discussed above, the use of covert
■^ Edward S. Corwin, "The President's Power," in Haight and Johnson, eds.
Thr Pre Slid cut's Role and Pmccm, (19fi5), p. 361.
"" Yotmgstnn-n Co. v. Sawyer, 343 U.S. 579, 637 (1952) (concurring opinion).
39
action involving armed force raises serious constitutional problems
where it is not authorized by statute, particularly if Congress is not
informed.) When Congress does not act, the President may in certain
circumstances exercise authority on the basis of his own constitutional
powers.
Congress can, however, choose to exercise its legislative authority
to regulate the exercise of that authority. In view of the President's
own constitutional powers, Congress may not deprive the President of
the function of foreign intelligence. But, as Chief Justice Marshall
stated. Congress can "prescribe the mode" by which the President car-
ries out that function. And the Congress may apply certain limits or
controls upon the President's discretion.
The Supreme Court has affirmed this constitutional power of Con-
gress. In Little v. Barreme,^'' Chief Justice Marshall, speaking for the
Court, found the seizure by the U.S. Navy of a ship departing a French
port to be unlawful, even though the Nai^ acted pursuant to Presiden-
tial order. By prior statute. Congress had authorized the seizure of
ships by the Navy, but limited the types of seizures that could be
made. The President's orders to the Navy disregarded the limits set
out in the law. If Congress had been silent. Chief Justice Marshall
stated, the President's authority as Commander-in-Chief might have
been sufficient to permit the seizure. But, ISIarshall declai-ed, once Con-
gress had "prescribed . . . the manner in which this law shall lie carried
into execution," the President was bound to respect the limitations
imposed by Congress.^*
There have been at least as many conceptions of the range of the
President's own power as there have been holders of the office of the
President. In the case of foreign intelligence activity. Justice Jack-
son's statement that "comprehensive and undefined Presidential pow-
ers hold both practical advantages and grave dangers for the coun-
try" 39 is particularly i-elevant, especiallv in view of the tension be-
tween the need for secrecy and the constitutional principle of checks
and balances. Yet. as Justice Brandeis declared, "checks and balances
were established in order that this should be a government of laws and
not of men." •*°
The 1947 National Securitv Act represented the exercise of Congress'
constitutional power to order the conduct of foreign intelligence ac-
tivity under law. By placing the autliority for foreign intelligence
activity on a statutory base, Conq-ress soujrht to I'educe the reliance on
"comprehensive and undefined" Presidential power that had pre-
viously been the principal source of authority. However, tlie language
of the 1947 Act did not expresslv authorize the conduct of covert ac-
tion and, as discussed earlier. Congress apparently did not intend
to grant such authority. As a result, inherent Presidential DOwer has
continued to serve as the principal source of authority for covert
action.
Congress continued to exercise this constitutional power in sub-
sequent legislation. In the Central Intelligence Act of 1949,^^ Congress
^2Cranchl70 (1805).
=^2 Cranch 170. 178 (1805).
^^ Yottngfitown Co. v. Sau-yct\ 3^3 U.S. 579. 634 (1952) (concurring opinion).
^''Mijcrs V. United States. 272 U.S. 52, 292 (1926) (dissenting opinion).
"50U.S.C.403a-403j.
40
set out the administrative procedures governing CIA activities. The
1949 Act regulated the CIA's acquisition of material, the hiring of per-
sonnel and its accounting for funds expended.
In 1974, Congress imposed a reporting requirement for the conduct
of certain foreign intelligence activities. In an amendment to the
Foreign Assistance Act,*^ Congress provided that no funds may be
expended by or on behalf of the CIA for operations abroad "other
than activities intended solely for obtaining necessary intelligence"
unless two conditions were met : a) the President must make a finding
that "each such operation is important to the national security of the
United States", and b) the President must report "in a timely fashion"
a description of such operation and its scope to congressional
committees.*^
In short, the Constitution provides for a system of checks and bal-
ances and interdependent power as between the Congress and the ex-
ecutive branch with resj^ect to foreign intelligence activity. Congress,
with its responsibility for the purse and as the holder of the legisla-
tive power, has the constitutional authority to regulate the conduct
of foreign intelligence activity.
*^22U.S.C. 2422.
" Ibid.
IV. THE PRESIDENT'S OFFICE
Intelligence has been the province of the President. It has informed
his decisions and furthered his purposes. Intelligence information has
been seen as largely belonging to the President, as being his to classify
or declassify, his to withhold or share. The instruments of U.S. intel-
ligence have been the Presidents' to use and sometimes to abuse.
The President is the only elected official in the chain of command
over the United States intelligence community. It is to him the Con-
stitution and the Congress have granted authority to carry out intelli-
gence activities. It is the President who is ultimately accountable to
the Congress and the American people.
The Committee focused its investigation on the instruments avail-
able to the President to control, direct, and supervise the U.S. intelli-
gence community. As the result of controversy as to whether the intel-
ligence community has been "out of control," Senate Resolution 21
directed the Committee to determine the "nature and extent of execu-
tive branch oversight of all United States intelligence activities."
This involves three Presidential instrumentalities : ^
— The National Security Council ;
— The Office of Management and Budget ;
— The President's Foreign Intelligence Advisory Board.
The Committee sought to establish whether these mechanisms, as
they have evolved, provide effective control over the entire range of
U.S. intelligence activities. Particular attention was given to the sub-
ject of covert action, in part because it has been a major object of
presidential-level review. In addition, the Committee considered
the adequacy of high-level supervision of espionage, counterintelli-
gence, and the overall management of the U.S. intelligence community.
For the first time in the history of congressional oversight, the Com-
mittee had access to records of the proceedings of the National Secu-
rity Council and its subcommittees. It reviewed the NSC directives
related to intellierence and the files of other agencies' participation in
the NSC's intelligence-related activities. The Committee conducted
extensive interviews with current and former White House, NSC, and
cabinet-level officials dealing with intellip-ence matters. It took sworn
testimony on these is<^ues from a number of them, including the present
Secretary of State. Officials of the Office of Management and Budget
and former members and staff of the President's Foreign Intelligence
Advisory Board were also interviewed.
This report presents the results of that investigation and the Com-
mittee's findings with respect to the central question of Presidential
accountability and control of the foreign intelligence activities of the
Ignited States Government.
^ A fourth instrumentality has been established as a result of President Ford's
February 17, ]{>76, reorsranization of the foreisrn intelligence community. Execu-
tive Order 11905 created the Intelligence Oversight Board.
(41)
42
A. The National Security Council
1. Overview
The National Security Council was created by the National Security
Act of 1947. According to the Act, the NSC is "to advise the President
with respect to the integration of domestic, foreign, and military poli-
cies relating to national security" and "assess and appraise the objec-
tives, commitments, and risks of the United States in relation to our
actual and potential military power." Over the years, the principal
functions of the NSC have been in the field of policy formulation and
the coordination and monitoring of overseas operations. Among its
responsibilities, the NSC has provided policy guidance and direction
for United States intelligence activities.
The National Security Council is an extremely flexible instrument.
It has only four statutory members : the President, the Vice President,
and the Secretaries of State and Defense. At the discretion of the
President, others may be added to the list of attendees ; NSC subcom-
mittees may be created or abolished, and the NSC staff given great
power or allowed to wither.
Thus, the operation of the NSC has reflected the personal style of
each President. The Council's role and responsibilities have varied ac-
cording to personalities, changing policies and special circumstances.
Presidents Truman, Kennedy and Johnson found a loose and informal
NSC structure to their liking. Others have set up more formal and
elaborate structures— President Eisenhower's NSC system is the best
example.^ At times, particularly during crises. Presidents have by-
passed the formal NSC mechanisms. President Kennedy set up an
Executive Committee (EXCOM) to deal with the Cuban Missile
Crisis; President Johnson had his Tuesday Lunch group to discuss
Viet Nam and other high level concerns. As a result, over the years the
NSC has undergone major changes, from the elaborate Planning
Board/Operations Coordination Board structure under Eisenhower to
its dismantlement by Kennedy and the creation of a centralized system
of NSC subcommittees under President Nixon and his Assistant
for National Security Affairs, Dr. Kissinger.
Today, in addition to the four statutory members, the National
Security Council is attended by the Director of Central Intelligence
(DCI) and the Chairman of the Joint Chiefs of Staff as advisers.
From time to time, others, such as the Director of the Arms Control
and Disarmament Agency, also attend.
Prior to President Ford's reorganization, the NSC was served by
seven principal committees: the Senior Review Group, the Under
Secretary's Committee, the Verification Panel, the Washington Spe-
cial Actions Group (WSAG), the Defense Program Eeview Commit-
tee, the 40 Committee, and the National Security Council Intelligence
^ For a full treatment of the evolu«^inn of the National Secnrity Council and its
place within the national security decisionmnking process, see Keith C'ark and
Laurence Legere. Tlie President and the Management of National Security
(1969) ; Stanley Falk and Theodore Bauer, National Serurity Managemeyit: The
NationM Security Structure (1972) ; and Inquiries of the Subcommittee on Na-
tional Policy Machinery for the Senate Committee on Government Operations,
Organizing for National Security (1961) .
43
Committee (NSCIC).^ The latter two committees had direct intelli-
gence responsibilities. The 40 Committee has now been replaced by the
Operations Advisory Group. No successor for NSCIC has been des-
ignated. The current NSC structure is shown below.
iMATIONAL SECURITY COUNCIL
• President •Vice President • Secretary of State • Secretary of Defense
• Chairman, Joint Chiefs of Staff • Director of Centrallntelligence
White Hous
Situation Ro(
Asst. to Pres, for Nat'l
Sec. Affairs
UNDER SECRETARIES
COMMITTEE
• n.'i
■i-r. „! Sut» ICh,..„l 1
• Asil ■■! Pr-,-, toi rjol 1
SfC Aff.i,rs
• Dm
S-.-C o( D.:f0Mit.
•Clij
-n:jn. JCS
•DCI
SENIOR REVIEW GROUP
• Asst to Prt?s for Ndt'l
Sue Atlairs IChn.nl
• Di'p Sue ol Stdle
• DupSucof Dofu.i'.D
• Clij.rmj... JCS
•DCI
■As;
to Pios fill Njl
Ch.i.
StfC Afto,
• Dep Sec of Sute
■ Dep Sec ol Defen
•Choirman. JCS
• Oh,
Coon
Econ Advisor
■ Director, 0MB
•DCI
;c of 0,-lrn
VERIFICATION PANEL
Sec Alljits ICh
• Dep Sec of Sl.ile
• Dep Sec ol Oe(.„s
WASHINGTON SPECIAL
ACTIONS GROUP
Pros for N.l
Alljirs (Chn
: of Sljle
:ol Defenst
dM. JCS
Sec AlljMs
• Sec of Stale
: of Defense
■DCI
.rmor.. JCS
3>ncv Geoer,
obser>
• Director, OMQ
Each of the current NSC subcommittees are "consumers" of the
intelligence community product. The DCI sits on all of them. In most
cases, the DCI briefs the subcommittees and the full NSC before
agenda items are considered. CIA representatives sit on working and
ad hoc groups of the various subcommittees. The CIA's Area Division
Chiefs are the Agency's representatives on the NSC Interdepartmental
Groups (IGs).* In all of these meetings there is a constant give and
take. Policymakers are briefed on current intelligence and they, in
turn, levy intelligence priorities on the CIA's representatives.
^The Senior Review Group, under the direction of the President's As-
sistant for National Security Affairs defines NSC issues; determines whether
alternatives, costs, and consequences have been fully considered ; and forwards
recommendations to the full Council and/or the President. The Under Secretaries
Committee seeks to ensure effective implementation of NSC decisions. The Veri-
fication Panel monitors arms control agreements and advises on SALT and
MBFR negotiations. WASG coordinates activities during times of crises, such as
the Middle East and Southeast Asia. The Defense Program Review Committee,
now nearly defunct, assesses the political, military and economic implications of
defense policies and programs.
*NSC Interdepartmental Groups (IGs) are made up of representatives from
State, Defense, CIA, the Joint Chiefs of Staff and the National Security Council.
IGs are chaired by the State representative, an Assistant Secretary, aed they
prepare working papers for the Senior Review Group.
44
£: The NSO and Intelligence
The 1947 National Security Act established the CIA as well as the
NSC. The Act provided that the CIA was "established under the
National Security Council" and was to carry out its prescribed func-
tions "under the direction of the National Security Council." Five
broad functions were assi^ed to the CIA :
(1) to advise the National Security Council in matters
concerning such intelligence activities of the Government de-
partments and agencies as relate to national security.
(2) to make recommiendations to the National Security
Council for the coordination of such intelligence activities of
the departments and agencies of the Government as relate
to the national security ;
(3) to correlate and evaluate intelligence relating to the
national security, and provide for the appropriate dissemina-
tion of such intelligence within the Government using where
appropriate existing agencies and facilities.
(4) to perform., for the benefit of the existing intelligence
agencies, such additional services of coTnmon concern as the
National Security Council determines can be more efficiently
accomplished centrally.
(5) to perfoTTYh such other functions and duties related to
intelligence affecting the national security as the National
Security Council may from time to time direct.
The Director of Central Intelligence is responsible for seeing that
these functions are performed, and is to serve as the President's
principal foreign intelligence officer.
The NSC sets overall policy for the intelligence community. It does
not, however, involve itself in day-to-day management activities. The
task of coordinating intelligence community activities has been dele-
gated to the DCI, who, until President Ford's reorganization, sought
to accomplish it through the United States Intelligence Board
(USIB). USIB was served by 15 inter-agency committees and a vari-
ety of ad hoc groups. It provided guidance to the intelligence commu-
nity on requirements and priorities, coordinated community activities
and issued, through the DCI, National Intelligence Estimates (NIEs) .
The DCI was also assisted by the Intelligence Resources Advisory
Committee (IRAC). IRAC assisted the DCI in the preparation of
a consolidated intelligence budget and sought to assure that intelligence
resources were being used efficiently.
As a result of President Ford's Executive Order, management of the
intelligence community will now be vested in the Committee on Foreign
Intelligence (CFI). USIB and IRAC are abolished. Membership on
the new committee will include the DCI, as Chairman, the Deputy
Secretary of Defense for Intelligence and the Deputy Assistant to
the President for National Security Affairs. Staff support will
be provided bv the DCI's Intelligence Community (IC) staff. The new
committee will reDoi-t directly to the NSC.
The CFI will have far-ranging responsibilities. It will oversea the
budget and resources, as well as establish management policies, for the
CIA, the National Security Agency, the Defense Intelligence Agency,
45
and United States reconnaissance programs. Further, it will establish
policy priorities for the collection and production of national intel-
ligence. The DCI will be responsible for producing national intelli-
gence, including NIEs. To assist him in this task, the DCI will set up
whatever boards and committees (similar to the now defunct USIB)
are necessary.
The President's Executive Order also directed the NSC to review,
on a semi-annual basis, certain foreign intelligence activities. Prepared
by the President's Assistant for National Security Affairs, these re-
views will focus on the quality, scope and timeliness of the intelligence
product; the responsiveness of the intelligence community to policy-
makers' needs; the allocation of intelligence collection resources; and
the continued appropriateness of ongoing covert operations and sensi-
tive intelligence collection missions.
One of the functions the NSC has assigned to the CIA is the con-
duct of foreign covert operations. These operations began in 1948 and
have continued to the present, uninterinipted. Authority to conduct
covert operations has usually been ascribed to the "such other functions
and duties" provision of the 1947 Act.^
The NSC uses National Security Council Intelligence Directives
(NSCIDs) to set policy for the CIA and the intelligence community.
NSCIDs are broad delegations of responsibility, issued under the au-
thority of the 1947 Act.' They may assign duties not explicitly stated
in the 1947 Act to the CIA or other intelligence departments or agen-
cies. NSCIDs, souietimes referred to by critics as the intelligence com-
munity's "secret charter," are executive directives and, therefore, not
subject to congfressional review. ITntil recently, Congress has not seen
the various NSCIDs issued by the NSC.
S. Overvieio: Jfi Committee and NSC 10
Prior to President Ford's reorganization, two NSC committees, the
40 Committee and the National Securitv Council Intelligence Com-
mittee, had special intelligence duties. Their functions and respon-
sibilities will be discussed in turn.
Throughout its history, the 40 Committee and its direct predeces-
sors—the 303 Committee, the 5412 or Special Group, the 10/5 and 10/2
Panels — have been charged by various NSC directives with exercising
political control over foreign covert operations.'^ Now this task will
be the responsibility of the Operations Advisory Group. The Com-
mittees have considered the objectives of any proposed activity,
^ Three iwssible legal bases for covert operations are most often cited : the
National Security Act of 1947, the "inherent powers" of the President in foreign
affairs and as Commander-in-Chief, and the Foreign Assistance Act of 1974. Con-
gressional acquiescence and ratification through the appropriations process is a
fourth possibility. See Aopendix I of this report for a full discussion.
' For example, NSCIDs are used to spell out the duties and responsibilities of
the DCI, the coordination of covert intelligence collectir>n activities, and the pro-
duction and dissemination of the intelligence commiinity product.
' Covert operations encompass a wide ransre of programs. These include politi-
cal and propaganda programs designed to influence or support foreign political
parties, groups, and specific political and military leaders ; economic action pro-
grams ; paramilitary operations ; and some coimterinsurgency programs. Human
intelligence collection, or spying, and counterespionage programs are not included
under the rubric of covert operations.
46
whether the activity Avould accomplish those aims, how likely it would
be to succeed, and in general whether the activity would be in the
American interest. In addition, the Committees have attempted to
insure that covert operations were framed in such a way that they
later could be "disavowed" or "plausibly denied" by the United States
Government. President Ford's Executive Order included the con-
cept of "plausible denial." Using the euphemism "special activities"
to describe covert operations, the Order stated :
Special activities in support of national foreign policy ob-
jectives [are those] activities . . . designed to further of-
ficial United States programs and policies abroad which
are planned and executed so that the role of the United States
Government is not apparent or publicly acknowledged.^'^
The concept of "plausible denial" is intended not only to hide the
hand of the United States Government, but to protect the President
from the embarrassment of a "blown" covert operation. In the words
of former CIA Director Richard Helms :
. . . [the] Special Group was the mechanism . . . set up . . .
to use as a circuit-breaker so that these things did not ex-
plode in the President's face and so that he was not held re-
sponsible for them.^''
In the past, it appears that one means of protecting the President
from embarrassment was not to tell him about certain covert opera-
tions, at least formally. According to Bromley Smith, an official who
served on the National Security Council staff from 1958 to 1969, the
concept of "plausible denial" was taken in an almost literal sense:
"The government was authorized to do certain things that the Presi-
dent was not advised of." ""^ According to Secretary of State Kissinger,
however, this practice was not followed during the Nixon Administra-
tion and he doubted it ever was. In an exchange with a member of
the House Select Committee on Intelligence, Secretary Kissinger
stated :
Mr. Kasten". Mr. Secretary, you said that the President
personally, directly approved all of the covert operations dur-
ing that period of time [1972 to 1974] and, in your knowl-
edge, during all periods of time. Is that correct ?
Secretary Kissinger. I can say with certainty during the
period of time that I have been in Washington and to my al-
most certain knowledge at every period of time, yes.^
Four senior officials who deal almost exclusively with foreign affairs
have been central to each of the sequence of committees charged w^ith
considering covert operations: The President's Assistant for National
Security Affairs, the Deputy Secretary of Defense, the Under Secre-
tary of State for Political Affairs (formerly the Deputy Under Secre-
tary), and the Director of Central In'tellijxence. These four officials,
plus the Chairman of the Joint Chiefs of Staff, made up the 40 Com-
^^ Executive Order No. 11905, 2/18/76.
^'' Richard Helms testimony. 6/13/75, pp. 28-29.
""" Staff summary of Bromley Smith interview, .5/5/75.
* Henry Kissinger testimony, House Select Committee on Intelligence, Hear-
ings, 10/31/75, p. 3341.
47
mittee. At certain times the Attorney General also sait on the Commit-
tee. President Ford's reor^^fanization Avill si^nificantlv alter this mem-
bership. The new Opei-ations AdA^isoiy Gronp will consist of the
President's Assisifant for National Secni-itv Affairs, the Secretaries of
State and Defense, the Chairman of the JCS, and the DCI. The
Attorney General and the Director of OMB will attend meetings as
observei-s. Tlie Chaii-man of tlie Group will be desifjnated by the
President. Staff supj)orl: will be provided by the NSC staff.
The formal composition of the Operations Gronp breaks with
tradition. The Secretai-ies of State and Defense will now be pait of
the approval process for covert opera^^ions, rather than the Under
Secretary of State for Political Affairs and Deputy Secretary of
Defense. The Operations Advisory Group appears to be, therefore, an
up-(^raded 40 Committee. Whether this proves to be the case remains to
be seen. Presidenit Ford's Executive Order contained a provision,
Section 3(c) (3), wliich allows (rroup members to send a "designated
representative" to meetings in "unusual circumstances."
The National Security Council Intelligence Committee (NSCIC)
was established in November 1971 as pait of a far-reaching reorgani-
zation of the intelligence community ordered by President Nixon.^
The Presidential directive stated :
The Committee will give direction and guidance on national
intelligence needs and piT>vide for a continuing evaluation of
intelligence products from the viewpoint of the intelligence
user.
One reason cited for creating NSCIC was a desire to make the
intelligence community more i-esponsive to the needs of policy makers.
According to a news report at the time :
"The President and Henry [Kissinger] have felt that the
intelligence we were collectinji- wasn't alwavs responsive to
their needs," said one source. "They suspected that one reason
was because the intelligence community had no way of know-
ing day to day what the President and Kissinger needed.
This is a new link Ix^tween producers and consumers. We'll
have to wait and see if it works." ^°
Prior to NSCIC no formal structure existed for addressing the
major questions concerning intelligence priorities rather than specific
operations: Do "producers" in the intelligence community perform
analyses which are useful to "consumers" — the policymakers at var-
ious levels of government; are intelligence resources allocated wisely
® For over a year, the intelligence community had been under study by the
Office of Management and Budget, then headed by Tames Schlesinger. In addi-
tion to NSCIC. the President's reorganization included an enhanced leadership
role for the DCI, the establishment of a Net Assessment Group within the
NSC staff, the creation of an Intellisrence Resources Advisory Committee
(IRAC), and a reconstitution of the United States Intelligence Board (USIB).
The Net Assessment Group was headed by a senior NSC staff member and was
responsible for reviewing and evaluating all intelligence products and for
producing net assessments. When .Tames STchlesinger was na'med Secretary of
Defense in Tune. 1973. the NSC Net Assessment Group was abolished. Its staff
member joined Schlesinger at the Defense Department and set up a similar office.
^'"Helms Told to Cut Global Expenses," New York Times, 11/7/71, p. 55.
48
among agencies and types of collection ? NSCIC was a structural re-
sponse to these issues as well as part of the general tendency at that
time to centralize a greater measure of control in the White House for
national security affairs.
NSCIC's mission was to give direction and policy guidance to the
intelligence community. It was not, and was not intended to be, a chan-
nel for transmitting substantive intelligence from the intelligence
community to policymakers nor for levying specific requirements in
the opposite direction. Neither was NSCIC involved in the process of
allocating intelligence resources. Its membership included the Assist-
ant to the President for National Security Affairs, who chaired the
Committee, the DCI, the Deputy Secretaries of State and Defense,
the Chairman of the JCS, and the Under Secretary of the Treasury
for Monetaiy Affairs.
NSCIC was abolished by Executive Order 11905. No successor body
was created. The task of providing policy guidance and direction to
the intelligence community now falls to the Committee on Foreign
Intelligence. According to the President's Executive Order, the CFI
will "establish policy priorities for the collection and production of
national intelligence." In addition, the full NSC is now required to
conduct policy reviews twice a year on the quality, scope and timeliness
of intelligence and on the responsiveness of the intelligence commu-
nity to the needs of policymakers.
B. Authorization and Control or Covert AcrnvrnES
1. The NSC and Covert Activities: History
President Ford's Operations Advisory Group is the most recent in a
long line of executive committees set up to oversee CIA covert activi-
ties. These committees and CIA covert activities can be traced back to
NSC-4-A, a National Security Council directive issued in December
1947.
In 1947 the United States was engaged in a new struggle, the Cold
War. To resist Communist-backed civil war in Greece, the Truman
Doctrine was proclaimed. The Marshall Plan was about to begin.
Within three years China would "fall," the Korean War would begin,
and the Soviet Union would acquire an atomic capability. The Cold
War was being fought on two fronts — one overt, the other covert.
The Soviet clandestine services, then known as the NKVD (now the
KGB), were engaged in espionage and subvereive activities through-
out the world. France and Italy were beleaguered by a wave of Com-
munist-inspired strikes. In Februai-y 1948, the Communists staged a
successful coup in Czechoslovakia. The Philippines government was
under attack by the Hukbalahaps, a Communist-led guerrilla group.
In that climate, and in response to it, a broad range of United States
covert activities were begun. They were intended to supplement not
replace, overt U.S. activities, such as the Marshall Plan.
In December 1947, the Department of State advised the National
Security Council that covert operations mounted by the Soviet Union
threatened the defeat of American objectives and recommended that
the United States supplement its own overt foreign policy activities
with covert operations. At the Council's first meeting, 021 December 19,
1947, it approved NSC-4, entitled "Coordination of Foreign Intelli-
49
gence Information Measures." This directive empowered the Secretary
of State to coordinate overseas information activities designed to
counter communism. A top secret annex to NSC-4 — NSC-4-A — in-
structed the Director of Central Intelligence to undertake covert psy-
chological activities in pursuit of the aims set forth in NSC-4. The
initial authority given the CIA for covert operations under NSC-4-A
did not establish formal procedures for either coordinating or approv-
ing these operations. It simply directed the DCI to undertake covert
action and to ensure, through liaison with State and Defense, that
the resulting operations were consistent with American policy. In
1948, an independent CIA office — the Office of Policy Coordination
(OPC) — was established to carry out the covert mission assigned by
the NSC. NSC-4— A was the President's first formal authorization
for covert operations in the postwar period," and it was used to un-
dertake covert attempts to influence the outcome of the 1948 Italian
national elections.
Over the next seven years, from June 1948 to March 1955, a series
of National Security Council directives was issued. Each was ad-
dressed, in part, to the review and control of CIA covert activities.
NSC 10/2 superseded NS'C-4-A on June 18, 1948, and a "10/2 Panel,"
the first predecessor of today's Operations Advisory Group, was es-
tablished. The panel was to review, but not approve, covert action
proposals. The 1948 directive was superseded by NSC 10/5 on Octo-
ber 23, 1951. This directive authorized an expansion of world-wide
covert operations ^^ and altered policy coordination procedures.^^
Throughout this period, NSC directives provided for consultation
with representatives of State and Defense, but these representatives
had no approval function. There was no formal procedure or com-
mittee to consider and approve projects. Nor was a representative of
the President consulted. From 1949 to 1952, the DCI approved CIA
covert action projects on his own authority;" from 1953 to March
1955 the DCI coordinated project approvals with the Psychological
" Covert operations were carried out by the OflBce of Strategic Services (OSS)
during the Second World War. OSS was disbanded on October 1, 1945. Three
months later, on January 22, 1946, President Truman issued an Executive Order
creating the Central Intelligence Group (CIG). CIG was the direct predecessor
of the CIA. It operated under an executive council, the National Intelligence
Agency (NIA). Although a psychological warfare capability existed within
CIG, it did not engage in any covert operations during its existence. CIG and
NIA were dissolved with the passage of the 1947 National Security Act.
^^ Prior to this time CIA covert operations were largely confined to psycho-
logical warfare, and almost all were media-related. These activities included the
use of false publications, "black" radio, and subsidies to publications. With the
issuance of NSC 10/2, three other categories of covert actixity were added to
the psychological warfare mission : political warfare, economic warfare and
preventive direct action (e.g., support for guerrillas, sabotage and front
organizations ) .
"At this same time, the OflSce of Policy Coordination (OPC) was merged
with the CIA's OflBce of Special Operations which was responsible for espionage.
The CIA's Clandestine Service was now in place.
" The DCI did, however, undertake external coordination of covert action
programs. Under NSC 10/2, the executive coordination group — the 10/2 Panel —
met regularly with the CIA's Assistant Director for Policy Coordination to plan
and review covert action programs. This procedure continued under the 10/5
Panel.
50
Strategy Board or the Operations Coordination Board.^^ Certain
covert activities were brought to the President's attention at the DCI's
initiative.
By the mid-1950s covert action operations were no longer an ad hoc
response to specific threats. They had become an institutional part of
the "protracted conflict" with the Soviet Union and Communism. In
September 1954, a Top Secret report on CIA covert activities, prepared
in connection with the second Hoover Commission, was submitted to
President Eisenhower. The introduction to that report is enlightening
for what it said about how covert operations were viewed at that time,
as well as the rationale for them.
As long as it remains national policy, another important
requirement is an aggressive covert psychological, political
and paramilitary organization more effective, more unique,
and if necessary, more ruthless than that employed by the
enemy. No one should be permitted to stand in the way of the
prompt, efficient, and secure accomplishment of this mission.
It is now clear that we are facing an implacable enemy
whose avowed objective is world domination by whatever
means and at whatever cost. There are no rules in such a game.
Hitherto acceptable norms of human conduct do not apply.
If the U.S. is to survive, longstanding American concepts of
"fair play" must be reconsidered. We must develop effective
espionage and counterespionage services and must learn to
subvert, sabotage, and destroy our enemies by more clever,
more sophisticated, and more effective methods than those
used against us. It may become necessary that the American
people be made acquainted with, understand and support this
fundamentally repugnant philosophy.
Two significant NSC directives on covert activities were issued in
1955. The first, NSC 5412/1, made the Planning and Coordination
Group (PCG), an OCB committee, the normal channel for policy
approval of covert operations.^^ Approval by an executive committee
was now the rule. The second NSC directive was issued later in
1955 and remained in force until NSDM 40, which created the 40
Committee, was issued in February, 1970. Because of the significance
of this second directive — it covered policy objectives as well as approval
and control procedures — and the fact that it stood as U.S. policy for
fifteen years, it deserves detailed consideration.
The directive reiterated previous NSC statements that the overt
'^The Psychological Strategy Board (PSB), an NSC subcommittee estab-
lised April 4, 1951. was charged with determining the "desirability and feasi-
bility" of proposed covert programs and major covert projects. A new and
expanded "10/5 Panel" was established, comprising the members from the earlier
10/2 Panel, but adding staff representation of the PSB. The 10/5 Panel func-
tioned much as the 10/2 Panel had, but the resulting procedures proved cumber-
some and potentially insecure. Accordingly, when the PSB was replaced by
the Operations Coordinating Board (OCB) on September 2. 1953. coordination
of covert operations reverted to a smaller group identical to the former 10/2
Panel, without OCB staff participation. In March 1954, NSC 5412 was issued.
It required the DCI to consult with the OCB.
" NSC 5412/1 was issued March 12, 1955. That same month the DCI briefed
the PCG on all CIA covert operations previously approved under NSC^-A, 10/2,
10/5, and 5412.
51
foreign activities of the U.S. Government should be supplemented by
covert operations." It stated, in part, that the CIA was authorized to :
— ^Create and exploit problems for International Com-
munism.
— Discredit International Communism, and reduce the
strength of its parties and organization.
— Reduce International Communist control over any areas
of the world.
— Strengthen the orientation toward the United States of
the nations of the free world, accentuate, wherever possible,
the identity of interest between such nations and the United
States as well as favoring, where appropriate, those groups
genuinely advocating or believing in the advancement of such
mutual interests, and increase the capacity and will of such
peoples and nations to resist International Communism.
— In accordance with established policies, and to the extent
practicable in areas dominated or threatened by International
Communism, develop underground resistance and facilitate
covert and guerrilla operations. . . .
The directive dealt with means as well as ends :
— Specifiically, such [covert action] operations shall include
any covert activities related to : propaganda, political action,
economic warfare, preventive direct action, including sabo-
tage, anti-sabotage, demolition, escape and evasion and evac-
uation measures ; subversion against hostile states or groups
including assistance to underground resistance movements,
guerrillas and refugee liberation groups; support of indige-
nous and anti-communist elements in threatened countries of
the free world; deception plans and operations and all com-
patible activities necessary to accomplish the foregoing.
Control and approval procedures were significantly altered by this
directive. The OCB's functions were transferred to "designated repre-
sentatives" of the Secretaries of State and Defense and the President.
This was the first time a "designated representative" of the President
had been brought into the approval, or consultative, process. The
Special Group, as this committee came to be known, was charged with
reviewing and approving covert action programs initiated by the
CIA."
Even under the new directive, criteria oroverning the submission
of covert action projects to the Special Group were never clearly
defined.
As a 1967 CIA memorandum stated:
The procedures to be followed in determining which CA
[covert action] operations required approval by the Special
" Coordination procedures were slightly modified on March 26, 1957. The
Secretary of State was given sole approval authority for particul^irly sensitive
proiects that did not have military implications. Further, the CIA was now
required to keep the Departments of State and Defense advised on the progress
in implementing all approved covert action programs.
52
Group or by the Department of State and other arms of the
U.S. Government were, during the period 1955 to March 1963,
somewliat cloudy, and thus can probably best be described as
having been based on value judgments by the DCI.
In the beginning, meetings of the Special Group were infrequent.
This may be explained, in part, by the special relationship that
existed among CiA Director Allen Dulles, his brother John Foster
Dulles w4io was Secretary of State, and President Eisenhower. Early
in 1959, regular weekly meetings of the Special Group were instituted,
with one result that criteria for submission of projects to the Group
were, in practice, considerably broadened. It was not until March 1963,
however, that criteria for submission to the Special Group became
more formal and precise. These submission criteria are the same as
exist today. (See page 53.)
One other development during this period deserves mention. After
a shoot-down of an American KB 47 aircraft in the Baltic region in
June 1959, the Special Group adopted a new attitude toward recon-
naissance in sensitive cases. They decided that review required for
these missions had previously been inadequate, and established review
on a routine basis. The Joint Chiefs of Staff set up a Joint Recon-
naissance Center ( JRC) to present monthly peripheral reconnaissance
programs to the Special Group. The new procedures did not prevent
the U-2 incident in 1960.
With the inauguration of President Kennedy in January 1961,
Special Group meetings were transferred to the White House under
the chairmanship of the President's Special Assistant for National
Security Affairs, McGeorge Bundy. For a brief period. General Max-
well Taylor, President Kennedy's military adviser, chaired the group,
but this role was again assumed by Bundy when Taylor became Chair-
man of the JCS. Prior to 1961, the State Department member of the
Special Group had been the "informal" chairman.
As a result of the failure of the Bay of Pigs, control procedures
for covert operations were tightened. The Special Group continued
its once-a-week meeting format and President Kennedy was informed
more frequently of covert action proposals. At the same time, however,
the control mechanism for approving and monitoring covert operations
was fragmented. In addition to the Special Group, two new executive
bodies were created — the Special Group on Counter Insurgency (CI)
and the Special Group (Augmented) .
On January 18, 1963, NSAM 124 was issued. This directive estab-
lished the Special Group (CI) to help insure effective interagency
programs designed to prevent and resist insurgency in specified critical
areas, such as Laos. Paramilitary operations were a central focus of
this new group. NSAM 124 did not, however, supersede previous NSC
directives on covert operations. Nevertheless, a certain number of
operations that might have earlier been referred to the Special Group
went to the Special Group (CI). General Maxwell Taylor chaired
this group and McGeorge Bundy and Robert Kennedy served on it,
among others.
In 1962 a third NSC subcommittee was established, the Special
Group (Augmented). Its purpose was to oversee Operation MON-
GOOSE, a major new CIA covert action program designed to over-
throw Fidel Castro. Its membership included, in addition to the regu-
lar Special Group members. Attorney General Kennedy and General
53
Taylor. Secretary of State Kusk and Secretary of Defense McNamara
occasionally attended meetings.^*
During the Johnson Administration, the Special Group, which was
renamed the 303 Committee,^^ continued to be chaired by the Presi-
dent's Assistant for National Security Affairs, first McGeorge Bundy,
and, after 1966, Walt Rostow. The most important regular, high-level
meeting in the national security process during the Johnson years
was, however, the Tuesday Lunch group. The Tuesday Lunch began
as an informal meeting of President Johnson, Secretary of State Rusk,
Secretary of Defense McNamara, and Bundy. Gradually, the meetings
became a regular occasion and participation was enlarged to include
the President's press secretary, the Director of Central Intelligence,
and the Chairman of the JCS. The agenda of the Tuesday Lunch was
devoted primarily to operational decisions — mostly on Vietnam. Al-
though the Tuesday Lunch was not meant to substitute for the 303
Committee, it probably did consider important matters involving
covert operations directed at North Vietnam.
2. The Jfi Committee and current procedures
On February 17, 1970, NSDM 40 was issued. It created the 40 Com-
mittee. The directive superseded and rescinded past NSC covert ac-
tion directives. It discussed both policy and procedure. With regard
to policy, NSDM 40 stated that it was essential to the defense and
security of the United States and its efforts for world peace that the
overt foreign activities of the United States Government continue to
be supplemented by covert action operations.
NSDM 40 assigned the DCI responsibility for coordinating and
controlling covert operations. The Director was instructed to plan and
conduct covert operations in a manner consistent with United States
foreign and military policies and to consult with and obtain appro-
priate coordination from any other interested agencies or officers on
a need-to-know basis.
The directive also spelled out the role of the 40 Committee. It stated
that the DCI was resnonsible for obtaining policy approval for all
major and/or politicallv sensitive covert action programs through the
40 Committee. In addition, NSDM 40 continued the Committee's
responsibility for reviewing and apnrovino- overhead reconnaissance
missions, a resnonsibility first acquired in 1959.
A new provision, not found in previous NSC directives, required the
Committee to finnually review covert operations nreviouslv approved,
and marip, the DCI responsible for insuring that the review took place.
Guidelines for the submission of covert nrtion pronos'ils to t^e 40
ComiTiittep were spelled out in an internnl CIA directive.^" The Direc-
tor of Central Intelligence decided whether an operational program
'^ For a detailed account of the workings of the Special Group (Augmented),
see the Committee's In+erim Report on "Alleged Assassination Plots Involving
Foreign Tveafiers." on. 139-148.
" In June 1964 NSAM 30!? was issued. NSAM 303 left the composition, func-
tions, and responsibilities of the Special Group unchanged. The effect of this
directive was. quite simply, to change the name of the Special Group to the 303
Committf^e. The purpose of NSAM 303 was .iwt as simple — the name of the
Special Group had become public as a result of the pnblication of the book The
Tnvi.Hhle Government and. therefore, it was felt that the name of the covert
action apnroval committee should be changed.
*" This directive will, at least initially, continue in effect for the new Operations
Advisory Group.
54
or activity should be submitted to the 40 Committee for policy ap-
proval. The paramount consideration was political sensitivity, but it
was also significant if a program involved large sums of money. In
the past, a "large" project was one costing over $25,000, but this guide-
line seems less clear today. As a general rule, the following types of
programs or activities required 40 Committee action: political and
propaganda action programs involving direct or indirect action to
influence or support political parties, groups or specific political or
militaiy leaders (this included governmental and opposition ele-
ments) ; economic action programs; paramilitary programs; and coun-
terinsurgency programs where CIA involvement is other than the
support and improvement of the intelligence collection capabilities of
the local services.
The internal CIA directive also stated that before proposals were
presented to the DCI for submission to the 40 Committee, they should
be coordinated with the Department of State. Further, paramilitary
action programs should be coordinated with the Department of De-
fense, and, ordinarily^ concurrence bv the v^mbassador to the country
concerned would be required. [Emphasis added.]
"Should" and "ordinarily" were underscored for an important rea-
son : major covert action proposals are not always coordinated among
the various departments. Nor, for that matter, were they always dis-
cussed or approved by the 40 Committee. For example, the CIA's 1970
effort to promote a military coup d'etat in Chile, undertaken at the
instruction of President Nixon, was never brought before the 40 Com-
mittee.
After a proposal was approved by the DCI, it was distributed in
memorandum form to the 40 Committee principals.^' Except in emer-
gencies, distribution to the principals was to occur at least 72 houre in
advance of a meeting. Normally, the written proposal, as contained in
the 40 Committee memorandum, was formallv considered folloAving
an oral presentation by the CIA. This presentation was usually given
by the Agency Division Chief having action responsibility. In addi-
tion to the principals, participants at 40 Committee meetings included,
on occasion, the CIA's Deputy Director for Operations, a representa-
tive from the State Department's Bureau of Intelligence and Re-
search, and the Assistant Secretary of State for the region involv^ed.
The 40 Committee could approve, modify, or reject any covert action
proposal. Proposals involving continuing action — for example, a sub-
sidy to a political group — were normally approved for a fixed period,
one year or less, at the end of which the project was again reviewed by
the Committee and either continued or eliminated. Reconnaissance
programs were rarely dealt with at these meetings. They were usually
cleared bv telenhone vote rather than at a formal meeting.
Prior to 1969 it does not appear that all 40 Committee approvals
were routinelv referred to the President. The President would become
involved, formally, only if there was disagreement within the Com-
mittee, or if the Chairman or another member thought a proposal was
^ The memorandiim described the proposal in summary form : what it was
expected to accomplish, its cost and the availability of funds, whether there were
alternative means for achipvins: the objectives sought, the risks involved, and
the possible consequences of disclosure.
55
sufficiently important, or sensitive, to warrant the President's attention.
However, as a result of the Hughes-Ryan Amendment to the 1974
Foreign xVssistance Act, the President is notified once a covert action
proposal has been approved by his executive committee. The Presi-
dent is then required to certify to Congress that the approved covert
action proposal is "important to the national security interests of the
Ignited States." The DCI then informs the Congress of this "Presiden-
tial Finding" in a "timely manner." In practice, informing Congress
means notifying six different committees — the Senate and House Com-
mittees on Armed Services, Foreign Relations and Appropriations.^-
The DCI does not, however, feel obligated to infonn the six commit-
tees of approved covert action operations prior to their implementa-
tion, although in some cases he has done so. Once the "Presidential
Finding" is in hand, the CIA's Directorate of Operations implements
the proposal.
During the early years of the Nixon Administration, 40 Conmiittee
meetings were held regularly although, on occasion, proposals were
approved by telephone vote. Over time, however, formal meetings be-
came fewer and fewer. This was due, in part, to a decline in covert ac-
tion projects. Most business was done by telephone after proposals had
been circulated in advance by couriers. Business became routine. "Tele-
phone concurrences," involving quick checks rather than intensive
discussion, was the rule. However, for major new departures, the Com-
mittee met in person. For example, the 40 Committee met nine times
between January 22 and December 11, 1975, to discuss Angola. The
National Security Council met once, on June 27, 1975. In addition, an
Interagency Working Group on Angola met 24 times between August
13, 1975, and January 14, 1976. The number and frequency of meetings
on Angola appears to reflect a need on the part of policymakers to sit
down and discuss the desirability and mechanics of undertaking a
major new covert operation. "Wlien a new departure is not being con-
sidered, when policy and interests are not shifting, 40 Committee busi-
ness remained routine, usually conducted by telephone.
Two additional points concerning 40 Committee procedures are im-
portant. First, covert action proposals were resubmitted by the DCI
to the 40 Committee when there was a need to reassess or reaffirm pre-
vious policy decisions. Resubmission would occur if new developments
warranted it, or if specifically required by the 40 Committee at the
time of approval.
Second, status reports on covert action programs and activities were
submitted when requested by the 40 Committee or at the discretion of
the DCI. Status reports were presented at least annually to the 40
Committee for each continuing activity approved by the Committee.
Apparently, however, these annual reviews were little more than pro
forma exercises carried out by the DCI. They were not thorough
examinations of on-going projects by the 40 Committee principals."
^ In addition, both the Senate and House Select Committees on Intelligence
Activities were briefed on current covert operations.
^ According to the CIA, prior to the review of these annual reports by the
40 Committee principals they were submitted in draft to the concerned agencies
for comment. Thus, the staff of 40 Committee principals had an opportunity to
examine on-going projects.
56
3. Covert Action Approvals
It is difficult to determine the number of covert operations approved
over the years by the 40 Committee or its predecessors. Records for
the early years are either not available or are incomplete. Also, there
has been a steady refinement of "programs" into individual "projects,"
thus making comparisons difficult. Despite this, a rough determination
can be made of projects approved for the period 1949 to 1967.^*
Between 1949 and 1952, 81 projects were approved by the DCI on
his own authority after coordination with either the 10/2 or 10/5
Panels. During the first two years of the Eisenhower administration,
1953-54, 66 projects were approved by the DCI in coordination with
the Operations Coordination Board or the Psychological Strategy
Board. Between March 1955 and February 1967, projects approved
or reconfirmed by the Operations Coordination Board, the Special
Group, or the 303 Committee were as follows :
Eisenhower administration — 104
Kennedy administration — 163
Johnson administration — 142
These totals reflect two things : first, an increase in the number of
projects approved and, second, a tightening up of approval proce-
dures. Regarding procedures, a CIA memorandum, dated February
25, 1967, stated :
As the sophistication of the policy approval process developed
so did the participation of the external approving authority.
Since establishment of the Special Group (later 303 Com-
mittee), the policy arbiters have questioned CIA presenta-
tions, amended them and, on occasion, denied them outright.
The record shows that the Group/Committee, in some in-
stances, has overridden objections from the DCI and in-
structed the Agency to carry out certain activities. . . .
Objections by State have resulted in amendment or rejection
of election proposals, suggestions for air proprietaries and
support plans for foreign governments. . . . The Committee
has suggested areas where covert action is needed, has decided
that another element of government should imdertake a pro-
posed action, imposed caveats and turned down specific pro-
posals for CIA action from Ambassadors in the field.
Whereas the "sophistication of the policy approval process" and
the "participation of the external approving authority" has increased
significantly since the establishment of the Special Group in 1955, this
has not meant that all, or even a majority, of covert action projects
have been approved by the "external approving authority." Low-risk,
low-cost covert action projects, such as a routine press placement or
the development of an "agent of influence," do not receive this atten-
tion. In this regard, an Agency memorandum, dated February 21,
1967, stated :
It is obvious that a compilation of Special Group approvals
in no way reflects the totality of significant CIA activities
carried on over the past 15 years. With respect to overall
' These numbers may include reapprovals of projects initiated earlier.
57
DDP activity, it does not include any mention of FI/CI
[Foreign Intelligence/Coimterintelligence] actions or, of
course, any decisions in the overt field. Even within the re-
stricted framework of covert action alone, a 1963 study pre-
pared by this office showed that of the 550 existing CIA proj-
ects of the DDP which were reviewed against the back-
ground of our own internal instruction on Special Group
submission, only 86 were separately approved (or reap-
pro ved) by the Special Group between 1 January and 1
December 1962.
Using the figures cited above, this would mean that 16 percent of
all covert action projects, large and small, received Special Group
approval between January 1 and December 1, 1962. The Select Com-
mittee's own review indicates that of the several thousand covert ac-
tion projects undertaken since 1961, only 14 percent Avere considered
on a case-by-case basis by the 40 Committee or its predecessors.^^ Those
not reviewed by the committee were the low-risk, low-cost type re-
ferred to above.
Another indication of the number of covert action proposals which
eventually reached the 40 Committee is contained in the CIA's 1972
Covert Action Manual. According to this document, "the 40 Commit-
tee actually looks at about one-fourth of our covert action projects."
The Manual continues :
. . . this proportion is a reflection on the nature of the proj-
ect system, not on any lack of policy approval for our covert
actions. For example, the Agency would have separate proj-
ects for each of a number of media assets that might be
brought to bear on an overall program of persuasion, but the
40 Committee would focus on the program with its descrip-
tions of the specific assets to be employed. . . . Thus, the i7n-
portant point on policy is that the lO Committee considers
individually all major and critical projects providing broader
pi'ogram guidelines for the remainder of our covert activity.
[Emphasis added.]
If.. The NjSC and- Covert Activities : Conclusions
Several points stand out in the history of the committees charged
with overseeing covert operations. The most obvious has less to do
with procedures than with the substance of the projects approved. The
justification for covert operations has changed sharply, from con-
taining International (and presumably monolithic) Communism in
the early 1950s to merely serving as an adjunct to American foreign
policy in the 1970s. It should be noted that early NSC directives framed
the purpose of covert operations entirely in terms of opposition to
International Communism. By contrast, NSDM 40 described covert
actions as those secret activities designed to further official United
States programs and policies abroad.
'^ According to the CIA. since the Hughes-Ryan Amendment to the 1974 For-
eign Assistance Act. all covert action projects not submitted on a case-by-case
basis have been submitted to the President for approval and to the oversight
committees of Congress for its information in collective, omnibus fonn.
58
As stated, procedural arrangements for considering and approv-
ing covert operations have been formalized and tightened over the
years. NSC-4-A of 1947 established no formal procedures for co-
ordinating or approving operations; the DCI, in liaison with State
and Defense, was to ensure that operations were consistent with
United States policy. Over time, procedures were developed and guide-
lines established to indicate which covert action proposals required
40 Committee approval. The requirement of a "Presidential Finding"
in the 1974 Foreign Assistance Act not only requires the President
to certify to Congress that an approved covert operation is important
to the national security of the United States, but, in effect, compels
him to become aware of actions approved by the 40 Committee.^*' The
concept of plausible denial, at least as it applies to the President,
is dead. Major new covert operations cannot be undertaken without
the knowledge, and approval, of the Chief Executive. President
Ford's Executive Order takes this one step further. The new Opera-
tions Advisory Group will not be responsible for policy approval
of covert operations, as was the 40 Committee. According to the
Executive Order, the Group will "consider and develop any policy
recommendation, including any dissents, for the President prior to
his decision" on each covert operation. The approval of covert opera-
tions now rests solely with the President.
However, recognition that procedural arrangements for consider-
ing and approving covert operations have become tighter does not
necessarily imply that they are adequate. Significant issues regarding
the control of covert operations remain. First, the criteria for deter-
mining which covert operations are brought before the Executive are
still inadequate. Small covert action projects not deemed politically
risky can be approved within the CIA. Although many of these are
in support of projects already approved by the Executive, they never-
theless make up a majority of all CIA covert action projects. In
addition, some of the low-risk projects approved within the CIA, such
as the development of a foreign "asset," may prove to be extremely
sensitive and risky. One CIA "asset," given the cryptonym QJ/WIN,
was recruited to spot "individuals with criminal and underworld
connections in Europe for possible multi-purpose use." ^^ Later the
CIA contemplated using Q J/WIN for its ZK/KIFLE project, a "gen-
eral stand-by capability" to carry out assassination when required.
Other CIA individual project "assets" used in connection with plots
to assassinate foreign leaders were WI/ROGUE and AM/LiVSH.
^ President Ford has recommended that the "Presidential Finding" require-
ment be dropped. In his message to Congress outlining his intelligence reor-
ganization, the President recommended that the 1974 Foreign Assistance Act
(Public Law 93-559) be modified as proposed by the Commission on the Organi-
zation of the Government for the Conduct of Foreign Policy. That Commission,
charged by Robert Murphy, recommended :
"We propose that Public Law 93-559 be amended to require reporting of
covert actions to the proposed Joint Committee on National Security, and to
omit any requirement for the personal certification of the President as to their
necessity." (Commission on the Organization of the Government for the Conduct
of Foreign Policy, 6/75. p. 101.)
^ Senate Select Committee, "Alleged Assassination Plots Involvine Foreign
Leaders," p. 182. See this report for a full discussion of QJ/WIN, ZR/RIFLE,
WI/ROGUE and AM/LASH.
59
Though none of these specific projects were apparently approved by
the ;NkSC, several ranking CIA officials testified that they were within
the general policy approved at the NSC level.
Second, there were gaps in 40 Committee supervision, notably in
the sensitive areas of human espionage and counterintelligence.
Whether intended or not, espionage and counterintelligence operations
may have the effect of political action, A former chairman of the
Special Group, McGeorge Bimdy, has testified that the distinction
among these operations needs re-examination. According to Bundy:
Intelligence collection is often separated from covert opera-
tions in the thinking of intelligence administrators and
other concerned officials. I think this distinction, like the
parallel distinction in the field of counterintelligence, de-
serves re-examination. Both intelligence collection and coun-
terintelligence have involved covert activity which goes well
beyond conventional espionage and counterespionage, and
such enlargements of activity often present many of the same
dangers as covert actions of other sorts.^*
Espionage operations can have the effect of political action. A pay-
ment to a dissident leader may be designed to collect intelligence on
the leader's group, but it may also be regarded as support for the
group's objectives. Counterintelligence operations can have a similar
impact. Counterintelligence measures used to enlist the support of
local intelligence and police, neutralize hostile intelligence services, and
discredit local CIA opponents are sometimes indistinguishable from
covert action. As such, the issue is whether these intelligence activities
can, or should, be made subject to effective executive branch and con-
gressional oversight. President Ford's Executive Order does not ad-
dress this issue. The Operations Advisory Group will be responsible
.for approving certain "sensitive intelligence collection operations," but
the Executive Order does not apparently include human as well as
technical collection. Nor is there any reference to Operations Group
review or approval of any counterintelligence activities.
Tliird, there is a basic conflict between sufficient consultation to en-
sure accountability and sound decisions on the one hand, and secure
operations on the other. 40 Committee approval procedures for covert
operations were, on occasion, by-passed by the President or his Na-
tional Security Affairs adviser. For highly sensitive proposals the
number of individuals or agencies consulted or informed is some-
times sharply limited on a "need to know" basis. Even the ambassador
in the country where the operation is to be conducted may not be in-
formed. Middle and lower level officials within the State Department
or the CIA with expertise may not be consulted. The risk of inadequate
consultation was aggravated by the informality of telephone clear-
ances. President Ford's Executive Order attempts to remedy this de-
ficiency, at least in part. The Executive Order states :
The Operations Group shall discharge the responsibilities
assigned . . . only after consultation in a formal meeting at-
''* McGeorge Bundy testimony, House Select Committee on Intelligence,
12/10/75.
60
tended by all members and observers ; or . . . when a designated
representative of the member or observer attends.^*^
Finally, the annual review of covert actions by the 40 Committee
dirl not appear to be searching or thorough. Annual reviews were
often handled in the same informal manner as approvals for new
covert action proposals — by telephone concurrence. Some ongoing
covert operations have been challenged over the years, most often by
the State Department. Some die a natural death. Some linger on for as
long as 20 to 25 years. It appears that some covert operations, such
as those in Italy, may come to an end only when they are exposed. Presi-
dent Ford's Executive Order contains two provisions to increase the
number of covert action reviews. First, the Operations Advisory Group
will he required to "conduct periodic reviews of programs previously
considered." There is no requirement, however, that these reviews must
take place at a formal meeting. Second, the Executive Order requires
the fnll National Security Council to review, twice a year, the "con-
tinued appropriateness" of ongoing covert operations.
5. Role of 0MB
In order to meet unanticipated needs, the CIA maintains a Con-
tingency Eeserve Fund. The fund is replenished bv annual appropria-
tions as well as unobligated funds from previous CIA appropriations.
More ofi-en than not, the unanticipated needs of the CIA relate to
covert operations.
The Director of Central Intelligence has the authority, under the
Central Intelligence As:ency Act of 1949, to spend reserve funds with-
out consulting 0MB. However, due to an arrangement among 0MB,
the CIA, and the Appropriations Committees of Congress, the CIA
has a.o-reed not to use reserve funds without 0MB approval. There is
no evidence that the DCI has ever violated this agreement. In prac-
tice. 0MB holds a double kev to this reserve fund : first. Tt approves
additions to the reserve fund and. second, it approves the amounts to
be released from the fund, upon CIA request and justification. 0MB
holds a careful review of each proposed release. Turndowns are rare,
but reductions in amounts requested occur often enough to prompt a
careful CIA presentation of its case.
Despite these levers of control. 0MB hns faced severpl handicaps
which render its control of the Contingencv Reserve Fund less effective
than it might be. First, OMB has not, in the past, been renresented on
the National Security Council or the 40 Committee. ^^ Much of the
dollar volume of reserve releases originates in 40 Committee action.
Thus, OMB resistance to reserve release requests were often in the face
of policv determinations already made. Second, although tbe chairmen
of the appropriations subcommittees of Congress are notified of draw-
downs from the fu7id, these notifications occur after the release action,
even though the release is conceptually the same as a supplemental ap-
propriation. Thus, OMB does not have the leverage in regard to
^^ Executive Order 1905. Sec. Sfc) (3).
^ Under President Ford's Executive Order, the Director of OMR will sit as
an observer on the Operations Arvisory Group, the successor to the 40 Committee.
61
Contingency Reserve Fund releases that it does in regard to supple-
mental appropriatitons requests (where 0MB is a party to recom-
mending supplemental to the President and Congress).
0MB suffers other limitations with respect to the use of CIA funds
for covert operations. First, CIA's budget submission to 0MB has,
in the past, neglected some aspects of clandestine spending, notably
proprietary activities. Second, current ground rules allow the repro-
gramming of CIA's regular appropriations to meet unanticipated
needs ; no 0MB approval is required for this reprogramming. To the
extent that the above funds are used for covert operations, 0MB has
no control over their use.
C. Providing the Intelligence Required by Policymakers
1. Work of NSCIC
The National Security Coimcil Intelligence Committ-ee was formed
in November 1971. At its first meeting, a Working Group, composed
primarily of officials from the intelligence community, was established.
That composition was soon seen as inappropriate for a committee
whose main purpose was to make intelligence more responsive to the
needs of policymaking "consumers." As a result, at its second — and
last — meeting, NSCIC changed the composition of the Working Group
to exactly parallel the parent body.^°
The various representatives who sat on the Working Group were
not the "intelligence" specialists from those agencies, but officials with
policymaking responsibilities. For example, the State Department was
represented by the Director of the Bureau of Politico-Military Affairs,
not the Director of the Bureau of Intelligence and Research. Repre-
sentatives were to seek the views of the operating bureaus of their
agencies on major intelligence questions.
An August 1974 meeting of NSCIC produced two direct results. In
response to a request for some mechanism to highlight critical intelli-
gence memoranda, the DCI now puts out "alert memoranda" — brief
notices in a form which cannot be overlooked. The meetinsf also resulted
in the production of a National Intelligence Estimate (NIE) on Soviet
perceptions of the United States.
Before it was abolished, NSCIC began reviewing the basic docu-
ments which levy requirements on the intelligence community — ^the
DCI's Perspectives on Intelligence, Substantive Obiectives, and espe-
cially, Key Intelligence Questions (KIQs). NSCIC also set up a
Working Group panel to conduct surA^eys of intelligence community
publications. There was also an NSCIC subcommittee which consid-
ered economic intelligence, chaired bv the Assistant Secretary of the
Treasury for International Affairs. The subcommittee was inactive.
^The Assistant to the President for National Security Affairs (Chairman),
the DCI (Vice Chairman), the Deputy Secretaries of State and Defense, the
Chairman, JCS, and the Under Secretary of Treasury for Monetary Affairs.
62
^. Limitations on Effectiveness
NSCIC's work reflected the basic dilemma inherent in suiting intel-
ligence to the needs of policymakers. The intelligence community must
be close enough to policymakers to know what is desired, yet distant
enough to preserve its objectivity. Within this framework, the diflFer-
ing demands of many kinds of policymakers must be balanced. For
example, making the intelligence community more responsive to the
needs of Cabinet-level officials might diminish the quality of the intel-
ligence produced for middle-level officials.
The limited effectiveness of NSCIC was due to several factors :
— The apparent lack of interest of senior officials in making NSCIC
work.
— The demands of other business on the sub-cabinet level officials
who made up NSCIC.
— "Consumer" unfamiliarity with the intelligence community. Of
necessity, NSCIC spent most of its time educating policymakers about
the community and what it can do. Most officials in policymaking posi-
tions, especially those in senior positions, bring little intelligence ex-
perience to their jobs. One of NSCIC's first tasks was to produce a
manual about the community for policymakers.
— Diversity among "consumers." Cooperative arrangements and the
tradition of working together are matters of long standing within the
intelligence community. By contrast, NSCIC represented a first at-
tempt to bring "consumers" together. The newness of the endeavor
combined with the diversity of the "consumers" made it difficult for
NSCIC to function effectively.
3. Conclusions
The intelligence community has not- always been responsive to the
needs of policymakers. Some have argued that the intelligence product
is more a reflection of what "producers," rather than "consumers,"
deem important. This is debatable. What is not at issue, however, is
that "consumers" should drive the intelligence process. NSCIC was a
disappointment in this regard. To say this is not to imply that the in-
telligence commmiity has been unresponsive to the needs of policy-
makers. Just the opposite may be true. "Producers" and "consumers"
get together almost daily at NSC subcommittee meetings (e.g., the
Senior Review Group and the Washington Special Action Group.)
Intelligence requirements are levied, informally, at these meetings. It
can be assumed that the intelligence community has been responsive to
these informal requirements and hence the need for a more formal
NSC mechanism — NSCIC — was eliminated. The new Committee on
Foreign Intelligence vtdll now have the responsibility for seeing that
policymakers are provided the intelligence they need.
D. Advertising the President on Intelligence Issues
1. Overview
The President needs an independent bodv to assess the quality and
effectiveness of our foreign intelligence effort. Since 1956 the Presi-
dent's Foreign Intelligence Advisory Board (PFIAB) has served
this function. Numerous proposals have recently been made to make
63
PFIAB an executive "watchdog" over United States foreign intelli-
gence activities. Some have suggested that a joint presidential/
congressional intelligence board be established or, at the least, Senate
confirmation of members of the President's board be required. The
Rockefeller Commission recommended that the Board's functions be
expanded to include oversight of the CIA with responsibility for
assessing CIA compliance with its statutory authority. The Murphy
Commission commented favorably on the Rockefeller Commission
recommendations. Whether PFIAB should adopt this oversight or
"watchdog" function, or whether Congress should be involved in the
activities of the Board is open to question. President Ford, in his
Executive Order, decided against transforming the Board into a CIA
watchdog. Instead, he created a new three-member Intelligence Over-
sight Board to monitor the activities of the intelligence community.
2. History of PFIAB
On February 6, 1956, President Eisenhower created, by Executive
Order, the Board of Consultants on Foreign Intelligence Activities.
The Board was established in response to a recommendation by the
second Hoover Commission, calling for the President to appoint a
committee of private citizens who would report to him on United
States foreign intelligence activities. Creation of the Board was also
intended to preempt a move in Congress at the time, led by Senator
Mike Mansfield, to establish a Joint Congressional Committee on
Intelligence.
The Board ceased functioning when President Eisenhower left
office in 1961, but was reactivated by President Kennedy following
the Bay of Pigs failure. It was renamed the President's Foreign
Intelligence Advisory Board (PFIAB) and has functioned, unin-
terrupted, since that time.
3. PFIAB Today
The Board currently operates under Executive Order 11460, issued
by President Nixon on March 20, 1969. The Board is responsible for
reviewing and assessing United States foreign intelligence activities.
It reports to the President periodically on its findings and recom-
mendations for improving the effectiveness of the nation's foreign
intelligence effort.
The Board presently has seventeen members, all drawn from private
life and all appointed by the President. It is chaired by Leo Cherne,
and holds formal meetings two days every other month. It has a staff
of two, headed by an executive secretary.
As its name indicates, the Board is advisory. Board reports and rec-
ommendations have contributed to the increased effectiveness and effi-
ciency of our foreign intelligence effort. For example, the Board played
a significant role in the development of our overhead reconnaissance
program. It has made recommendations on coordinating American
intelligence activities; reorganizing Defense intelligence; applying
science and technology to the National Security Agency, and rewriting
the National Security Council Intelligence Directives (NSCIDs). The
Board has conducted post-mortems on alleged intelligence failures and,
since 1969, made a yearly, independent assessment of the Soviet stra-
tegic threat, thereby supplementing regular community intelligence
64
assessments. Most recently, it has reported to the President on economic
intelligence and human clandestine intelligence collection.
The Board has not served a "watchdog" function. As the Rockefeller
Commission noted, the Board does not exercise control over the CIA,
which is, in fact, the Board's only source of information about Agency
activities. When the Board has occasionally inquired into areas of
possible illegal or improper CIA activity, it has met resistance. For
example, when the Board became aware of the so-called Huston Plan
• and asked the FBI and the Attorney General for a copy, the request
was refused. The Board did not pursue the matter with the White
House. In 1970, the Board was asked by Henry Kissinger, then the
President's National Security Advisor, to examine Allende's election
victory in Chile to determine whether the CIA had failed to foresee,
and propose appropriate actions, to prevent Allende's taking office. The
Board requested 40 Committee and NSC minutes to determine the
facts. Its request was refused and its inquiry was dropped.
The President needs an independent body to assess the quality and
effectiveness of our foreign intelligence effort. In the words of its
Executive Secretary, the Board has "looked at intelligence through the
eyes of the President." PFIAB has served, in effect, as an intelligence
"Kitchen Cabinet." The Board has been useful, in part, because its
advice and recommendations have been for the President. As such, the
executive nature of this relationship should be maintained.
Over the years, many of PFIAB's recommendations have been
adopted, and others have served as a basis for later reform or reorga-
nization. The Board has not been an executive "watchdog" of the CIA.
To make it so would be to place the Board in an untenable position :
adviser to the President on the quality and effectiveness of intelligence
on the one hand and "policeman" of the intelligence community on
the other. These two roles conflict and should be performed separately.
J).. Intelligence Oversight Board
To assist the President, the NSC, and the Attorney General in over-
seeing the intelligence community. President Ford has created an
Intelligence Oversight Board. The Board will consist of three private
citizens appointed by the President. They will also serve on PFIAB.
The Board will be, in effect, a community-wide Inspector General of
last resort. It will review reports from the Inspectors General and
General Counsels of the intelligence community and report periodi-
cally to the Attorney General and the President on any activities which
appear to be illegal or improper. The Board will also review the prac-
tices, procedures, and internal guidelines of the various IGs and Gen-
eral Counsels to ensure that they are designed to bring questionable
activities to light. Finally, the Board will see to it that intelligence
community IGs and General Counsels have access to any information
they require.
The President's Intelligence Oversight Board should serve a useful
purpose. However, the ability of a small, part-time Board to monitor
the activities of the entire intelligence community is questionable.
Further, the Board is a creature of the Executive and, as such, may
be unable or, at times, unwilling to probe certain sensitive areas. A
65
body independent of the Executive must also be responsible for moni-
toring the activities of the intelligence community, including those
which may be either illegal or improper.
E. Allocating Intelligence Kesources
1. Role of 0MB
The Office of Management and Budget (0MB) is the principal staff
arm of the President for supervising the Federal budget. OMB is also
a staff arm for management — a tool the President occasionally uses to
reorganize or redirect the structure and activities of the Federal
Government.
In managing U.S. intelligence activities, the President has used
OMB to pull together his annual intelligence budget and also to moni-
tor the expenditure of intelligence funds. For example, OMB annually
reviews the intelligence community's appropriations requests and
makes its recommendations to the President for amounts to be included
in his budget. Further, OMB apportions ^^ CIA's appropriation and
has authority to approve releases from the CIA Contingency Reserve
Fund.
The fiscal management responsibility of OMB has been especially
critical in the field of intelligence. Intelligence activities comprise a
large part of that small and shrinking portion of the federal budget
which is "controllable." ^^ About 75 percent of federal spending for
fiscal 1976 was designated in the President's budget submission as
"uncontrollable." The Committee has found that the direct cost of na-
tional intelligence spending is currently [deleted] and total intelli-
gence spending is approximately twice that. Thus the total U.S. intel-
ligence budget is about [deleted] percent of federal spending, but is
[deleted] percent of controUable federal spending. Because the U.S.
intelligence budget is fragmented and concealed, the relationship be-
tween controllable intelligence program sand controllable federal
spending has never been shown to Congress in the President's budget.
OMB has been a principal point at which the President can identify
and exert management leverage over this aggregate of controllable
funds.
Over the years, OMB (and its predecessor, the Bureau of the
Budget) has had the greatest management impact when :
— It has been used as an instrument of presidential
reorganization ;
— It has identified major issues for the President, usually
involving bids by intelligence agencies to maintain or launch
duplicative or marginally useful programs.
For example, in 1960 President Eisenhower commissioned the Bud-
get Bureau to establish a Joint Study Group of the principal intel-
^ "Apportionment" of funds is described by bndgcetary statutes as the OMB
action, following congressional appropriations, whereby agencies receive formal
notification of amounts appropriated and the distribution of spending by time
period and program.
*° Defined as spending that is not predetermined by statute, such as Interest
on the federal debt, veterans benefits. Social payments, et cetera.
66
licence agencies to take a hard look at U.S. intelligence collection
requirements and other problems. In its report, the Joint Study Group
recommended to the President a variety of measures to strengthen
intelligence management, including a more assertive role for the DCI,
stronger control by NSA of the cryptologic agencies, and centralized
management of collection requirements.
A decade later. President Nixon commissioned OMB to probe the
management of the intelligence community, and to determine what
changes, short of legislation, might be made. An ensuing report by
Assistant OMB Director James Schlesinger concluded that the divi-
sion of labor envisaged by the National Security Act of 1947 had been
rendered obsolescent and meaningless by technology and the ambitions
of U.S. intelligence agencies. The Schlesinger Report recommended
nothing less than the basic reform of U.S. intelligence management,
centering upon a strong DCI who could bring intelligence costs under
control and bring intelligence production to an adequate level of qual-
ity and responsiveness. In addition, the OMB report pointed to nine
specific mergers or shifts of intelligence programs estimated to save
nearV one billion dollars annually.
OMB has also been an occasional lightning rod for the identification
of specific budget or management issues. In the mid-sixties the Bureau
of the Budget called the President's attention to the problems of better
coordinating the costs and benefits of overhead reconnaissance. Fur-
ther, the Bureau pressed hard for a reorganization of Defense map-
ping and charting activities emphasizing the issues of needless dupli-
cation of service mapping agencies. This was resolved following the
Schlesinger Report.
2. Recent Trends and Programs
OMB reportedly was given a major role in developing the recom-
mendations presented to President Ford for overhauling intelligence
budgeting and management. If this was the case, it would reverse a
recent trend. Since 1971, OMB's day-to-day influence upon intelligence
management has been at a low point. OMB has been confined to its
cyclical, institutional role in the budget process. The strengths and
weaknesses of this role will be discussed below.
3. OMB Role in Formulating the Budget
OMB can always get the President's attention in recommending
what should be included in his annual budget proposals to Congress.
Associated with OMB budget recommendations is the identification
of major resource allocation issues, with an analysis of options and
a recommended course of action. However, OMB recommendations on
intelligence have had less presidential acceptance than in other areas of
the federal budget. This has been due to the difficulty of carrying any
"military" budget issue opposed by the Secretary of Defense and the
relative ineffectiveness of DCI support. Further, OMB is excluded
from some of the early, formative stages of DOD program determina-
tions for intelligence which cover eighty percent of the intelligence
budget.
67
For the past three years, with OMB encoiirao;ement, the DCI has
provided the President with his own recommendations for the national
intelligence budget. Unfortunately, these have come too late in the
process to have much impact. These recommendations have followed,
not preceded, DOD submissions to OMB and OMB's own formative
stages of analysis.
The President's annual and five-year planning targets are an inte-
gral part of the federal budget process. Federal agencies are adjured
to fit their fiscal and staffing plans within the presidential targets, with
special emphasis upon the nearest or "budget" year. Presidential tar-
gets are especially important in their potential for strengthening cen-
tral management of the intelligence community. The DCI has
recognized this. These targets can assist the DCI in getting more value
for the intelligence dollar. However, OMB has issued the planning
targets too late in the planning process and without any in-depth
coordination of totals and major components with the DCI. By the
time the DCI and CIA have received their target figures in June or
July, most of the major decisions on budget request levels and future
year implications have already been agreed to within Defense and
CIA. This type of problem is widespread in the federal budget process
but, because of the insulation of intelligence from external checks and
balances, the problem is especially serious in intelligence budgeting.
The problem is exacerbated by OMB's issuance to the Department
of Defense of a planning target which has the effect of constituting an
alternative planning; base for intelligence. This target has not been
directly related to DOD's intelligence budget. The Secretary of De-
fense has been given, in effect, a choice between a level of intelligence
spending consistent with the DCI's planning target and one which
matches his own view of overall DOD priorities and claims. Not sur-
prisinglv, Secretaries of Defense have tended to opt for the latter. The
result, therefore, of the two planning targets has made the DCI's
management mandate all the harder to fulfill.
Jf,. Presidential Budget Decisionmaking
OMB's budaret recommendations to the President, which culminate
OMB's annual budget review, have been the only comprehensive pres-
entations of United States' intelligence spending. These serve to high-
light major issues and are done by analvsts independent of any intelli-
gence agency. In contrast with the DCI's national intelligence budget
presentation, which excludes future year figures and does not have
the Secretary of Defense's recommended amounts, the OMB presenta-
tion is complete and based upon each agency's final positions. More-
over, the OlSIB presentation offers specific solutions to the President's
problem of restraining intelligence spending without degrading
intelligence operations.
These presentations and those related to the DCI's National Foreign
Intelligence Budaret are not shared with Congress. Therefore, except
for selective briefings bv the DCI and individual program managers,
Congress has not been informed of the major options at stake in the
President's budget.
68
6. ApportionTnent and Budget Execution
0MB apportionment of appropriated funds is the source of much
of OMB's muscle in budget execution. By law (31 U.S.C. 665), federal
agencies cannot use appropriated funds in the absence of an 0MB
apportionment. The apportionment can convey the funds in lump sum,
distributed by quarter, or by major program. 0MB can impose set-
asides and can call special hearings. With regard to intelligence pro-
grams, however, OMB apportionment action is weak and f raarmented.
The only direct intelligence apportionment by OMB is to CIA — i.e.,
those earmarked amounts of the DOD appropriation which are trans-
ferred from Defense to CIA under authority of the Central Intelli-
gence Agency Act of 1949. This apportionment is done in lump sum.
The rest of the intelligence budget is scattered among, and apportioned
by, some 20 DOD appropriations and an appropriation to State with-
out a distinction made for intelligence funds. Thus, OMB apportion-
ment is procedurally applied to less than 20 percent of the annual
national intelligence budget and to less than 10 percent of total intel-
ligence spending.
Another weakness of OMB's ability to monitor budget execution is
its procedural blindness to advances, renrogramming, and managment
of intelligence proprietary activities. Other weaknesses include:
— A large proportion of funds spent for CIA covert action projects
have come from Defense Department advances, under authority of
the Economy Act, and therefore are outside OMB apportionment.
— OMB does not rontinelv receive notice of maior reprogramming of
CIA funds from activities shown and justified in the congressional
budget. The premium upon exploitation of unforeseen intelliflrence
opportunities puts a premium upon budgeting flexibilitv. Yet OMB
lacks a set of benchmarks to determine routinely when CIA or other
intelligence agencies have substantially departed from the approved
budget.
It appears that more than half oi nil larp-e-scale covprt action proj-
ects initiated in the period 1961-76 did not come to OMB for review.
6. Ahsence of GAO Audits
The absence of GAO audits in the intelliarence community affects
OMB's ability to monitor intelligence performance. In other federal
areas GAO audits often include an evaluation of iierformance effec-
tiveness and economy, as well as compliance. OMB has a standing
arrangement to follow up with aorencies on GAO audits. GAO audits
often provide launching points for OMB investigations or reinforce
OMB interests in broader problems. The absence of such independent
and critical GAO reports in the intelligence field weakens both OMB
and congressional oversight.
7. OMB Representation! 07i Excom **
The process of planning and budqfeting for overhead reconnaissance
is new enough to have escaped historic overlaps of jurisdiction afflict-
'' This EXCOM was abolished as a result of President Ford's recent Executive
Order. It is likelv that a similar body will be re-established under the direction
of the new Committee on Foreign Intelligence.
69
ing the rest of the intelligence community. An Executive Committee
(EXCOM) wiis established to coordinate reconnaissance develop-
ment and planning, chaired by the DCI with the Assistant Secretary
of Defense for intelligence as the other memlber. While 0MB was not a
member of EXCOM, it had a representative at EXCOM meetings.
EXCOM decisions often were a compromise between the DCI and the
Depar'tment of Defense which may or may not have represented the
most cost-effective solution. On occasion, the 0MB representative took
a role in defining options and insisting upon analysis of key points.
Here is one area of intelligence budgeting where 0MB was actively
represented and therefore in a position to help the President identify
and resolve large issues.
8. Net Assessment of 0MB Role in Intelligence Management
OMB's cyclical role in the budget process has the strengths and
weaknesses noted. Recognizing that 0MB has statutory authority in
budget preparation and ap])ortionment of funds, it is nevertheless
true that the key to 0MB influence for management improvement is
the extent to whic'h the Preident chooses to use and back 0MB for
specific projects. OMB's role ought to be at its strongest in the intelli-
gence community, given the absence of public scrutiny and checks and
balances which operate in other federal program areas.
The Committee notes several trends in intelligence budgeting
and management which indicate an increasing need for strong and
objective 0MB staff assitance to the President: first, intelligence
spending has increased significantly in the last decade. There are pres-
sures for further growth ; second, as already noted, intelligence is one
of the few "controllable" program areas of a federal budget; third,
the results of intelligence spendinsr do not seem to be commensurate
with the increases in outlavs. Inflation partly explains this. Since 1969
the real value of goods and services available to intelligence has been
reduced by an estimated twentv i">ercent. Inflation is not a full ex-
planation, however. Ris^idities in the intellip-ence budsret protect each
manager's share, at the cost of nerpe^^uatino: less nroductive or dunli-
cative programs. The result is that ceilino-s on the intelligence budget
are permitted to drive out long-term improvements in economy and
effectiveness. Fourth, there is a fragmentation of management au-
thoritv in the intelligence communitv. The DCI has had successive
nresidential mandates to mauporp. \^y^\^^ j^^s been handicapped by the
lark of co?itrol of intellijrence dollars.
In tbe face of such a challeno-e. t^^e nature of future presidential
maTidates to OAfB could be imno^tnut to both executive and conores-
sioual ovPT-qio-ht, In anv futurp detoi-minatimi to strenp-then Ol^TB's
role, it will be necessary to enlarge the staff of the six-person 0MB
intellifi-enceunit.
9. OMB^s Bole as Affected Tyti the Presidsnfs Recent Executiaie Order
In his Executive Order of February 18. President Ford strensfth-
ened OMB's role in intelli.frence management in two principal ways:
First. OMB has been mndp an observpr to the Onprations Advisory
Group, successor to the 40 Committee. This step will likely give OMB
70
a regular and timely scriitinv of all proposed covert action and other
sensitive intelligence projects. OMB's review will, therefore, no longer
be confined to a postdecision review of those projects requiring Con-
tingency Reserve Fund financing. Another likely effect is to strengthen
the substantive mandate of OMB's inquiry into CIA projects of all
kinds.
Second, the President has given the DCI a more direct influence
on the national intelligence budget by requiring that the new Com-
mittee on Foreign Intelligence ( CFI ) . which is headed by the DCI.
"shall control budget preparation and resource allocation for the Na-
tional Foreisn Intelligence Program." Further, the President requires
that the CFI ''shall, pri&r to suhmission to the Oifiee of Management
and Budget, review, and amend as it deems appropriate, the budget
for the National Foreign Intelligence Prosfram." [Emphasis added.]
The combined effect of these two changes would appear to
strengthen OMB's review role. The directive appears to tackle the prob-
lem of the weak and ill-timed impact of DCI review : it also puts 0MB
in the position of evaluating the analyses and proposals of both the
CFI and the intelligence agencies on the way to the President.
The managerial, faws in the President's Executive Order are these :
1. The President's directive that "neither the DCI nor the CFI shall
have responsibility for tactical intelligence'' exempts what may be one
of the largest and managerially vulnerable areas of intelligence from
national manasrement and beneficial tradeoffs. It gives Defense a dodsre
that could defeat future DCI and 0MB management efforts. By fail-
ing to make the distinction between operational control of intelligence
organic to military units and management overview (i.e.. maintenance
of DCI ''CFI data base, continuing overview, and occasional initia-
tives) . the President's directive may have undercut much of the DCI/
0MB managerial clout.^*
2. The silence of the Executive Order on execution of the intelli-
gence budget fails to mandate CFI and 0MB apportionment of fimds
appropriated for intelligence and GAO audit. The Order does give
the CFI authority to control "resource allocation.'" If this is inter-
preted to mean a svstem of centralized CFI apportionment via O^IB.
executive oversight of national intelligence programs could be
strengthened. The meaning of these words in the Executive Order
therefore deserves probing.
3. The actual authority of the DCI in the new Committee on Foreiqm
Intelligence mav not be very strong in practice because the Executive
Order does nothinor about the pattern of intelligence anpronrintions.
Defense still receives eighty percent of the national intelligence
bud.o^et. The Order recognizes the Secretary of Defense as responsible
for directinsr. funding, and operatinor "XSA and national, defense, and
military- intellisrence and reconnaissance activities as renuired." The
Secretary of Defense remains the "executive agent of the U.S. Govern-
ment"' for sififnals intelligence. In view of these formidable DOD pow-
ers, the CFI may be dominated by — or at least subject to the veto of —
the Department of Defense.
** See Coneressional study, Congressional Oversight of the Intelliegnce Budget,
Parts I and II.
V. THE DIRECTOK OF CENTRAL INTELLIGENCE
Issues
In Januarj^ 1946, President Truman established by Presidential
Directive the National Intellig:ence Authority under the direction of
the Director of Central Intelligence (DCI). The Directive authorized
the Director of Central Intelligence to plan, develop and coordinate
the foreign intelligence activities of the United States Government.^
That same year, the Joint Congressional Committee on the In-
vestigation of the Pearl Harbor Attack described how the military-
sen-ices in Washington had failed to bring all the intelligence to-
gether about Japanese plans and intentions and then concluded that
"operational and intelligence work requires centralization of authority
and clear-cut allocation of responsibility.'' ^
Subsequentlv, in 1947, Congress passed the National Security Act
giving the DCI responsibility for "coordinating the intelligence ac-
tivities of the several Government departments and agencies in the
interest of national security."' ^ Concurrently, the President designated
the Director of Central Intelligence as his principal foreign intelli-
gence adviser and established an Intelligence Ad"vison' Committee
(later reconstituted as the United States Intelligence Board) to "ad-
vise'' the DCI in carrv'ing out his responsibilities.*
The precise roles and responsibilities of the DCI. however, were not
clearly spelled out. For fear of distracting attention from the principal
objective of the 1947 National Security Act — to unify the armed
services — the TThite House did not delineate the DCI's functions in
anv detail.^ The Congressional debates also failed to address the extent
' Presidential Directive. 1/22/46. Federal Register. Vol. II. pp. 1337. 1339.
^ Joint Committee on the Investigation of the Pearl Harbor Attack, Report,
pursuant to S. Con. Res. 27. 7/20/46. 79th Cong.. 2nd Sess.. p. 254.
' Section 102. National Security Act of 1947. 61 Statutes-at-large 497-499. Pro-
visions of Section 102 are codified at 50 U.S.C. 403.
* National Security Council Intelligence Directive (NSCID) Xo. 1. 12/12/47.
The Intelligence Advisory Committee was chaired by the DCI. and was composed
of representatives from the Departments of State. Army, Navy, and Air Force,
the Joint Chiefs of Staff, and the Atomic Energy Commission. In 1957, the Presi-
dent's Foreign Intelligence Advisory Board recommended that the IntelUgenco
Advisory Committee be merged with the United States Communications Intelli-
gence Board to perform the overall intelligence coordinating function more ef-
fectively. Consequently, the United States Intelligence Board (USIB) was estab-
lishPd in 1958.
Under President Ford's Executive Order Xo. 11905, 2/18/76. USIB was dis-
solved, but the DCI was given responsibility to "establish such committees of col-
lectors, producers and users of intelligence to assist in his conduct of his respon-
sibilities."
^ Draft Legislative History of the CIA, prepared by the Ofl5ce of Legislative
Counsel, CIA. .July. 1967; and Organizational History of CIA, 1950-1953, pre-
pared by the CIA, p. 27.
(71)
72
of DCI authority over the intelligence community. Rather, congres-
sional committees were interested in whether the DCI's primary
responsibility would be to the military services or whether he would
report directly to the National Security Council (NSC) and the
President.*^ But the problems facing the DCI were obvious from the
beginning. According to a 1948 memorandum by the CIA's General
Counsel :
In its performance of the intelligence functions outlined
in the National Security Act, the primary difficulty exper-
ienced by CIA has been in certain weakness of language
in paragraph 102(d) concerning the meaning of coord-
ination of intelligence activities. Where the Act states "it
shall be the duty of the Agency ... to advise the National
Security Council . . . [and] to make recommendations to the
National Security Council for the coordination of such intel-
ligence activities," it has been strongly argued that this places
on the Director a responsibility merely to obtain cooperation
among the intelligence agencies. This weakness of language
and the ensuing controversy might have been eliminated by
the insertion after the phrase "it shall be the duty of the
Agency," the following words: "and the Director is hereby
empowered," or some other such phrase indicating the intent
of Congress that the Director was to have a controlling voice
in the coordination, subject to the direction of the National
Security Council.^
Under Senate Resolution 21, the Select Committee has undertaken
for the first time since 1947 a studv of the manner in which the
successive Directors of Central Intelligence have carried out their
responsibilities, in an effort to determine: (1) whether the DCI's
assigned responsibilities are proper and sufficient; (2) whether the
DCI has sufficient authority to carry out these responsibilities; (3)
whether the DCI should continue as Director of the Central Intelli-
gence Agency, if he is to play a leadership role for the entire intelli-
gence comnnmity; and (4) whether Congress should enact more
explicit or different definitions of the DCI's responsibilities.
* Hearings before the Senate Armed Services Committee on S. 758, pp. 173-176,
and Hearing's before the House Clommittee on Expenditures in the Executive
Departments on H.R. 2139 (1947). During the House hearings, Representative
Hale Boggs commented :
"I can see . . . even if this biU becomes law, as pre«entlv set up, a great deal of
room for confusion on intelligence matters. Here we have the Director of the
Central Intelligence Agency, responsible to the National Security Council, and
yet the Director is not a member of that Council, but he has to get all of his
information down through the chair of the Secretary of National Defense, and
all the other agencies of Government in addition to our national defense agencies.
. . . I juH cnnnot quite ace how the man is fioino to carry out his functions
there without a great deal of confusion, and really more opportunity to put the
blame on somebody else than there is now."
Secretary of the Navy James Forrestal replied :
"Well, if you have an organization. Mr. Boges, in which men have to rely
unon placing the blame, . . . you cannot run any orsranization. and it goes to
the root really of this whole question. This thing will work, and I have said
from the begmning it would only work, if the components tvant it to work."
[Emphasis added.]
■^ Memorandum from Lawrence R. Houston to the Director, 5/7/48.
73
Introduction
The Pearl Harbor intelligence failure was the primary motivation
for establi?hinor a Director of Central Intelligence. President Truman
desired a national intelligence organization which had access to all
information and would be headed by a Director who could speak au-
thoritatively for the whole community and could insure that the com-
munity's operation served the foreign policy needs of the President and
his senior advisers.* President Truman and subsequent Presidents have
not wanted to rely exclusively on the intelligence judgments of depart-
ments with vested interests in applying intelligence to support a partic-
ular foreign policy or to justify acquiring a new weapons system.
However, the DCI's responsibility to produce national intelligence
and to coordinate intelligence activities has often been at variance with
the particular interests and prerogatives of the other intelligence
community departments and agencies. During the Second World War,
the Department of 'State and the military services developed their own
intelligence operations. Despite establishment of the Director of Cen-
tral Intelligence in 1946, they have not wanted to give up control over
their own intelligence capabilities. The military services particularly
have argued that they must exercise direct control over peacetime intel-
ligence activities in order to be prepared to conduct wartime military
operations. The State and Defense Departments have steadfastly op-
posed centralized management of the intelligence community under
the DCI.
However, over time the actual degree of conflict between the DCI's
responsibility to coordinate intelligence activities and the interests of
the other parts of the community has depended on how broadly each
DCI chose to interpret his coordination responsibilities and how he
allocated his time between his three major roles.^ The three roles the
DCI plays are: (1) the producer of national intelligence; (2) the
coordinator of intelligence activities; and (3) the Director of the Cen-
tral Intelligence Agency.
A. The Producer of National Intelligence
As the President's principal foreign intelligence adviser, the DCI's
major responsibility is to produce objective and independent national
^ Harry S. Truman, Mffmoirs, Vol. II, p. 58.
" Question : When you were DCI, did you ^'epl tbat institutionally or functionally
your position was bumping heads with the DOD intelligence apparatus in different
ways or not, and if not, why not, in view of the structufe?
Mr. Schlesinger: Well, historically there hav^ been intervening periods of
open warfare and detente . . . Prior to these, one of the problems of the intelligence
community has been the warfare that exists along jurisdictional boundaries, and
this tended to erupt in the period of the 1960's, in particular when they were
inti'oducing a whole set of new technical collection capabilities ; that open warfare
was succeeded by a period of true detente, but the problem w-ith such detente is
that it tends to be based on marriage contracts and the principle of good fences
make good neighbors, and that a mutual back-scratching and the like, so that
you do not get effective resource management under those circumstances. (James
Schlesinger, testimony, 2/2/76, pp. 29-30.)
69-983 O - 76 - 6
74
intelligence for senior policymakers.^" In so doing, he draws on a
variety of collection methods and on the resources of the departmental
intelligence organizations as well as CIA analysts." But the DCI
issues national intelligence and is alone responsible for its production.^^
The most important national intelligence which the DCI produces
is the National Intelligence Estimate (NIE). An NIE presents the
intelligence community's current knowledge of the situation in a
particular country or on a specific topic and then tries to estimate what
is going to happen within a certain period of time. NIEs are prepared
for use by those in the highest policy levels of government and rep-
resent the considered judgment of the entire community.^^ Major
differences of opinion within the intelligence community are illumi-
nated in the text or in the footnotes. Wlien an NIE is released, however,
it is the DCI's own national intelligence judgment, in theory free from
departmental or agency biases."
To carry out this responsibility to produce independent and objec-
tive national intelligence, DCI Walter Bedell Smith established the
Board of National Estimates in 1950. The Board was comprised of
senior government officials, academicians and intelligence officers and
had a small staff known as the Office of National Estimates (ONE).
One member of the Board would be responsible for supervising the
drafting of the estimates by the ONE staff, for reviewing these judg-
ments collectively for the DCI, and for adjudicating disputes within
the community. When the United States Intelligence Board reviewed
an NIE, the DCI could have confidence in the opinions expressed in
the estimate because each estimate reflected the collective judgment of
his own Board. According to the former chairman of the Board of
National Estimates, John Huizenga :
The Board of National Estimates in fact functioned as a kind
of buffer. It provided procedures by which the departmental
views could be given a full and fair hearing, while at the same
time ensuring that the DCI's responsibilities to produce in-
telligence from a national viewpoint could be upheld.^^
^"According to NSCID No. 1, 2/17/72. national intelligence is that intelligence
required for the formulation of national security policy and concerning more
than one department or agency. It is distinguished from departmental intel-
ligence, which is that intelligence in support of the mission of a particular
department.
"Prior to President Ford's Executive Order No. 11 90.^;, o/]s/7fi. the TTnited
States Intelligence Board, composed of representatives from the various agencies
and departments of the intelligence community, formally reviewed the DCI's
na^^ional intelligence judgments.
^ Under President Ford's Executive Order No. 11905. 2/18/76. the DCI will
have responsibility to "supervise production and dissemination of national intel-
ligence."
"At present, the DCI briefs the Congress on the judgments contained in his
NIEs. The Congress does not receive the DCI's NIEs on a regular basis.
" In his role as CIA Director, the DCI also produces current intelligence and
research studies for senior policymakers. These intelligence judgments are pre-
pared by CIA analysts who are supposed to be free from departmental prefer-
ences. Such current reporting is not formally reviewed by the other members of
the intelligence community, but is often informally coordinated.
^ John Huizenga testimony, 1/26/76, p. 11.
75
In 1973, Colby replaced the Board and the ONE staff with a new
system of eleven National Intelligence Officers (NIOs). Each NIO has
staff responsibility to the DCI for intelligence collection and produc-
tion activities in his geographical or functional specialty. The NIOs
coordinate the drafting of NIEs within the community. They do not,
however, collectively review the final product for the DCI.^*^ Director
Colby testified that he thought the Board of National Estimates tended
to fuzz over differences of opinion and to dilute the DCI'S final
intelligence judgments.^^
In the course of its investigation, the Committee concluded that the
most critical problem confronting the DCI in carrying out his respon-
sibility to produce national intelligence is making certain that Ms in-
telligence judgments are in fact objective and independent of depart-
mental and agency biases. However, this is often quite difficult. A most
delicate relationship exists between the DCI and senior policymakers.
According to John Huizenga :
There is a natural tension between intelligence and policy,
and the task of the former is to present as a basis for the de-
cisions of policymakers as realistic as possible a view of forces
and conditions in the external environment. Political leaders
often find the picture presented less than congenial. . . .
Thus, a DCI who does his job well will more often than not
be the bearer of bad news, or at least will make things seem
disagreeable, complicated, and uncertain. . . . Wlien intelli-
gence people are told, as happened in recent years, that they
were expected to get on the team, then a sound intelligence-
policy relationship has in effect broken down.^^
In addition, the DCI must provide intelligence for cabinet officers
who often have vested interests in receiving information which sup-
ports a particular foreign policy (State Department) or the acquisi-
^" Under the NIO system, the Defense Intelligence Agency fDIA) and the
military services have assumed greater responsibility for the initial drafting of
military estimates. Because NIOs have no separate staff, they must utilize experts
in the community to draft sections of the estimates. In 1975, DIA prepared the
first drafts of two chapters of the NIE on Soviet offensive and defensive strate-
gic forces. Colby contends that as a consequence, analysts throughout the com-
munity felt more involved. (William Colby testimony, 12/11/75.)
" According to Colby :
"A board? You say why don't you have a board also? I have some reservation
at the ivory tower kind of problem that you get out of a board which is too
separated from the rough and tumble of the real world. I think there is a tend-
ency for it to intellectualize and then write sermons and appreciations. . . .
"I think there is a tendency to become institutionally committed to an approach
and to an appraisal of a situation and to begin to interpret new events against
the light of a predetermined approach toward those events. I think that has been
a bother. I like the idea of an individual total responsibility, one man or woman
totally responsible, and then you don't get any fuzz about how there was a vote,
and therefore I really didn't like it but I went along and all that sort of thing,
one person totally responsible, I think, is a good way to do it. That can be the
Director or whatever you .set up. But I do like that idea of separating out and
making one individual totally re.spon.sible so there's nobody else to go to, and
there's no way of dumping the responsibility onto somebody else. That really
is my main problem with the board, that it diffuses resi)onsibility, that it does
get out of the main line of the movement of material. (Colby, 12/11/75, pp. 36-37.)
^ Huizenga, 1/26/76, pp. 13-14.
76
tion of a new weapon system (Department of Defense).^'' The
President and NSC staff want confirmation that their policies are suc-
ceeding. Moreover, each NIE has in the past been formally reviewed
by other members of the intelligence community. Although CIA
analysts have developed expertise on issues of critical importance to
national policymakers, such as Soviet strategic programs, most DCIs
have been reluctant to engage in a confrontation with members of the
USIB over substantive findings in national intelligence documents.^"
According to John Huizenga :
The truth is that the DCI, since his authority over the intel-
ligence process is at least ambiguous, has an uphill struggle
to make a sophisticated appreciation of a certain range of
issues prevail in the national intelligence product over against
the parochial views and interests of departments, and espe-
cially the military departments.^^
Finally, the DCI's own analysts in CIA are sometimes accused of
holding an "institutional" bias. According to James Schlesinger :
The intelligence directorate of the CIA has the most com-
petent, qualified people in it, just in terms of their raw intel-
lectual capabilities, but this does not mean that they are free
from error. In fact, the intelligence directorate tends to make
a particular type of error systematically in that the intelli-
gence directorate tends to be in close harmony with the pre-
vailing biases in the intellectual community, in the univer-
sity community, and as the prevailing view changes in that
community, it affects the output of the intelligence
directorate,^^
In particular, CIA analysts are sometimes viewed as being predis-
posed to provide intelligence support for the preferences of the arms
control community. According to Schlesinger :
For many years it was said, for example, that the Air
Force had an institutional bias to raise the level of the Soviet
threat, and one can argue that in many cases that it did and
that was a consequence.
" According to Huizenga :
"It should be recognized that the approach of an operating department to intel-
ligence issues is not invariably disinterested. The Department of State sometimes
has an interest in having intelligence take a certain view of a situation because
it has a heavy investment in an ongoing line of policy, or because the Secretary
has put himself on record as to how to think about a particular problem. In the
Defense Department, intelligence is often seen as the servant of desired policies
and programs. At a minimum there is a strong organizational interest in seeing
to it that the intelligence provides a vigorous appraisal of potential threats. It
is not unfair to say that because of the military leadership's understandable de-
sire to hedge against the unexpected, to provide capabilities for all conceivable
contingencies there is a natural thrust in military intelligence to maximize
threats and to oversimplify the intentions of potential adversaries. It is also
quite naturally true that military professionals tend to see military power as the
prime determinant of the behavior of states and of the movement of events in
international politics." (Huizenga, 1/26/76, pp. 11-12.)
'" Thid.. p. 11.
"^ IMd., p. 12.
^-Schlesinger, 2/2/76, pp. 24-25.
77
But there developed an institutional bias amongst the
analytic fraternity which ran in the opposite direction. There
was an assumption that the Soviets had the same kind of arms
control objectives that they wished to ascribe or persuade
American leaders to adopt, and as a result there was a steady
upswing of Soviet strategic capabilities, and the most serious
problem, it seems to me, or the most amusing problem devel-
oped at the close of the cycle when the Soviets had actually
deployed more than 1,000 ICBMs, and the NIEs, as I recall
it, were still saying that they would deploy no more than 1,000
ICBMs because of the prevailing belief in the intelligence
analytic fraternity that the Soviets would level off at 1,000
just as we had.
So one must be careful to balance what I will call the
academic biases amongst the analysts with the operational
biases amongst other elements of the intelligence community.^^
Consequently, on the occasions when the DCI does support his own
staff's recommendations over the objection of the other departments,
the objectivity of the national intelligence product may still be under-
mined by the bias of CIA analysts.
Recognizing all these difficulties, the Select Committee has investi-
gated two particularly difficult cases for Director Helms in an effort
to illustrate the problems the DCI confronts in carrying out his re-
sponsibility to produce objective and independent national intelligence.
During the summer and fall of 1969, the White House and then the
Secretary of Defense indirectly pressured the DCI to modify his
judgments on the capability of the new Soviet SS-9 strategic missile
system. The issues under debate were: (1) whether the SS-9 was a
MIRV (Multiple Independently Targeted Re-entry Vehicle) missile;
and (2) whether the Soviets were seeking to achieve a first strike ca-
pability. The intelligence judgments on these points would be critical
in decisions as to whether the ITnited States would deploy its own
MIRV missiles or try to negotiate MIRV limitations in SALT (the
Strategic Arms Limitation Talks), and whether the United States
would deploy an Anti-Ballistic Missile (ABM) system to protect the
United States Minuteman missile force against a Soviet first strike.
On the first issue, in June 1969, the President's Special Adviser for
National Security Affairs, Henry Kissinger, called Director Helms to
the AVliite House to discuss an estimate on Soviet strategic forces. Kis-
singer and the NSC staff made clear their view that the new Soviet mis-
sile was a MIRV and asked that Helm's draft be rewritten to provide
more evidence sup]Dorting the DCI's judgment that the SS-9 had not
demonstrated a MIRV capability. In response, the Chairman of the
Board of National Estimates rewrote the draft, but he did not change
the conclusion: All seven tests of the SS-9 were MRVs (Multiple Re-
entry Vehicles) ; they were certainly not independently guided after
^ Schlesinger, 2/2/76, pp. 26-27. CIA analysts are also sometimes accused of
being biased in favor of the clandestine intellieence collected by their own agency.
This charge is not, however, supported by a CIA study of what kinds of reporting
CIA analysts themselves find KEY in writing their intelligence memoranda. For
FY 1974. while CIA analysts considered clandestine reporting to be important,
overt State Department reporting on political and economic subjects was cited
more frequently as KEY. (Annual DDI Survey, FY 1974.)
78
separation from the launch vehicle.^* According to testimony by three
Board members, at the time they saw nothing improper in a White
House request to redraft the estimate to inchide more evidence. How-
ever, in this case, they interj^reted tlie White House request as a subtle
and indirect effort to alter the DCI's national intelligence judgment.^^
On the second issue, three months later, Helms decided to delete a
paragraph in the Board of National Estimates' draft on Soviet stra-
tegic forces after an assistant to Secretary of Defense Laird informed
Helms that the statement contradicted the public position of the
Secretary.^^
The deleted paragraph read :
We believe that the Soviets recognize the enormous diffi-
culties of any attempt to achieve strategic superiority of such
order as to significantly alter the strategic balance. Conse-
quently, we consider it highly unlikely that they %vill attempt
within the period of this estimate to achieve a first-strike
capability, i.e., a capability to launch a surprise attack against
the U.S. with assurance that the USSR would not itself receive
damage it would regard as unacceptable. For one thing, the
Soviets w^ould almost certainly conclude that the cost of
such an undertaking along with all their other military com-
mitments would be prohibitive. More important, they almost
certainly would consider it impossible to develop and deploy
the combination of offensive and defensive forces necessary
to counter successfully tlie various elements of U.S. strategic
attack forces. Finally, even if such a project were economically
and technically feasible the Soviets almost certainly would
calculate that the U.S. would detect and match or overmatch
their efforts.-^
Subsequently, the State Department representative on the United
States Intelligence Board inserted the deleted paragraph as a footnote.
^ In a memorandum to the US IB representatives, dated 6/16/69, the Director
of the Office of National Estimates, Abbot Smith, sitated :
"The Memorandum to Holders of NIE 11-8-68, approved by USIB on 12 .Tune
was discussed at a meeting with Dr. Kissinger and others on Saturday. Out of
this meeting came requests for (a) some reordering of the paper; (b) clarifica-
tion of some points; and (c) additional argument pro and con about the
MRV-MIRV problem. We have accordingly redrafted the paper with these re-
quests in mind. No changes in estimates were asked, nor (we think) have been
made. But the details call for coordination."
See also, staff summary of Carl Duckett interview, 6/13/75.
-= Staff summaries of interviews with John Huizenga, 7/9/75 ; Abbot Smith,
8/2/75 ; Williard Mathias, 7/7/75.
^ Memorandum from Director Helms to USIB Members, 9/4/69, and staff sum-
mary of Abbot Smith interview, 8/2/75.
According to William Baroody, Secretary Laird's Special Assistant :
"I am fairly confident that I did not specifically bring pressures to bear on
the Director of Centrnl Intelligence to delete or change any particular paragraph.
We did discuss the differences at the time between, as these documents refresh
my memory, between the DTA concern of that narticular paragraph and the CIA
estimate." (William Baroody testimony, 2/27/76, p. 4.)
"^ Draft NIE 11-8-69. approved by the Board of National Estimates prior to
the USIB meeting on August 28, 1969.
79
These are stark, and perhaps exceptional, examples of White House
and Defense Department pressures on the DCI, but they illustrate the
kinds of buffeting with wliich the DCI must contend. Director Helms
testified :
A national intelligence estimate, at least when I was Di-
rector, was considered to be the Director's piece of paper.
USIB contributed to tlie process but anybody could contribute
to tlie process, the estimates staff', individuals in the White
House. And the fact that a paragraph or a sentence was
changed or amended after USIB consideration was not
extraordinary. . . .
So this question w^hich seems to have come up about some-
body influencing one aspect or influencing another aspect of
it, the w^liole process was one of influences back and forth,
some in favor of this and some in favor of that. . . .
So that was the system then. I dont know^ what is the sys-
tem now, but on this issue of the first strike capability one
of the things that occurred in connection with that was a
battle royale over whether it was the Agency's job to decide
definitively whether the Soviet Union had its first strike
capability or did not have a first strike capability. And this
became so contentious that it seemed almost impossible to
get it resolved.
I have forgotten just exactly what I decided to do about
the whole thing, but I don't know, I think it was back in '69.
There was a question about certain footprints and MRVs and
things of this kind, and some people felt that they were very
important footprints and other people thought they were
unimportant footprints, and there's no question there's a
battle royale about it.
However, it was resolved however. If you felt that there
was pressure to eliminate one thing, there was a manifold
pressure to put in something else.
But anyway, I don't really see an issue here.-®
Wliile Helms may not see an issue here, the Committee found that
constant tension exists between the DCI, whose responsibility it is to
produce independent and objective national intelligence, and the agen-
cies, who are required to cooperate in this effort.
A second case investigated by the Select Committee illustrates the
potential problems the DCI confronts in producing relevant national
intelligence for senior policymakers planning highly sensitive mili-
tary operations. In April 1970, following Prince Sihanouk's ouster,
United States policymakers decided to initiate a military incursion
into Cambodia to destroy North Vietnamese sanctuaries. In making
this decision, these policymakers had to rely on an earlier (February)
NIE and current reporting from the various dej)artments and agen-
cies. They never received a formal DCI national intelligence estimate
or memorandum on the political conditions inside Cambodia after
Sihanouk's departure or on the possible consequences of such an
American incursion. Why ? Because Director Helms decided in April
not to send such an estimate to the NSC.
Richard Helms testimony, 1/30/76, pp. 59-61.
80
In April 1970, analysts in the Office of National Estimates pre-
pared a long memorandum entitled "Stocktaking in Indochina : Longer
Term Prospects" which included discussion of the broad question of
future developments in Cambodia, and addressed briefly the question
of possible United States intervention : ^^
Nevertheless, the governments of Laos and Cambodia are both
fragile, and the collapse of either under Communist pressure
could have a significant adverse psychological and military
impact on the situation in South Vietnam. . . . Because the
events in Cambodia and their impact are harder to predict,
if Hanoi could be denied the use of base areas and sanctuaries
in Cambodia, its strategy and objectives in South Vietnam
would be endangered. Hanoi is clearly concerned over such a
prospect. Cambodia, however, has no chance of being able to
accomplish this by itself ; to deny base areas and sanctuaries
in Cambodia would require heavy and sustained bombing
and large numbers of foot soldiers which could only be sup-
plied by the U.S. and South Vietnam. Such an expanded
allied effort could seriously handicap the Communists and
raise the cost to them of prosecuting the war, but, however
successful, it probably would not prevent them from continu-
ing the struggle in some form.^°
Helms received this draft memorandum 13 days before the planned
United States incursion into Cambodia. Then the day before the in-
cursion began. Helms decided not to send the memorandum to the
White House. A handwritten note from Helms to the Chairman of
the Board of National Estimates stated : "Let's take a look at this on
June 1, and see if we w^ould keep it or make certain revisions."
The Committee has been unable to pinpoint exactly why Director
Helms made this decision.^^ One member of the Board of National
Estimates recalled that Helms would have judged it "most counter-
productive" to send such a negative assessment to the White House.^-
George Carver, Director Helms' Special Assistant for Vietnamese Af-
fairs in 1970, objected to this conclusion that Helms refrained from
sending the memorandum forward because he thought the message
^ DCI Helms encouraged the analysts to prepare such a memorandum for the
White House. On an early draft, Helms commented to Abbot Smith, Chairman
of the Board of National Estimates : "O.K. Let's develop the paper as you sug-
gest and do our best to coordinate it within the Agency. But in the end I want
a good paper on this subject, even if I have to make the controversial judgments
myself. We owe it to the policymakers I feel." (Richard Helms, 4/7/70.)
™ "Stocktaking in Indochina : Longer Term Prospects," ONE memorandum,
4/17/70, para. 69.
^ Helms told the Committee :
"Unfortunately my memory has become hazy about the reasons for decisions
on the papers you identify. ... In a more general way let me try to be help-
ful to you (I will assume that you have or will talk to [George] Carver and that
you win give rensonable weight to hi« comments. In the first p^ace, it is almost
impossible at this late date to recreate all the relevant circumstances and con-
siderations which went into decisions of the kind you are examining, made six
years ago. Secondly, it is dangerous to examine exhaustively one bead to the
exc^U'sinn of ^ther be^ds 'n the necklace." (Telegram from Richard Helms to the
Select Committee, 3/2.3/76.)
^Staff summary of James Graham interview, 2/5/76.
81
would be unpalatable or distressing to the White House.^^ Rather,
Carver argued tliat Helms judged that it would not be appropriate
to send forward a memorandum drafted by analysts who did not know
about the planned U.S. military operation.
According to Carver's testimony, Helms was told in advance about
the, planned incursion under the strict condition that he could not
inform other intelligence analysts, including the Chairman of the
Board of National Estimates and the CIA intelligence analysts work-
ing on Indochina questions. Then because the analysts were not in-
formed, Helms decided not to send forward their memorandum on
Indochina.
According to Carver :
He [Hehns] thought that it might be unhelpful, it might
indeed look a little fatuous, because the people who had pre-
pared it and drafted it were not aware that the U.S. was on
the verge of making a major move into Cambodia, hence their
commentary was based on the kind of unspoken assumption
that there was going to be no basic operational change in the
situation, as they projected over the weeks and months im-
mediately ahead.^^
Further, Carver speculated that Helms probably felt he would not
be listened to if it were immediately open to the counterattack that the
analysts did not know of the planned operations.^*"" In effect, Carver
argues that in carrying out the President's restriction on discussing
the planned operations. Helms denied his analysts the very informa-
tion he considered necessary for them to have to provide intelligence
judgments for senior policymakers. Helms took this decision even
though the memorandum in question included a judgment on the pos-
sible consequences of United States intervention in Cambodia.
Thus, for whatever combination of reasons, in the spring of 19Y0
prior to tlie Cambodia incursion, the DCI did not provide senior
policymakers formally with a national intelligence memorandum
which argued that the operation would not succeed in thwarting the
North Vietnamese effort to achieve control in Indochina,
Six weeks later, while the Cambodia incursion was still underway,
the State Department requested a Special NIE(SNIE) on North
Vietnamese intentions which would include a section on the impact of
the United States intervention in Cambodia. A draft estimate was
prepared and coordinated within the intelligence community, just as
the incursion was ending. The estimate began with a number of caveats
such as : "Considerable difficulties exist in undertaking this analysis at
this time. Operations in Cambodia are continuing and the data on re-
sults to date is, in the nature of things, incomplete and provisional."
The draft went on to say that assessing Hanoi's intentions is always a
difficult exercise but "even more complicated in a rapidly moving situ-
^' George Carver testimony, 3/5/76, p. 30.
" Ihid.. p. 10. Carver told the Committee that his overall judgments were "based
on what I am reasonably convinced is a recollection of a series of conversations,
although I cannot cite to you a specific conversation or give you a Memorandum
for the Record that says that." (Ibid., p. 15.)
"* Ibid., pp. 22-23.
82
at ion, in which there are a number of unknown elements, particularly
with respect to U.S. and Allied courses of action." With respect to the
situation in Cambodia, the estimate concluded :
Although careful analysis of these losses sujjsests that the
Communist situation is by no means critical, it is necessary to
retain a ^ood deal of caution in judging the lasting impact
of the Cambodian aifair on the Communist position in Indo-
china.^^
Despite all these qualifications, Helms again decided not to send the
estimate to the White House. While Helms does not recall the reasons
for his decision, he did tell the Committee :
In my opinion there is no way to insulate the DCI from un-
popularity at the hands of Presidents or policymakers if he
is making assessments which run counter to administrative
policy. That is a built-in hazard of the job. Sensible Presi-
dents understand this. On the other hand they are human
too, and in my experience they are not about to place their
fate in the hands of any single individual or group of indi-
viduals. In sum, make the intelligence estimates, be sure they
reach the President personally, and use keen judgment as to
the quantity of intelligence paper to which he should be sub-
jected. One does not want to lose one's audience, and this is
easy to do if one overloads the circuit. No power has yet been
found to force Presidents of the United States to pay atten-
tion on a continuing basis to people and papers when confi-
dence has been lost in the originator.^®
Nevertheless, as John Huizenga testified:
In times of political stress on intelligence, there is more a
question of invisible pressures that might cause people to feel
that they were being leaned upon, even though nobody asked
them to take out some words or add some words . . . When
intelligence producers have a general feeling that they are
working in a hostile climate, what really happens is not so
much that they tailor the product to please, although that's
not been unknown, but more likely, they avoid the treatment
of difficult issues.^^
In the end, the DCI must depend on his position as the President's
principal intelligence adviser or on liis personal relationship with the
President to produce objective and independent national intelligence.^^
Organizational arrangements such as the Board of National Esti-
mates may, nevertheless, help insulate the DCI from pressures; but
^ Draft SNIE 14-3-70.
'^ Telegram from Richard Helms to the Select Committee, 3/23/76.
=" Huizenga, 1/26/76, pp. 20-21.
^ John Huizenga testified that "there were very few instances of gross inter-
ference." While "it's fair to say [the Cambodia and SS-9 cases] were gross, par-
ticularly the SS-9 case," objectivity and independence are difficult to uphold
when political consensus breaks down over foreign policy issues. Huizenga
concluded, "the experience of these years persuade me that we have yet to prove
that we can have in times of deep political division over foreign policy a profes-
sional, independent, objective intelligence system." (Huizenga, 1/26/76, p. 9.)
83
only if tliey are used. In the cases of the SS-9 and Cambodia, Helms
took the decisions without consulting with the Board collectively.
B. Coordinator of Intelligence Activities
1. The Intelligence Process
In theory, the intelliafence process works as follows. The President
and members of the NSC — as the major consumers of forei^ intel-
ligence — define what kinds of information they need. The Director
of Central Intelligence with the advice of other members of the intel-
ligence community establishes requirements for the collection of dif-
ferent kinds of intelligence. (An intelligence requirement is defined
as a consumer statement of information need for which the informa-
tion is not already at hand.) Resources are allocated both to develop
new collection systems and to operate existing systems to fulfill the
intelligence requirements. The collection agencies — the National Se-
curity Agency (NSA), CIA, DIA, and the military services — manage
the actual collection of intelligence. Raw intelligence is then assembled
by analysts in CIA, DIA, the State Department, and the military
services and ^produced as finished intelligence for senior policymakers.
In practice, however, the process is much more complicated. The
following discussion treats the Committee's findings regarding the
means and methods the DCI has used to carry out his responsibility
for coordinating intelligence community activities.
'2. Managing Intelligence Collection
Although the responsibility of the DCI to coordinate the activities
of the intelligence community is most general, the DCIs have tended
to interpret their responsibility narrowly to avoid antagonizing the
other departments and agencies in the intelligence community. While
DCIs have sought to define the general intelligence needs of senior
United States policymakers, they have not actually established intel-
ligence collection requirements or chosen specific geographical targets.
The individual departments establish their own intelligence collec-
tion requirements to fulfill their perceived national and departmental
needs. For example, DIA compiles the Defense Intelligence Objectives
and Priorities document (DIOP) which is a single statement of intel-
ligence requirements for use by all DOD intelligence components, in
particular. Defense attaches, DIA production elements, the intelli-
gence groups of the military services, and the military commands. The
DIOP contains a listing by country of nearly 200 intelligence issues
and assigns a numerical priority from one to eight to each country and
topic. The State Department sends out ad hoc requests for informa-
tion from United States missions abroad. Although the Department
does not compile a formal requirements document, Foreign Service
Officer reporting responds to the information needs of the Secretary
of State.
In the absence of authority to establish intelligence requirements,
the DCI relies on issuing general collection guidance to carry out his
coordinating responsibilities. The DCI annually defines United States
substantive intelligence priorities for the coming year in a DCI Direc-
tive. This sets out an elaborate matrix arraying each of 120 countries
against 83 intelligence topics and assigning a numerical priority from
84
1 to 7 for each country and topic combination. Since 1973, the DCI
has also distributed a memorandum called the DCI's "Perspectives"
\Yhich defines the major intellio^ence problems policymakers will face
over the next five years; a memorandum known as the DCI's "Objec-
tives" which details the general resource management and substantive
intelligence problems the community will face in the upcoming year;
and the DCI's "Key Intelligence Questions" (KIQs) which identify
topics of particular importance to national policymakere.
All these documents have in the past been reviewed by members of
the intelligence community on USIB, but the DCI cannot compel the
departments and agencies to respond to this guidance. For example,
the Defense Intelligence Objectives and Priorities "express the
spectrum of Defense intelligence objectives and priorities geared
specifically to approved strategy" derived from the Joint Chiefs of
Staff. But the DIOP does not include a large number of economic,
political and sociological questions which the Defense Department
considers inappropriate for it to cover. Consequently, Defense-con-
trolled intelligence assets do not give priority to non-military ques-
tions even though such questions are established as priorities in the
DCI's guidance.
In addition, through three intelligence collection committees of the
United States Intelligence Board, DCIs have tried in the past to rec-
oncile the different departmental requirements and to insure that the
interests of the entire community are brought to bear in the intelligence
collectors' operations.^^ The Committee on Imagery Requirements and
Exploitation (COMIREX) dealt with photographic reconnaissance.*"
The SIGINT Committee coordinated the collection of signals and
communications intelligence.*^ The Human Resources Committee dealt
with overt and clandestine human collection.*^
In the collection of overhead photography and signals intelligence,
the DCI through the COMIREX and SIGINT Committees provides
guidance as to targets and amounts of coverage. These Committees also
administer a complex accounting system designed to evaluate how
well, in technical terms, the specific missions have fulfilled the various
national and departmental requirements. Because of the nature of over-
head collection, the whole community can participate in selecting the
targets and in evaluating its success. The operating agency is respon-
sive solely to requirements and priorities established by the USIB
committees. At the same time, the DCI alone cannot direct which
photographs to take or when to alter the scope of coverage. The role
of the DCI is to make sure that the preferences of the entire commu-
nity are taken into account when targets are chosen.
'* Under President Ford's Executive Order No. 11905, these three collection
committees will probably continue under the DCI's responsibility to establish
"such committees of collectors, producers, and users to assist in his conduct of
his responsibilities."
^ In 1955, Richard Bissell. a Special Assistant to the DCI, set up an informal
Ad-Hoc Requirements Committee (ARC) to coordinate collection requirements
for the U-2 reconnaissance program. Membership initially included representa-
tives of CIA, the Army, Navy, and Air Force. Later representatives of NSA, the
Joint Chiefs of Staff, and the State Department were added. In 1960. with the
development of a new overhead reconnaissance system, the ARC was supplanted
by a formal USIB Committee, the Committee on Overhead Reconnaissance or
85
For example, prior to the Middle East war in 1973, the USIB
SIGINT committee recommended that the Middle East be a priority
taro:et for intelligence collection if hostilities broke out, and asked
NSA to evaluate the intelligence collected and to determine appro-
priate targets. When the war broke out, NSA implemented this USIB
guidance. Later in the week, the same committee discussed and ap-
proved DIA's recommendation to change the primary target of one
collector. The DCI did not order the changes or direct what intelli-
gence to collect, but through the USIB mechanism he insured that
the community agreed to the retargeting of the system.
The DCI has been less successful in involving the entire intelligence
community in establishing collection guidance for NSA operations or
for the clandestine operations of CIA's Directorate of Operations.
These collection managers have substantial latitude in choosing which
activities to pursue ; and the DCI has not yet established a mechanism
to monitor how well these collectors are fulfilling the DCI's com-
munity guidance.
During 1975, USIB approved a new National SIGINT Kequire-
ments System, an essential feature of which requires USIB to initiate a
formal community review and approval of all SIGINT requirements.
In addition, each requirement must contain a cross reference to per-
tinent DCI priorities and specific KIQs. However, this system does
COMOR. COMOR's responsibilities included coordination of collection require-
ments for the development and operation of all overhead reconnaissance systems.
As these programs grew and the volume of photographs increased, serious prob-
lems of duplication in imagery exploitation prompted the DCI and the Secretary
of Defense to establish a special joint review group. Subsequently, it recom-
mended the establishment of the National Photographic Interpretation Center
(NPIC) and the creation of a new USIB Committee to coordinate both collection
and exploitation of national photographic intelligence. In 1967, COMIREX was
established.
*' During World War II, the military services controlled all communications
intelligence. After the war, a U.S. Communications Intelligence Board (USCIB)
was established to coordinate COMINT activities for the NSC and to advise the
DCI on COMINT issues. However, in 1949 the Secretary of Defense set up a
separate COMINT board under the Joint Chiefs of Staff to oversee the military's
COMINT activities, and this arrangement stood for three years, despite the
DCI's objections. In 1952, NSA was established with operational control over
COMINT resources and the Secretary of Defense was given executive authority
over all COMINT activities. At the same time, the USCIB was reconstituted
under the chairmanship of the DCI to advise the Director of NSA and the
Secretary of Defense. In 1958, the USCIB was merged with the Intelligence
Advisory Committee to form the United States Intelligence Board. The COMINT
Committee of the USIB was formed soon thereafter ; this became the SIGINT
Committee in 1962 when its responsibilities were extended to include ELINT.
"General Bennett, Director of the Defense Intelligence Agency, proposed in
1970 the establishment of a USIB subcommittee to provide a national-level forum
to coordinate the various human source collection programs, both overt and
clandestine. Following objections from the CIA's Directorate of Operations,
Director Helms decided instead to establish an ad hoc task force to study the
whole range of HUMINT problems. After a year's study, the task force recom-
mended the establishment of a USIB committee on a one-year trial basis. The
President's Fnre'gn Int^eilisence Advi'-ory Board (PFIAB), in a separate study,
also endorsed the idea. Subsequently, the Human Sources Committee was accord-
ed permanent status in June 1974 and in 1975 its name was changed to the
Human Resources Committee.
86
not vest in the DCI operational authority over NSA and its collection
systems.*^ The Director of NSA will still determine which specific
communications to monitor and which signals to intercept. In a crisis,
the Secretaries of State and Defense and tlie military commanders will
continue to be able to task NSA directly and inform the DCI and
the SIGINT Committee afterwards.
In contrast to technical intelligence collection where the DCI has
sought expanded community involvement in defining requirements,
DCIs have not been very receptive to Defense Department interests in
reviewing CIA's clandestine intelligence collection. In part, the DCIs
have recognized the difficulty of viewing human collection as a whole,
since it comprises many disparate kinds of collectors, some of which
are not even part of the intelligence comnninity. For example, Foreign
Service Officers do not view themselves as intelligence collectors,
despite the large and valuable contribution FSO reporting makes to the
overall national human intelligence effort. In addition, the CIA's
Clandestine Service (DDO) has lobbied against a USIB Human
Sources Committee, fearing that it would compromise the secrecy of
their very sensitive operations.^*
So DCIs, as Directors of the agency responsible for collecting
intelligence clandestinely, resisted establishment of a permanent
ITSIB committee to review human collection until 1974.*^ Wlien
established, the Committee was specifically not given responsibility
for reviewing the operational details or internal management of the
individual departments or agencies. In the case of "sensitive" infor-
mation, departments and agencies were authorized to withhold infor-
mation from the Committee and report directly to the DCI.
It is not surprising, therefore, that the Human Resources Com-
mittee has only just begun to expand community influence over human
collection. The Committee issues a general guidance document called
the Current Intelligence Reporting List (CIRL). Although the mili-
tary makes some use of this document, the DDO instructs CIA
Stations that the CIRL is provided only for reference and does not
constitute collection requirements for CIA operations. The Human
*^ William Colby testified before the Committee :
"I think it is clear I do not have command authority over the [NSA]. That
is not my authority. On the other hand, the National Security Council Intelli-
gence Directives do say that I do have the job of telling them what these priori-
ties are and what the subjects they should be working on are." (William Colby
testimony, 9/29/75, pp. 20-21.)
** The DCI currently exercises some control over military clandestine opera-
tions. The Chief of Stntion in e^ch country is the DCI's "designated representa-
tive" and has responsibility for coordinating all military clandestine opera-
tions. In the past, the DDO has only objected if the projects were not worth the
risk or duplicated a DDO operation. The Chief of Station rarely undertook to
evaluate whether the military operations could be done openly or would be
Sliccossful.
^ While the DCI has final responsibility for the clandestine collection of
intelligence, he i^till faces problems in coordinating the clandestine and technical
collection programs in his own agency. Illustrative of this is the recent estab-
lishment of a National Intelligence OflScer (NIO) for Snecial Activities to help
the DCI focus DDO operations on three or four central intellisence gaps. Direc-
tor Colby determined that only through a special assistant could he break down
the separate cultures of DDO and technical intelligence collection and the barriers
between the intelligence analysts and DDO.
87
Resources Committee has initiated community-wide assessments of
human source reporting in individual countries which emphasize the
ambassador's key role in coordinating human collection activities in
the field. But the Committee has not defined a national system for
establishing formal collection requirements for the various human
intelligence agencies.
In summar}^, the DCI does not have authority to manage any collec-
tion programs outside his own agency. The DCI only issues general
guidance. The departments establish their own intelligence collection
requirements and the collection managers (NSA, DIA, CIA, and
the military services) retain responsibility for determining precisely
which intelligence targets should be covered. President Ford's Execu-
tive Order does not change the DCI role in the management of
intelligence collection activities.
3. Allocating Intelligence Resources
In a 1971 directive. President Nixon asked Director Helms to plan
and review all intelligence activities including tactical intelligence
and the allocation of all resources to rationalize intelligence priorities
within budgetary constraints.^^ Since 1971, the DCI has prepared
recommendations to the President for a consolidated national intelli-
gence program budget. Director Helms, in his first budget recommen-
dations, proposed a lid on intelligence spending, noting that "we
should rely on cross-program adjustments to assure that national
interests are adequately funded." *^ However, prior to President
Ford's Executive Order, the DCI has had no way to insure author-
itatively that such objectives were realized.
The DCI has independent budget authority over only his own
agency whi'^h represents only a small percentage of the overall
national intelligence budget. As chairman of an Executive Committee
or ExCom for special reconnaissance activities, the DCI has been
involved in the preparation of the program budget for the develop-
ment and management of the major United States technical collection
systems. However, differences of opinion between the DCI and the
other member of the ExCom. the Assistant Secretary of Defense
for Intelligence, were referred to ih^ Secretary of Defense for resolu-
tion. The Secretary of Defense in his budget allocated the remaining
intelligence community resources.
The DCI's role in the Defense intelligence budget process was in
effect that of an adviser. The DCI's "Perspectives," which analyze
the political, economic, and military environment over the next five
years, have had little impact on the formulation of Defense intelli-
gence resource requirements. According to John Clarke, former Asso-
^ "Announcement Ontlinins Management Sfeps for Improvinc the Effectiveness
of the Intelligence Community," November 5, 1971, 7 Pres. Docs. p. 14S2. Nixon
sought to enhance the ro'e of the DCI as community leader and to give the DCI
responsibility to coordinate Defense Department technical collection operations
with other intellisrence programs. Nixon's directive followed a comprehensive
study of the intelligence community by the Office of Management and Budget
(known as the Schlesinger Report) which recommended a fundamental reform
in tho intelligence community's decisionmaking bodies and procedures.
" Director of Central Intelligence, National Intelligence Program Memorandum,
FY 1974, p. 44.
88
ciate Deputy to the Director of Central Intelligence for the Intelli-
gence Community, the "Perspectives" ''did not have any great bearing
on the formal guidances that the different departments naving intel-
ligence elements used in deciding how much they needed or how many
dollars they required for future years." *^ The military services and
DIA responded to the fiscal guidance issued by the Secretary of
Defense.
The DCI's small staff of seven professionals in the Resource Re-
view Office of the Intelligence Community Staff' kept a low profile
and spent most of its time gathering information on the various
Defense intelligence activities. They did not provide an independent
assessment of the various programs for the DCI. Consequently, the
DCI rarely had sufficient knowledge or confidence to challenge a
Defense Department recommendation. When the DCI did object, he
generally focused on programs where he thought the Defense Depart-
ment was not giving adequate priority to intelligence activities in
which the President had a particular interest.
For example, partly as a result of the intense concern by the NSC
staff, the DCI expended substantial effort to insure that two Air
Force ships, initially built to operate on the Atlantic missile range
monitoring Cape Canaveral hrings, continued to be available to
monitor foreign missile activities. When in 1970-1971, the number of
United States missile tests decreased substantially, the Air Force
proposed that both ships be retired. The DCI, in turn, requested an
intelligence community study which concluded that the ships were
essential for foreign intelligence purposes. Consequently, the DCI
brokered an arrangement for a sharing of the ships' cost within the
Department of Defense. Today, a little under 20 percent of the ship
program is devoted to intelligence needs. The DCI had neither the
authority to direct the retention of these Air Force ships nor sufficient
resources to take over their funding for intelligence purposes to insure
that they were not retired. Nevertheless, the DCI played a definite
role in working out an arrangement whereby at least one ship will
be available until the national intelligence requirement can be met
by another means.^®
In practice, the DCI only watched over the shoulder of the Assistant
Secretary of Defense for Intelligence as he reviewed the budget re-
quests of DIA, NSA, and the military services. If the DCI wished
to raise a particular issue, he had a number of possible forums. He could
set up an ad hoc interagency study group or discuss the question in
the Intelligence Resources Advisory Committee (IRAC).^° He could
highlight resource issues in the annual fall joint OMB-Defense
Department review^ of the Defense budget or in his December letter to
the President presenting the consolidated national intelligence budget.
However, the groups were only advisory to the DCI and had no
authority over the Secretary of Defense. The joint review^ and the
**John Clarke testimony, 2/5/76, pp. 15-16.
*' According to Carl Duckett, the CIA's Deputy Director of Science and
Technology, "frankly we had to fight very hard the last two years to keep the
ships active at all." (Carl Duckett testimony, 11/10/75, pp. 106-107.)
™ IRAC was established in 1971 to advise the DCI in preparing a consolidated
intelligence program budget for the President. Members included representatives
from the Departments of State and Defense, 0MB, and the CIA. IRAC was
abolished by President Ford's Executive Order of 2/18/76.
89
DCI's letter to the President occurred so late in the Defense Depart-
ment budget cycle that the DCI had little opportunity to effect any
sionificant changes.
Thus, the DCI's national budget recommendations were for the
most part the aggregate figures proposed by the vai-ious Defense
agencies. The DCI did not proAade an independent calculated evalua-
tion of the entire national intelligence budget. The DCI did not
present the President with broad alternative options for the alloca-
tion of national intelligence resources. The DCI was not able to effect
trade-offs among the different intelligence programs or to reconcile
differences over priorities. Finally, the President's decisions on the
intelligence budget levels were not based upon the recommendations
of the DCI. but rather upon Defense Department totals. According to
John Clarke:
I would have to submit that in my judgment I do not think
the Presidents have used the Director's recommendations
with respect to the intelligence budgets. There have been few
exceptions where they have solidified behind the Director's
appeal, but fundamentally he has looked to the Secretary of
Defense to decide what level of intelligence activities there
should be in the defense budget.^^
Because the Secretary of Defense had final authority to allocate
most of the intelligence budget, the DCI either had to "persuade" the
Secretary to allocate Defense intelligence resources according to the
Direx^tor's recommendations or take his case directly to the President.
According to James Schlesinger :
. . . the authority of whoever occupies this post, whatever
it is called comes from the President. . . . To the extent that
it is believed that he has the President's ear, he will find
that the agencies or departments will be responsive, and if it
is believed that he does not have the President's ear. they will
be unresponsive.^-
But because the DCI must expend substantial political capital in
taking a Defense budget issue to the President, he rarely has sought
Presidential resolution. Over the past five years, the DCI went directly
to the President only twice. Both these issues involved expensive
technical collection systems, and both times the DCI prevailed.
In summary, DCIs have not been able to define priorities for the
allocation of intelligence resources — either among the different sys-
tems of intelligence collection or among intelligence collection, anal-
ysis, and finished intelligence. Without authority to allocate intelli-
gence budget resources, DCIs have been unable to insure that un-
warranted duplication and waste are avoided.
4. Key Intelligence Questions
As described above, DCIs have confronted major problems in seek-
ing to cany out their coordinating responsibilities under the 1947
National Security Act. They have not had authority to establish re-
quirements for tile collection or production of national intelligence.
^Clarke, 2/5/76, p. 27.
=-' Schlesinger, 2/2/76, pp. 43, 45.
69-983 O - 76 - 7
90
They have not been able to institute an effective means to evahiate
liow well the community is carryino- out their guidance. They have
not had a mechanism to direct the allocation of intelligence resources
to insure that the intelligence needs of national policymakers are met.
To help solve these problems, Director Colby instituted a new in-
telligence management system known as the Key Intelligence
Questions (KIQs). Through formation of a limited number of KIQs,
Colby tried to focus collection and production efforts on critical policy-
maker needs and to provide a basis for reallocating resources toward
priority issues.^^ This section will briefly highlight the resistance which
Colby's new management scheme provoked and the difficulties experi-
enced in evaluating the overall community efforts.
The KIQ scheme had four stages. First the DCI issued the KIQs.
Then the National Intelligence Officers (NIOs) with representatives
from the various collection and production agencies developed a
strategy to answer the individual KIQs. After surveying what in-
formation was currently available to answer the KIQs, the various
agencies made commitments to collect and produce intelligence
reports "against" the various KIQs. At the end of the year, the DCI
evaluated the intelligence community's perfoiTnance.
The KIQ management process has finished its first full year of
operation and a beginning has been made to provide intelligence con-
sumers with the opportunity to make known their priorities for intelli-
gence collection and production. Collection managers have been
brought together in developing a strategy to answer key questions and
analysts have received guidance as to the kinds of reports they should
produce. In addition, the DCI now has before him considerable in-
formation about how the intelligence community is focusing on
intelligence questions which are important to senior national policy-
makers. He should be in a better position to show collection and
production managers where they have failed to meet their commit-
ments to work against individual KIQs or to spend a high percentage
of their resources on KlO-related activities.
However, while the KIQ concept is imaginative, the management
tool has encountered serious problems. First, the KIQ system does not
solve the DCI's problem of trying to establish priorities in intelli-
gence collection and production. Few topics are not included under
one KIQ or another. The KIQs have not yet been meshed with the
existing requirements system. While the KIQs are supposed to estab-
lish collection and production requirements in lieu of the DCI's Di-
rective on priorities, both continue to exist today. The Defense Depart-
ment has not only continued to issue the DIOiP but has produced its
own Defense Key Intelligence Questions (DKIQs) which number over
] ,000. Instead of providing a means for the DCI to establish priorities
for the intelligence community, the KIQs to date have added another
layer of requirements.
^^ In FY 1975, there were 69 KIQs. drafted by the DCI's National Intelligence
Officers in consultation with the NSC Intelligence Committee working group.
Approximately one-third of the KIQs dealt with Soviet foreign policy motivations
and military technology. The other KIQs dealt with such issues as the negoti-
ating position of the Arabs and Israelis, the terrorist threat, etc.
91
Second, Colby's management scheme has met strong resistance
from the collection and the production agencies. After one year it is
difficult to identify many intelligence activities that have changed
because of tlie IviQs. llie IviQ, K^trategy Keports were issued nine
months after tlie IviQs and tended to list collection and production ac-
tivities already under way. The DCl was not in a position to direct
the various members of tlie intelligence community to undertake com-
mitments tor diuerent colieccion eirorts, and tiie Strategy Keports
rarely contained new commitments.
While all agencies participated, DIA and DDO have responded to
the KIQs only insofar as they were consistent with their respective
internal collection objectives. DlA's "IviQ Collection Performance
Keport" pointed out tliat "the Deiense Attache system primarily re-
sponds to the DKIQs and J SOP X Joint Strategic Objectives Plan]
objectives and therefore, responses to KIQs will have to maintain con-
sistency with the two aforementioned collection guidance vehicles." ^*
111 fact, DIA writes its "Intelligence Collection Requests" and "Con-
tinuing Intelligence Kequirements," and they are then keyed back to
the relevant KiQs, somewhat as an afterthought.^^
The Deputy JJirector of Operations for tlie CIA issues his "Ob-
jectives" for the collection of clandestine human intelligence. While
these are derived from the KIQs, these "Objectives" are in fact the
collection requirements of the Clandestine Service. Since it takes so
long to recruit agents, DDO considers it is not in a position to respond
to specific KIQs dealing with near-term intelligence gaps unless a
source is already in place. Moreover, DDO determined not to deflect
or divert its effort to satisfy KIQs unless the questions happened to
fall within DDO internal objectives.
DIA and DDO invoked the KIQs to justify thei?' operations and
budgets, however they did not appear to be shaping the programs to
meet KIQ objectives. Without authority to direct resources to answer
the specific Key Intelligence Questions, the DCI had little success in
compelling the major collectors and producers of intelligence to re-
spond to the KIQs, if they were unwilling. Only NSA has made a
serious effort to insure that their collection requirements are respon-
sive to the KIQs. In USIB meetings, NSA Director General Allen
argued that the KIQs should be viewed as requirements for the in-
telligence community and the KIQ Strategy Keports should provide
more detailed instructions to field elements for collection.^^
Colby's new management scheme also failed to establish a workable
evaluation process. NIOs provided subjective judgments as to how well
the community had answered each KIQ and an assessment of the rela-
tive contribution of each agency. Although NIOs discussed their assess-
ments with consumers, they had no staff to conduct a systematic and
^ DIA, "KIQ Collection Performance Report," 8/18/75.
°^ In FY 1975, only 7 percent of DIA's attache reports responded to
KIQs. Out of 2,111 attache reports against the KIQs only 34 of the 69 were
covered. According to DIA, military attaches have access to particular types of
information and it would be unfair to assume they had the capability to respond
to all the KIQs.
^Minutes of USIB meeting, 2/6/75. Approximately 70 percent of NSA's re-
quirements for FY 1975 were KIQ-related, and about 50 percent of its operations
and maintenance budget could be ascribed to the KIQs.
92
independent review of how well the community had answered the
questions. Furthermore, NIOs did not base their evaluations on any
specific kinds of information, such as all production reports or all raw
intelligence collected on a particular KIQ. They commented on how
well the agencies had carried out their commitments in the Strategy
Reports without asking the collectors for any information about what
activities they undertook or what amount of money had been spent.
They merely took the collector's word that something had or had not
been done. Finally, they did not develop a method to insure that the
judgments of the individual NIOs were consistent with each other.
In addition, the IC Staff aggregated the amount of resources ex-
pended by the various collection and production managers in answer-
ing each KIQ and determined what problems had been encountered.
However, collection and production managers prepared cost estimates
of the activities expended against individual KIQs according to an
imprecisely defined process. And although the IC Staff provided
guidance as to how to do the calculations, the decisions as to how best
to estimate costs were left to the individual agencies. Not surprisingly,
the agencies employed different methods.^^ Consequently, the cost es-
timates were not comparable across agencies, and the IC Staff had no
way of making them comparable, since they could not change the dif-
ferent accounting systems in the various intelligence agencies.'^
In summary, the evaluation process did not permit a comparison
of total efforts and results against the KIQs on a community- wide
basis. Colby lacked the necessary tools to use the KIQ management
system to effect resource allocation decisions. The DCI at best was in
a position to shame recalcitrants into action by pointing up stark fail-
ures in a particular agency's efforts against the KIQs. The KIQ process
was only a surrogate for DCI authority to allocate the intelligence
resources of the community.
Colby's frustrations in trying to direct intelligence community
efforts via the KIQ process are indicative of the DCI's limited au-
thority. Within the present intelligence structure, an effort to get the
DDO and DIA to respond to what the DCI has defined as key policy-
maker intelligence questions met considerable resistance. Thus, the
most important issue raised by the KIQ manasfement experience is not
how to refine the process but whether the DCI can really succeed in
directing collection and production activities in the intelligence com-
munity toward critical policymaker needs without greater authority
over the allocation of resources.
"For example, DIA begins with the assumption that 60 percent of the De-
fense attache budget goes for collection. This figure is then multiplied by the
percentage of attache reports which responded to KIQs and the total cost ex-
pended against the KIQs was calculated to be $1.3 million. In contrast, DDO
calculates cost according to the IC Staff's recommended formula, which esti-
mates the number of manhours devoted against the KIQs and multiplies the es-
timate by an average production manhour cost.
^ In addition, while the State Department provides cost estimates of INR's
intelligence production costs, it did not submit collection cost statistics, main-
taining that Foreign Service reports were not intelligence collection. So the
evaluation process did not provide a complete picture of intelligence collection on
individual KIQs.
93
5. President Ford? 8 Executive Order
On February 18, 1976, President Ford announced a reorganization
of the intellicrence community to "establish policies to improve the
quality of intelligence needed for national security, to clarify the au-
thority and responsibilities of the intelligence departments and agen-
cies. . . ." The major change introduced by the President is the
formation of the Committee on Foreign Intelligence (CFI) chaired
by the DCI and reporting directly to the NSC. The CFI will have
responsibility to: (1) "control budget preparation and resource al-
location for the National Foreign Intelligence Program;" (2) "estab-
lish policy priorities for the collection and production of national
intelligence;" (3) "establish policy for the management of the Na-
tional Foreign Intelligence Program;" and (4) "provide guidance
on the relationship between tactical and national intelligence." ^^
It is still too soon to pass judgment as to whether the Executive
Order will aid the DCI in his efforts to coordinate the activities of the
intelligence community. By making the DCI chairman of the CFI,
the Executive Order appears to enhance the stature of the DCI by
expanding his role in \h^ allocation of national intelligence resources.
But, as in the case of the Nixon directive in 1971, the DCI appears to
have been given an expanded set of responsibilities without a real
reduction in the authority of other members of the intelligence com-
munity over their own operations. There exist many ambiguities in the
language of the Executive Order^ particularly with regard to the role
of the CFI.
The CFI is given responsibility to "control budget preparation and
resource allocation" for national intelligence programs, but the Sec-
retary of Defense retains responsibility to "direct, fund, and op-
erate NSA." The CFI is asked to "review and amend" the budget
prior to submission to 0MB, as if the CFI will not control the prep-
aration of the budget but rather would become involved only after the
agencies and departments independently put together their own
budget. Finally, the relationship is not clear between the DCI's re-
sponsibility to "ensure the development and submission of a budget"
and the CFI's responsibility to "control budget preparation."
Moreover, the specific prohibition against DCI and CFI responsi-
bility for tactical intelligence appears to be a step backward from the
1971 Nixon directive which asked the DCI to plan and review the
allocation of all intelligence resources. While DCIs since 1971 have
not become deeply involved in such tactical intelligence questions, they
have reserved the right to become involved; and on several occasions
they have supported efforts to transfer money from the national
Defense Department intelligence budget to the budgets of the military
services, or vice versa. There are, in addition, at least theoretical trade-
offs to be made between tactical and national intelligence, especially
since the dividing mark between all intelligence operations has become
increasingly blurred with the development of large and expensive
technical collection systems.
'* Executive Order No. 11905. Other members of the CFI will be the Deputy
Secretary of Defense for Intelligence and the Deputy Assistant to the President
for National Security Affairs.
94
C. Director of the CIA
At the same time the DCI has responsibility for coordinating the
activities of the entire community, he also has direct authority over
the intelligence operations of the CIA. As Director, the DCI runs
covert operations and manages the collection of clandestine human
intelligence (Directorate of Operations) ; manages the collection of
signals intelligence abroad and allocates resources for the development
and operation of certain technical collection systems (Directorate of
Science and Technology) ; and produces current intelligence and
finished intelligence memoranda (Directorate of Intelligence).
The fact that the DCIs have also directed the operations of the
CIA has had a variety of consequences. First, DCIs have tended to
focus most of their attention on CIA operations. The first Directors
were preoccupied with organizing and establishing CIA and with
defining the Agency's role in relation to the other intelligence orga-
nizations. While Allen Dulles and Richard Helms were DCI, each
spent considerable time running covert operations. John McCone
focused on improving the ClA's intelligence product and developing
new technical collection systems when he was Director. Admiral
Rabom emphasized refining the Agency's budgetary procedures.*'"
Second, by having their own capabilities to collect and produce
intelligence, DCIs have been able to assert their influence over the
intelligence activities of the other members of the intelligence com-
munity. John Clarke, former Associate Deputy to the DCI for the
Intelligence Community, testified that Helms objected to the sugges-
tion that CIA get rid of all its SIGINT activities because he needed
"something to keep [his] foot in the door" so he could "look at the
bigger problem." ^'^ According to Clarke :
... to some degree historically, the Director's involvement
has not only been based upon good, healthy competition
among systems, which I think is good, but the directors have
seen it as an opportunity to give them a voice at the table in
judgments which have importance to their higher role, a
larger role as Director of CI.^^
However, this ability to assert influence in turn has had another
consequence: DCIs have been accused of not being able to nlay an
objective role as community leader while they have responsibility for
directing one of the community's intelligence agencies. Potential con-
flict exists in decisions with respect to every CIA activity. For ex-
ample, on each of the two occasions that the DCI went directly to the
President to object to a Defense Department budget recommendation,
the DCI won Presidential support for a CIA-developed technical
collection system. Such DCI advocacy raises the fundamental ques-
tion of whether the DCI can indeed b© an objective community leader
if he is also Director of the CIA which undertakes research and devel-
opment on technical collection systems. According to James
Schlesinger :
There has always been concern and frequently there has
been the reality that the DCI does not overlook all these
*"• Colby, 12/11/75, pp. 4-5.
"^ Clarke, 2/5/76, p. 59.
" Ibid., pp. 59-60.
95
assets in a balanced way ... as long as the DCI has special
responsibility for the management of clandestine activities,
that it tends to affect and to some extent contaminate his
ability to be a spokesman of the commimity as a whole in-
volving intelligence operations which are regarded as reason-
ably innocent from the purview of American life.
Components of the intelligence community other than
the CIA have feared that the DCI would be tempted to
expand the authority of the CIA in the collection activities
relative to the other components of the intelligence com-
munity. And there has been some evidence that supports such
suspicion. . . .
What I believe is at the present time you have got incon-
sistent expectations of the DCI. He's supposed to be the fair
judge amongst the elements of the intelligence community
at the same time that CIA personnel expect him to be a
special advocate for the CIA. You cannot have both roles.^^
President Ford's Executive Order seeks in part to reduce the conflict
of interest problem by establishing two Deputies to the DCI, one for
intelligence community affairs and one for CIA operations. The DCI
and his Deputy for commimity affairs will have offices in downtown
Washington. Nevertheless, the DCI will continue to have an office at
CIA headquarters and to have legal responsibility for the operations
of the Agency and at the same time general responsibility for coordi-
nating the activities of the entire intelligence community.
"^ Schlesinger, 2/2/76, pp. 8, 49.
VI. HISTORY OF THE CENTRAL INTELLIGENCE AGENCY
Introduction ^
The current political climate and the mystique of secrecy surround-
ing the intelligence profession have created misperceptions about the
Central Intelligence Agency. The CIA has come to be viewed as an
unfettered monolith, defining and determining its activities independ-
ent of other elements of government and of the direction of American
foreign policy. This is a distortion. During its twenty-nine year his-
tory, the Agency has been shaped by the course of international events,
by pressures from other government agencies, and by its own internal
norms. An exhaustive history of the CIA would demand an equally
exhaustive history of American foreign policy, the role of Congress
and the Executive, the other components of the intelligence community,
and an examination of the interaction among all these forces. Given
the constraints of time and the need to pursue other areas of research,
this was an impossible task for the Committee. Nonetheless, recogniz-."
ing the multiple influences that have contributed to the Agency's de-
velopment, the Committee has attempted to broadly outline the CIA's
organizational evolution.
An historical study of this nature serves two important purposes.
First, it provides a means of understanding the Agency's present struc-
ture. Second, and more importantly, by analyzing the causal elements
in the CIA's patterns of activity, the study should illuminate the pos-
sibilities for and the obstacles to future reform in the U.S. foreign
intelligence system.
The concept of a peacetime central intelligence organization had
its origins in World War II with the Office of Strategic Services
(OSS). Through the driving initiative and single-minded determina-
tion of General William J. Donovan, sponsor and later first director
of OSS, the organization became the United States' first central in-
telligence body. Although OSS was disbanded in 1945 and its func-
^ This section is the summary version of a longer history to be published as an
Appendix to the Committee's Final Report. This section and the longer history
are based on four principal groups of sources. Since classification restrictions pre-
vent citing individual sources directly, the categories of sources are identified as
follows : ( 1 ) approximately seventy-five volumes from the series of internal CIA
histories, a rich if uneven collection of studies, which deal with individual com-
ponents of the CIA, the administrations of the Directors of Central Intelligence,
and specialized areas of intelligence analysis. The histories have been compiled
since the late 1940's and constitute a unique institutional memory. (2) approxi-
mately sixty interviews with present and retired Agency employees. These in-
terviews were invaluable in providing depth of insight and understanding to the
organization. (3) special studies and reports conducted both within and outside
the Agency. They comprise reviews of functional areas and of the overall admin-
istration of the CIA. (4) documents and statistics supplied to the Select Commit-
tee by the CIA in response to specific requests. They include internal communica-
tions, budgetary allocations, and information on grade levels and personnel
strengths.
(97)
98
tional components reassigned to other government agencies, the exist-
ence of OSS was important to the CIA, First, OSS provided an orga-
nizational precedent for the CIA ; like OSS, the CIA included clandes-
tine collection and operations and intelligence analysis. Second, many
OSS personnel later joined the CIA; in 1947, the year of the CIA's
establishment, approximately one-third of the CIA's personnel were
OSS veterans. Third, OSS suffered many of tiie same problems
later experienced by the CIA; both encountered resistance to the
execution of their mission from other government agencies, both ex-
perienced the difficulty of having their intelligence analysis "heard,"
and both were characterized by the dominance of their clandestine op-
erational components.
Despite the similarities in the two organizations, OSS was an in-
strument of war, and Donovan and his organization were regarded by
many as a group of adventurers, more concerned with derring-do op-
erations than with intelligence analysis. The post-war organization
emerged from different circumstances from those that had fostered
the development of OSS.
Following the War, American policymakers conceived the idea
of a peacetime central intelligence organization with a specific pur-
pose in mind — to provide senior government officials with high-quality,
objective intelligence analysis. At the time of the new agency's crea-
tion, the military services and the State Department had their own
independent intelligence capabilities. However, the value of their anal-
ysis was limited, since their respective policy objectives often skewed
their judgments. By reviewing and synthesizing the data collected by
the State Department and the military services, a centralized body was
intended to produce national intelligence estimates independent of
policy biases. "National" intelligence meant integrated interdepart-
mental intelligence that exceeded the perspective and competence of
individual departments and that covered the broad aspects of national
policy. "Estimates" meant predictive judgments on the policies and
motives of foreign governments rather than descriptive summaries
of daily events or "current intelligence."
Although policymakers agreed on the necessity for national intel-
ligence estimates, they did not anticipate or consider the constraints
that would impede achievement of their objective. As a result, the CIA
assumed functions very different from its principal mission, becoming
a competing producer of current intelligence and a covert operational
instrument in the American cold war offensive.
The establishment of the Central Intelligence Agency coincided
with the emergence of the Soviet Union as the antagonist of the United
States. This was the single most important external factor in shaping
the Agency's development. Of equal importance were the internal orga-
nizational arrangements that determined the patterns of influence
within the Agency. In exploring the Agency's complex development,
this summary will address the following questions : Wliat institutional
and jurisdictional obstacles prevented the Agency from fulfilling its
original mission? To what extent have these obstacles persisted? In
what ways have U.S. foreign policy objectives influenced priorities in
the Agency's activities ? Wliat internal arrangements have determined
the Agency's emphases in intelligence production and in clandestine
99
activities? What accounts for the continued dominance of the clan-
destine component within the Agency ? How have individual Directors
of Central Intelligence defined their roles and what impact have their
definitions had on the direction of the Agency? What impact did
technological developments have on the Agency and on the Agency's
relationship with the departmental intelligence services ?
This study is not intended to catalogue the CIA's covert operations
but to present an analytical framework within which the CIA's poli-
cies and practices may be understood. The following section summa-
rizes the Agency's evolution by dividing its history into four segments :
1946-1952; 1953-1961; 1962-1970; and 1971-1975. Each period con-
stitutes a distinct phase in the Agency's development.
A. The Central Intelligence Group and the Central Intelligence
Agency: 1946-1952
The years 1946 to 1952 were perhaps the most crucial in deter-
mining the functions of the central intelligence organization. The
period marked a dramatic transformation in the mission, size and
structure of the new entity. In 1946 the Central Intelligence Group
(CIG), the CIA's predecessor, was conceived and established as an
intelligence coordinating body to minimize the duplicative efforts of
the Departments and to provide objective intelligence analysis to senior
policymakers. By 1952 the Central Intelligence Agency was engaged
in independent intelligence production and covert operations. The CIG
was an extension of Executive departments ; its personnel and budget
were allocated from State, Army and Navy. By 1952 the CIA had
developed into an independent government agency commanding man-
power and budget far exceeding anything originally imagined.
1. The Origins of the Central Intelligence Group
As World War II ended, new patterns of decisionmaking emerged
within the United States Government. In the transition from war
to peace policymakers were redefining their organizational and in-
formational needs. As President, Franklin Roosevelt maintained a
highly personalized style of decisionmaking, relying primarily on in-
formal conversations with senior officials. Truman preferred to confer
with his cabinet officers as a collective body. This meant that officials
in the State, War and Navy departments were more consistent partici-
pants in Presidential decisions than they had been under Roosevelt.
From October through December 1945, U.S. Government agencies
engaged in a series of policy debates about the necessity for and the
nature of the future United States intelligence capability.
Three major factors dominated the discussions. The first was the
issue of postwar reorganization of the Executive branch. The debate
focussed around the question of an independent Air Force and the
unification of the services under a Department of Defense. Discussion
of a separate central intelligence agency and its structure, authority,
and accountability was closely linked to the larger problem of defense
reorganization.
Second, it was clear from the outset that no department was willing
to consider resigning its existing intelligence function and accompany-
100
ing personnel and budgetary allotments to a central agency. As
departmental representatives aired their preferences, maintenance of
independent capabilities was an accepted element in defining future
organization. Coordination, not centralization, was the maximum that
each Department was willing to concede.
Third, the functions under discussion were intelligence analysis and
the dissemination of intelligence. The shadow of the Pearl Harbor
disaster dominated policymakers' thinking about the purpose of a
central intelligence agency. They saw themselves rectifying the condi-
tions that allowed Pearl Harbor to happen — a fragmented military-
based intelligence apparatus which in current terminology could not
distinguish "signals" from "noise," let alone make its assessments
available to senior officials.
Formal discussion on the subject of the central intelligence func-
tion began in the fall of 1945. The Departments presented their sep-
arate views, while two independent studies also examined the issue.
Inherent in all of the recommendations was the assumption that the
Departments would control the intelligence product. None advocated
giving a central independent group sole responsibility for collection
and analysis. All favored making the central intelligence body re-
sponsible to the Departments themselves rather than to the President.
Each Department lobbied for an arrangement that would give itself
an advantage in intelligence coordination.
The Presidential directive establishing the Central Intelligence
Group reflected these preferences. The Departments retained autonomy
over their intelligence services, and the CIG's budget and staff were
to be drawn from the separate agencies. Issued on January 22, 1946,
the directive provided the CIG with a Director chosen by the Presi-
dent. The CIG was responsible for coordination, planning, evaluation,
and dissemination of intelligence. The National Intelligence Au-
thority (NIA), a group comprised of the Secretary of State, the
Secretary of War, the Secretary of the Navy, and a personal repre-
sentative of the President served as the Group's supervisory body.
The Intelligence Advisorv Board (lAB), which included the heads
of the militarv and civilian intelligence agencies, was an advisory
group to the Director of Central Intelligence (DCI).
Through budget, personnel, and oversight, the Departments had
assured control over the Central Intelligence Group. The CIG was
a creature of departments that were determined to maintain inde-
pendent capabilities as well as their direct advisory relationship to
the President. In Januarv 1946 they succeeded in doing both; by re-
taining autonomy over their intelligence operations, they established
the strone: institutional claims that would persist for the lifetime
of the Central Intelligence Agency.
^. The Directors of Central Intelligence^ 19^6-1952
At a time when the new agency was developing its mission, the role
of its senior official was crucial. The Director of Central Intelligence
was responsible for representing the agency's interests to the Depart-
ments and for pressing its jurisdictional claims. In large part the
strength of the agency relative to the Departments was dependent on
the stature that the DCI commanded as an individual. The four DCIs
101
from 1946 to 1952 rang^ed from providing only weak leadership to
firmly solidifying the new organization in the Washington bureauc-
racy. Three of the four men were career military officers. Their appoint-
ments were indicative of the degree of control the military services
managed to retain over the agency and the acceptance of the services'
primary role in the intelligence process.
Sidney Souers, the first DCI, served from January to June 1946.
Though a rear admiral, he was not a military careerist but a business
executive, who had spent his wartime service in naval intelligence.
He accepted the job with the understanding that he would remain
only long enough to establish an organization. Having participated
in the drafting of the directive which created CIG, Souers had a fixed
concept of the central intelligence function — one that did not chal-
lenge the position of the departmental intelligence components.
Under Lieutenant General Hoyt Vandenberg, CIG moved beyond
production of coordinated intelligence to acquire a clandestine col-
lection capability as well as authority to conduct independent re-
search and analysis. Vandenberg was an aggressive, ambitious per-
sonality, and as the nephew of Arthur Vandenberg, Chairman of the
Senate Foreign Relations Committee, exerted considerable influence
on behalf of the CIG. In May 1947, Vandenberg was succeeded by
Rear Admiral Roscoe Hillenkoetter. Two months after Hillenkoetter's
appointment, the CIG was reconstituted as the Central Intelligence
Agency. Hillenkoetter did not command the personal stature to suc-
cessfully assert the Agency's position relative to the Departments.
Nor did he possess the administrative ability to manage the Agency's
rapidly expanding functions.
It was precisely because of Hillenkoetter's weakness that General
Walter Bedell Smith was selected to succeed him in October 1950.
Nicknamed "the American Bulldog" by Winston Churchill, Smith was
a tough-minded, hard-driving, often intimidating career military of-
ficer who effected major organizational changes during his tenure.
Smith's temperament and his senior military status made him one of
the strongest DCIs in the Agency's history. He left the Agency in
February 1953.
3. The Evolution of the Central Intelligence Function^ 19Jt.6-1952
The CIG had been established to rectify the duplication among
the military intelligence services and to compensate for their biases.
The rather vaguely conceived notion was that a small staff in the CIG
would assemble and review the raw data collected by the departmental
intelligence services and produce objective national estimates for the
use of senior American policymakers. Although in theory the concept
was reasonable and derived from informational needs, institutional
resistance make implementation virtually impossible. The depart-
mental services jealously guarded both their information and what
they believed were their preroo:atives in providing policy guidance to
the President, making the CIG's primary mission an exercise in futil-
ity. Limited in the execution of its responsibility for coordinated esti-
mates, the CIG emerged within a year as a current intelligence
producer, generating its own summaries of daily events and thereby
competing with the Departments in the dissemination of information.
102
An important factor in the change was the CIG's authorization to
carry out independent research and analysis "not being presently per-
formed" by the other Departments. Under this authorization, granted
in the spring of 1946, the Office of Reports and Estimates (ORE) was
established. ORE's functions were manifold — the production of na-
tional current intelligence, scientific, technical, and economic in-
telligence as well as interagency coordination for national estimates.
With its own research and analysis capability, the CIG could carry
out an independent intelligence function without having to rely on the
departments for data. The change made the CIG an intelligence pro-
ducer, while still assuming the continuation of its role as a coordina-
tor for estimates.
Yet acquisition of a research and analysis role meant that inde-
pendent production would outstrip coordinated intelligence as a
primary mission. Fundamentally, it would be far easier to assimilate
and analyze data than it had been or would be to engage the Depart-
ments in producing "coordinated" analysis.
The same 1946 directive which provided the CIG with an independ-
ent research and analysis capability also granted the CIG a clandestine
collection capability. Since the end of the war, the remnant of OSS's
clandestine collection capability rested with the Strategic Services
Unit (SSU) , then in the War Department. In the postwar dismantling
of OSS, SSU was never intended to be more than a temporary body,
and in the spring of 1946 SSU's duties, responsibilities and personnel
were transferred to CIG along with SSU's seven overseas field stations
and communications and logistical apparatus.
The transfer resulted in the establishment of the Office of Special
Operations (OSO). OSO was responsible for espionage and counter-
espionage. From the beginning the data collected by OSO was highly
compartmented. ORE did not draw on OSO for its raw information.
Instead, overt collection was ORE's major source of data.
Since its creation CIG had had two overt collection components.
The Domestic Contact Service (DCS) solicited domestic sources, in-
cluding travellers and businessmen for foreign intelligence informa-
tion on a voluntary basis. The Foreign Broadcast Information Service
(FBIS) an element of OSS, monitored overseas broadcasts. These
components together with foreign publications provided ORE with
most of its basic information.
The acquisition of a clandestine collection capability and authoriza-
tion to carry out independent research and analysis enlarged CIG's
personnel strength considerably. As of June 1946 the total CIG staff
numbered approximately 1,816. Proportionately, approximately one-
third were overseas with OSO. Of those stationed in Washington,
approximately half were devoted to administrative and support func-
tions, one-third were assigned to OSO, and the remainder to intelli-
gence production.
The passage of the National Security Act in July 1947 legislated
the changes in the Executive branch that had been under discussion
since 1945. The Act established an independent Air Force, provided
for coordination by a committee of service chiefs, the Joint Cliiefs of
Staff (JCS), and a Secretaiy of Defense, and created the National
103
Security Council (NSC). The CIG became an independent depart-
ment and was renamed the Central Intelligence Agency.
Under the Act, the CIA's mission was only loosely defined, since
efforts to thrash out the CIA's duties in specific terms would have con-
tributed to the tension surrounding the unification of the services. The
four general tasks assigned to the Agency were (1) to advise the NSC
on matters related to national security; (2) to make recommendations
to the NSC regarding the coordination of intelligence activities of the
Departments; (3) to correlate and evaluate intelligence and provide
for its appropriate dissemination and (4) "to perform such other
functions ... as the NSC will from time to time direct. ..."
The Act did not alter the functions of the CIG. Clandestine collec-
tion, overt collection, production of national current intelligence and
interagency coordination for national estimates continued, and the per-
sonnel and internal structure remained the same.
The Act affirmed the CIA's role in coordinating the intelligence
activities of the State Department and the military — determining
which activities would most appropriately and most efficiently be
conducted by which Departments to avoid duplication. In 1947 the
Intelligence Advisory Committee (lAC) was created to serve as a
coordinating body in establishing intelligence requirements ^ among
the Departments. Chaired by the DCI, the Committee included repre-
sentatives from the Departments of State, Army, Air Force, the Joint
Chiefs of Staff, and the Atomic Energy Commission. Although the
DCI was to establish priorities for intelligence collection and analysis,
he did not have the budgetary or administrative authority to control
the departmental components. Moreover, no Department was willing
to compromise what it perceived as its own intelligence needs to
meet the collective needs of policymakers as defined by the DCI.
As the CIA evolved between 1947 and 1950, it never fulfilled its
estimates function but continued to expand its independent intelligence
production. In July 1949 an internal study conducted by a senior
ORE staff member stated that ORE's emphasis in production had
shifted "from the broad long-term type of problem to a narrowly
defined short-term type and from the predictive to the non-predictive
type." In 1949 ORE had eleven regular publications. Only one of
these addressed national intelligence questions and was published
with the concurrence or dissent of the other departments. Less than
one-tenth of ORE's products were serving the purpose for which the
CIG and the CIA had been created.
If.. The Reorganization of the Intelligence Function^ 1950
By the time Walter Bedell Smith became DCI in 1950, it was clear
that the CIA's record on the production of national intelligence esti-
mates had fallen far short of expectation. ORE had become a direc-
tionless service organization, attempting to answer requirements levied
by all agencies related to all manner of subjects — politics, economics,
science, and technology. The wholesale growth had only confused
ore's mission and led the organization into attempting analysis in
areas already adequately covered by other departments. Likewise, the
^ Requirements constitute the informational objectives of intelligence collec-
tion, e.g., in 1947 determining Soviet troop strengths in iJastern Europe.
104
obstacles posed by the Departments prevented the DCI and the
Agency from carrying out coordination of the activities of the depart-
mental intelligence components.
These problems appeared more stark following the outbreak of
the Korean War in June 1950. Officials in the Executive branch and
members of Congress criticized the Agency for its failure to predict
more specifically the timing of the North Korean invasion of South
Korea. Immediately after his appointment as DCI in October 1950,
Smith discovered that the Agency had no current coordinated esti-
mate of the situation in Korea. Under the pressure of war, demands
for information were proliferating, and it was apparent that ORE
could not meet those demands.
Smith embarked on a program of reorganization. His most signifi-
cant change was the creation of the Office of National Estimates
(ONE), whose sole purpose was to produce National Intelligence
Estimates (NIEs) . There were two components in ONE, a staff which
drafted the estimates and a senior body, known as the Board of Na-
tional Estimates, which reviewed the estimates, coordinated the judg-
ments with other agencies, and negotiated over their final form.
Smith also attempted to redefine the DCI's position in relation to
the departmental intelligence components. From 1947 to 1950 the DCIs
had functioned at the mercy of the Departments rather than exercising
direction over them. By formally stating his position as the senior
member of the Intelligence Advisory Committee, Smith tried to as-
sume a degree of administrative control over departmental activities.
Nonetheless, the obstacles remained, and personal influence, rather
than recognized authority, determined the effectiveness of Smith and
his successors in interdepartmental relationships.
In January 1952, CIA's intelligence functions were grouped under
the Directorate for Intelligence (DDI), ORE was dissolved and
its personnel were reassigned. In addition to ONE, the DDI's
intelligence production components included : the Office of Research
and Reports (ORR), which handled economic and geographic intelli-
gence; the Office of Scientific Intelligence (OSI), which engaged in
basic scientific research ; and the Office of Current Intelligence (OCI) ,
which provided current political research. Collection of overt infor-
mation was the responsibility of the Office of Operations (00). The
Office of Collection and Dissemination (OCD) engaged in the dis-
semination of intelligence as well as storage and retrieval of un-
evaluated intelligence.
The immediate pressures for information generated by the Korean
War resulted in continued escalation in size and intelligence produc-
tion. Government-wide demands for the Agency to provide informa-
tion on Communist intentions in the Far East and around the world
justified the increases. By the end of 1953 DDI personnel numbered
3,338. Despite the sweeping changes, the fundamental problem of
duplication among the Agency and the Departments remained. DDI's
major effort was independent intelligence production rather than co-
ordinated national estimates.
5. Clandestine Operations
The concept of a central intelligence agency developed out of a
concern for the quality of intelligence analysis available to policy-
105
makers. The 1945 discussion which surrounded the creation of the CIG
focussed exclusively on the problem of production of coordinated intel-
ligence judgments. Tavo years later, debates on the CIA in both the
Congress and the Executive assumed only a collection and analysis
role for the newly constituted Agency. Yet, within one year of the
passage of the National Security Act, the CIA was charged with the
conduct of covert psychological, political, paramilitary, and economic
activities.^ The acquisition of this mission had a profound impact on
the direction of the Agency and on its relative stature within the
government.
The suggestion for the initiation of covert operations did not origi-
nate in the CIA, but with senior U.S. officials, among them Secretary
of War James Patterson, Secretary of Defense James Forrestal, Sec-
retary of State George Marshall, and George Kennan, Director of the
State Department's Policy Planning Staff. Between 1946 and 1948
policymakers proceeded from a discussion of the possibility of initiat-
ing covert psychological operations to the establishment of an organi-
zation to conduct a full range of covert activities. The decisions were
gradual but consistent, spurred on by the growing concern over Soviet
intentions.
By late 1946 cabinet officials were preoccupied with the Soviet
threat, and over the next year their fears intensified. For U.S. policy-
makers, international events seemed to be a sequence of Soviet incur-
sions. In March 1946 the Soviet Union refused to withdraw its troops
from the Iranian province of Azerbaijan; two months later civil war
involving Communist rebel forces erupted in Greece. In 1947 Com-
munists assumed power in Poland, Hungary and Rumania, and in the
Philippines the government was under attack by the Hukbalahaps, a
communist-led guerrilla group. In February 1948 Communists staged
a successful coup in Czechoslovakia. At the same time France and
Italy were beleaguered by a wave of Communist-inspired strikes. Poli-
cymakers could, and did, look at these developments as evidence of
the need for the United States to respond.
In March 1948 near hysteria gripped the U.S. Government with
the so-called "war scare." The crisis was precipitated by a cable from
General Lucius Clay, Commander in Chief, European Command, to
Lt. General Stephen J. Chamberlin, Director of Intelligence, Army
General Staff, in which Clay said, "I have felt a subtle change in
Soviet attitude which I cannot define but which now gives me a feeling
that it [war] may come with dramatic suddenness." The war scare
launched a series of interdepartmental intelligence estimates on the
likelihood of a Soviet attack on Western Europe and the United
States. Although the estimates concluded that there was no evidence
the U.S.S.R. would start a war. Clay's cable had articulated the degree
of suspicion and outright fear of the Soviet Union that was shared
by policymakers in 1948.
For U.S. officials, the perception of the Soviet Union as a global
threat demanded new modes of conduct in foreign policy to supple-
* Psychological oi)erations were primarily media-related activities, including
unattributed publications, forgeries, and subsidization of publications ; jwlitical
action involved exploitation of dispossessed persons and defectors, and support to
political parties ; paramilitary activities included support to guerrillas and sabo-
tage ; economic activities consisted of monetary and fiscal operations.
3-983 O - 76 - 8
106
ment the traditional alternatives of diplomacy and war. Massive
economic aid represented one new method of achieving U.S. foreign
policy objectives. In 1947 the United States had embarked on an un-
precedented economic assistance program to Europe with the Truman
Doctrine and the Marshall Plan. By insuring economic stability, U.S.
officials hoped to limit Soviet encroachments. Covert operations rep-
resented another, more activist departure in the conduct of U.S. peace-
time foreign policy. Covert action was an option that was something
more than diplomacy but still short of war. As such, it held the
promise of frustrating Soviet ambitions without provoking open
conflict.
The organizational arrangements for the conduct of covert opera-
tions reflected both the concept of covert action as defined by U.S. offi-
cials and the perception of the CIA as an institution. Both the
activities and the institution were regarded as extensions of the State
Department and the military services. Covert action was to serve a
support function to foreign and military policy preferences, and the
CIA was to provide the vehicle for the execution of those preferences.
In June 1948, a CIA component, the Office of Special Projects, soon
renamed the Office of Policy Coordination (OPC), was established
for the execution of covert operations. The specific activities included
psychological warfare, political warfare, economic warfare, and para-
military activities. OPC's budget and personnel were appropriated
within CIA allocations, but the DCI had no authority in determining
OPC's acti\'ities. Responsibility for the direction of OPC rested with
the Office's director, appointed by the Secretary of State. Policy guid-
ance — decisions on the need for specific activities — came to the OPC
director from State and Defense, bypassing the DCI.
In recommending the development of a covert action capability in
1948, policymakers intended to make available a small contingency
force with appropriate funding that could mount operations on a lim-
ited basis. Senior officials did not plan to develop large-scale con-
tinuing activities. Instead, they hoped to establish a small capability
that could be activated when and where the need occurred — at their
discretion.
6. The Office of Policy Coordination, 191^8-1952
OPC developed into a far different organization from that envi-
sioned by Forrestal, Marshall, and Kennan. By 1952, when it merged
with the Agency's clandestine collection component, the Office of Spe-
cial Operations, OPC had innumerable activities worldwide, and it
had achieved the institutional independence that was unimaginable
at the time of its inception.
The outbreak of the Korean War in the summer of 1950 had a sig-
nificant effect on OPC. Following the North Korean invasion of South
Korea, the State Department as well as the Joint Chiefs of Staff re-
quested the initiation of paramilitary activities in Korea and China.
OPC's participation in the war effort contributed to its transforma-
tion from an organization that was to provide the capability for a
limited number of ad hoc operations to an organization that conducted
continuing, ongoing activities on a massive scale. In concept, man-
power, budget, and scope of activities, OPC simply skyrocketed. The
comparative figures for 1949 and 1952 are staggering. In 1949 OPC's
107
total personnel strength was 302 ; in 1952 it was 2,812 plus 3,142 over-
seas contract personnel. In 1949 OPC's budget figure was $4,700,000 ;
in 1952 it was $82,000,000. In 1949 OPC had personnel assigned to
seven overseas stations; in 1952 OPC had personnel at forty-seven
stations.*
Apart from the impetus provided by the Korean War several other
factors converged to alter the nature and scale of OPC's activities.
First, policy direction took the form of condoning and fostering ac-
tivity without providing scrutiny and control. Officials throughout the
government regarded the Soviet Union as an aggressive force, and
OPC's activities were initiated and justified on the basis of this shared
perception. The series of NSC directives wliich authorized covert op-
erations laid out broad objectives and stated in bold terms the neces-
sity for meeting the Soviet challenge head on. After the first 1948
directive authorizing covert action, subsequent directives in 1950 and
1951 called for an intensification of these activities without establish-
ing firm guidelines for approval. State and Defense guidance to OPC
quickly became very general, couched in terms of overall goals rather
than specific activities. This allowed OPC maximum latitude for the
initiation of activities or "projects," the OPC term.
Second, OPC operations had to meet the very different policy needs
of the State and Defense Departments. The State Department encour-
aged political action and propaganda activities to support its diplo-
matic objectives, while the Defense Department requested paramili-
tary activities to support the Korean War effort and to counter Com-
munist-associated guerrillas. These distinct missions required OPC to
develop and maintain different capabilities, including manpower and
support material.
The third factor contributing to OPC's expansion was the organi-
zational arrangements that created an internal demand for projects.
To correlate the requirements of State and Defense with its operations,
OPC adopted a project system rather than a programmed financial
system. This meant that OPC activities were organized around proj-
ects rather than general programs or policy objectives and that OPC
budgeted in terms of anticipated numbers of projects. The project
system had important internal effects. An individual within OPC
judged his own performance, and was judged by others, on the im-
portance and number of projects he initiated and managed. The result
was competition among individuals and among the OPC divisions to
generate the maximum number of projects. Projects remained the
fundamental units around which covert activities were organized, and
two generations of Agency personnel have been conditioned by this
system.
7. OPC Integration and the OPC-OSO Merger
The creation of OPC and its ambiguous relationship to the Agency
precipitated two major administrative problems : the DCI's relation-
ship to OPC, and antagonism between OPC and the Agency's clandes-
tine collection component, the Office of Special Operations. DCI Wal-
ter Bedell Smith acted to rectify both problems.
* Congress in 1949 enacted legislation exempting the DCI from the necessity
of accounting for specific disbursements.
108
As OPC continued to grow, Smith's predecessor, Admiral Hillen-
koetter, resented the fact that he had no management authority over
OPC, although its budget and personnel were being allocated through
the CIA. Hillenkoetter's clashes with the State and Defense Depart-
ments as well as with Frank G. Wisner, the Director of OPC, were
frequent. Less than a week after taking office, Smith announced that as
DCI he would assume administrative control of OPC and that State
and Defense would channel their policy guidance through him rather
than through Wisner. On October 12, 1950, the representatives of
State, Defense and the Joint Chiefs of Staff formally accepted the
change. The ease with which the shift occurred was primarily a result
of Smith's own position of influence with the Departments.
OPC's anomalous position in the Agency revealed the difficulty of
maintaining two separate organizations for the execution of varying
but overlapping clandestine activities. The close "tradecraft" rela-
tionship between clandestine collection and covert action, and the
frequent necessity for one to support the other was totally distorted
with the separation of functions in OSO and OPC. Organizational
rivalry rather than interchange dominated the relationship between
the two components.
On the operating level the conflicts were vicious. Each component
had representatives conducting separate operations at each overseas
station. Given the related missions of the two, OPC and OSO person-
nel were often competing for the same agents and, not infrequently, at-
tempting to wrest agents from each other. In 1952 the outright hostility
between the two organizations in Bangkok required the direct interven-
tion of the Assistant Director for Special Operations, Lyman Kirk-
patrick. There an important local official was closely tied to OPC, and
OSO was trying to lure him into its employ.
Between 1950 and 1952 Smith took several interim steps to encour-
age coordination between the two components. In August 1952 OSO
and OPC were merged into the Directorate for Plans (DDP).
The lines between the OSO "collectors" and the OPC "operators"
blurred rapidly, particularly in the field, where individuals were called
upon to perform both functions.
The merger did not result in the dominance of one group over
another; it resulted in the maximum development of clandestine
operations over clandestine collection. For people in the field, rewards
came more quickly through visible operational accomplishments than
through the silent, long-term development of agents required for clan-
destine collection. In the words of one former high-ranking DDP
official, "Collection is the hardest thing of all; it's much easier to
plant an article in a local newspaper."
To consolidate the management functions required for the burgeon-
ing organization, Smith created the Directorate for Adminis-
tration (DDA). From the outset, much of the DDA's effort supported
field activities. The Directorate was responsible for personnel, budget,
security, and medical services Agency- wide. However, one quarter of
DDA's total personnel strength was assigned to logistical support for
overseas operations.
109
By 1953 the Agency had achieved the basic structure and scale it
retained for the next twenty years. The Korean War, United States
foreign policy objectives, and the Agency's internal organizational
arrangements had combined to produce an enormous impetus for
growth. The CIA was six times the size it had been in 1947.
Three Directorates had been established. The patterns of activity
within each Directorate and the Directorates' relationships to one
another had developed. The DDP commanded the major share of the
Agency's budget, personnel, and resources; in 1952 clandestine col-
lection and covert action accounted for 74 percent of the Agency's
total budget;^ its pereonnel constituted 60 percent of the CIA's per-
sonnel strength. While production rather than coordination dominated
the DDI, operational activities rather than collection dominated the
DDP. The DDI and the DDP emerged at different times out of dis-
parate policy needs. They were, in effect, separate organizations.
These fundamental distinctions and emphases were reinforced in the
next decade.
B. The Dulles Era: 1953-1961
Allen W. Dulles' impact on the Central Intelligence Agency was
perhaps greater than that of any other single individual. The source
of his influence extended well beyond his personal qualities and in-
clinations. The composition of the United States Government, inter-
national events, and senior policymakers' perception of the role the
Agency could play in United States foreign policy converged to make
Dulles' position and that of the Agency unique in the years 1953 to
1961.
The election of 1952 brought Dwight D, Eisenhower to the presi-
dency. Eisenhower had been elected on a strident anti-Communist plat-
form, advocating an aggressive worldwide stance against the Soviet
Union to replace what he described as the Truman Administration's
passive policy of containment. Eisenhower cited the Communist vic-
tory in China, the Soviet occupation of Eastern Europe, and the
Korean War as evidence of the passivity which had prevailed in the
United States Government following World War II. He was equally
passionate in his call for an elimination of government corruption and
for removal of Communist sympathizers from public office.
This was not simply election rhetoric. The extent to which the
urgency of the Communist threat had become a shared perception
is difficult to appreciate. By the close of the Korean War, a broad
consensus had developed about the nature of Soviet ambitions and
the need for the United States to respond. The earlier fear of United
States policymakers that the Soviet Union would provoke World
War III had subsided. Gradually, the Soviet Union was perceived
as posing a worldwide political threat. In the minds of government
officials, members of the press, and the informed public, the Soviets
would try to achieve their purposes by the penetration and subversion
of governments all over the world. The accepted role of the United
States was to prevent that expansion.
^This did not include DDA budgetary allocations in support of DDP opera-
tions.
no
Washington policymakers regarded the Central Intelligence Agency
as a primary means of defense against Communism. By 1953, the
Agency was an established element of government. Its contributions
in the areas of political action and paramilitary warfare were recog-
nized and respected. It alone could perform many of the kinds of
activities seemingly required to meet the Soviet threat. For senior
officials, covert operations had become a vital element in the pursuit
of United States foreign policy objectives.
At this time, the CIA attracted some of the most able lawyers,
academicians, and young, committed activists in the country. They
brought with them professional associations and friendships which
extended to the senior levels of government. The fact that Agency
employees often shared similar wartime experiences, comparable social
backgrounds, and then complementary positions with other govern-
ment officials, contributed significantly to the legitimacy of and con-
fidence in the Agency as an instrument of government. Moreover,
these informal ties created a tacit understanding among policymakers
about the role and direction of the Agency. At the working level,
these contacts were facilitated by the Agency's location in downtown
Washington. Housed in a sprawling set of buildings in the center of
the city. Agency personnel could easily meet and talk with State
and Defense officials throughout the day. The CIA's physical presence
in the city gave it the advantage of seeming an integral part of, rather
than a separate element of, the government.
A crucial factor in securing the Agency's place within the govern-
ment during this period was the fact that the Secretary of State, John
Foster Dulles, and the DCI were brothers. Whatever the formal rela-
tionships among the State Department, the NSC, and the Agency,
they were supereeded by the personal and working association between
the brothers. Most importantly, both had the absolute confidence of
President Eisenhower. In the day-to-day formulation of policy, these
relationships were crucial to the Executive's support for the Agency,
and more specifically, for Allen Dulles pereonally in the definition of
his own role and that of the Agency.
No one was more convinced that the Aarency could make a special
contribution to the advancement of Ignited States foreign policy goals
than Allen Dulles. Dulles came to the post of DCI in February 1953
with an extensive background in foreign affairs and foreign espionage,
dating back to World War I. By the time of his appontment,
his view of the CIA had been firmly established. Dulles' role
as DCI was rooted in his wartime experience with OSS. His interests
and expertise lay with the operational aspects of intelligence, and his
fascination with the details of operations persisted.
Perhaps the most important effect of Dulles' absorption with oper-
ations was tlie impact it had on the Agency's relationship to the intel-
ligence "community" — the intelligence components in State and De-
fense. As DCI Dulles did not assert his position or that of the Agency
in attempting to coordinate departmental intelligence activities.
This, after all, had been a major purpose for the Agency's creation.
Dulles' failure in this area constituted a lost opportunity. By the mid-
Ill
die of the decade the Agency was in the forefront of technological
innovation and had developed a strong record on military estimates.
Conceivably, Dulles could have used these advances as bureaucratic
leverage in exerting some control over the community. He did not.
Much of the reason was a matter of personal temperament. Jolly,
gregarious, and extroverted in the extreme, Dulles disliked and avoided
confrontations at every level. In doing so, he failed to provide even
minimal direction over the departmental intelligence components at
a time when intelligence capabilities were undergoing dramatic
changes.
1. The Clandestine Service ^^
It is both easy to exaggerate and difficult to appreciate the place
which the Clandestine Service secured in the CIA during the Dulles
administration and, to a large extent, retained thereafter. The number
and extent of the activities undertaken are far less important than the
impact which those activities had on the Agency's institutional iden-
tity — the way people within the DDP, the DDI, and the DDA per-
ceived the Agency's primary mission, and the way policymakers re-
garded its contribution to the process of government.
Covert action was at the core of this perception. The importance of
covert action to the internal and external evaluation of the Agency
was in large part derived from the fact that only the CIA could and
did perform this function. Moreover, in the international environ-
ment of the 1950's Agency operations were regarded as an essential
contribution to the attainment of United States foreign policy objec-
tives. Although by 1954 the Soviet threat was redefined from military
to political terms, the intensity of the conflict did not diminish. Politi-
cal action, sabotage, support to democratic governments, counterin-
telligence — all this the Clandestine Service could provide.
The Agency also benefited from what were regarded as its opera-
tional "successes" in this period. In 1953 and 1954 two of the Agency's
boldest, most spectacular covert operations took place — the overthrow
of Premier Mohammed Mossadegh in Iran and the coup against
President Jacobo Arbenz Guzman of Guatemala. Both were quick
and bloodless operations that removed two allegedly Communist-asso-
ciated leaders from power and replaced them with pro-Western offi-
cials. Out of these early achievements both the Agency and Washington
policymakers acquired a sense of confidence in the CIA's capacity for
operational success.
The DDP's major expansion in overseas stations and in the estab-
lishment of an infrastruture for clandestine activities had taken place
between 1950 and 1952. In the decade of the 1950's the existing struc-
ture made possible the development of continuous foreign intelligence,
counterintelligence, political action, and propaganda activities.
Policymakers' perception of covert action as the CIA's primary
mission was an accurate reflection of the Agency's internal dynamics.
Between 1953 and 1962, the Clandestine Service occupied a preeminent
position in the CIA. First, it had the consistent attention of the DCI.
"'* The term "Clandestine Service" is used synonymously with the Deputy
Directorate for Plans. Although Clandestine Service has never heen an official
desip^nation, it is common usage in the intelligence community and appears as
such in the Select Committee's hearings.
112
Second, the DDP commanded the major portion of resources in the
Agency. Between 1953 and 1961 clandestine collection and covert ac-
tion absorbed an average of 54 percent of the Agency's total annual
budget.*' Although this represented a reduction from the period of the
Korean War, DDP allocations still constituted the majority of the
Agency's expenditures. Likewise, from 1953 to 1961, the DDP gained
nearly 2,000 personnel. On its formal table of organization, the DDP
registered an increase of only 1,000. However, increases of nearly 1,000
in the logistics and communications components of the DDA rep-
resented growth in support to Clandestine Service operations.
Within the Agency the DDP was a Directorate apart. As the number
of covert action projects increased, elaborate requirements for secrecy
developed around operational activities. The DDP's self-imposed secu-
rity requirements left it exempt from many of the Agency's procedures
of accountability. Internally, the DDP became a highlv compart-
mented structure, where information was limited to small gi'oups of
individuals based primarily on a "need to know" principle.
The norms and position of the Clandestine Service had important
repercussions on the execution of the CIA's intelligence mission in the
1953 to 1962 period. Theoretically, the data collected by the DDP field
officers should have served as a major source for DDI analysis. How-
ever, strict compartmentation prevented open contact between DDP
personnel and DDI analysts. Despite efforts in the 1960's to break down
the barriers between the Directorates, the lack of real interchange and
interdependence persisted.
In sum, the DDP's preeminent position during the period was a
function of several factors, including policymakers' perception of the
Agency primarily in operational terms, the proportion of resources
which the Clandestine Service absorbed, and the time and attention
which the DCI devoted to operations. These patterns solidified under
Dulles and in large part account for the DDP's continued primacy
within the Agency.
2. Intelligence Production
In the decade of the 1950's the CIA was the major contributor to
technological advances in intelligence collection. At the same time
DDI analysts were responsible for methodological innovations in
strategic assessments. Despite these achievements, CIA's intelligence
was not serving the purpose for which the organization had been
created — informing and influencing policymaking.
By 1960 the Agencv had achieved significant advances in its strate-
gic intelligence capability. The development of overhead reconnais-
sance, beginning with the U-2 aircraft and growing in scale and
sophistication with follow-on systems, generated information in
greater quantity and accuracy than had ever before been contem-
plated. Basic data on the Soviet Union beyond the reach of human
collection, such as railroad routes, construction sites, and industrial
concentrations became readily available.
Analysts in the Office of National Estimates began reevaluating
assumptions regarding Soviet strategic capabilities. This reevaluation
resulted in reduced estimates of Soviet missile deployments at a time
when the armed services and members of Congress were publicly
* This did not include DDA budgetary allocations in support of DDP operations.
113
proclaiming a "missile gap" between the United States and the Soviet
Union.
A final element contributed to the Agency's estimative capaJbility :
material supplied by Oleg Penkovsky. Well-placed in Soviet military
circles, Penkovsky turned over a number of classified documents relat-
ing t/O Soviet strategic planning and capabilities. These three factors —
technological breakthrough, analytic innovation, and the single most
valuable Soviet agent in history — converged to make the Agency the
most reliable source of intelligence on Soviet strategic capabilities in
the government.
Yet the entrenched position of the military services and the Agency's
own limited charter in the area of military analysis made it difficult
for the Agency to challenge openly the intelligence estimates of the
services. The situation was exacerbated by Dulles' own disposition. As
DCI he did not associate himself in the first instance with intelligence
production and did not assume an advocacy role in extending the
Agency's claims to military intelligence.
Strategic intelligence, although a significant portion of the DDI's
production effort, constituted a particular problem. A broader prob-
lem involved the overall impact of intelligence on policy. The CIA
had been conceived to provide high-quality national intelligence esti-
mates to policymakers. However, the communication and exchange
necessary for analysts to calibrate, anticipate and respond to policy-
makers' needs never really developed.
The size of the Directorate for Intelligence constituted a major ob-
stacle to the attainment of consistent interchange between analysts and
their clients. In 1955 there were 466 analysts in ORE, 217 in OCI, and
207 in OSI. The process of drafting, reviewing and editing intel-
ligence publications involved large numbers of individuals each of
whom felt responsible for and entitled to make a contribution to the
final product. Yet without access to policymakers, analysts did not
have an ongoing accurate notion of how the form and substance of the
intelligence product might best serve the needs of senior officials. The
product itself — as defined and arbitrated among DDI analysts — be-
came the end rather than the satisfaction of specific policy needs.
The establishment of the Office of National Estimates was an at-
tempt to insure direct interaction between senior level officials and the
Agency. However, by the mid-1950's even its National Intelligence
Estimates showed signs of being submerged in the second-level paper
traffic that was engulfing the intelligence community. Between 1955
and 1956 a senior staff member in ONE surveyed the NIEs' reader-
ship by contacting executive assistants and special assistants of the
President and cabinet officers, asking if the NIEs were actually placed
on their superiors' desks. The survey revealed that senior policymak-
ers were not reading the NIEs. Instead, second and third-level offi-
cials used the estimates for background information in briefing senior
officials. The failure of the NIEs to serve their fundamental purpose
for senior officials was indicative of the overall failure of intelligence
to influence policy,
S. The Comirmnity CoordirMtionProhlem
Dulles' neglect of the community management or coordination as-
pect of his role as DCI was apparent to all who knew and worked with
114
him. His reluctance to assume an aggressive role in dealing with the
military on the issue of military estimates was closely tied to his lack
of initiative in community-related matters. Unlike Bedell Smith before
him and John McCone after him, Dulles was reluctant to take on the
military.
The development of the U-2 and follow-on systems had an enormous
impact on intelligence-collection capabilities and on the Agency's rela-
tive standing in the intelligence community. Specifically, it marked
the Agency's emergence as the intelligence community's leader in the
area of overhead reconnaissance.
At a time when the CIA was reaping the benefits of overhead recon-
naissance and when the DDI's estimates on Soviet missiles were taking
issue with the services' judgments, Dulles could have been far more
aggressive in asserting the Agency's position in the intelligence com-
munity and in advancing his own role as coordinator.
As the community became larger and as technical systems came to
require very large budgetary allocations, the institutional obstacles
to interdepartmental coordination increased. By not acting on the op-
portunity he had, Dulles allowed departmental procedures, specifical-
ly those in the military's technical collection programs, to become more
entrenched and routinized, making later attempts at coordination more
difficult.
The coordination problem did not go unnoticed during Dulles'
term, and there were several attempts within Congress and the
Executive to direct Dulles' attention to the DCI's community respon-
sibility. The efforts were unsuccessful both because of Dulles' personal
disposition and because of the inherent weakness of the mechanisms
established to strengthen the DCI's position in the community.
In January 1956, President Eisenhower created the President's
Board of Consultants on Foreign Intelligence Activities (PBCFIA).
In May, 1961 it was renamed the President's Foreign Intelligence
Advisory Board (PFIAB). Composed of retired senior government
officials and members of the professions, the Board was to provide
the President with advice on intelligence matters. As a deliberative
body it had no authority over either the DCI or the community. Thus,
the Board had little impact on the administration of the CIA or on
the other intelligence services. The Board did identify the imbalance
in Dulles' role as DCI, and in December 1956 and again in December
1958 it recommended the appointment of a chief of staff for the DCI to
handle the Agency's internal administration. In 1960, the PBCFIA
suggested the possibility of separating the DCI from the Agency
to serve as the President's intelligence advisor and to coordinate
community activities. Nothing resulted from these recommendations.
In 1957, the Board recommended the merger of the United States
Communications Intelligence Board with the Intelligence Advisory
Committee.^ This proposal was intended to strengthen the DCI's
"^ The USCIB was established in 1946 to advise and make recommendations
on communications intelligence to the Secretary of Defense. USOIB's member-
ship included the Secretaries of State, Defense, the Director of the FBI, and
representatives of the Army, Navy, Air Force, and CIA. USCIB votes were
weighted. Representatives of State, Defense, the FBI. and CIA each had two
votes : other members had one. Although the DCI sat on the Committee, he had
no vote.
115
authority, and it resulted in the creation in the following year of the
United States Intelligence Board (USIB) with the DCI as chairman.
Like the lAC, howev^er, USIB was little more than a super-structure.
It had no budgetary authority; nor did it provide the DCI with any
direct control over the components of the intelligence community.
The separate elements of the community continued to function under
the impetus of their own internal drives and mission definitions.
Essentially, the problem that existed at the time of the creation of
the CIG remained.
From 1953 to 1961 a single Presidential administration and con-
sistent American policy objectives which had wide public and govern-
mental support contributed to a period of stability in the Agency's
history. The internal patterns that had begun to emerge at the close
of the Korean War solidified. The problems remained much the same.
The inherent institutional obstacles to management of the com-
munity's intelligence activities combined with Dulles' failure to assert
the Agency's and the DCI's coordination roles allowed the perpetua-
tion of a fragTiiented goveniment-wide intelligence effort. The CIA's
own intelligence production, though distinguished by advances in
technical collection and in analysis, had not achieved the consistent
policy support role that the Agency's creation had intended to provide.
Dulles' marked orientation toward clandestine activities, his broth-
er's position as Secretary of State, and cold war tensions combined to
maximize the Agency's operational capability. In tenns of policymak-
ers' reliance on the CIA, allocation of resources, and the attention of
the Agency's leadership, clandestine activities had overtaken intelli-
gence analysis as the CIA's primary mission.
C. Change and Rotjtinizatiox : 1961-1970
In 1961 cold war attitudes continued to dominate the foreign policy
assumptions of United States policymakers. In the early part of the
decade American confidence and conviction were manifested in an ex-
pansive foreign policy that included the abortive Bay of Pigs landing,
a dramatic confrontation with the Soviet Union over the installation
of Soviet missiles in Cuba, increased economic assistance to underde-
veloped countries in Latin America and Africa, and rapidly escalating
military activities in Southeast Asia.
Although the American presence in Vietnam symbolized LT.S. ad-
herence to the strictures of the Cold War, perceptions of the Soviet
Union began to change by the middle of the decade. The concept of an
international monolith broke down as differences between the U.S.S.R.
and China emerged. Moreover, the strategic arms competition assumed
increased importance in relations between the two coimtries.
The CIA was drawn into each major development in United States
policy. As in the previous decade, operations dominated policymakers'
perceptions of the Agency's role. The United States' intei-ventionist
policy fostered the CIA's utilization of its existing capabilities as well
as the development of paramilitary capabilities in support of Ameri-
can count erinsurgency and military programs. At the same time the
Agency's organizational arrangements continued to create an inde-
pendent dynamic for operations.
116
The most significant development for the Agency in this period
was the impact of technological capabilities on intelligence produc-
tion. These advances resulted in internal changes and forced increased
attention to coordination of the intelligence community. The costs,
quality of intelligence and competition for deployment generated by
technical collection systems necessitated a working relationship among
the departmental intelligence components to replace the undirected
evolution that had marked the previous decade. Despite the Agency's
internal adjustments and attempts to effect better management in
the community, the CIA's fundamental srtucture, personnel, and in-
centives remained rooted in the early 1950's.
1. The Directors of Central Intelligence^ 1961-1970
Jolin A. McCone came to the Central Intelligence Agency as an
outsider in November 1961. His background had been in private in-
dustry, where he had distinguished himself as a corporate manager. He
also held several government posts, including Under Secretary of the
Air Force and Chairman of the Atomic Energy Commission. McCone
brought a quick, sharp intellect to his job as DCI, and his contribution
lay in attempting to assert his role and that of the Agency in coor-
dinating intelligence activities among the Departments. Much of his
strength in the intelligence community derived from the fact that
he was known to have ready access to President Kennedy. McCone
resigned from the Agency in April 1965, precisely because Lyndon
Johnson had not accorded him similar stature.
Admiral William F. Raborn served as DCI for only a year. He
left in June 1966, and his impact on the Agency was minimal.
Richard M. Helms came to the position of DCI after twenty years
in the Clandestine Service. Just as Allen Dulles had identified him-
self with the intelligence profession. Helms identified himself with
the Agency as an institution. Having served in a succession of senior
positions, Helms was a first-generation product of the Agency, and
he commanded the personal and professional respect of his contem-
poraries. Helms' orientation remained on the operations side, and
he did not actively pursue the DCI's role as a coordinator of intelli-
gence activities in the community.
2. The Effort at Management Reform
The Bay of Pigs fiasco had a major impact on President Kennedy's
thinking about the intelligence community. He felt he had been
poorly served by the experts and sought to establish procedures that
would better insure his own acquisition of intelligence. In short, Ken-
nedy defined a need for a senior intelligence officer and in so doing as-
sured John McCone an influential position in policymaking. Ken-
nedy's definition of the DCI's position emphasized two roles : coordi-
nator for the community, and principal intelligence adviser to the
President. At the same time, Kennedy directed McCone to delegate
the internal management of the Agency to a deputy director. Although
McCone agreed with Kennedy's concept of the DCI's job and vigor-
ously pursued the objectives, the results were uneven.
To carry out the management function in the Agency, McCone
created a senior staff. The principal officer was the Executive Director-
Comptroller, who was to assume responsibility for day-to-day ad-
117
ministraiton.^ The arrangement did not free the DCI from continuing
involvement in Agency-related matters, particularly those concerning
the Clandestine Service. The nature of clandestine operations, the fact
that they involved and continue to involve people in sensitive, com-
plicated situations, demanded that the Agency's senior officer assume
responsibility for decisions. A former member of McCone's staff esti-
mates that despite the DCI's community orientation, he spent 90 per-
cent of his total time on issues related to clandestine operations.
The establishment of the office of National Intelligence Programs
Evaluation (NIPE) in 1963 was the first major effort by a DCI to
insure consistent contact and coordination with the community. Yet,
from the outset McCone accepted the limitations on his authority;
although Secretary of Defense Robert McNamara agreed to provide
him with access to the Defense Department budget (which still consti-
tutes 80 percent of the intelligence conmiunity's overall budget) , Mc-
Cone could not direct or control the intelligence components of the
other departments. The NIPE staff directed most of its attention to
sorting out intelligence requirements through USIB and attempting to
develop a national inventory for the community, including budget, per-
sonnel and materials. Remarkably, this had never before been done.
The most pressing problem for the community was the adjustment to
the impact of technical collection capabilities. The large budgetary
resources involved, and the value of the data generated by overhead
reconnaissance systems precipitated a major bureaucratic battle over
their administration and control. From 1963 to 1965, much of McCone's
and the senior NIPE staff officer's community efforts were directed
toward working out an agreement with the Air Force on development,
production, and deployment of overhead reconnaissance systems.
In 1961 the Agency and the Air Force had established a working
relationship for overhead reconnaissance systems through a central ad-
ministrative office, whose director reported to the Secretary of Defense
but accepted intelligence requirements through USIB. By informal
agreement, the Air Force provided launchers, bases, and recovery ca-
pability for reconnaissance systems, while the Agency was responsible
for research, development, contracting, and security. Essentially, the
agreement allowed the Agency to decide which systems would be de-
ployed, and the Air Force challenged the CIA's jurisdiction.
A primary mission was at stake in these negotiations, and the
struggle was fierce on both sides. Control by one agency or another did
not involve only budgets and manpower. Since the Air Force and CIA
missions were very different, a decision would affect the nature of the
reconnaissance program itself — tactical or national intelligence pri-
orities, the frequency and location of overflights, and the use of data.
The agreement that emerged in 1965 attempted to balance the inter-
ests of both the Air Force and the CIA. A three-person Executive
Committee (EXCOM) for the administration of overhead reconnais-
sance was eef ablished. Its members included the DCI, an Assistant Sec-
retary of Defense, and the President's Scientific Advisor. The EX
COM reported to the Secretary of Defense, who was a&signed primai-y
administrative authority for overhead reconnaissance systems. The
' Other chaneres included placing the General Counsel's oflBce, the Audit Staff,
and the OflSce of Budget, Program Analysis and Manpower directly under the DCI.
118
arrano;ement recooriized the DCI's authority avs head of the commu-
nity to establish collection requirements in consultation with USIB;
it also gave him responsibility for processing and utilizing data gen-
erated by overhead reconnaissance. In the event that he did not agree
with a decision made by the Secretary of Defense, the DCI was given
the right to appeal to the President.
The agreement represented a compromise between Air Force and
CIA claims 'and provided substantive recognition of the DCI's na-
tional intelligence responsibilitv. As a structure for decisionmaking,
it has worked well. However, it has not rectified the inherent competi-
tion over technical collection systems that has come to motivate the
intelligence process. The development of these systems has created
intense rivalry, principally between the Air Force and the Agency,
over program deployments. With so much money and manpower at
stake with each new system, each organization is eager to gain the
benefits of successful contracting. As 'a result, the accepted solution
to problems with the intelligence product has come to be more collec-
tion rather than better analysis.
After 1965 efforts to impose some direction on the community did
not receive consistent attention from DCIs Raborn and Helms. The
DCIs' priorities, coupled with the inherent bureaucratic obstacles and
the burden of Vietnam, relegated the problem of coordination to a
low priority.
3. The Intelligence Function
Internally, the Agency was also 'adjusting to the impact of techni-
cal and scientific advances. In 1963, the Directorate for Science
and Technology (DDS&T) was created. Previously, scientific and tech-
nical intelligence production had been scattered among the other three
directorates. The process of organizing an independent directorate
meant wresting manpower and resources from the existing components.
Predictably, the resistance was considerable, and a year and a half
passed between the first attempts at creating the Directorate and its
actual establishment.
The new component included the Office of Scientific Intelligence
and the office of FLINT (electronic intercepts) from DDI, the Data
Processing Staff from DDA, the Development Projects Division (re-
sponsible for overhead reconnaissance) from the DDP, and a newly
created Office of Research and Development. Later in 1963, the For-
eign Missile and Space Analysis Center was added. The Directorate's
specific functions included, and continue to include, research, devel-
opment, operation, data reduction, analysis, and contributions to Na-
tional Intelligence Estimates.
The Directorate was organized on the premise that close coopera-
tion should exist between research and application on the one hand,
and technical collection and analysis on the other. This close coordina-
tion along with the staffing and career patterns in the Directorate
have contributed to the continuing vitality and quality of the
DDS&T's work.
The DDP began and remained a closed, self-contained component ;
the DDI evolved into a closed, self-contained component. However,
the DDS&T was created with the assumption that it would continue
to rely on expertise and advice from outside the Agency. A number of
119
arrangements insured constant interchanges between the Directorate
and the scientific and industrial communities. First, since all research
and development for technical systems was done through contracting,
the DDS&T could draw on and benefit from the most advanced tech-
nical systems nationwide. Second, to attract high-quality professionals
from the industiial and scientific communities, the Directorate estab-
lished a competitive salary scale. The result has been personnel mo-
bility between the DDS&T and private industry. It has not been
unusual for individuals to leave private industi-y, assume positions
with DDS&T for several years, then return to private industry. This
pattern has provided the Directorate with a constant infusion and
renewal of talent. Finally, the Directorate established the practice of
regularly employing advisory groups as well as fostering DDS&T
staff participation in conferences and seminars sponsored by profes-
sional associations.
The Agency's intelligence capabilities expanded in another direc-
tion. Although in the 1953-1961 period, the Agency had made some
contributions to military intelligence, it had not openly challenged the
Defense Department's prerogative in this area. In the early 1960's that
opportunity came. By 1962, Secretary of Defense Robert McNamara's
dissatisfaction with the quality of military estimates led him to begin
tapping the Agency's analytic capabilities. Specifically, McNamara
requested special estimates from the Agency and included Agency
personnel in community-wide exercises in long-term Soviet force pro-
jections. McNamara's initiatives provided the CIA with leverage
against the military services' dominance in strategic intelligence. The
Secretary's actions, together with McCone's insistence on the DCI's
need for independent judgments on military matters, resulted in the
Agency's expanded analytic effort in strategic intelligence.
In 1962, the Office of Current Intelligence established a military
intelligence division, and five years later the militaiy intelligence units
of OCI and ORR were combined into a separate office, the Office of
Strategic Research (OSR).
During this period economic intelligence grew in importance. In
the decade of the 1950's economic research had concentrated on anal-
ysis related to the Soviet Union and its "satellites." With the emer-
gence of independent African nations in the early 1960's, and the
view that the U.S.S.R. would engage in political and economic pene^
tration of the fledgling governments, demands for information on the
economies of these countries developed. Likewise, the growing eco-
nomic strength of Japan and the countries of Western Europe pro-
duced a related decline in the U.S. competitive posture and reflected
the growing inadequacy of the dollar-dominated international mone-
tary system. Economic analysts found themselves called upon for
detailed research on these countries as trading partners and rivals
of the United States. In 1967 an independent Office of Economic Re-
search (OER) succeeded ORR.
.^. The Paramilitary Surge
The Clandestine Service continued to dominate the Agency's activ-
ities during this period. In budget, manpower, and degree of DCI
attention accorded the DDP, clnndestine operations remained the
CIA's most consuming mission. The policies and operational prefer-
120
ences of the Executive branch dictated the Agency's emphasis in
clandestine activities.
Evidence of Communist guerrilla activities in Southeast Asia and
Africa convinced Kennedy and his closest advisers of the need for
the United States to develop an unconventional warfare capability.
"Counterinsurgency," as the U. S. effort was designated, aimed at
preventing communist-supported military victories without precipi-
tating a major Soviet-American military confrontation.
As part of this effort, the Agency, under the direction of the Ken-
nedy Administration, initiated paramilitary operations in Cuba, Laos,
and Vietnam. Following the Bay of Pigs, attempts to undermine the
government of Cuban Premier Fidel Castro continued with Operation
MONGOOSE. Conducted between October 1961 and October 1962,
MONGOOSE consisted of paramilitary, sabotage, and political
propaganda activities. The Agency's large-scale involvement in South-
east Asia began in 1962 with programs in Laos and South Vietnam.
In Laos, the Agency implemented air supply and paramilitary train-
ing programs, which gradually developed into full-scale management
of a ground war. Between 1962 and 1965, the Agency worked with the
South Vietnamese government to organize police forces and para-
military units.
In the remainder of the decade, Vietnam dominated the CIA just
as it did other government agencies. In both the DDP and the DDI,
the CIA's resources were directed toward supporting and evaluating
the U.S. effort in Vietnam. For the Agency and the DCI, it was a
contradictory position, one which left the institution and the man
vulnerable to the pressures of conflicting purposes.
On the one hand, the DDP was supportins; a major paramilitary
operation, which, at its peak in 1970, involved 700 people, 600 of whom
were stationed in Vietnam, the rest at headquarters.^ Stated in other
terms, 12 percent of the DDP's manpower was devoted to Vietnam.
Clearly, the Agency's stake in the operational side of the war was
significant.
At the same time, the analysts were also drawn into the war. After
the initiation of the bombing campaign against North Vietnam in
1965, the Agency began receiving requests for assessments of the cam-
paign's impact. By 1966, both the Office of "Research and Reports and
the Office of Current Intelligence had established special staffs to deal
with Vietnam. In addition, the Special Assistant for Vietnam Affairs
(SAVA) staff was created under the direction of the DCI. The total
number of DDI analysts involved was 69.
While the DDP effort was increasinq- in proportion to the American
military^ buildup, DDI estimates painted a pessimistic view of the
likelihood of U.S. success with successive escalations in the ground
and air wars.^° At no time was the institutional dichotomy between the
opprational and analvtical components more stark.
The Agency's involvement in Southeast Asia had long-term effects
on the institution. In particular, it determined the second-generation
*Bv 19f>5, the demands for personnpl were so great that each DDP component
was levied on a quota basis to contribute personnel.
^^ There were exceptions to this. The SAVA group produced some positive esti-
mates of the bombing.
121
leadership group within the Agency. By 1970, the first generation of
Agency careerists was beginning to reach retirement age and vacancies
were opening in senior-level positions. In poth the DDP and the DDI,
many of those positions were filled by individuals who had distin-
guished themselves in Southeast Asia-related activities. In the Clande-
stine Service, men who spent considerable time in the Far East have
gone on to become a former DCI, the present Deputy Director for
Operations,^ ^ the present Chief of the Western Hemisphere Division,
the Chief of the Counterintelligence Staif, and the present Deputy
Chief of the Soviet/East European Division. On the DDI side, the
present Assistant Deputy Director for Intelligence and the Chief Na-
tional Intelligence Officer ^^ were all involved in Vietnam assessments
at the height of the war. Clearly, the rewards were considerable for
participation in a major operation.
The decade of the 1960's brought increased attention to the problem
of coordinating intelligence activities in the community but illustrated
the complex difficulties involved in effective management. Depart-
mental claims, the orientation of the DCI, the role accorded him by the
President, and the demands of clandestine operations all affected the
execution of the coordination role. Although policymakers were incon-
sisitent in their utilization of the Agency's intelligence analysis capa-
bility, all continued to rely heavily on the CIA's operational capability
in support of their policies. That fact established tlie Agency's own
priorities and reinforced the existing internal incentives. Despite the
Agency's growing sophistication and investment in technological
systems, clandestine activities continued to constitute the major share
of the Agency's budget and pei-sonnel. Between 1962 and 1970 the DDP
budget averaged 52 percent of the Agency's total amiual budget.^^
Likewise, in the same period, 55 percent of full-time Agency personnel
were assigned to DDP activities.^* Essentially, the pattern of acti\'ity
that had 'begun to emerge in the early 1950's and that became finiily
established under Dulles continued.
D. The Recent Past: 1971-1975
The years 1971 to 1975 were a period of transition and abrupt change
for the CIA. The scale of covert operations declined, and in the Execu-
tive branch and at the senior level of the Agency growing concern
developed over the quality of the intelligence product and the manage-
ment of the intelligence community's resources. However, external
pressures overshadowed initial attempts at reform.
" In 1973 DCI James Schlesinger changed the name of the Clandestine Service
from the Directorate for Plans to the Directorate for Operations (DDO).
" See page 123 of this section for discussion of National Intelligence Officers.
^' This does not include the proportion of the DDA budget that supported DDP
activities.
" This figure includes those individuals in the communications and logistics
components of the DDA, whose activities vrere in direct support of the DDP
mission.
9-983 O - 76 - 9
122
By the start of the decade broad changes had evolved in American
foreign policy. Dissension over Vietnam, the Congress' more assertive
role in foreign policy, and shifts in the international power structure
had eroded the assumptions on which U.S. foreign policy had been
based. The consensus that had existed among the press, the informed
public, the Congress, and the Executive branch and tliat had both sup-
ported and protected the CIA broke down. As conflicting policy pref-
erences emerged and as misconduct in the Executive branch was
revealed, the CIA, once exempt from public examination, became sub-
ject to close scrutiny.
/. The Directors of Central InteJligence^ 1973-1975
James E. Schlesii\<rer's tenure as DCI from February to July 1973
was brief but significant. An economist by training and long an ob-
server of the intelligence community through his extensive experience
in national security affairs, Schlesinger came to the CIA with definite
ideas on restructuring the management of the community and on im-
proving the quality of intelligence. During his six month term he em-
barked on changes that promised to alter the DCI's and the Agency's
existing priorities.
William E. Colby succeeded Schlesinger. An attorney, OSS veteran,
and career DDP officer, Colby's background made him seem of the
traditional operations school in the A.<rency. His overseas assi.""nments
included positions in Rome, Stockholm, and Saigon, where he was
Chief of Station. Yet Colby brought an Agency-wide and community
orientation to his term as DCI that was uncommon for DDP careerists.
Soon after his appointment the Agency became the focus of public and
Congressional inquiries, and most of Colby's time was absorbed in re-
sponding to these developments.
2. E-fforts at Change
Foreign affairs were a continuing priority in the Nixon Administra-
tion. Until 1971, Vietnam absorbed most of the time and attention of
the President and his Assistant for National Securitv Affairs. Henry
Kissinger. After 1971, both tunned to a redefinition of U.S. foreign pol-
icy. Sharing a global view of U.S. ]:)olicv, the two men sought to re-
structure relationships with the Soviet Union and with the People's
Republic of China. It was Kissinger rather than Richard Helms who
served as President Nixon's intelligence officer. Kissinger provided
Nixon with daily briefings and relied on the staff of the National Se-
curity Council for intelligence analysis.
Both men's preference for working with (and often independently
of) small, tightly managed staffs is well known. However, both were
genuinely interested in obtainins: more and better quality intelligence
from the CIA. In December 1970, Nixon requested a study of the in-
telligence community. Executed by James Schlesinger, then Assistant
Director of the Bureau of the Budget, the study resulted in the Presi-
dential directive of November 5, 1971, assigning the DCI responsibil-
ity for review of the intelligence community budget. The intention was
that the DCI would advise the President on community-wide budget-
ary allocations by serving in a last review capacity. The effort faltered
for two reasons. First, Nixon chose not to request Congressional enact-
ment of revised legislation extending the authority of the DCI. The
123
decision inherently limited the DCI's ability to exert control over the
intelligence components. Thus, the DCI was once again left to arbitrate
as one among equals. Second, the implementation of the directive was
less energetic and decisive than it might have been. Helms did not at-
tempt to make recommendations on budgetary allocations and instead,
presented the President with the agreed views of the representatives
of the departmental intelligence components. Furthemiore, within the
Agency, the mechanism for assisting the DCI in community matters
was weak. Early in 1972 Helms established the Intelligence Commun-
ity (IC) Staff as a replacement for the NIPE staff to assist in com-
munity matters. Between the time of the decision to create such a staff
and its actual organization, the number of personnel assigned was
halved.
It is likely that had James Schlesinger remained as DCI, he would
have assumed a vigorous role in the community, and would have at-
tempted to exercise the DCI's implied authority. Schlesinger altered
the composition of the IC staff by reducing the number of CIA per-
sonnel and increasing the number of non-Agency personnel to facili-
tate the staff's contacts with the community. Schlesinger's primary
concern was upgrading the quality of the Agency's intelligence analy-
sis, and he had begun to consider changes in the Office of National
Estimates. In addition, he made considerable reductions in personnel —
with most of the cuts occurring in the DDO.^^'^
ITnder Colby, attempts at innovation continued. Colby abolished
the Office of National Estimates and replaced it with a group of eleven
senioi" specialists in functional and geographical areas known as Na-
tional Intelligence Officers (NIOs). NIOs are responsible for intelli-
gence collection and production in their designated fields, and the
senior NIO is directly responsible to the DCI. The purpose of the
NIO system was to establish better communication and interchange
between policymakers and analysts than had been the case with the
Office of National Estimates.
These changes were accompanied by shifts in emphasis in the DDO
and the DDL In the Clandestine Service the scale of covert operations
was reduced, and by 1972 the Agency's paramilitary program in South-
east Asia was dissoh^ed. Yet, the overall reduction did not affect the
fundamental assumptions, organization, and incentives governing the
DDO. Indeed, in 1975 clandestine activities still constituted 37 per-
cent of the Agency's total budget. ^^ The rationale remains the same,
and the operational capability is intact— as CIA activities in Chile
illustrated. While Soviet strategic capabilities remain the first priority
for clandestine collection requirements, in response to recent inter-
national developments, the DDO has increased its collection activities
in the areas of terrorism and international narcotics traffic — with con-
siderable success.
In the DDI, economic intelligence has continued to assume increased
importance and taken on new dimensions. In sharp contrast to the
British intelligence service, which has for generations emphasized
international economics, the DDI onlv recently has begim developing
a capability in such areas as international finance, the gold market,
"* See footnote, p. 121.
" This does not include DDA budgetary allocations in support of DDO activi-
ties.
124
and international economic movements. The real impetus for this
change came in August 1971 with the U.S. balance of payments crisis.
Since that time, and with subsequent international energy problems,
the demands for international economic intelligence have escalated
dramatically.
The Agency's technological capabilities have made a sustained con-
tribution to policymaking. By providing the first effective means of
verification, CIA's reconnaissance systems facilitated the United
States' participation in arms control agreements with the Soviet
Union, beginning with the 1972 Interim Agreement limiting strategic
arms.
In December 1974 these developments and the impetus for change
begun under Schlesinger were overtaken by public revelajtions of
alleged CIA domestic activities. What had been a consensual accept-
ance of the CIA's right to secrecy in the interests of national security
was rejected. The Agency's vulnerability to these public revelations
was indicative of the degree to which American foreign policy and
the institutional framework that supported that policy were under-
going redefinition.
E. CONCLUSIOX
A brief history cannot catalogue the many shifts in the numerous
CIA subdivisions over a period of nearly thirty years. Instead, this
summary has attempted to capture the changes in the CIA's main
functional areas. Sharing characteristics common to most large, com-
plex organizations, the CIA has responded to, rather than anticipated,
the forces of change ; it has accumulated functions rather than redefin-
ing them ; its internal patterns were established early and have solidi-
fied ; success has come to those who have made visible contributions in
high-priority areas. These general characteristics have affected the
specifics of the Agency's development :
— The notion that the CIA could serve as a coordinating body and
that the DCI could orchestrate the process did not take into account
inherent institutional obstacles. Vested departmental interests and
the Departments' control over budget and management choices
frustrated the Agency's and the DCI's ability to execute the coordina-
tion function. These limitations exist today, when the resources and
complexities of administration have escalated dramatically.
— The DDO and the DDI evolved out of separate, independent or-
ganizations, serving different policy needs. Strict compartmentation
in the DDO reinforced the separation. The two components were not
mutually supportive elements in the collection and analysis functions.
— The activities of the Clandestine Service have reflected not what
the Agency can do well but what the demands of American foreign
policy have required at particular times. The nature of covert opera-
tions, the priority accorded them bv senior policymakers, and the
orientation and background of some DCIs have made the clandestine
mission the preeminent activity within the organization.
— The qualities demanded of individuals in the Clandestine Serv-
ice — essentially management of people, provide the basis for bureau-
cratic skills in the organization. These skills account for the fact that
those DCIs who have been Agency careerists have all come from the
DDO.
125
— Growth in the range of American foreicrn policy interests and
the DDI's response to additional requirements have resulted in an
increased scale of collection and analysis. Rather than rectifying the
problem of duplication the Agency has contributed to it by becoming
yet another source of intelligence production. The DDI's size and the
administrative process involved in the production of finished intelli-
gence precluded close association between policymakers and analysts,
between the intelligence product and policy informed by intelligence
analysis.
The relationship between intelligence analysis and policymaking is
a reciprocal one. The creation of the NIO system was in part a recog-
nition of the need for close interaction between analysts and their
clients. If intelligence is to influence policy and if policy needs are to
direct intelligence priorities, senior policymakers must actively utilize
the intelligence capabilities at their disposal. For policymakers not
to do so only wastes resources and encourages lack of direction in
intelligence production. Likewise, tlie Director of Central Intelligence
or his successor for management of the community must assign priority
attention to the roles of principal intelligence advisor to the President
and head of the intelligence community. History has demonstrated that
the job of the DCI as community manager and as senior official of the
Agency are competing, not complementary roles. In the future separa-
tion of the functions may prove a plausible alternative.
'Clandestine activities will remain an element of U.S. foreign policy,
and policymakers will directly affect the level of operations. The prom-
inence of the Clandestine Service within the Agency may moderate as
money for and high-level Executive interest in covert actions diminish.
However, DDO incentives which emphasize operations over collec-
tion and which create an internal demand for projects will continue
to foster covert action unless an internal conversion process forces a
change.
Over the past thirty years the United States has developed an in-
stitution and a corps of individuals who constitute the U.S. intelli-
gence profession. The question remains as to how both the institution
and the individuals will best be utilized.
VII. THE CENTRAL INTELLIGENCE AGENCY:
STATUTORY AUTHORITY
The National Security Act of 1947 provides the Central Intelligence
Agency with statutory authority for its activities. Section 102(d) of
that Act lists the following "powers and duties" for the Agency:
(1) to advise the National Security Council in matters concerning
such intelligence activities of the Government departments and agen-
cies as relate to national security ;
(2) to make recommendations to the National Security Council for
the coordination of such intelligence activities of the departments 'and
agencies of the Government as relate to the national security ;
(3) to correlate and evaluate intelligence relating to the national
security, and provide for the appropriate dissemination of such intel-
ligence within the Government using where appropriate existing agen-
cies and facilities: Provided.. That the Agency shall have no police,
subpena, law-enforcement powers, or internal-security functions : Pro-
vided further^ That the departments and other agencies of the Gov-
ernment shall continue to collect, evaluate, correlate, and disseminate
departmental intelligence : And 'pTovid£,d, further. That the Director
of Central Intelligence shall be responsible for protecting intelligence
sources and methods from unauthorized disclosure ;
(4) to perform, for the benefit of the existing intelligence agencies,
such additional services of common concern as the National Security
Council determines can be more efficiently accomplished centrally ;
(5) to perform such other functions and duties related to intelli-
gence affecting the national security as the National Security Council
may from time to time direct.^
The CIA has engaged in the following three types of activities,
none of which is specifically mentioned in the 1947 legislation: (1)
direct clandestine collection of intelligence; (2) covert action; and
(3) direct collection of information regarding the activities of Ameri-
can nationals within the ITnited States. As the fact of CIA involve-
ment in these activities has become widely known, questions have been
raised regarding the statutory authority by which the Agency under-
took these responsibilities.
It is important to note at this point that the confusion which has
resulted from the lack of specific legislative guidelines with respect
to these three kinds of activities miist rest with Congress. The lan-
guan^e of the National Security Act, its legislative history, and the
post-enactment interpretation of the legislation by Congress itself
indicates that the Act can leg'itimatelv be constnied as authorizing
clandestine collection by the CIA. The Select Committee's record
shows that the legislating committees of the House and Senate in-
tended for the Act to authorize the Agency to engage in espionage.
This activity could and should have been specifically authorized in
the 1949 legislation.
'50 U.S.C. 403(d).
(127)
128
Authority for covert action cannot be found in the National Secu-
rity Act. The Committee finds that the executive branch should have
approached Congress for authority for the CIA to engage in such
activities, particularly where they involved the use of force. At the
same time, Congress should have acted in response to well-publicized
instances of covert action to clarify CIA authority in this area.
Finally, Congress did take decisive action in the National Security
Act of 1947 to prevent the CIA's assuming any police, law-enforce-
ment, or internal security function in the United States. Some of the
CIA's activities have been in clear violation of that principle. Congress
now has a responsibility, however, to clarify the Agency's authority
where CIA's domestic activities are directly linked to its foreign
intelligence responsibilities.
A. Clandestine Collection of Intelligence
While the National Security Act of 1947 authorizes correlation,
evaluation, and dissemination of national security intelligence by the
CIA, nowhere does it specify that the Agency is authorized to engage
in the direct collection of intelligence. As its authority to engage in
direct collection, the CIA has relied upon Section 102(d) (4) and (5)
of the Act,^^ which authorizes the Agency :
(4) to perform, for the benefit of the existing agencies, such
additional services of common concern as the National Secu-
rity Council determines can be more efficiently accomplished
centrally ;
(5) to perform such other functions and duties related to
irttelligence affecting the national security as the National
Security Council may from time to time direct. 50 U.S.C.
403 (d) (4) and (5).
The legislative history of the 1947 Act does not indicate clearly that
the full Congress specifically intended by these provisions to authorize
direct clandestine collection by the CIA. The legislating committees
discussed the issue in some detail in executive session, but it was
mentioned only briefly in public hearings and floor debates. However,
the public record does suggest that the full Congress had access to
information which indicated that the Act could be construed as au-
thorizing direct collection. No action was taken to prohibit such activ-
ity. Moreover, the 1949 enactment of the Central Intelligence Agency
Act demonstrates congressional intent to facilitate clandestine activ-
ities, and thus congressional endorsement of the view that such activi-
ties were the legitimate function of the CIA.
The Committee has been able to locate full records for only one of the
closed committee meetings on the National Security Act. In a tran-
script of the June 27, 1947 meeting of the House Committee on Expen-
ditures in the Executive Departments, executive branch representa-
tives proposed centralization of clandestine collection in the CIA. The
Conunittee discussed the wisdom of this proposal with a number of
^* Memorandum from the CIA General Counsel to the Director. 5/7/48 : memo-
randum from the CIA General Counsel to the Deputy Chief for Foreign Intelli-
gence, 4/14/61.
129
witnesses.^ General Hoyt S. Vandenberg, then Director of Central
Intelligence, suggested centralized collection to the Senate Committee
on the Armed Services,^ and other executive branch personnel who
participated in the preparation of the Act have stated that the Senate
committee discussed the proposal.* In addition, a 1961 memorandum
by CIA General Counsel Lawrence Houston and recent interviews
with Houston and former CIA Legislative Counsel Walter Pforz-
heimer indicate that the possibility of including language in the Act
specifically to authorize espionage by the CIA was discussed.^ Accord-
ing to Houston and Pforzheimer, this proposal was rejected on the
grounds that it would be inappropriate for the United States to be
on record as a participant in this kind of activity.^
The House Committee was informed that the Central Intelligence
Group, the predecessor agency to the CIA, had engaged in clandestine
collection, and that it relied for its authority upon language in subsec-
tions 8 (c) and (d) of the Presidential Directive of January 22, 1946
establishing the CIG.'^ The Committee was therefore specifically on
notice that this language, which is almost identical to Section 102(d)
(4) and (5) of the National Security Act of 1947, had been considered
sufficiently broad to authorize direct clandestine collection. (The Presi-
dential Directive, like the 1947 Act, does not mention collection of
any kind.)
Committee re^Dorts on the National Security Act make no reference
to a collection role for the CIA. In open committee hearings very little
was said about the issue. Occasional remarks do indicate, however, that
the Agency would perform some kind of collection function. In testi-
mony before the Senate Armed Services Committee, General Vanden-
berg said that the CIA would collect "foreign intelligence information
of certain types." ^ Earlier in his testimony Genei'al Vandenberg had
referred to "certain . . . activities" which intelligence agencies such as
the CIA, military intelligence, and the FBI could not "expose ... to
the public gaze." ^ General Vandenberg had spoken with some specific-
ity of the need for centralizing clandestine collections in the CIA be-
fore both the House and Senate Committees in closed session. It can
be assumed that these additional remarks, which were released to the
public, referred to clandestine collection as well.
^ Transcript. House Committee on Expenditures in the Executive Departments,
Hearings on H.R. 2319, 6/27/47 (liereinafter cited as House transcript), pp. 10-19,
53-55. 79^86. 111-112, 118-125, 134-135. 159-164.
"Testimony of General Hoyt S. Vandenberg, Director of Central Intelligence
(unsanitized, now declassitfied ) , Senate Armed Services Committee, Hearings on
S. 758, 4/29/47.
* Staff summary of Walter Pforzheimer, former CIA Legislative Counsel, inter-
view, 3/4/76.
^ Memorandum from the CIA General Counsel to the Deputy Chief for Foreign
Intelligence, 4/14/61 ; staff summary of Dawrence Houston interview, 6/4/75 ;
staff summary of Walter Pforzheimer interview, 5/20/75.
No discussion of such a proposal is reported in the public record, but the House
committee executive session transcript contains brief references to it. Allen Dulles
testimony. House transcript, p. 59.
'Houston (staff siunmary), 6/4/75.
' General Hoyt S. Vandenberg testimony, Peter Vischer testimony. House tran-
script, pp. 10, 76.
' Vandenberg. Senate Armed Services Committee, Hearings, 4/29/47, p. 496.
'/6i<f, (p. 492).
130
Little more was said in public. Diirino; the House floor debates. Rep.
Biisbey, a member of the Committee on Expenditures, expressed ob-
jection to clandestine collection bv the CIA and said he hoped the bill
would be amended to prohibit snch activity.^" No such amendment was
adopted, however, and Rep. Holifield, another member of the com-
mittee, later remarked :
I want to impress upon the minds of the Members that the
work of this Central Intellisfence A<rencv, as far as the collec--
tion of evidence is concerned, is strictly in the field of secret
forei^ intelligence — what is known as clandestine intelli-
gence."
The remarks of Representatives Bnsbey and Holifield indicate that
it was anticipated that the authority conveyed bv the bill extended to
clandestine collection by the CIA. Still later in the floor debate, how-
ever. Rep. Patterson stated that while he clearly wanted "an inde-
pendent intelligence agency, working without direction by our armed
services, with full authority in operational procedures," he knew that
it was "impossible to incorporate such broad authority in the bill
now before us." ^^ Rep. Patterson may have been expressing regret that
the National Security Act did not authorize the CIA to engage in
direct collection of intelligence ; he may have been expressing the view
that the Act would riot give the CIA full independence in its opera-
tions from the armed services ; or he may have been referring to what
we now describe as covert action.
Public references to collection are too obscure and in some cases too
ambiffuous for the inference to be drawn that the full Congress spe-
cifically intended to authorize direct collection by the CIA. It would
require an attentive legislator, alert to the full record, to be apprised
of the possibility of CIA participation in this activity throuo;h the
public hearings and debates. But the language of Section 102(d) (4)
and (5) indicates that the Congress intended some flexibility in the
operations of the CIA. These provisions are sufficientlv broad that
clandestine collection of infonnation could reasonablv fall within the
range of activities which thev describe. There is no substantial evidence
that Congress intended specifically to exclude clandestine collection
from the "services of common concern . . . for the benefit of existing
ao-encies" or from the "other functions and duties related to intelligence
afi'ecting the national security" which were authorized by the Act.
Two years after the enactment of the National Securitv Act. Con-
gress passed the Central Intelligence Agency Act of 1949, 50 IT.S.C.
403a-403i. The 1949 legislation was an enabling act; technically it
contributed nothing to the kinds of activities which the Agency was
authorized to carry out. Its enactment, however, sheds some light upon
what Congress thought it had authorized in 1947.
There is no doubt that the purpose of certain provisions of the 1949
Act was to protect clandestine activities of the CIA. The Act waives
the normal restrictions placed on government acquisition of materiel,
hiring, and accounting for funds expended. If Congress did not be-
'" 93 Cong. Ree. 9404 (1947) .
" lUd, p. 9430.
" TUd, p. 9447.
131
lieve that some type of clandestine activity had been authorized by
the National Security Act, these provisions would not have been
necessary.
Further, the Cono;ress had reason to believe that the CIA was al-
ready engaged in espionage. Prior to passage of the Act, there had
been discussion in the press of CIA involvement in direct clandestine
collection.^^ Clandestine collection was specifically discussed in closed
hearings on the Act,^* and finally, in floor debates Members of Con-
gress referred to the legislation as "an espionage bill." ^^ "VA^iile there
was much debate on the floor of both Houses as to the wisdom of spe-
cific provisions of the bill and the general need for secrecy in the en-
actment process, no one suggested that the provisions of the bill were
unwarranted because the operations which they were designed to
facilitate were not authorized by law.
The Central Intelligence Agency Act appears to represent congres-
sional endorsement of the view that the National Security Act had au-
thorized the CIA to engage in direct clandestine collection. That is a
view consistent with the language of the National Security Act and, to
the degree that the history addresses the issue, with its legislative
history.
B. Covert Action
Covert action is defined as clandestine activity designed to influence
foreign governments, events, organizations or persons in support of
U.S. foreign policy conducted in such a way that the involvement of
the U.S. Government is not apparent. In its attempts directly to
influence events it is distinguishable from clandestine intelligence
gathering — often referred to as espionage. It has been argued that
authority for the CIA to conduct covert action can be found in the
1947 National Security Act, the 1949 Central Intelligence Agency Act
and the post enactment interpretation of those acts by the Congress
and the Executive.
The National Security Act contains no reference to covert action.
Section 102(d) (5) of the Act has been cited, however, as the statutory
basis for covert action. That paragraph provides that the Agency shall
"perform such other functions and duties related to intelligence affect-
ing the national security as the National Security Council may, from
time to time, direct." Paragraph 5 was cited by the National Security
Council in authorizing covert action by the CIA in NSC^— A and
NSC 10/2.
The language of 50 U.S.C. 403(d) (5) may in fact authorize abroad
ran2:e of activities not otherwise specified in the Act. An important
limitation on such authorization, however, is that the activities must
be "related to intelligence affecting the national security." Many covert
actions are "related to intelligence" in the sense that their perform-
ance is tied to clandestine intelligence operations, uses the same meth-
""The X at Bogrota," The Washington Post, 4/13/48; Hanson W. Baldwin,
"Intelligence — II," The New York Times, 7/22/48.
" Gen. Hoyt S. Vandenberg testimony, Honse Amied Services Committee
Hearing on H.R. 5871, 4/8/48. (The CIA Act was not passed by the 80th Con-
gress in 1948, but the same bill reported by the House Armed Services Committee
in 1948 was enacted by the 81st Congress in 1949. )
"95 Cong. Rec. 1946, 1947 (1949).
132
ods, and yields an intelligence product. It must be noted, however,
that the chief purpose of these operations is not to gather intelligence,
and that many covert actions, such as the invasion of the Bay of Pigs,
have only the most limited relationship to "intelligence affecting the
national security."
Given the fact that some of the actions which the CIA has taken to
influence events in other countries are arguably "related to intelligence
affecting the national security", again it may be useful to examine the
legislative history of the National Security Act to determine if these
forms of covert action were within the range of activities which Con-
gress intended to authorize. But there is little in the public record or
even in the House Committee's executive session transcript which sheds
any light on the intent of Congress with respect to covert action. Occa-
sional references were made to "operational activities",^^ "special oper-
ations,^' or "operational procedures," ^^ but the context of these re-
marks indicates that they were at least as likely to refer to the
clandestine collection of intelligence as to covert action. In any case,
these terms were never used in such a way as to indicate clearly that
the Congress intended to authorize the activities which they encom-
passed. A memorandum by the CIA's general counsel, written soon
after the passage of the Act, concedes that the legislative history con-
tains nothing to show that Congress intended to authorize covert action
bytheCIA.^^
Neither the 1947 Act nor its legislative history, however, indicates
congressional intent to prohibit covert actions by the Agency. As pre-
viously noted, the Executive had intended from the outset that the
CIA would engage in clandestine collection of intelligence. The
flexibility which 50 U.S.C. 403(d)(5) conveyed to the Agency,
together with the capacity to act in secret which was being developed
in connection with its clandestine collection function, made the CIA
an attractive candidate to carry out these additional senstitive opera-
tions. The executive branch was soon to seize upon this flexibility and
assign major covert operations to the Agency.
In December 1947 the National Security Council instructed the CIA
to undertake covert psychological operations.^" Six months later the
NSC vastly expanded the range of covert activities authorized to in-
clude :
propaganda ; economic warfare ; preventive direct action, in-
cluding sabotage, anti-sabotage, demolition and evacuation
measures; subversion against hostile states, including assist-
ance to guerrilla and refugee liberation groups, and support
of indigenous anti-Communist elements in the threatened
countries of the free world.^^
Under the authority of 50 U.S.C. 403 (d)(5), there was established an
Office of Special Projects to conduct covert actions. ^^
^* James Forrestal testimony, House Committee on Expenditures in the Execu-
tive Departments. Hearings on H.R. 2319, 1947, p. 120.
" Memorandum from Allen Dulles, 4/25/47, Senate Armed Services Committee.
Hearings on S. 758, p. 529.
" 93 Cong. Rec, 9447, 1947.
" Memorandum from the CIA General Counsel to the Director, 9/25/47.
"" NSC-4-A, 12/17/47.
"^ NSC Directive, 6/18/48.
133
All of this occurred prior to enactment of the Central Intelligence
Agency Act in 1949. As noted previously, the CIA Act included pro-
visions the clear purpose of which was to protect the security of secret
operations. What is not clear is whether these operations were meant
by the Congress to include covert action as we now understand the
term.
By 1948 the CIA was already engaged in a variety of covert actions.
In seeking passage of the Central Intelligence Agency Act the Execu-
tive anticipated that its provisions would facilitate these operations,
as well as covert collection. Remarks in executive session of the House
Committee on Armed Services indicate that such operations were used
to justify passage of the Act, and that this committee knew that plans
for coveit action were then pending, which the Act was necessary to
implement.-^
Tiiere is no evidence that the full Congress, on the other hand, knew
or understood the range of clandestine activities, including covert ac-
tion, which the Executive was undertaking. The Connnittee reports
on the bills that were to become the Central Intelligence Agency Act
include no reference to covert action, and the floor debates do not indi-
cate that the Congress knew that covert action, as opposed to clandes-
tine intelligence gathering, was being or would be undertaken by the
CIA.-* Thus, while the very nature of some of the provisions of the
1949 Act indicates that the Congress assumed that the CIA would en-
gage in some clandestine activities, and while the legislative histoi'y
of that Act indicates that these operations were expected to include
espionage, there is nothing in the legislation or its history to indicate
that the full Congress meant by the Act to facilitate covert action.
It has been suggested that congressional provision of funds to the
CIA indicates congressional approval of, or authorization for the
CIA's conduct of covert action. Such a premise was offered in a
1962 internal memorandum of the Agency's General Counsel -^ and
in a Justice Department memorandum dated two days later.^*^ In
December 1975 this argument was made publicly by the Special Coun-
sel to the Director of the CIA in testimony before the House Select
Committee on Intelligence. The Special Counsel said that given "CIA
reporting of its covert action programs to Congress, and congres-
sional appropriation of funds for such programs" the "law is clear
that, under these circumstances. Congress has effectively ratified the
authority of the CIA to plan and conduct covert action under the
direction of the President and the National Security Council." "
The principal problem with this analysis is that the CIA has not
reported its covert action programs to Congress as a whole, but only
'^ Vandenberg, House Armed Services Committee Hearings on H.R. 5871, 4/8/
48.
"* It was remarked in the House debates, however, in the context of a discus-
sion of intelligence gathering that "in spite of all our wealth and power and
might we have been extremely weak in psychological warfare, notwithstanding
the fact that an idea is perhaps the most powerful weapon on this earth."
95 Cong. Rec. 1947 (1949).
"Memorandum from the CIA General Counsel to the Director, 1/15/62, p. 2.
^ Memorandum, OflBce of Legislative Counsel, Department of Justice, 1/17/62,
pp. 12-13.
"Testimony of Mitchel Rogovin, Special Counsel to the Director of Central
Intelligence, House Select Intelligence Committee Hearings, 12/9/75, pp. 1735-
1736.
134
to a few members of a few committees of Congress. Small subcom-
mittees of the Armed Services and Appropriations Committees in each
House were briefed to some extent on these activities until 1974, when
the Foreign Assistance Act was amended to require that six com-
mittees of Congress be informed with respect to those foreign activ-
ities of the CIA which are not intended solely for obtaining necessary
intelligence.
Other members of Congress may ultimately have become gener-
ally aware that the CIA engaged in some non-intelligence production
operations; the role of the CIA in the Bay of Pigs operation, for
example, was widely known. Still it cannot be said that Congress as
a whole, knowing that the Agency made a practice of covert actions,
ratified such operations by appropriating funds for them. The Con-
gress as a whole has never voted for appropriations for the CIA. The
funds provided to the CIA are concealed in the appropriations made
to other agencies, they are then transferred to the CIA, pursuant to
the provisions of the CIA Act of 1949, with the approval of the 0MB
and selected members of the Appropriations Committees. Congress
as a whole has known neither how much the CIA would receive nor
where the funds which would be transferred to the CIA were con-
cealed. A question has been raised as to whether the CIA is even
"appropriated" funds pursuant to constitutional requirements.^^
More convincing than the argument that Congress has ratified covert
action by appropriation is the suggestion that ratification has been
by acquiescence. Although the Congress as a whole has not made
appropriations for covert action, in recent years it has been
aware that funds for such operations were being channeled to the
CIA. Congress has had the power to put an end to these activities by
attaching conditions to the use of funds appropriated by it. The
failure to exercise this power may be interpreted as congressional
ratification of CIA authority.
In December 1974 the Congress passed a set of amendments to the
Foreign Assistance Act of 1961. Section 82 of these amendments,
which became Section 662 of the 1961 Act and is knowm as the Hughes-
Ryan Amendment, provides :
Limitations on intelligence activities. — (a) No funds appro-
priated under authority of this or any other act may be ex-
pended by or on behalf of the Central Intelligence Agency
for operations in foreign countries, other than activities in-
tended solely for obtaining necessary intelligence, unless and
until the President finds that each such operation is impor-
tant to the national security of the United States and reports,
in a timely fashion, a description and scope of such operation
to the appropriate committees of the Congress, including the
Committee on Foreign Relations of the United States Senate
and the Committee on Foreign Affairs of the United States
House of Representatives, (b) The provisions of subsection
(a) of this section shall not apply during military operations
initiated by the United States under a declaration of war ap-
proved by the Congress or an exercise of powers by the Presi-
dent under the War Powers Resolution. 22 U.S.C. 2422.
" Elliot Maxwell. "The CIA's Secret Funding and the Constitution," Yale Law
Jmmal, Vol. 84 (1975), pp. 608-636.
135
The Huo;]ies-Ryan Amendment was cited by the Special Counsel to
the Director of the Central Intelligence Ao^ency when he appeared
before the House Select Committee on Intelligence to argue that Con-
gress has "both acknowledged and ratified the authority of the CIA
to plan and conduct covert action." He said that the provision "clearly
implies that the CIA is authorized to plan and conduct covert
action." ^^
Section 32 does not explicitly authorize covert action by the Central
Intelligence Agency. On its face it contributes nothing to the CIA's
authority to do anything. It can be argued, however, that the amend-
ment represents recognition by the Congress that authority for the
CIA to engage in covert action does exist. This argument has consid-
erable merit. While certain restrictions were placed upon the conduct
of covert action, it was not foreclosed as it could have been. On the
other hand, it can be argued that the amendment merely represents
Congress' acknowledoement that the CIA does cany out non-intelli-
gence production activities. The purpose of Section 32 was to acquire
information about these operations so that a decision could be made
about their legitimacy. This argument is bolstered by the fact that a
number of the proponents of the amendment, including its sponsor
in the Senate, saw the amendment as a temporary measure. Senator
Hughes stated on the floor that the measure "provides a temporary
arrangement, not a pemianent one, recognizing that a permanent ar-
rangement is in the process of being developed." ^° Thus the amend-
ment might be seen not as congressional ratification of the CIA's au-
thority to conduct covert action, but as a temporarv measure to plaice
limits on what the CIA was doing anyway. At the same time, the
measure requires reporting so that Congress, traditionally deprived
of information about covert action, can determine what further action
to take with respect to this activity.
The significance of the events up to 1974 is that until that date
Congress could escape a full share of responsibility for the CIA's
covert actions. Enactment of the Hughes-Ryan Amendment, howevei',
does represent formal acknowledgement by Congress that the CIA
engages in operations in foreign countries for purposes other than
obtaining intelligence. Since passage of that Act, six standing com-
mittees of Congress have received information on specific CIA covert
actions, and public hearings have been held on the subject by the
Select Committee. The full Congress now has information on covert
action, and it has the power to prohibit or further restrict this activity,
either directly or through limitations on the expenditure of funds. If
Congress takes no such action, a convincing argument can be made that
it has authorized covert action by acquiescence.
C. Domestic AcTI^^TIES
The record shows that the CIA has engaged in a variety of clandes-
tine collection programs directed at the activities of Americans within
the United States. Some of these activities have raised constitutional
Rogovin, House Select Committee on Intelligence, Hearings, 12/9/75, p. 1737.
' Cong. Rec. S18062, daily ed., 10/2/74.
136
questions related to the rights of Americans to engage in political
activity free from government surveillance. But they have also raised
questions about (1) the authority of the CIA, under its charter, to
collect and use information about Americans, and (2) the extent to
which the specific statutory prohibition on police and internal security
functions by the CIA restricts these domestic activities.
The National Security Act of 1947 defines the duties of the CIA in
terms of "intelligence"' or "intelligence relating to the national secur-
ity." The legislative history of the Act clearly shows that Congress
intended the activities authorized by this language to be related to
foreign intelligence.^^ This construction is aided by the statute's provi-
sion that "the Agency shall have no police, subpena, law enforcement
power, or internal-security functions," (50 U.S.C. 403(d) (3)). In re-
cent years, however, the executive branch has interpreted foreign intel-
ligence broadly to include intelligence programs the purpose of which
is to determine foreign influence on dissident domestic groups. These
programs have involved intelligence gathering within the ITnited
States directed at United States nationals. They have continued, under
Presidential orders, even when no significant foreign connections were
found. Even if these investigations had been, based at the outset upon
specific evidence of contact between domestic groups and hostile for-
eign governments or powers, however, and even if they liad been
terminated immediately when they revealed no foreign threat, a ques-
tion arises as to whether such investigations would be authorized by
the National Security Act.
The legislative history of the Act shows that in establishing the CIA
Congress contemplated an agency wliich not only would be limited
to foreign intelligence operations but one which would conduct very
few of its operations within the ITnited States. It was contemplated
that the Agency would have its headquarters here,^- and in House
Committee hearings in executive session the possibility of seeking for-
eign intelligence information from private American citizens who
traveled abroad was discussed with approval. ^^ But in public and in
private it was generally agreed among legislators and representatives
of the Executive that the CIA would be "confined out of the continen-
tal limits of the United States and in foreign fields," ^* that it should
^ The purpose of the CIA was to take over the functions of the CTG, which had
acted as a foreign intelligence agency. The assumption that the CIA would con-
tinue in the foreign intelligence tifld underlies much of the legislative delmtes
over Section 102 of the National Security Act. For example, in the House floor
dehates it was remarked that, "The Central Intelligence Agency deal.s with in-
telligence outside the United States," [93 Cong. Rec. 9494 (1947)]. that "the
Central Intelligence Agency is supposed to operate only abroad" (Ibid, p. 9448)
and that "the Central Intelligence Agency deals only with external security"
(TMd, p. 9447). It was frequently remarked that the Agency was not to be per-
mitted to act as a domestic police or "Gestapo." [Senate Armed Services Com-
mittee, Hearings on S. 758. (1947), p. 497: House Expenditures in the Executive
Departments Committee, Hearings on H.R. 2319 (1947), pp. 127. 438, 479-481;
93 Cong. Rec. 9413, 9422, 9443 (1947).] Specific care was taken to prevent the CIA
or the Director of Central Intelligence from interfering in any way with the
functions of the FBI [see 50 U.S.C. 403 (e) and 93 Cong. Rec. 9447-9448 (1947).]
^ Vandenberg testimony. House transcript, 6/27/47, p. 60.
^' Allen Dulles testimonv, Ihid., p. 52-53, 66.
^ Hid., p. 59.
137
have no "police power or anything else within the confines of this coun-
try," ^^ and that it was "supposed to operate only abroad." ^^
This view was reiterated in the legislative history of the Central
Intelligence Agency Act of 1949. The following exchange took place
between Kep. Holifield and Rep. Sasscer of the House Committee on
the Armed Services, which had reported the 1949 bill :
Mr. Holifield. I would like to question the gentleman from Mis-
souri. On page 4 of the report, subsection 5(b), it is provided that an
employee while in this country on leave may be assigned to temporary
duty in the United States for special purposes or reorientation prior to
i-eturning to foreign service.
In the original unification bill passed through the Committee on
Expenditures, of which I am a member, we had the setting up of this
CIA. It was clearly brought out at that time that no internal security
work of any kind would be done by the CIA ; that all of its intelligence
work would be done in a foreign field. In vicAv of this particular para-
graph here I want to be assured at this time that such special duties as
are mentioned here, or reorientation, do not apply to security functions
in the United States.
Mr. Sasscer. Mr. Speaker, if the gentleman will yield, I will say to
the gentleman that that is correct, that this bill is in no wise directed to
internal security. If they come back here it is purely a matter of Jeave,
and reorientation, and training to go back into their work in foreign
countries. 95 Cong. Rec. 1947-1948 ( 1949) .
The bill which had been submitted by the Executive to establish the
Agency in 1947 incorporated by reference the provisions of the Presi-
dential Directive of January 22, 1946, which established the CIG and
provided that it would have "no police, law enforcement or internal
security functions." " Partly in an eifort to ensure that the CIA did not
exceed the bounds which Congress contemplated foi- its activities, the
bill was amended to include this prohibition and other provisions of the
1946 Directive in its text. Members of Congress were concerned that
the Directive could be amended, without consulting Congress, to assign
to the CIA responsibilities which would affect the rights of the Ameri-
can people. ^^
=^ Ibid., p. GO.
*" 93 Cong. Rec. 9448 (1947) .
^ The Presidential Directive also specified at Section 9 that "Nothing contained
herein shall be construed to authorize the making of investigations inside the
continental limits of the United States and its possessions except as provided by
law and Presidential Directives." According to Lawrence Houston, this provision
had been added to the Directive at the request of the FBI, which was concerned
that the CIG should not become involved in investigating subversive groups in
the United States. It was not included in the statutory draft, however, because
of an agreement between the CIG and the FBI that CIG could gather foreign
intelligence within the United States from such sources as businessmen who
traveled abroad. (Lawrence Houston testimony, President's Commission on CIA
Activities, 3/17/75, pp. 1656-1657.)
^ Dulles testimony. House transcript. 6/27/47, pp. 57-58. ^V^len General Vanden-
berg was consulted about this possibility in executive session of the House Com-
mittee on Executive Expenditures, he responded, "No sir; I do not think there
is anything in the bill, since it is all foreign intelligence, that can possibly affect
any of the privileges of the i>eople of the United States." But Congress continued
to be concerned about the potential for a secret domestic police in the CIA. As
Rep. Brown responded to General Vandenberg, "There are a lot of things that
might affect the privileges and rights of the people of the United States that are
foreign, you know." (Vandenberg testimony Ibid., p. 32.)
69-983 O - 76 - 10
138
By codifying the prohibition against police and internal security
functions, Congress apparently felt that it had protected the American
people from the possibility that the CIA might act in any way that
would have an impact upon their rights.
The CIA, however, has interpreted the internal security prohibition
narrowly to exclude investigations of domestic activities of American
groups for the purpose of determining foreign associations. But his-
tory indicates that at the time of enactment of the National Security
Act, threats to "internal security" were widely understood to include
domestic groups with for-eign connections. Investigations by the FBI
of American groups w^ith no such connections, in fact, have been a
i^ecent phenomenon. The original order from President Roosevelt to
J. Edgar Hoover to begin internal security operations was to investi-
gate foreign communist and fascist influence within the United
States.^^ There is no evidence that by 1947 these investigations were
considered foreign intelligence.
The CIA's domestic intelligence programs have not relied for their
authority solely upon the premise that the agency's mandate to engage
in foreign intelligence activities includes information gathering on
foreign contacts of domestic groups. As authority for some of its
operations with the United States, the Agency has relied upon Sec-
tion 102(d) (3) of the National Security Act, Avhich charges the Direc-
tor of Central Intelligence with responsibility to protect intelligence
sources and methods from unauthorized disclosure.'*"
The CIA has construed the sources and methods language broadly to
authorize investigation of domestic groups whose activities, including
demonstrations, have potential, however remote, for creating threats to
CIA installations, I'ecruiters or contractors. In the course of carrying
out tliese investigations the Agency has collected general information
about the leadership, funding, activities, and policies of targeted
groups.
These activities have raised serious questions as to (1) whether such
a broad interpretation of the sources and methods language is consist-
ent with the intent of Congress in enacting that provision, and (2)
again, whether such an interpretation is consistent with the statutory
prohibition against conduct by the CIA of internal security functions.
The sources and methods langiiaixe was discussed only briefly in the
recorded legislative history of the National Security Act. As originally
drafted, the proposed Act had charged the Director with "fully" pro-
tecting sources and methods. In the House Committee executive ses-
sion, however, General Vandenburg suggested that the Director could
not possibly "fully" protect sources and methods, and the word "fully"
was subsequently dropped.*^'' According to the former General Counsel
to the CIA, who was privv to many of the discussions and debates on
the legislation as it was being prepared, the purpose of the sources and
methods provision was essentially to allay concern in the military
services that the Agency would not operate with adequate safeguards
to protect the services' intelligence secrets.^^ Despite congressional
" See Domestic Intelligence Report, p. 25.
^^ See detailed report on CHAOS report.
*^ Houston. President's Commission on tbe CIA. 3/17/75, pp. 1654-1655 ; Staff
summary of Lawrence Houston interview, 6/11/75.
"° Vandenberg testimony House transcript, 6/27/47, p. 28.
139
concern, expressed again and again during hearings and floor de-
bates on the bill, that the CIA was to have no potential for in-
fringing upon the rights of American citizens and that it was to be
virtually excluded from acting within the United States, no one ques-
tioned whether the sources and methods language would raise prob-
lems in this area. The lack of interest in the provision suggests that it
was not viewed as conveying new authority to investigate; rather it
charged the Director of Central Intelligence Agency with responsibil-
ity to use the authority which he already had to protect sensitive mtel-
ligence information. This could mean implementing strict security
procedures within CIA facilities and conducting background investi-
gations of CIA personnel (although according to the former Agency
General Counsel, the CIA first requested that the FBI perform this
investigative function; J. Edgar Hoover refused to assume this re-
sponsibility on grounds of insufficient personnel within his own Bu-
reau*-). Given the prohibition against internal security functions, it
is unlikely that the provision was meant to include investigations of
private American nationals who had no contact with the CIA, on the
grounds that eventually their activities might threaten the Agency.
*'' Houston, President's Commission on CIA activities within the United States,
3/17/75, pp. 1655-1656.
VIII. COVERT ACTION
"o activity of the Central Intelligence Agency has engendered more
troversy and concern than "covert action," the secret use of power
No
controversy
and persuasion. The contemporary definition of covert action as used
by the CIA — "any clandestine operation or activity designed to influ-
ence foreign governments, organizations, persons or events in support
of United States foreign policy" — suggests an all-purpose policy tool.
By definition, covert action should be one of the CIA's least visible
activities, yet it has attracted more attention in recent yeai-s than any
other United States foreign intelligence activity. The CIA has been
accused of interfering in the internal political affairs of nations rang-
ing from Iran to Chile, from Tibet to Guatemala, from Libya to Laos,
from Greece to Indonesia. Assassinations, coups d'etat, vote buying,
economic warfare — all have been laid at the doorstep of the CIA. Few
political crises take place in the world today in which CIA involve-
ment is not alleged. x\s former Secretary of Defense Clark Clifford
told the Committee :
The knowledge regarding such operations has become so
widespread that our country has been acrused of being re-
sponsible for practically every internal difficulty that has
occurred in every country in the world. ^
Senate Resohitioii 21 authorized the Conunittee to investigate
"the extent and necessity of overt and covert intelligence activities in
the LTnited States and abroad." - In conducting its inquiry into covert
action, the Committee addressed several sets of questions:
— First, what is the past and present scope of covert action ?
Has covert action been an exceptional or commonplace tool of
United States foreign policy? Do present covert operations
meet the standard — set in the Hughes-Ryan amendment to
the 1974 Foreign Assistance Act — of "important to the na-
tional security of the ITnited States ?"
— Second, what is the value of covert action as an instru-
ment of United States foreign policy ? How successful have
covert operations been over the years in achieving short-range
objectives and long-term goals ? What have been the effects of
these operations on the "targeted" nations? Have the costs of
these operations, in terms of our reputation throughout the
world and our capacity for ethical and moial leadership,
outweighed the benefits achieved?
^ Clark Clifford testimony. 12/5/75. Hearings. Vol. 7. p. 51.
' Senate Resolution 21, Section 2, Clause 14. The CIA conducts several kinds of
covert intelligence activities abroad : clandestine collection of positive foreign
intelligence, counterintelligence (or liaison with local services), and covert
action. Although there are a variety of covert action techniques, most can he
grouped into four broad categories: political action, propaganda, paramilitary,
and economic action.
(141)
142
— Third, have the techniques and methods of covert action
been antithetical to our principles and ideals as a nation?
United States officials have been involved in plots to assassi-
nate foreig;n leaders. In Chile, the ITnited States attempted
to overthrow a democratically elected orovemment. INIany
covert operations appear to violate our international treaty
obligations and commitments, such as the charters of the
United Nations and Organization of American States. Can
these actions be justified when our national security interests
are at stake ?
— Fourth, does the existence of a covert action capability
distort the decisionmaking process? Covert operations by
their nature cannot be debated openly in vrays required by
a constitutional system. However, has this meant that, on
occasion, the Executive has resorted to covert operations to
avoid bureaucratic. Congressional, and public debate? Has
this contributed to an erosion of trust between the executive
and legislative branches of government and between the
government and the people?
— Fifth, what are the implications of maintaining a
covert action capability, as presently housed in the CTA's
Directorate for Operations? Does the very existence of this
capability make it more likely that covert operations will be
presented as a policy alternative and be implemented? Has
the maintenance of this standing capability generated, in
itself, demands for more and more covert action? Conversely,
what are the implications of 7wt maintaining a covert action
capability? Will our national securitv be imperiled? Will our
policymakers he denied a valuable policv option ?
— ^Sixth, is it possible to accomplish many of our covert
objectives through overt means? Radio Free Europe and
Radio Liberty may be instructive in this regard. For years
RFE and RL were operated and subsidized, covertly, by the
CTA. Today they operate openlv. Could other CTA covert
activities be conducted in a similar manner?
— Finally, should the ITnited States continue to maintain a
covert action capability? If so, should there be restrictions
on certain kinds of activities? What processes of authoriza-
tion and review, both within the executive and legislative
branches, should be established?
Over the past year, the Committee investigated several major
covert action programs. These programs were selected to illustrate
(1) covert action techniques, ranging from propaganda to paramili-
tary activitie<-', from economic action to subsidizing and supporting for-
eign political parties, media, and labor organizations; (2) different
kinds of "target" countries, from developed Western nations to less
developed nations in Africa, Asia and Latin America; (B) a broad
time span, from 1947 to the present; and (4) a combination of cases
that the CIA considers to be representative of success and failure.
One of the Committee's case studies, Chile, was the subject of a
publicly released staff report.^ It served as background for the Com-
" Senate Select Committee. "Covert Action in Cliile."
143
mittee's public session on covert action.* During its covert action in-
quiry, the Connnittee took extensive testimony in executive session
and received l-i briefings from the CIA. The stall' interviewed over
120 persons, inckiding IJi former Ambassadors and 12 former CliV
Station Chiefs. The successor Senate intelligence oversight comniit-
tee(s) will inherit the Connnittee's chassified covert action case studies
as well as a rich documentary base for future consideration of covert
action.
In addition to the major covert action case studies, the Committee
spent five months investigating alleged plots to assassinate foreign
leaders. This inquiry led, inevitably, into covert action writ large.
Plots to assassinate Castro could not be understood unless seen in
the context of Operation MONGOOSE, a massive covert action
program designed to "get rid of Castro." The death of General Schnei-
der in Chile could not be understood unless seen in the context of what
was known as Track II — a covert action program, undertaken by the
CIA at the direction of President Nixon, to prevent Salvador Allende
from assuming the office of President of Chile. During the assassina-
tion inquiry, the Committee heard from over 75 witnesses during 60
days of hearings.
The Committee has chosen not to make public the details of all the
covert action case studies, with the exceptions noted above. The force
of the Committee's recommendations on covert action might be
istrengthened by using detailed illustrations of what the United
iStates did under what circumstances and with what results in country
i"X" or "Y." The purpose of the Committee in examining these cases,
however, was to understand the scope, techniques, utility, and pro-
priety of covert action in order to make recommendations for the
future. The Committee concluded that it was not essential to expose
past covert relationships of foreign political, labor and cultural leaders
with the United States Government nor to violate the confidentiality
of these relationships. Therefore, names of individuals and institu-
tions have been omitted.
In addition, the Committee decided, following objections raised by
the CIA, not to publicly release two sections of this Report — "Tech-
niques of Covert Action" and "Covert Action Projects: Initiation,
Review, and Approval." These two sections will be submitted to the
Members of the Senate in a classified form. However, for a discussion
of covert action techniques, as they were practiced in Chile, see the
Connnittee Staff Report, "Covert Action in Chile: 1963-1973" (pp.
6-10,14-40).
A. Evolution of Covert Action
Covert action was not included as one of the charter missions of the
CIA. The National Security Act of 1947 (which established the
Agency and the National Security Coimcil) does not specifically men-
tion or authorize secret operations of any kind, whether for intelligence
collection or covert action.^ The 1947 Act does, however, contain a
provision which directs the CIA to "perform such other functions and
duties related to intelligence affecting the national security as the
* Senate Select Committee, Hearings, 12/4-5/75, Vol. 7.
^ See Appendix I, "Congressional Authority for the CIA to Conduct Covert
Actions."
144
National Security Council may from time to time direct." ^ One of the
drafters of the 1947 Act, former Secretary of Defense Clark Clifford,
has referred to this provision as the "catch-all" clause. According to
Mr. Clifford:
Because those of us who were assigned to this task and had
the drafting responsibility were dealing with a new subject
with practically no precedents, it was decided that the Act
creating the Central Intelligence Agency should contain a
"catch-all" clause to provide for unforeseen contingencies.
Thus, it was written that the CIA should "perform such other
functions and duties related to intelligence aftecting the na-
tional security as the National Security Council may from
time to time direct." It was under this clause that, early in the
operation of the 1947 Act, covert activities were authorized.
I recall that such activities took place in 1948 and it is even
possible that some planning took place in late 1947. It was
the original concept that covert activities undei-taken under
the Act were to be carefully limited and controlled. You will
note that the language of the Act provides that this catch-
all clause is applicable only in the event that the national
security is affected. This was considered to be an important
limiting and restricting clause.'
Beginning in December 1947, the National Security Council issued
a series of classified directives specifying and expanding the CIA's
covert mission.^ The first of these directives, NSC-4-A, authorized the
Director of Central Intelligence (DCI) to conduct coveit psycho-
logical operations consistent with United States policy and in coordi-
nation with the Departments of State and Defense.
A later directive, NSC 10/2, authorized the CIA to conduct covert
political and paramilitary operations. To organize and direct these
activities, a semi-independent Office of Policy Coordination (OPC)
was established within the CIA. OPC took policy direction from the
Departments of State and Defense.^ The directive establishing OPC
referred to the "vicious covert activities of the U.S.S.R." and author-
ized the OPC to plan and conduct covert operations, including covert
political, psychological, and economic warfare. These early activities
were directed against the Soviet threat. They included countering
Soviet propaganda and covert Soviet support of labor unions and
student groups in Western Europe, direct U.S. support of foreign
political pai'ties, "economic warfare," sabotage, assistance to refugee
liberation groups, and support of anti-Comnnniist groups in occupied
or threatened areas.
Until a reorganization in June, 1950, OPC's responsibilities for
paramilitary action were limited, at least in theory, to contingency
planning. Networks of agents Avere trained to assist the escape of re-
'50 U.S.C. 403(d)(5).
' Clifford, 12/5/75, Hearings, pp. 50-51.
*For a full discussion of tlie National Security Council and its direction of
intelligence activities, see Chapter IV. "The President's Office."
"The semi-independent status of OPC within the CIA created a rivalry with
the exi.sting CIA component responsible for clandestine intelligence, the Office of
►Strategic Operations.
145
sistance forces and carry out sabotage behind enemy lines in the event
of war. However, OPC did conduct some guerrilla-type operations in
this early period against Soviet bloc countries, using neighboring
countries as bases and employing a variety of "black" activities.^"
The size and activities of the OPC grew dramatically. Many covert
action programs initiated in the first few yeai"S as an adjunct to the
Unitetl States ix)licy of communist containment in Europe ev^entually
developed into large-scale and long-term operations, such as the
clandestine propaganda radios aimed at the So\'iet bloc — Radio Free
Eui'ope and Radio Liberty.
Many early OPC activities involved subsidies to European "counter-
front"' labor and political organizations. These were intended to serve
as alternatives to Soviet- or communist-inspired groups. Extensive
OPC lalx>r, media, and election operations in Western Europe in the
late 1940's, for insitance, were designed to luidercut debilitating strikes
by conmiiHiist trade unions and election advances by communist par-
ties. Support for "counterfront"' organizations, especially in the areas
of student, labor and cultural activities, was to become nuich more
prevalent in the 1950s and 1960s, although they later l^ecame inter-
national rather than European-oriented.
Communist aggression in the Far p]ast led the United States into
war in Korea in June 1950. At the same time, Defense Department
pressure shifted the focus of OPC activities toward more aggressive
responses to Soviet and Chinese Communist threats, particularly mili-
tary incursions. Large amounts of money were spent for guerrilla and
propaganda operations. These ojierations were designed to support
the ITnited States military mission in Korea. Most of these diversionary
paramilitaiy operations never came to fruition. For example, during
this period the CIA's Office of Procurement acquired some $152 million
worth of foreign weapons and ammunition for use by guerrilla forces
that never came into existence.
As a result of the upsurge of paramilitary action and contingency
l)lanning, OPC's manpower almost trebled during the first year of
the Korean War. A large part of this increase consisted of paramilitary
experts, who were later to be instrumental in CIA paramilitary opera-
tions in the Ray of Pigs, the Congo, and Laos, among others. In support
of paramilitary activities the CIA had bases and facilities in the
T 'nited States, Europe, the Mediterranean and the Pacific. OPC's in-
creased activity was not limited to paramilitary operations, however.
Py 1958, there were major covert o])erations in 48 countries, consist-
ing primarily of propaganda and ])olitical action.
Another event in 1950 affected the develoimient and organizational
framework for covert action. General Walter Bedell Smith became
CIA Director. He decided to merge OPC with the CIA's Office of
Special Operations." Although the merger was not completed until
^" "Black" activities are (hose intended to give tlie impression tliat tliey are
sponsored by an indigenous opposition force or a hostile power, rather than by
the United States.
" Tn order to accomplisli the merger. Smith first consolidated the OPC chain
of command by ordering the Director of OPC to report directly to the DCI instead
of through the Departments of State and Defense. Smith also appointed his own
senior representatives to field stations to coordinate the covert activities of the
OPC and the espionage operations of the OSO. The two offices were often com-
peting for the same potential a.ssetsin foreign countries.
146
1954, the most important organizational step took place in August
1952 — a single new directorate, entirely within the structure and con-
trol of the CIA, was established. Known as the Directorate for Plans
(DDP),^- this new directorate was headed by a Deputy Director and
was assigned responsibility for all CIA covert action and espionage
functions. The CIA's "Clandestine Service" was now in place.
By the time the DDP iwas organized, OPC had a large staff
and an annual budget of almost $20U million. It dominated the smaller
and bureaucratically weaker OSO in size, glamour, and attention. Yet,
one of the original purposes of the merger, according to General Smith,
was to protect the OSO function of clandestine intelligence collection
from becoming subordinate to the covert action function of OPC. In
1952, Smith wrote that the merger was :
designed to create a single overseas clandestine service, while
at the same time preserving the integrity of the long-range
espionage and counterespionage mission of the CIA from
amalgamation into those clandestine activities which are sub-
ject to short-term variations in the prosecution of the Cold
War.
Despite Smith's desires, the Cold War, and the "hot war" in Korea,
increased the standing, and influence, of the covert "operators" within
the CIA. This trend continued throughout the 1950s and 1960s.
The post-Korean War period did not see a reduction in CIA covert
activities. Indeed, the communist threat was now seen to be world-
wide, rather than concentrated on the borders of the Soviet Union
and mainland China. In response, the CIA, at the direction of the
National Security Council, expanded its European and crisis-oriented
approach into a world-wide effort to anticipate and meet communist
aggression, often with techniques equal to those of the Soviet clandes-
tine services. This new world-wide approach was reflected in a 1955
Xational Security Council Directive which authorized the CIA to :
— Create and exploit problems for International Commu-
nism;
— Discredit International Communism, and reduce the
strength of its parties and organization ;
— Reduce International Communist control over any areas
of the world.
The 1950s saw an expansion of communist interest in the Third
World. Attempts to anticipate and meet the communist threat there
proved to be an easier task than carrying out clandestine activities
in the closed Soviet and Chinese societies. Political action projects in
the Third World increased dramatically. Financial support was pro-
vided to parties, candidates, and incumbent leaders of almost every
political persuasion, except the extreme left and right. The immediate
purpose of these projects was to encourage political stability, and thus
jH-eyent Communist incursions; but another important objective of
political action was the acquisition of "agents of influence" who could
be used at a future date to provide intelligence or to carry out political
action. Through such projects, the (^lA developed a world-wide in-
"The name was changed to the Directorate for Operations (DDO) in 1073.
147
f rastructiire of individual agents, or networks of agents, engaged in a
variety of covert activities.
By 1955, the CIA's Clandestine Service bad gone through a number
of reorganizations. It emerged with a structure for the support of
covert action that remained essentially the same until the early 1960s.
The Clandestine Service consisted of seven geographic divisions and a
number of functional staffs — foreign intelligence, counterintelligence,
iechnical support for covert action, and planning and program co-
ordination. With the demise of paramilitary activities following the
Korean War, the Paramilitary Operations Staff had been abolished
and its functions merged with the staff responsible for ])sychologica]
action. An International Organizations Division, created in June 1954,
handled all programs in support of labor, youth, student, and cultural
counterfront organizations.
ITsing the covert action budget as one measure of activity, the scope
of political and ?:)sychological action during the 1950s was greatest
in the Far East, Western Europe, and the Middle East, with steadily
increasing activity in the Western Hemisphere. The inteniational
labor, student, and media projects of the International Organizations
Division constituted the greatest single concentration of covert political
and propaganda activities. Paramilitary action began to increase again
in the late 1950s with large-scale operations in two Asian countries
and increased covert military assistance to a third."
The Bay of Pigs disaster in 1961 prompted a reorganization of CIA
covert action and the procedures governing it. A new form of covert
action — counterinsurgency — was now emphasized. Tender the direction
of the National Security Council, the CIA rapidly expanded its coun-
terinsurgency capability, focusing on Latin America, Africa, and the
Far East. After the Geneva agreements of 1962, the CIA took oyer the
training and advising of the Meo army, previously a responsibility of
I^.S. military advisers. The Laos operation eventually became the larg-
est paramilitary effort in post-war history. In 1962 the Agency also
began a small paramilitary program in Vietnam. Even after the
Ignited States Military Assistance Command (MxVCV) took over
paramilitary programs in Vietnam at the end of 1963, the CIA con-
tinued to assist the U.S. military's covert activities against North
Vietnam.
The CIA's paramilitary effort continued to expand throughout the
decade. The paramilitary budget reached an all-time hich in 1970. It
probably Avould have continued to climb, had not the burden of the
Laos proirram been transferred to the Department of Defense in
1971.^*
" In 1062 a paramilitary office was reconstituterl in the CTA. Following the
Ray of Pies, a panel headed by Lvnian Kirkpatriek. then the CTA's Executive
Director-Comptroller, recommended that an office be created in the Clandestine
Sprvice to centralize and professionalize paramilitary action and contingency
i^'anning, dramng upon Agency-wide resources for larsre-scale operations. As a
result, a new paramilitary division was establishe<l. It was to operate under the
gnidonce of a new NSC approval jarrouip — the Snecial Groun (Counterinsurgency).
"Part of the Agency's interest in naramilitary activities stemmed from the
Agencv's view that these activities are interdenendent with intelligence collec-
tion functions. DCI .John McCone protested the transfer of paramilitary pro-
grams in Vietnam to MACV in 196.S-1964 because he thought that a third of the
intelligence reporting of the CIA's Vietnam station might be lost with such a re-
duction of CIA participation.
148
Paramilitary action was but one of the CIA's collection of tools
dnrino- the early and middle 1960s. Outside the Far East the CIA
mounted an increasino- number of political, ])ropa<janda, and economic
projects. This was the era of Operation MONGOOSE, a massive covert
assault on the Castro reoime in Cuba.^'> The need to combat the "export
of revolution" by connnunist powers stinndated a variety of new
covert techniques aimed at an increasinoly broad range of "targets."
Coveit action reached its peak in the years 1964 to 1967.
In contrast to the period 1964 to 1967, when expenditures for polit-
ical and propaganda action increased almost 60 percent, the period
1968 to the present has registered declines in every functional and geo-
graphic category of covert action — except for paramilitary operations
in the Far East which did not drop until 197^. The number of individ-
ual covert action projects dropped by 50 i:)ercent from fiscal year 1964
(when they reached an all-time high) to fiscal year 1968. The number
of projects by itself is not an adequate measure of the scope of covert
action. Projects can vary considerably in size, cost, duration, and effect.
Today, for example, one-fourth of the current covert action projects
are relatively high-cost (over $100,000 annually).
No matter which standards are used, covert activities have decreased
considerably since their peak period in the mid- and late 1960s. Re-
cent trends reflect this deciease in covert action. In one country, covert
activities began in the early years of the OPC and became so extensive
in the 1950s and 1960s that they affected almost every element of that
society. A retrenchment began in 1965; by 1974 there were only two
relatively small-scale political action projects. The only covert, expendi-
ture projected for fiscal year 1976 is a small sum for the development
of potential "assets" or local agents who may be used for covert action
in the future. In a second country, covert action expenditures in
1975 were less than one pei'cent of the total in 1971. A slight in-
crease was projected for fiscal yeai' 1976, also for the development of
potential assets for future use. The CIA lias thus curtailed its covert
action projects in these two countries, although its current investment
in potential assets indicates that the Agency does not want to preclude
the possibility of covert involvement in the future.
Some of the major reasons for the decline of covert activities since
the mid- and late 1960s include :
— a reduction of CIA labor, student, and media projects
following the 1967 Ramparfs disclosure and the subsequent
recommendations of the Katzenbach Committee;
— the transfer of covert military assistance in Laos from
the CIA budget to tlie Defense Department budget in 1971,
and the termination of many other covert activities in that
area with the end of the war in Indochina in 1975 ;
— reductions in overseas personnel of the Clandestine Serv-
ice as a result of studies and cuts made by James Schlesinger,
first when he was with the Office of Management and Budget
and later durinc: his brief tenure as Director of Central In-
telligence in 1978;
" Senate Select Committee, "Alleged Assassination Plots Involving Foreign
Leaders," p. 139 ff.
149
— sliiftin<r XLS. foreign jxilicy priorities in the 1970s,
which liave de-eniphasized sustained involvement in the in-
ternal affairs of other nations; and
— concern ainono- Aoency officials and U.S. policymakers
that publicity given to CIA covert activities would increase
the chances of disclosure and generally decrease the chances
of success of the kinds of large-scale, high-expenditure proj-
ects that developed in the 1060s.^'"^
B. CoXGRESSIOXAL OVERSIGHT
There is no reference to covert action in the 1947 National Security
Act, nor is there any evidence in the debates, connnittee reports, or
legislative history of the 1947 Act to show that Congress intended
specifically to authorize covert operations.^^ Since the CIA's wartime
predecessor, the Office of Strategic Services, had conducted covert
operations. Congress may have anticipated that these operations were
envisioned.
AVhether specifically authorized by Congress or not, CIA covert op-
erations were soon underway. Citing the "such other functions and
duties" clause of the 1947 Act as authority, the National Security
Council authorized the CIA to undertake covert operations at its first
meeting in Deceuiber 1947. At that point Congress became responsible
for overseeing these activities.
ShoKly after the passage of the 1947 Act, the Armed Services and
Appropriations Committees of the House and the Senate assumed
jurisdiction for CIA activities and appropriations. In the Senate, fol-
lowing an infoimal arrangement worked out with Senators Vanden-
berg and Russell, small CIA subcommittees were created within
Armed Ser\'ices and Appropriations. Over time, the relations between
the subconnnittees and the CIA came to be dominated by two prin-
ciples: "need to know" and "want to know." ^' The "want to know"
principle was best expressed in a statement made in 1956 by a con-
gressional overseer of the CIA, Senator Leverett Saltonstall :
It is not a question of reluctance on the part of CIA officials
to speak to us. Instead, it is a questicm of our reluctance, if
you will, to seek information and knowledge on subjects
which I personally, as a member of Congress and as a citizen,
would rather not have, unless I believed it to be my responsi-
bility to have it because it might involve the lives of Ameri-
can citizens.^®
^'^ The next two sections of this report "Covert Action Techniqnes" and "Covert
Action Projects : Initiation, Review, and Approval." remain classified after con-
sultation between the Committee and the executive branch. See p. 143.
^^ For a full discussion of the statutory authority for CIA activities, and con-
.Jiressional authorizition of covert action, see Chapter A' II and Appendix I.
" The Rockefeller Commission made a similar point in its Report :
"In sum, congressional oversight of the CIA has been curtailed by the secrecy
shrouding its activities and budget. At least until quite recently, Congress has not
sought substantial amounts of information. Correspondingly, the CIA has not
generally volunteered additional information." (Report of the Commission on CIA
Activities Within the United States, 6/6/75, p. 77.)
" Congressional Record— April 9. 1956, p. S..'>292.
150
From tlie beginning, the House and the Senate subcommittees were
relatively inactive. According to information available to the Select
Committee, the Senate Armed Services subcommittee met 26 times be-
tween January 1966 and December 1975. The subcommittee met five
times in 1975, twice in 1974, once in 1978 and 1972, and not at all in
1971.
Relations between the CIA and the subcommittees came to be de-
termined, in large part, by the personal relationship between the chair-
men and the CIA Director, often to the exclusion of other subcom-
mittee members. Staff assistance was minimal, usually consisting of no
more than one professional stalf mend)er.
The two Senate subcommittees had somewhat different responsibili-
ties.^'* The Appropriations subconmiittee was to concentrate on the
budgetary aspects of CIA activities. The Armed Services subcommit-
tee had the narrower responsibility of determining the legislative
needs of the Agency and recommending additional or corrective leg-
islation. It did not authorize the CIA's annual budget.
The CIA subcommittees received general information about some
covert operations. Prior to the Hughes-Ryan Amendment to the 1974
Foreign Assistance Act, hoAvever, the subcommittees were not notified
of these operations on any regular l)asis. Notifications occurred on the
basis of informal agreements between the CIA and the subcommittee
chairmen.^° CIA covert action briefings did not include detailed de-
scriptions of the methods and cost of individual covert action projects.
Rather, projects were grouped into broad, general programs, either on
a country-wide basis or by type of activity, for presentation to the sub-
committees.
Chile can serve as an example of how oversight of covert action was
conducted. According to CIA records, there was a total of 58 congres-
sional briefings on Chile by the CIA between April 1964 and Decem-
ber 1974. At 88 of these meetings there was some discussion of covert
action; special releases of funds for covert action from the Contin-
gency Reserve were discussed at 28 of them. Of the 88 covert action
briefings. 20 took place prior to 1978, and 18 took place after.-^
Of the 38 covert action projects undertaken in Chile between 1963
and 1974 with 40 Committee approval. Congress was briefed in some
fashion on eight. Presumably the 25 others were undertaken without
congressional consultation.^^ Of the more than $18 million spent
in Chile on covert action projects between 1963 and 1974, Congress
" Initially the Armed Services and Appropriations subcommittees met separ-
ately. However, in the 1960s, because of overlapping membership tlie two com-
mittees met jointly. For several years Senator Richard Russell was chairman
of both subcommittees.
-°In 1967, the House and Senate CIA appropriations subcommittees began
receiving notifications of withdrawals from tlie CIA's Contingency Reserve Fund
within 48 hours of the release. In 1975 the two Armed Service subcommittees
began receiving tlie same notifications, at the initiative of Director Colby.
"^The 13 J)riefings which occurred after 1978 (March 1973 to December 1974)
included meetings with the Senate Foreign Relations Subcommittee on Multi-
national Corporations and the House Foreign Affairs Subcommittee on Inter-
American Affairs. All these meetings were concerned with past CIA covert action
in Chile.
- Among the 2.5 projects were a .$1.2 million authorization in 1971. half of
which was spent to purchase radio stations and newspapers while the other half
went to support municipal candidates in anti-Allende political parties : and an
additional expenditure of $815,000 in late 1971 to provide support to opposition
political parties in Chile.
151
received briefings (sometimes before and sometimes after the fact) on
projects totaling about $9.3 million. Further, congressional oversight
committees were not consulted about projects which were not reviewed
by the full 40 Connnittee. One of these was the Track II attempt by
the CIA, at the instruction of President Nixon, to prevent Salvador
Allende from taking office in 1970."^
Congressional oversight of CIA covert operations was altered as
a result of the Hughes-Eyan amendment to the 1974 Foreign Assist-
ance Act. That amendment stated :
Sec. 662. Limitation on Intelligence Activities. — (a) No
funds appropriated under the authority of this or any other
Act may be expended by or on behalf of the Central Intelli-
gence Agency for operations in foreign countries, other than
activities intended solely for obtaining necessary intelligence,
unless and until the President finds that each such operation
is important to the national security of the United States and
reports, in a timely fashion, a description and scope of such
operation to the appropriate committees of the Congress, in-
cluding the Committee on P'oreign Relations of the United
States Senate and the Committee on Foreign Affairs of the
United States House of Representatives.^*
The Hughes-Ryan amendment had two results. First, it established
hy statute a reporting requirement to Congress on covert action. Sec-
ond, the amendment increased the nmiiber of connnittees that would be
informed of approved covert operations. The inclusion of the Senate
Foreign Relations Committee and the House International Relations
Connnittee was in recognition of the significant foreign policy impli-
cations of covert operations.
Despite these changes, the oversight role of Congress with respect to
covert operations is still limited. The law does not require notification
of Congress before covert operations are implemented. The DCI has
not felt obligated to inform the subcommittees of approved covert
action operations prior to their implementation, although in some cases
he has done so. Problems thus arise if members of Congress object to a
decision by the President to undertake a covert operation.
The recent case of Angola is a good example of the weaknesses of
the Hughes-Ryan amendment. In this case, the Executive fully com-
plied with the requirements of the amendment. In January 1975 the
administration decided to provide substantial covert political sup-
port to the FNLA faction in Angola.^^ In early February, senior mem-
'^ With respect to congressional oversight of CIA activities in Chile, the Com-
mittee's Staff report on "Covert Action in Chile" concluded :
"Between April 1964 and December 1974, CIA's consultation with its congres-
sional oversight committees — and thus Congress' exercise of its oversight func-
tion — was inadequate. The CIA did not volunteer detailed information; Congress
most often did not seek it." (Senate Select Committee, "Covert Action in Chile,"
p. 49.)
=^22 use 2422.
"'^ There were three factions involved in the Angolan conflict : the National
Front for the Liberation of Angola (FNLA), led by Holden Roberto ; the National
Union for the Total Independence of Angola (UNITA), led by .Jonas Savimbi ;
and the Popular Movement for the Liberation of Angola, (MPLA) led by Agos-
tinho Neto. The latter group received military and political support fnmi the
Soviet Union and Cuba.
152
bers of the six congressional committees received notification of this
decision.
In late July the 40 Committee and President Ford approved
an additional expenditure to pi'ovide covert military assistance to
the FNLA and a second Angolan faction, UNITA. Again senior
members of the six committees were notified. The Chairman, the
ranking minority member, and Chief of Staff of the Senate Foreign
Relations Committee were briefed in late Jnly. Under procedures es-
tablished within that connnittee, a notice of the CIA briefing w\as cir-
culated to all conmiittee members. When Senator Dick Clark, Chair-
man of the Foreign Relations Subcommittee on African Afi^airs,
learned that the covert action program was in Africa, he requested
further details. On July 28, Clark's subcouunittee was briefed on the
paramilitary assistance progi-am to tlie FNLA and, apparently, some
meml)ers of the subcommittee objected.
In early September the Administration decided to increase its covert
military assistance to Angola by $10.7 million, bringing the total
amount to $25 million. Again, the required notifications were carried
out.2«
In early November, Senator Clark raised his objections to the
Angola operation before the full Senate Foreign Relations Connnittee.
The Committee in turn asked Director Colby and Secretary Kissinger
to testify, in closed session, on U.S. involvement in Angola. At this
meeting, several members of the Committee expressed their concern
for the program to Director Colby and Undersecretary Joseph Sisco,
who represented the State Department in Secretary Kissinger's
absence. Despite tliis concern, in mid-November President Foi'd and
the 40 Conmiittee authorized the expenditure of another $7 million for
covert military assistance to Angola. In early December, the con-
gressional committees were notified of this new infusion of military
assistance.
Finding opposition within the briefing mechanism ineffective. Sena-
tor Clark proposed an amendment to a pending military and security
assistance bill. In January 197(^ after a conq:)licated series of legislative
actions, additional covert military assistance to Angola was prohibited
by (^ongress by an amendment to the Defense appropriations bill.
The dispute over Angola illustrates the dilemma Congress faces with
respect to covert operations. The Hughes-Ryan amendment guar-
anteed information about covert action in Angola, but not any control
over this controversial instrument of foreign policy. Congress had to
resort to the power of the purse to express its judgment and will.
C. Findings anu Conclusions ''''''
Coveit action has been a tool of United States foreign policy
for the past 28 yeai's. Thousands of covert action projects
■■"' On September 2.5, 1975 the New York TlmcH first reported tlie fact of U.S.
covert assistance to the FNLA and UNITA. The article stated that Director Colby
had notified Congress of the Angola operation in accordance with the Hughes-
Ryan amendment, but "no serious objections were raised." There was little
reaction to the Times article, either in Congress or by the public.
''"' See Appendix II which presents summaries of recommendations regarding
covert action made to the Senate Select Committee during the course of its
investigation.
153
have been undertaken. An extensive record has been established on
which to base judgments o,f whether covert action should have a
role in the foreign policy of a democratic society and, if so, under
Avhat restraints of accountability and control. The Committee's ex-
amination of covert action has led to the following findings and
conclusions.
1. The Use of Covert Action
Although not a specific charter mission of the Central Intelligence
Agency, covert action quickly became a primary activity. Covert
action projects were first designed to counter the Soviet threat in
P^urope and were, at least initially, a limited and ad hoc response
to an exceptional threat to American security. Covert action soon
became a routine program of influencing governments and covertly ex-
ercising power — involving literally hundreds of projects each year.
By 1953 there were major covert operations underway in 48 coun-
tries, consisting of propaganda, paramilitary and political action
projects. By the 1960s, covert action had come to mean "any clandes-
tine activity designed to influence foreign governments, events, orga-
nizations or persons in support of Ignited States forpign policy." Sev-
eral thousand individual covert action projects have been undertaken
since 1961, although the majority of these have been low-risk, low-cost
projects, such as a routine press placement or the development of an
"agent of influence."
That covert action was not intended to become a pervasive foreign
policy tool is evident in the testimony of those who were involved in
the drafting of the 1947 National Security Act. One of these drafters,
Clark Clifford, had this to say about the transition of covert action
from an ad hoc response to a frequently used foreign policy tool:
It was the original concept that covert activities under-
taken under the Act were to be carefully limited and con-
trolled. You will note that the language of the Act provides
that this catch-all clause is applicable only in the event that
national security is affected.^* This was considered to be an
important limiting and restricting clause.
However, as the Cold War continued and Communist ag-
gi-ession became the major problem of the day, our Govern-
ment felt that it was necessary to increase our country's re-
sponsibilities in protecting freedom in various parts of the
world. It seems apparent now that we also greatly increased
our covert activities. I have read somewhere that as time
progi-essed we had literally hundreds of such operations
going on simultaneously. It seems clear that these operations
have ffotten out of hand.-^^
^The CIA, under the 1947 Act, is directed "to perform such other functions
and duties related to intelligence affecting the national security as the National
Security Council may from time to time direct."
=^ Clifford, 12/5/7.5, Hearings, p. .51.
154
"Z. Covert Action ^''JSuccess'^'' and '"' F ailuTe^''
The record of covert action reviewed by the Coimnittee suggests that
net judgments as to "'success" or "failure" are difficult to draw.^*^ The
Conunittee has found that when covert operations have been consistent
with, and in tactical support of, policies which have emerged from a
national debate and the established processes of government, these op-
erations liave tended to be a success. Covert support to beleaguered
democrats in Western Europe in the late ID-lUs was in support of an
established policy based on a strong national consensus. On the other
hand, the public has neither miderstood nor accepted the coveit harass-
ment of the democratically elected Allende government. Kecent covert
intervention in Angola preceded, and indeed preempted, public and
congressional debate on America's foreign policy interest in the fu-
ture of Angola. The intervention in Angola was conducted in the
absence of etforts on the part of the executive branch to develop a
national consensus on America's interests in Southei'n Africa,
The Conunittee has received extensive testimony that coveit action
can be a success when the objective of the project is to support an indi-
vidual, a party, or a government in doing what that individual, party,
or govermnent wants to do — and when it has the will and capacity to
do it. Covert action cannot build political institutions where there is
no local political will to have them. Where this has been attempted,
success has been problematical at best, and the risks of exposure
enormously high.
The Committee's findings on paiamilitary activities suggest that
these operations are an anomaly, if not an aberration, of covert
action.^^ Pai'amilitary operations are among the most costly and
controversial forms of covert action. They are difficult, if not impos-
sible, to conceal. They lie in the critical gray area between limited
influence, short of the use of force, and overt military intervention.
As such, paramilitary activities are especially significant. In Viet-
nam, paramilitary strategy formed a bridge between the two levels
of involvement. Paramilitary operations have great potential for
escalating into major military commitments.
Covert U.S. paramilitaiy programs have generally been designed to
accomplish one of the following objectives: (1) subversion of a hos-
tile government (e.g., Cuba) ; {'!) support to friendly governments
^Former Attorney General and Under Secretary of State Nicholas Katzen-
baeh had this to say about covert action "success" and "failure" :
"I start from the premise that some of our covert activities abroad have been
successful, valuable in support of a foreign policy which was understood and
approved by the electorate and Congress ... I also start from a premise that
some of our activities abroad have not been successful, and have been wrong and
wrongheaded. In some cases we have grossly over-estimated our capacity to
bring about a desired result and have created situations unintended and un-
desirable." (Nicholas Katzenl)ach testimony. House Select Committee on In-
telligence, 12/10/75, Hearings, Vol. 5, p. 1797.)
31 The Committee studied, in detail, covert military operations in five coun-
tries, including Laos, Vietnam, and Angola. The Committee analyzetl paramili-
tary programs in terms of (1) executive command and control; (2) secrecy and
deniability; (3) effectiveness; (4) propriety; and (5) legislative oversight. The
latter issue is vital because paramilitary oi)erations are directly related to, and
pose special problems for. Congress' authority and responsibilities in making
war.
155
(Laos) ; (3) unconventional adjunot support to a larger war eli'oit
(Korea, Vietnam, Laos after the middle 19608).
There are two principal criteria which determine tlie minimum suc-
cess of paramilitary operations: (1) achievement of the policy goal;
and (2) maintenance of deniability. if the hrst is not accomplished, the
operation is a failure in any case ; if the second is not accomplished, the
paramilitary option otiei-s few if any advantages over the option of
overt military intervention. On balance, in these terms, the evidence
points toward the failure of paramilitary activity as a technique of
covert action.-^-
Of the hve paramilitary activities studied by the Committee, only
one appears to have achieved its objectives. The goal of supporting a
central govermnent was achieved — ^the same government is still in
power many years later. There were a few sporadic reports of the
operation in the press, but it was never fully revealed nor confirmed.
In no paramilitary case studied by the Coimnittee was complete
secrecy successfully presei-ved. All of the operations wei'e reported in
the Amei-ican press to varying extents, while they were going on. They
remained deniable oidy to the extent that such reports were tentative,
sketchy, and unconfirmed, and hence were not necessarily considered
accurate.
3. The Itnpact of Covert Action
Assessing the "success" or "failure" of covert action is necessary.
Just as important, however, is an assessment of the impact of covert
action on "targeted" nations and the reputation of the United States
abroad.
The impact of a large-scale covert operation, such as Operation
MONGOOSE in Cuba, is apparent. Less apparent is the impact of
small covert projects on "targeted" countries. The Committee has
found that these small projects can, in the aggregate, have a powerful
effect upon vulnerable societies.
In some cases, covert support has encouraged a debilitating de-
pendence on the United States. In one Western nation the covert
investment was so heavy and so persistent that, according to a former
CIA Station Chief in that country :
Any aspiring politician almost automatically would come
to CIA to see if we could help him get elected . . . They were
the wards of the United States, and that whatever happened
for good or bad was the fault of the United States.
Cyrus Vance, a former Deputy Secretary of Defense, cited another
such example:
Paramilitary operations are perhaps unique in that it is more
difficult to withdraw from them, once started, than covert
32 For example, the covert paramilitary program in Laos certainly ceased to
be plausibly deniable as soon as it was revealed officially in the 1969 Symington
hearings of the Senate Foreign Relations Committee (it was revealed unoffi-
cially even earlier). If U.S. policy was the preservation of a non-communist
Laotian government, the program obviously failed. Some administration wit-
nesses, nevertheless, including DCI Colby, cite<l the war in Laos as a great
success. Their reasoning was l)ased on the view that the limited effort in Laos
served to put pressure on North Vietnamese supply lines, and therefore was a
helpful adjunct of the larger U.S. effort in Vietnam.
156
operations. This is well illustrated by the case of the Conoo,
where a decision was taken to withdraw in early 1966, and it
'took about a year and a half before the operation was tenni-
naited. Once a paramilitary operation is commenced, the re-
cipient of the paramilitary aid tends to become dependent
upon it and inevitably advances the aro^ument that to cut back
or terminate the aid would do the recipient o;reat damatje.
This makes it especially difficult to diseno:age.^^
In other cases, covert support, to forei^ political leadere, parties,
labor unions, or the media has made them vulnerable to repudiation in
their own society when their covert ties are exposed. In Chile,
several of the Chilean nationals who had been involved in the CIA's
anti-Allende "spoilino^" operation had to leave the country when he
was confirmed as President,
In addition, the history of covert action indicates that the cumula-
tive effect, of hidden intervention in the society and institutions of a
foreign nation has oft.en not only transcended the actual tlireat, but
it has also limited the foreign policy options available to the United
States Government by creating ties to gix)ups and causes that the
United States cannot renounce without revealing the earlier covert
action.
The Committee also found that the cumulative effects of covert
action are rarely noted by the operational divisions of the CIA in the
presentation of new projects or taken into account by the responsible
National Security Council review levels.
The Committee has found that certain covei-t operations have been
incompatible with American principles and ideals and, when exposed,
have resulted in damaging this nation's ability to exercise moral and
ethical leadership throughout the world. The U.S. involvement in
assassination plots against foreign leaders and the attempt to foment
a military coup in Chile in 1970 against a democratically elected gov-
ernment were two examples of such failures in purposes and ideals.
Further, because of widespread exposure of covert, operations and
suspicion that others are taking place, the CIA is blamed for virtually
every foreign internal crisis.
4. The Executive''s Use of Covert Action
In its consideration of covert action, the Committee was struck by
the basic tension — if not incompatibility — of covert operations and
the demands of a cons'titutional svstem. Secrecy is essential to covert
operations; secrecy can, however, become a source of power, a l>arrier
to serious policy debate within government, and a means of circum-
venting the established checks and procedures of government. The
Committee found that secrecy and compartmentation contributed to
a temptation on the part of the Executive to resort, to covert o]:)erations
in order to avoid bureaucratic, congressional, and public debate. In
addition, the Committee found that the major successes of covert ac-
tion tended to encourage the Executive to press for the use of covert
action as the easy way to do things and to task the CIA with difficult
requirements, such as running a lai-ge-scale "secret" war in Laos or
' Cyrus Vance testimony, 12/5/75, Hearings, Vol. 7. p. 85, footnote.
157
attempting to overturn the results of a national election in Chile —
within a five-week period.
The Connnittee found that the Executiv^e Iras used the CIA to con-
duct covert operations because it is less 'accountable than other gov-
ernment agencies. In this regard, Secretary of State Henry Kissinger
told the Committee :
I do not believe in retrospect that it was good national policy
to have the CIA conduct the war in L/aos. I think we should
have found some other way of doing it. And to use the CIA
simply because it is less accountable for very visible major
operations is poor national policy. And the covert activities
should be confined to those matters that clearly fall into a
gray area between overt military action and diplomatic activi-
ties, and not to be used siinply for the convenience of the
executive branch and its acooimtability.^^
Under questioning, Secretary Kissinger went on to say that in Laos
there were two basic reasons why the CIA was used to fight that war :
"one, to avoid a formal avowal of American participation there for
diplomatic reasons, and tlie second, I suspect, because it was less
accountable.*' ^"^
The Committee has found that the temptation of the Executive to
use covert action as a "convenience" and as a substitute for publicly
accountable policies has been strengthened by the hesitancy of the
Congress to use its powers to oversee covert action by the CIA. Much
of this hesitancy flowed from the legitimate desire on the part of con-
gressional oversight committees to maintain the security of covert
action projects. But it also resulted from a reluctance on the part of
the appropriate committees to challenge the President or to become
directly involved in projects perceived to be necessary foi- the national
security. Congressional hesitancy also flowed from the fact that con-
gressional oversight coinmittees are almost totally dependent on the
Executive for information on covert operations. The secrecy needed
for these operations allows the Executive to justify the limited provi-
sion of information to the Congress.
5. Maintaining a Covert Gayability
Former senior government officials have testified to their concern
that the use and control of covert action is made more difficult by a
strong activism on the part of CIA operational officers. McGeorge
Bundy, a former Special Assistant for National Security Affairs to
Presidents Kennedy and Johnson, has Stated :
While in principle it has always been the understanding of
senior government officials outside the CIA that no covert
operations would be undertakeii without the explicit approval
of "higher authority,"' there has also been a general expecta-
tion within the Agency that it was its proper business to gen-
erate atti-active proposals and to stretch them, in operation,
to the furthest limit of any authorization actually received.^'
^^ Henry Kissinger tesitimony, 11/21/75, p. 54.
'"/birf., p. 56.
^' McGeorge Bundy testimony, House Select Committee on Intelligence,
12/10/75, Hearings, Vol. 5, pp. 1794-1795.
158
Clark Clifford, in testimony before the Select Committee, reinforced
this view :
On a number of occasions a plan for covert action has been
presented to the NSC and authority requested for the CIA to
proceed from point A to point B. The authority will be given
and the action will be launched. When point B is reached,
the persons in charge feel that it is necessary to go to point C
and they assume that the oiiginal authorization gives them
such a right. From point C, they go to D, and possibly E, and
even further. This led to some bizarre results, and, when
investigation is started, the excuse blandly presented that
the authority was obtained from the NSC before the project
was launched. ^^
The activism referred to by Bundy and Clifford is reflected in part,
in the maintenance of a standing covert action capability and a world-
wide "infrastructure." The Committee found that one of the most
troublesome and controversial issues it confronted in evaluating covert
action was the question of the utility and propriety of the CIA's main-
taining a worldwide "infrastructure" (e.g., agents of influence, assets,
and media contacts). Are these "assets" essential to the success of a
major covert action program ? Or does this standby capability generate
a temptation to intervene covertly as an alternative to diplomacy ?
There is no question that the CIA attaches great importance to the
maintenance of a worldwide clandestine infrastructure — the so-called
"plumbing"^ — in place. During the 1960s the Agency developed a
worldwide system o,f standby covert action "assets," ranging from
media personnel to individuals said to influence the behavior of gov-
ernments.^^ In recent yeai'S, however, the Agency has substantially re-
duced its overseas covert action infrastructure even to the point of
closing bases and stations. A limited infrastructure is still maintained,
however. For example, although the United States has no substantial
covert action program in the Western Hemisphere today, the CIA does
continue to maintain a modest co\ert action infrastructure consisting
of agents of influence and media contacts.
The CIA's infrastructure is constructed in response to annual Oper-
ating Directives. These directives set station priorities for both clan-
destine collection and covert action.'*° The Operating Directives are
developed and issued by the CIA and informally coordinated with
concerned CIA geographic bureaus and the Department of State.
Therefore, the infrastructure that is in place at any given time is
there at the direction of the CIA.
The Committee finds several troublesome problems with the CIA's
development and maintenance of covert action infrastructures
■'"Clark M. Clifford testimony 12/5/75, Hearings. Vol. 7, pp. 51-.52.
'"' During its assassination in(iuiry, the Committee found that certain CIA
assets, with the cryptonyms QJ/WIN, AVI/ROGUE and AM/LASH were in-
volved, or contemplated for use in, plots to assassinate foreign leaders.
^'' For example, the Chilean Operating Directive for FY 1972 directed the
Santiago Station to : "Sponsor a program which will enable the Chilean armed
forces to retain their integrity and independent political power. I'rovide direct
financial support to key military figures who can he expected to develop a mean-
ingful following in their respective services to restrain and, perhaps, topple the
Allende government." The Select Committee found no evidence to indicate that
this "direct financial support" was provided.
159
throughout the world: (1) The operating decisions are made by the
CIA, althougli infrastructure guidelines are cleared with the State
Department; the Agency's Operating Directives are rarely seen out-
side the CIA and (2) the actual covert action projects which build
and maintain these infrastructures rarely, if ever, go to the NSC for
approval.
The Connnittee finds that the independent issuance of Operating
Directives, and the fact that most covert action projects which estab-
lish and maintain the CIA's infrastructure around the world do not
go to the NSC, combine to shield this important clandestine system
from effective policy control and guidance. The Committee believes
that all small so-called "non-sensitive" projects which do not now go
to the NSC level for approval should, at a minimiun, be aggregated
into appropriate country or regional programs, and then brought to
the NSC level for approval.
Covert action should be the servant of policy. Secretary Kissinger
made this point before the Connnittee when he testified :
If the diplomatic track cannot succeed without the covert
track, then the covert track was imnecessary and should not
have been engaged in. So hopefully, if one wants to draw a
general conclusion, one would have to say that only those co-
vert actions can be justified that support a diplomatic track.^^
6. Conclusions
Given the open and democratic assumptions on which our govern-
ment is based, the Committee gave serious consideration to proposing
a total ban on all forms of covert action. The Committee has con-
cluded, however, that the ITnited States should maintain the option
of reacting in the future to a grave, unforeseen threat to United
States national security through covert means.
The Hughes-Ryan amendment to the 1974 Foreign Assistance Act
restricts the CIA fix>m undertaking "operations in foreign countries,
other than activities intended for obtaining necessary intelligence,
unless and until the President finds that each such operation is impor-
tant to the national security of the United States." *^ The Committee
has concluded that an even stricter standard for the use of covert action
is required than the injunction that such operations be "important to
the national security of the United States."
The Committee's review of covert action has underscored the neces-
sity for a thoroughgoing strengthening of the Executive's internal
review process for covert action and for the establishment of a realistic
system of accountability, both within the Executive, and to the Con-
gress and to the American people. The requirement for a rigorous and
credible system of control and accountability is complicated, however,
by the shield of secrecy which must necessarily be imposed on any
coveit activity if it is to remain covert. The challenge is to find a sub-
stitute for the public scrutiny thi'ough congressional debate and press
attention that normally attends government decisions. In its considera-
tion of the present processes of authorization and review, the Commit-
tee has found the following :
Henry Kissinger tesftimony, 11/21/75. p. 38.
See p. 1.51, for full text of Hughes-Ryan amendment.
160
(1) The most basic conclusion reached by the Committee is that
covert action must be seen as an exceptional act, to be undertaken only
when the national security requires it and when overt means will not
suffice. The Committee concludes that the policy and procedural bar-
riers are presently inadequate to insure that any covert operation is
absolutely essential to the national security. These barriers must be
tightened and raised or covert action should be abandoned as an in-
strument of foreign policy.
(2) On the basis of the record, the Committee has concluded that
covert action must in no case be a vehicle for clandestinely undertaking
actions incompatible with American principles. The Committee has
already moved to condemn assassinations and to recommend a statute
to forbid such activit3\ It is the Committee's view that the standards
to acceptable covert activity should also exclude covert operations in
an attempt to subvert democratic governments or provide support for
police or other internal security forces which engage in the systematic
violation of human rights.
(3) Covert operations must be based on a careful and systematic
analysis of a given situation, possible alternative outcome, the threat
to American interests of these possible outcomes, and above all, the
likely consequences of an attempt to intervene. A former senior intelli-
gence analyst told the Committee :
Clearly actions were taken on the basis of some premises, but
they seem not to have been arrived at by any sober and sys-
tematic analysis, and tended often, it appeared, to be sim-
plistic and passionate. In fact, thei-e was often little or no
relationship between the view of world politics as a whole, or
of particular situations of threat held by operatoi's on the
one hand, and analysts on the other. The latter were rarely
consulted by the former, and then only in partial disingenious
and even misleading ways.
It says something strange about successive DCIs that they
allowed this bifurcation, even contradiction, to obtain.*^
The Committee has concluded that bringing the analysts directly
into the forinal decision process would be a partial remedy to the prob-
lem of relating analysis to operations. More important would be the
insistence of the Director of (Central Intelligence that the political
premises of any proposed covert operation be rigorously analyzed.
(4) The Committee also concludes that the appropriate NSC com-
mittee (e.g., the Operations Advisory Group) should review every
covert action proposal. The Committee also hold,s strongly to the view
" .John Huizenga testimony, 1/26/76, pp. 6-7. The Committee found, in its
case study of Chile, that there was little or no coordination between the intelli-
gence analysts and the covert operators, e.specially in politically sensitive proj-
ects, which were often restricted within the Clandestine Service and the 40
Committee. The project files for Chile gave no indication of consultation with the
Intelligence Directorate from 1964 to 1973. The exclusion of expert analytic
advice extended to the DCI's staff responsible for preparing National Intelligence
Estimates. Today, however, the Deputy Director for Intelligence (DDI) is in-
formed by the DDO of new covert activities. The DDI has an opportunity to
comment on them and offer recommendations to the DCI, but he is not in the
formal approval process.
161
that the small nonsensitive covert action proposals which, in the aggre-
gate, establish and maintain the Agency's covert infrastructure around
tlie world should he considered and analyzed by the appropriate NSC
committee. The Connnittee also l)elieves that many of the small covert
action proposals for projects would fall away when forced to meet the
test of being part of a larger covert action operation in support of the
openly avoAved policies of the United States.
(5) With respect to congressional oversight of covert action, the
Committee believes that the appropriate oversight committee should
be informed of all significant covert operations prior to their initia-
tion and that all covert action projects should be reviewed by the com-
mittee on a semi-annual basis. Further, the oversight committee should
require that the annual budget submission for covert action programs
be specific and detailed as to the activity recommended. Unforeseen
covert action projects should be funded only from the Contingency
Reserve Fund which could be replenished only after the concurrence
of the oversight and any other appropriate congressional committees.
The legislative intelligence oversight committee should be notified
prior to any withdrawal from the Contingency Reserve Fund.
IX. CIA COUNTERINTELLIGENCE
A. Counterintelligence: an Introduction
1. Definition of C ounterintelligence
Counterintelligence (CI) is a special form of intelligence activity,
separate and distinct from other disciplines. Its purpose is to discover
hostile foreign intelligence operations and destroy their effectiveness.
This objective involves the protection of the United State Govern-
ment against infiltration by foreign agents, as well as the control and
manipulation of adversary intelligence operations. An effort is made
to both discern and decive the plans and intentions of enemy intel-
ligence services. Defined more formally, counterintelligence is an in-
telligence activity dedicated to undermining the effectiveness of hostile
intelligence services. Its purpose is to guard the nation againt espion-
age, other modern forms of spying, and sabotage directed against the
United States, its citizens, information, and installations, at home
and abroad, by infiltrating groups engaged in these practices and by
gathering, storing, and analyzing information on inimical clandestine
activity.^
In short, counterintelligence specialists wage nothing less than a
secret war against antagonistic intelligence services. "In the absence
of an effective LT.S. counterintelligence program," notes a counterin-
telligence specialist, "[adversaries of democracy] function in what is
largely a benign environment." ^
^. Tlie Threat
The adversaries of democracy are numerous and widespread. In the
Ignited States alone, 1,079 Soviet officials were on permanent assign-
ment in February 1975, according to FBI figures.^ Among these, over
40 percent have Ijeen positively identified as members of the KGB or
GRI^, the Soviet civilian and military intelligence units. Conservative
estimates for the number of imidentified intelligence officers raise the
figures to over 60 percent of the Soviet representation ; some defector
sources have estimated that 70 percent to 80 percent of Soviet officials
have some intelligence connection.*
Furthermore, the number of Soviets in the United States has triplea
since 1960, and is still increasing.'^ The opening of American deep-
water ports to Russian ships in 1972 has given Soviet intelligence
^ Counterintelligence may also be thought of as the knowledge needed for the
protection and preservation of the military, economic, and productive strength
of the United States, including the security of the Government in domestic and
foreign affairs against or from espionage, sabotage, and all other similar
clandestine activities designed to weaken or destroy the United States. (Report
of the Commission on Government Security Washington, D.C., 19.57. pp. 4.S-49. )
" Staff summary of interview, FBI counterintelligence specialist, 5/8/7.5.
^ Staff summary of interview, FBI counterintelligence specialist. 3/10/75.
* FBI counterintelligence specialist (staff summary), 3/10/75.
"'' FBI counterintelligence specialist (staff summary), 5/8/75.
(163)
164
services "virtually complete geographic access to the United States,"
observes a counterintelligence specialist.*' In 1974, for example, over 200
Soviet ships with a total crew complement of 13,000 officers and men
called at 40 deep-water ports in this country.
Various exchange groups provide additional opportunities for Soviet
intelligence gathering within the United States. Some 4,000 Soviets
entered the United States as commercial or exchange visitors in 1974.
During the past decade, the FBI identified over 100 intelligence officers
among the approximately 400 Soviet students who attended American
•universities during this period as part of an East- West student
exchange program.' Also, in the 14-year history of this program, more
than 100 American students were the target of Soviet recruitment
approaches in the USSR.
Other areas of counterintelligence concern include the sharp increase
in the number of Soviet immigrants to the United States (less than 500
in 1972 compared to 4,000 in 1974) ; the rise in East- West commercial
exchange visitors (from 641 in 1972 to 1,500 in 1974) ; and the growing
number of Soviet bloc officials in this country (from 416 in 1960 to 798
in 1975 ).«
Foreign intelligence agents have attempted to recruit not only execu-
tive branch personnel, but also Congressional staff members. The FBI
has advised the Committee that there have been instances in the past
where hostile foreign intelligence officers have used the opportunity
presented by overt contacts to attempt to recruit members of Congres-
sional staffs who might have access to secret information.^*
The most serious threat is from "illegal" agents who have no easily
detectable contacts with their intelligence service. The problem of
"illegals" is summarized by the FBI as follows :
The illegal is a highly trained specialist in espionage trade-
craft. He may be a [foreign] national and/or a professional
intelligence officer dispatched to the United States under a
false identity. Some illegals [may be] trained in the scientific
and technical field to permit easy access to sensitive areas of
employment.
The detection of . . . illegals presents a most serious problem
to the FBI, Once they enter the United States with either
fraudulent or true documentation, their presence is obscured
among the thousands of legitimate emigres entering the
United States annually. Relatively undetected, they are able
to maintain contact with [the foreign control] by means of
secret writing, microdots, and open signals in conventional
communications which are not susceptible to discovery
through conventional investigative measures.^*"
• IMd.
' IMd, 3/10/75.
* IMd.
** FBI Memorandum for the Record, 10/30/75. Such recruitment approaches
have heen reported to the FBI by Congressional staff members. If the FBI other-
wise learns of such recruitments, its policy is to report the facts to the appro-
priate Members of Congress.
^^ FBI memorandum, "Intelligence Activities Within the United States by
Foreign Governments," 3/20/75.
165
In several instances the FBI accomplished this most difl3.cult assign-
ment by carefully designed and limited mail opening programs which,
if they had ben authorized by a judicial warrant, might have been en-
tirely proper. It is most unfortunate that the FBI did not choose to seek
lawful authorization for such methods.^'^
This brief summary of the threat facing the American counterintel-
ligence corps in this country is troubling enough, yet it does not take
into accomit the worldwide scope of the problem. As an FBI counter-
intelligence expert states, hostile foreign intelligence services
are alert for operational opportunities against the United
States whether they occur within this country, abroad (in
other countries) or in the home country itself. An operation
might begin in the home country with recruitment of an
American visitor; transfer to the United States with his
return ; and again, even later, might be transferred to a third
country where the American agent may be met outside the
normal reach of United States counterintelligence coverage.
Regardless of the geographical location, the operation is still
directed against the United States and can cause just as much
damage from abroad as within our own borders.®
The espionage activities of the Soviet Union and other communist
nations directed against the United States are extensive and
relentless.®^
To combat this threat, American counterintelligence officers have
developed various sophisticated investigative techniques to (1) obtain
information about foreign intelligence services, (2) protect our
intelligence service, and (3) control the outcome of this subterranean
struggle for intelligence supremacy. The task is difficult technically,
and raises sensitive legal and ethical questions. As the CIA Deputy
Director for Operations has testified, the
U.S. counterintelligence program to be both effective and in
line with traditional American freedoms must steer a middle
course between blanket, illegal, frivolous and unsubstanti-
ated inquiries into the private lives of U.S. citizens and exces-
sive restrictions which will render the Government's counter-
intelligence arms impotent to protect the nation from foreign
penetration and covert manipulation.^"
3. CI as Product: Information about '"''The Etiermf'
Counterintelligence is both an activity and its product. The product
is reliable information about all the hostile foreign intelligence serv-
ices who attack the United States by stealth. To guard against hostile
intelligence operations aimed at this nation, a vast amount of infor-
mation is required. It is necessaiy to laiow the organizational structure
of the enemy service, the key personnel, the methods of recruitment
and training, and the specific operations.
This information must be gathered within the United States and in
all the foreign areas to which U.S. interests extend. Within the intelli-
*" Testimony of W. R. Wannall, Assistant Director, FBI, 10/21/75, p. 5; see
Report on CIA and FBI Mail Opening.
" FBI Counterintelligence specialist ( staff summary ) , 3/10/75.
*'' See Appendix III, Soviet Intelligence Collection and Operations Against the
United States.
'^ "William Nelson testimony, 1/28/76, p. 5.
166
gence service, this acquisitive activity is referred to as intelligence
collection. The resulting product — pertinent information on the enemy
intelligence service — is often called "raw" intelligence data. The efforts
of intelligence services through the world to conceal such information
from one another, through various security devices and elaborate de-
ceptions, creates the counterintelligence specialist what James Angle-
ton, former Chief of CIA Counterintelligence, calls a kind of "wilder-
ness of mirrors."
!).. CI as Activity : Security and C ounteres'pionage
As an activity, CI consists of two matching halves: security and
counterespionage. Security is the passive or defensive, side of counter-
intelligence. It consists basically of establishing static defenses against
all hostile and concealed acts, regardless of who carries them out.
C ounteresfionage (CE) is the offensive, or aggressive, side of coun-
terintelligence. It involves the identification of a specific adversary and
a knowledge of the specific operation he is conducting. Counterespion-
age personnel must then attempt to counter these operations by infil-
trating the hostile service (called penetration) and through various
forms of manipulation. Ideally, the thrust of the hostile operation is
turned back against the enemy.
The security side of counterintelligence includes the screening and
clearance of personnel and the development of programs to safeguard
sensitive intelligence information (that is, the proper administration
of security controls). The intelligence services try to defend three
things: (1) their personnel, (2) their installations, and (3) their
operations.
At the Central Intelligence Agency, the Office of Security is respon-
sible for protection of pei'sonnel and installations, while actual oper-
ations are largely the preserve of the CI staff and the operating divi-
sions. Among the defensive devices used for information control by
intelligence agencies throughout the world are: security clearances,
polygraphs, locking containers, security education, document ac-
coimtability, censorship, camouflage, and codes. Devices for physical
security include fences, lighting, general systems, alarms, badges and
passes, and watchdogs. Area control relies on curfews, checkpoints, re-
stricted areas, and border-frontier control.^- Thus the security side of
counterintelligence "is all that concerns perimeter defense, badges,
knowing eveiything you have to know about your own people;" the
counterespionage side "involves knowing all about intelligence serv-
ices — foreign intelligence services — theii- people, their installations,
their methods, and their operations. So that you have a completely
different level of , interest." ^^ However, the Office of Security and the
CI staff exchange information to assure adequate security systems.
5. The Penetration and the Double Agent
Several kinds of operations exist w^ithin the rubric of counterespion-
age. One, however, transcends all the others in importance: the pene-
tration. A primary goal of counterintelligence is to contain the intel-
ligence service of the enemy. To do so, it is eminently desirable to
'■ staff summary of interview, CIA security specialist, 8/20/75.
" Raymond Rocca deposition, 11/25/75, p. 19.
167
know his plans in advance and in detail. This admirable, but difficult
objective may be achieved through a high-level infiltration of the op-
position service. As a Director of the CIA has written, "Experience has
shown penetration to be the most effective response to Soviet and Bloc
Lmtelligence] services." "
Moreover, a well-placed infiltrator in a hostile intelligence service
may be better able than anyone else to determine whether one's own
service has been penetrated. A former Director of the Defense
Intelligence Agency (DIA) has observed that the three principal pro-
grams used by the United States to meet, neutralize, and defeat hos-
tile intelligence penetrations are: (1) our own penetrations; (2) se-
curity screening and clearance of personnel; and (3) our efforts for
safeguarding sensitive intelligence information.^^ The importance of
the penetration is emphasized by an experienced CIA counter-
espionage operative, with mixed but expressive similes: "Conduct-
ing counterespionage with penetration can be like shooting fish in a
barrel;" in contrast, "conducting counterespionage without the act
of penetration is like fighting in the dark." >^
Methods of infiltrating the opposition service take several forms.
Usually the most effective and desirable penetration is the recruit-
ment of an agent-in-place.^^ He is a citizen of an enemy nation and
is already in the employ of its intelligence service. Ideally, he
will be both highly placed and venal. The individual, say a KGB
officer in Bonn, is approached and asked to work for the intelligence
service of the United States. Various inducements — including ideol-
ogy — may be used to recruit him against his own service. If the
recruitment is successful, the operation may be especially worthwhile
since the agent is presumably already trusted within his organiza-
tion and his access to documents may be unquestioned. Jack E. Dun-
lap, who worked at and spied on the National Security Agency
(NSA) in the 1960s, is a well-known example of a Soviet agent-in-
place within the U.S. intelligence service. His handler was a Soviet
Air Force attache at the Soviet Embassy in Washington. Of course,
a single penetration can be worth an intelligence gold mine, as were
Kim Philby for the Soviet Union and Col. Oleg Penkovsky for the
United States.
Another method of infiltration is the double agent. Double agents,
however, are costly and time-consuming, and they are risky. Human
lives are at stake. Double agents also normally involve pure
drudgery, with few dramatic results, as new information is checked
against existing files. On top of this comes the difficulty of assuring
against a doublecross.
Moreover, passing credible documents can be a major problem.
The operations must be made interesting to the opposition. To make
fake papers plausible, the genuine article must be provided now and
again. Classified documents must be cleared, and this process can be
"Memorandum from John McCone to Chairman, President's Foreign Intel-
ligence Advisory Board. 10/8/63.
" The Carroll Report on the Dunlap Case, 2/12/64.
'" CIA/CI specialist, staff summary, 11/1/75.
" CIA/CI specialist, staff summary, 10/17/75.
168
painstakingly slow. Also, "this means letting a lot of good stuff go to
the enemy without much in return," complains a CI officer with con-
siderable experience.^^
To accomplish each of these tasks, hard work, careful planning, and
considerable manpower are necessary. The extraordinary manpower
requirements of the double agent operation restricted the abilities
of the British to run cases during the Second World War^ — approxi-
mately 150 double agents for the entire period of the war and no more
than about 25 at any one time.^^ Moreover, their mission was eased
greatly by the ability of the British to read the German cipher
throughout most of the conflict.
6. The Defector
Almost as good as the agent-in-place and less troublesome than the
whole range of double agents is the "defector with knowledge.'' Here
the procedure consists of interrogation and validation of bona fides, as
usual, but without the worrisome, ongoing requirements for a skillful
mix of false and genuine documents and other logistical support.
Though an agent-in-place is preferable because of the continuing use-
ful information he can provide, often a man does not want to risk his
life by staying in-place, especially where the security is sophisticated;
his preference is to defect to safety. In other words, agents-in-place are
harder to come by in systems like the Soviet bloc countries; defection
is more likely. ^° In contrast, agents-in-place are more easily recruited
in so-called Third World areas.
Within the United States, the interrogation of intelligence service
defectors who have defected in the U.S. is primarily the responsibility
of the FBI, though the CIA may have a folloAv-up session with the
individual. Sometimes the bona fides of a defector remain disputed for
many years.
CIA-recruited defectoi-s abroad are occasionally brought to the
United States and resettled. The FBI is notified and, after the CIA
completes its interrogation, FBI may interrogate. CIA does not bring
all defectors to the United States; only those expected to make a sig-
nificant contribution. CIA generally handles resettlement not only of
defectors from abroad, but also (at the request of the FBI) of de-
fectors in the United States.
7. The Deception
The penetration or double agent is closely related to another impor-
tant CE technique: the deception. Simply stated, the deception is an
attempt to give the enemy a false impression about something, caus-
ing him to take action contrary to his own interests. Fooling the Ger-
mans into the belief that D Day landings were to be in the Pas de Calais
rather than in Normandy is a classic example of a successful deception
operation in World War II.^^
'* Rocca deposition, 11/25/75, pp. 33-.34.
^* Sir .Tohn Masterman, Double Cross System of the War of 1939-Jf5 (New
Haven : Yale University Press, 1972) .
■" Bruce Solie, deposition, 11/25/75, pp. 26-27.
"' Masterman, Double Cross System.
169
Deception is related to penetration because our agents operating
within foreign intelligence agencies can serve as excellent cliaimels
through which misleading information can How to the enemy. So
double agents serve both as collectors of positive intelligence and
channels for deception. However, there are opportunities for deception
other than our own agents; in fact, "an infinite variety'' exists, accord-
ing to an experienced practitioner.^^ One example: the U.S. can
allow penetration of its own intelligence service, and then feed false
information through him.
8. Other CI Techniques
Other counterespionage operations include surreptitious surveil-
lance of various kinds (for instance, audio, mail, physical, and "opti-
cal" — that is, photography), interrogation (sometimes incommuni-
cado as in the case of one defector) , and provocation. Decoding clandes-
tine radio transmission and letters with messages written in secret
ink between the visible lines is part and parcel of the CE trade, as is
trailing suspected agents, observing "dead droj)s" (the exchange of
material, like documents or instructions, between a spy and his han-
dler), and photographing individuals entering opposition embassies
or at other locations. At the recent funeral of CIA agent Kichard
Welch, two Eastern European diplomats were discovered among the
press corps snapping photographs of CIA intelligence officers attend-
ing the burial ceremony.^* Since the focus of offensive counterintelli-
gence is disruption of the enemy service, provocation can be an im-
portant element of CE, too. It amounts, in essence, to harassment of
the opiX)sition, such as publishing the names of his agents or sending
a defector into his midst who is in reality a double agent.
9. CI as Organization
Security at CIA is the responsibility of the Office of Security, a
division of the Dejjuty Director for Administration. Counterespionage
policy is guided by the Counterintelligence Staff of the Operations
Directorate (Clandestine Service). Besides setting policy, the CI Staff
sometimes conducts its own operations, though most CI operations
emanate directly from the various geographic divisions as the CI field
personnel — through the practice of the counterintelligence discipline —
attempt to guard against enemy manipulation of espionage and covert
action operations.
Structurally, counterintelligence services are usually composed of
two additional sections which support Security and Operations. They
are the Research and the Liaison sections. Good research is critical
to a good counterintelligence effort, and it may take several forms. It
can involve the amassing of encyclopedic intelligence on individuals,
including American citizens associated — wittingly or unwitttingly —
with hostile intelligence services. Specialists say that the hallmark of
a sophisticated CI service is its collection of accurate records.^"^ CI
research personnel also produce reports on topics of interest to the
specialty, including guidelines for the interrogation of defectors and
current analyses on such subjects as proprietary companies used by
^" CTA counterintelligence specialist (staff summary). 11/1/75.
^* CIA counterintelligence specialist (staff summary), 1/15/76.
^ 6/27/75.
"= Ihid, 6/27/75.
69-983 O - 7fi - 12
170
foreign intelligence services and the structure of Soviet bloc intel-
ligence services. CI researchers also analyze defector briefs and, in the
case of compromised documents, help ascertain who had access and
what damage was inflicted.
Liaison with other counterintelligence services, 'at home and abroad,
is also vital since no effective counterintelligence organization can do
its job alone. The various CI units at home are particularly impor-
tant, as counterintelligence — ^with all its intricacies and deceptions —
requires coordination among agencies and sharing of records. Unlike
the totally unified KGB organization, the American intelligence serv-
ice is fragmented and depends upon liaison to make operations more
effective. Coordination between CIA and FBI counterintelligence
units is esipecially critical since, in theory at least, the former has for-
eign jurisdiction and the latter domestic, yet they must monitor the
movements of foreign spies in and out of these two jurisdictions. Some-
times this coordination fails dramatically. In 1970, for example, J.
Edgar Hoover of the FBI terminated formal liaison with the CIA
and all the other intelligence units in the Government because of a
disagreement with the CIA on a question of source disclosure (the
Thomas Riha case).^^
Liaison with foreign intelligence services overseas can undergo
strain, too. As one CI specialist has said : "There are no friendly serv-
ices; there are services of friendly foreign powers." ^^ Each service
fears the other has been infiltrated by hostile agents and is reluctant
to see national secrets go outside its own vaults. Nonetheless, coopera-
tion does take place, since all intelligence services seek information and,
with precautions, will take it Avhere they can get it if it is useful.
The CIA will work with friendly services to uncover hostile intel-
ligence operations, including illegals, directed at the government of
the friendly service. For example, a CIA-recruited defector may re-
veal Soviet agents in a friendly foi-eign government. This information
is shared with the friendly government, if there is proper protection
of the source. Protection of the CIA source is paramount.
FBI counterespionage activities within the United States are super-
vised by the Counterintelligence l^ranch of the FBI Intelligence Di-
vision. The Branch is made up of four Sections, three of which direct
field operations conducted by the Bureau's field offices. The fouith
handles liaison with other agencies and supervises the FBI's Legal
Attaches assigned to serve in the embassies in several foreign countries.
The formal structure foi' counterespionage coordination between the
FBI and the military intelligence agencies was established in 1939
and embodied most recently in a "charter" for the Interdepartmental
Intelligence Conference in 1964.^"'' This formal body, chaired by the
FBI Director and including the heads of the military intelligence
agencies, has not played a significant decisionmaking role in recent
years.
-* Staff summary of interview, former FBI liaison person with CIA, 8/22/75.
" Rocea deposition, 11/25/75, p. 43.
'"" Confidential memorandum from President Roosevelt to Department Heads,
6/26/39; memorandum from Attorney General Kennedy to .7. Edgar Hoover,
Chairman, Interdepartmental Intelligence Conference, 3/5/64.
171
As late as 1974, some FBI officials took the position that the Bu-
reau's counterespionage activities were not under the authority of
the Attorney General, since the FBI was accountable in this area
directly to the United States Intelligence Board and the National
Security Council. A Justice Department committee chaired by As-
sistant Attorney General Henry Petersen sharply rejected this view
and declared :
There can be no doubt that in the area of foreign counter-
intelligence, as in all its other functions, the FBI is subject
to the power and authority of the Attorney General.-^"
In recent years the FBI has taken steps to upgrade its counter-
espionage effort, which had been neglected because of the higher
priority given to domestic intelligence in the late 60s and early 70s.^'*^
New career development and mid-career training programs have been
instituted. FBI agents specializing in counterespionage begin their
careers as criminal investigators and not as analysts; and Bureau
officials stress that their role is accurate fact-finding, rather than
evaluation. Nevertheless, counterespionage supervisory personnel have
recently attended high-level training courses in foreign affairs and area
studies outside the Bureau.^""^
Here, then, are the key elements of counterintelligence. Together
they combine into a discipline of great importance, for the rock bottom
obligation of an intelligence service is to defend the country ; meeting
this obligation is the very raison dJ'etre of counterintelligence. The
discipline also represents the most secret of secret intelligence ac-
tivities — the heart of the onion. Its great importance and its ultra
secrecy make counterintelligence an area of concern that cannot be
ignored by policymakers and by those responsible for legislative over-
sight. As a review of current issues in CI attests, the discipline has
several problems which demand the attention of those charged with
the defense of the country and the reform of the intelligence
community.
B. Current Issues in Counterintelligence
1. Two Philosophies
December 1974 marked the end of an era in CIA counterintelli-
gence. James Angleton, the Chief of Counterintelligence at the Central
Intelligence Agency since 1954, retired over differences of opinion with
Director William Colby on the proper approach to the practice of
counterintelligence.
The new regime proved to be considerably different in its approach
to counterintelligence, emphasizing a diffusion of CI responsibili-
^" Report of the Petersen Committee on COINTELPRO, pp. 34-35. The com-
mittee was especially concerned that the ad hoc equivalent of the U.S. Intelli-
gence Board had approved the discredited "Huston Plan" in 1970. However, the
committee complied with the FBI's request that it exclude from it.? review of
domestic COINTELPRO activities the Bureau's "extremely sensitive foreign
intelligence collection techniques." (Memorandum from FBI Director Kelley to
Acting Attorney General Robert Bork, 12/11/73.)
^' C. D. Brennan testimony, Hearings, Vol. 2, p. 117.
""^ W. R. Wannall testimony, 1/21/76, pp. 18-22.
172
ties throughout the Operations Directorate. Presumably, this has
led to an increased flow of counterintelligence information within the
Agency but, at the same time, has raised questions concerning com-
partmentation and security.
The new Chief of CIA Counterintelligence has instituted a series
of specific changes which have been studied closely by the Select
Committee. The findings are of an extremely sensitive character and
have been reported to the Senate and to the President in a classified
form. It should be noted here that CIA counterintelligence is now em-
phasizing different factors than heretofore, which reflect a some-
what different philosophy than that espoused by Angleton. These dif-
erences in viewpoint raise several important questions concerning how
best to protect the United States, including the proper degree of com-
partmentation of CI information, methods of operation, approaches
to security, research priorities, extent of liaison cooperation, and
emphasis on deception activities, among other things.
A high-level executive branch review of the classified issues which
have surfaced in this disagreement is of considerable importance. In-
cluded in this review should be an examination of the approval proc-
ess for certain counterespionage operations.
2. Interagency Relations
Equally as troubling as these issues is the problem of CIA/CI rela-
tions with other counterintelligence units in the Government. Partic-
ularly vexing have been the on-again off-again liaison ties between the
Agency and the FBI.^^ This histoiy has been marked by turbulence,
though a strong undercurrent of cooperation has usually existed at
the staff level since 1952 (when the Bureau began sending a liaison
man to the CIA on a regular basis). The sources of friction between
the CIA and the FBI in the early days revolved around such matters
as the frequent unwillingness of the Bureau to assist the CIA within
the United States or to help recruit foreign officials in this country.
Pressure from the CIA on the Bureau to increase microphone coverage
of foreign targets within the United States was also a "red flag" to
Hoover.^^
A series of such disagreements punctuated the relations between
the two agencies throughout the 1950s and 1960s. Several flaps arose,
for example, when the CIA Domestic Operations Division attempted
to recruit foreign officials within the United States and failed to ad-
vise the Bureau.^°
In 1966 an infoiTnal agreement w^as negotiated between the FBI and
the CIA to regularize their "coordination." This agreement had as its
"heart" that the CIA would "seek concurrence and coordination of the
FBI" before engaging in clandestine activity in the United States, and
that the FBI would "concur and coordinate if the proposed action does
not conflict with any operation, current or planned, including active
investigation [by] the FBI." Moreover, when an agent recmited by
the CIA abroad arrived in the United States, the FBI would "be
advised" and the two agencies would "confer regarding the handling
* Former FBI liaison person with CIA (staff summary), 8/22/75.
Ihid.
' Ihid.
173
of the agent in the United States," The CIA could "continue" its "han-
dling" of the agent for "foreign intelligence" purposes ; and the FBI
would also become involved where there were "internal security fac-
tors," although it was recognized that CIA might continue to "handle"
the agent in the United States and provide the Bureau with "informa-
tion" bearing on "internal security matters." ^°^'
Eventually, the much heralded (though actually minor) Riha inci-
dent in 1970 became "the straw that broke the camel's back." ^^ Hoover
ordered the discontinuation of FBI liaison with the Central Intelli-
gence Agency. Though informal means of communication continued
between CIA and FBI staff personnel, Hoover's decision was a set-
back to the coordination of counterintelligence activities in the Gov-
ernment, Not until Hoover was gone from the Bureau did formal
liaison relations begin to improve.^^
Today, most counterintelligence officers in both agencies say that
coordination and communication linkages are good, though a recently
retired CIA/CI officer points to "a vital need for closer integi-ation
of the CI efforts of the CIA and the FBI." ^^ The most salient criti-
cisms of FBI counterintelligence voiced at the CIA concern (1) the
lack of sufficient CI manpower in the FBI; (2) occasional disputes
over the bona fides of defectors: and, (3) differences of opinion on
the possibility of hostile penetrations within the Government. Each
of these matters also requires immediate review by the executive
branch. In particular, the occasional interagency disputes over de-
fector bona fides and differences of opinion on suspected hostile pene-
trations cry out for a higher level of authority in the executive branch
to settle these sometimes divisive disagreements.
•5. The jScope and Bams of FBI Counterintelligence
In the imperfect contemporary Avorld where other nations have
interests which conflict with those of the United States, foreign-
directed clandestine intelligence activities in this country must be of
constant concern to the American people. One of the original reasons
for the FBI's domestic intelligence mission was that the United States
needed in the late 1930s a coordinated program for investigating "per-
sons engaged in espionage, counter-espionage or sabotage." ^^ By mid-
1939 the FBI and military intelligence had gathered a "reservoir of
information concerning foreign agencies operating in the United
States" with efficient "channels for the exchange of information." ^^
There is no question that during this prewar period, foreign espionage
constituted a serious threat to the security of the United States and
thus supported the basic decision to conduct investigations of activities
which were "not within the specific provisions of prevailing statutes" ^®
^"^ Testimony of former FBI liaison person with CIA, 9/22/75, pp. 52-55.
^ .Tames Angleton testimony, 9/24/75, Hearings, pp. 657-58.
^ Scott Miller testimony, the Commission on CIA Activities Within the United
States, 3/19/75, p. 938.
*• Statement from Scott Miler to the Senate Select Committee, 1/28/76, pp.
32^33.
^ Memorandum from J. Edgar Hoover to Attorney General Murphy, 3/16/39.
^ Ijetter from Attorney General Murphy to President Roosevelt, 6/17/39.
** Memorandum from Hoover to Murphy, 3/16/39.
174
but which involved "potential" espionage, counterespionage, or sabo-
tage.^"
One of the major difficulties in any attempt to base investigations
of foreign espionage on the criminal statutes has been, from the outset,
the restricted and sometimes contradictory scope of the laws. A recent
legal analysis has observed that "the legislation is in many ways in-
comprehensible." ^* Most notably, the espionage statutes do not make
it a crime simply to engage in the knowing and unauthorized transfer
of classified information to foreign agents.^^ Moreover, the statutes
do not extend to a range of privately held information, especially on
scientific and technical matters, which would be valuable to a foreign
power.
Hostile foreign intelligence activities include more than just look-
ing for classified information or espionage recruits. Information of a
highly technical and strategic nature (though unclassified), which is
normally restricted or unavailable in other societies, is openly
procurable in the United States through academic institutions, trade
associations, and government offices. Intelligence officers may seek out
persons who have defected to the United States, to induce them to
redefect back to their home country .^° Foreign intelligence targets in
this country may include information possessed by third nations and
their representatives in the United States.
Moreover, the type of activity w^hicli is most easy to detect and which
may indicate possible espionage does not always satisfy the normal
standard of "reasonable suspicion." As a study prepared by the Fund
for the Republic stated twenty years ago :
The problems of crime detection in combatting espionage are
not ordinary ones. Espionage is a crime which succeeds only
b}^ secrecy. Moreover-, spies work not for themselves or
privately organized crime "syndicates," but as agents of na-
tional states. Their activities are therefore likely to be care-
fully planned, highly organized, and carried on by techniques
skillfully designed to prevent detection.*^
Consequently, espionage investigations must be initiated on the basis
of fragments of information, especially where there may be only an
indication of a suspicious contact with a foreign agent and limited
data as to the specific purposes of the contact.
In addition, prosecution is frequently not the objective of an espi-
onage investigation. For one thing, the government may desire "to
''' Directive of President Roosevelt, 6/26/39. While the FBI's responsibilities
were also described at times as extending to "subversion," and the lack of outside
guidance allowed for overly broad FBI investigations, the problem of spying
was always paramount. See the orders of President Roosevelt and Attorney
General Biddle regarding warrantless wiretapping, discussed in report on war-
rantless FBI Electronic Surveillance.
^ Harold Edgar and Benno C. Schmidt, "The Espionage Statutes and Publica-
tion of Defense Information." Coliimhia Law Review, Vol. .53, (Mav. 1{>73) pp.
929. 9.34.
^^ Ibid., p. 1084.
*" FBI Memorandum, "Intelligence Activities Within the United States by For-
eign Governments," 3/20/75.
" Fund for the Republic, Digest of the Puhlic Record of Communism in the
United States (New York, 1955) , p. 29.
175
avoid exposino: its own coiinterespiona;gre practices and informa-
tion." *^ In addition, the purpose of the investigation may be to find
out what a known foreign agent is looking for, both as an indication
of the espionage interest of the foreign country and as a means of
insuring that the agent is not on the track of vital information. Since
foreign agents are replaceable, it may be a better defense not to expel
them from the country or otherwise halt their activities, but rather to
maintain a constant watch on their operations. This also means in-
vestigating in a more limited fashion many of the Americans with
whom the foreign agent associates, in order to determine what the
agent may be interested in learning from them.
In the 19-^Os and 1940s, another argument for going beyond the
criminal statutes was that there were significant ideological and na-
tionality factors which motivated persons to engage in espionage. As
Attorney General Jackson put it in 1940, individuals were a "likely
source" of law violation because they w^ere "sympathetic with the sys-
tems or designs of foreign dictators." ^^ The 1946 Report of the Cana-
dian Royal Commission made similar findings. This was the most
pereuasive rationale for continuing FBI intelligence investigations
of Communists and Fascists, as well as German and other nationality
groups, before World War II. It continued to be a substantial basis
for such investigations of Commimists after the war.**
By the mid-fifties, however, the characteristics of foreign espionage
had changed substantially. The decline of the Communist Party caused
a shrinkage in possible recruits, with the result that Soviet in-
telligence reverted "more and more ... to the old type of conven-
tional spy." *^ A report prepared by the Association of the Bar of the
City of New York observed that it was "vital" to adjust the govern-
ment's security programs to "new conditions," one of which w^as the
"decline of the appeal of Communism." The report added :
In the 1930s and 1940s the Soviet Union could rely on the
support, of a small but substantial group in this country who
were sympathetic with its asserted aims. Now this has largely
changed. . . . This has made a radical change in the type and
number of persons who might be lured into Communist
espionage.*''
The FBI itself believed that the Community Party had become a
"potential" rather than an actual espionage danger.*^ While that
*^ Ibid.
*^ Proceedings of the Federal-State Conference on Law Enforcement Problems
of National Defense, 8/.5-6/40.
** "A characteristic of most of the cases in which espionage for the Soviet
Union has been prosecuted is that the participants seem to have been motivated
by ideology. . . ." Fund for the Republic, Digest of the Public Record of Com-
munism in the Ignited States, p. 29.
*° Alexander Dallin, Soviet Espionage ( New Haven : Yale University Press,
1955), p. 510. This authoritative study of Communist espionage added that "the
traditional type of nonpolitical spy has advantages over a Communist : his past
evokes no suspicion."
"Report of the Special Committee on the Federal Loyalty-Security Program
of the Association of the Bar of the City of New York ( New York : Dodd, Mead
&Co., 1956), pp. 35-36.
*''FBI Monograph, "The Communist Menace in the United States Today,"
(19.55), p. (iv-v.)
176
potential threat was still significant, in view of the Party's subser-
vience to the Soviet Union, the counterespionage justification for
sweeping investigations of persons one or two steps removed from
the Party (e.g., "sympathizers" or "infiltrated" groups) lost much of
its force.
Nevertheless, there continue to be hostile foreign intelligence ac-
tivities which the FBI characterizes as "efforts to penetrate the Ameri-
can political system" or attempts "to develop an agent of influence in
American politics" or efforts "to influence the U.S. policy-making
structure." "^^
Therefore, the monitoring of contacts between U.S. government of-
ficials and foreign officials who are likely to be carrying out the direc-
tions of a hostile foreign intelligence service is a necessary part of
the FBI's investigative duties. The subject of investigation is the for-
eign official, and any inquiry directed towards the American official
can be limited to determining the nature of the foreign official's in-
terests. Frequently it is desirable that the American official be in-
formed by the Bureau, especially when the contact is overt rather
than furtive or clandestine. (The same is also true with respect to
overt contacts with American private citizens.) ^'■'
There lare two areas of special difficulty in prescribing the FBI's
proper responsibility. The first involves contacts between Members of
Congress or high-level executive officials and equally high-level for-
eign officials. There have been ins^tances where the FBI has had reason
to believe that such contacts might involve the unauthorized disclosure
of confidential information to a foreign government. Except in such
rare circumstances, however, contacts of this nature need not be the
subject of FBI investigation or dissemination. ^°
The second difficulty involves the concept "foreign subversion," used
most recently in President Ford's Executive Order defining the coun-
terintelligence duties of the U.S. intelligence community, including
the FBI.^^ As noted above, the Bureau characterizes certain hostile
foreign intelligence activities as attempts to develop "agents of influ-
ence in American politics." The" FBI considered one of Dr. Martin
Luther King's advisors to be such an "agent of influence." In this case,
as with the massive investigations to uncover jwssible foreign "influ-
ence" on domestic protest activities, the concern for "foreign subver-
sion" was distorted so far beyond reasonable definition that the term
"subversion" should be abandoned completely. Even with the qualifier
"foreign," the concept is so elastic as to be susceptible to future misuse.
Nevertheless, there remains a compelling need to investigate aJJ the
activities of hostile foreign intelligence services, including their efforts
to recniit "agents of influence." This can be accomplished by continu-
ing investigation of the foreign agents themselves. Where a foreign
'^ FBI Memorandum, "Intelligence Activities Within the United States by
Foreign Governments," 3/20/75.
^* Contacts made secretly or with the apparent intent to avoid detection justify
more extensive iuAestigation.
™ Where the FBI discovers such contacts as a by-product of its investigations
for other purjKXses, they can be notetl without reference to the identity of the U.S.
official in order to compile a quantitative measure of foreign activity.
"^ Executive Order 11905, "United States Foreign Intelligence Activities," Sec.
2(a)(2) : Sec. 4(b)(4) ; Sec. 4(g) (1), 2/18/76.
177
agent makes an overt contact with an American, a limited inquiry
regarding the American is appropriaite to deter-mine the rrature of the
foreigrr agent's interests. This applies whether the agent's interest is
infor-mation or "influence," and the Bureau cair frequently make its
inquiry known to the Airrerican. But the Bureau's objectives should be
c-onfined solely to learrring more about the overall mission of the hostile
ser*vice and tire par-ticular assigmnents of its officers, as opposed to
investigatiirg "influerrce" by foreign officials or agerrts who do rrot have
irrtelligeirce duties and the lawful activities of Americarrs who are not
foreigrr agerrts. There is rro compellirrg reasorr for irrterrsive irrvestiga-
tions of U.S. officials (or private citizerrs) simply becarrse they are
targets of foreigrr "'influerrce." The lirre must be tightly dr'awn so that
FBI courrter-intelligerrce irrvestigatiorrs do rrot therrrselves once agairr
irrtrrrde irrto the Airrericarr political process, with corrsequerrces darrrag-
ing not oirly to the rights of Americarrs, but also to public confiderrce
irr the Burearr. Citizerr cooperation with the FBI is esserrtial to its suc-
cess in detectirrg arrd corrntering the threat of hostile foreigrr intelli-
gence operutiorrs to the defense of the nation.
To achieve this end, the federal criminal statutes dealing with
espiorrage should be substarrtially revised to take accourrt of the con-
temporary counterintelligence responsibilities of the FBI. A realistic
defirrition of foreign-directed clandestine intelligerrce activity would
make it possible for the FBI to base its couirterirrtelligence mvestiga-
tiorrs orr the firm foundation of the criminal law, rather than the shift-
irrg interpretatiorrs of terms like "subversiorr" in executive orders. The
Conrmittee agrees with Attorney General Edward H. Levi that:
the fact that the FBI has criminal investigative responsi-
bilities, which must be conducted within the confines of con-
stitutiorral protections strictly errforced by the courts, gives
the organization an awareness of the interests of individual
liberties that might be missing in an agerrcy devoted solely to
intelligence work.^^
C. Conclusions
1. A Subcommittee on Counterintelligence should be established
within the framework of the National Security Council (NSC). Its
prrrpose would be to monitor CI activities, authorize important
courrterespionage operations, and adjudicate interagerrcy disagree-
ments over CI policies, coordination, defector bona fides, suspected
hostile penetrations, and related matters.
2. The President of the United States, in consultation with the
oversight committee (s) of Congress, should undertake a top secret
review of current issues iir the realm of counterintelligence. This re-
view, which should form the basis for an internal Presidential state-
merrt on rrational counterintelligence policy arrd objectives, should
iirclude close attention to the followirrg issrres: compartmerrtation,
operations, security, research, accountability, trairrirrg, interrral review,
deceptiorr, liaisorr and coordination, and mairpower.
8. Corrgressional oversight should devote more atterrtiorr to this
"" Levi testimony, 12/10/75, Hearings, Vol. 6, pp. 314-315.
178
area to help preserve the liberties of American citizens and to prod
the intelligence community toward a more effective defense of the
nation.
(Additional recommendations on counterintelligence, including
reform of the espionage laws and legislation setting standards for
activities affecting the rights of Americans, are made in the Commit-
tee's Report on Intelligence Activities and the Rights of Americans.)
X. THE DOMESTIC IMPACT OF FOREIGN CLANDESTINE
OPERATIONS: THE CIA AND ACADEMIC INSTITU-
TIONS, THE MEDIA, AND RELIGIOUS INSTITUTIONS
Although its operational arena is outside the United States, CIA
clandestine operations make use of American citizens as individuals
or through American institutions. Clandestine activities that touch
American institutions and individuals have taken many forms and are
effected through a wide variety of means : university officials and pro-
fessors -provide leads and make introductions for intelJigence pur-
poses; ^ scholars and journalists collect intelligence; journalists devise
and place propaganda; United States publications provide cover for
CIA agents overseas.
These forms of clandestine cooperation had tlieir origins in the early
Cold War period when most Americans perceived a real threat of a
communist imperium and were prepared to assist their government
to counter that threat. As the communists pressed to influence and to
control international organizations and movements, mass communica-
tions, and cultural institutions, the United States responded by in-
volving American private institutions and individuals in the secret
struggle over minds, institutions and ideas. Over time national per-
ceptions would change as to the nature and seriousness of the com-
munist ideological and institutional threat. Time and experience would
also give increasing currency to doubts as to whether it made sense for
■a democracy to resort to practices such as the clandestine use of free
American institutions and individuals — practices that tended to blur
the very difference 'bet^veen "our" system and "theirs" that these
covert programs were designed to preserve.
These covert relationsliips have attracted public concern and the
attention of this Committee because of the importance Americans
attach to the independence of private institutions. Americans recognize
that insofar as univereities, newspapei-s, and religious groups help
mold the beliefs of the i:)ulblic and the policymakers, their divei"sity
and legitimacy must be rigorously protected. It is through them that
a society informs and criticizes itself, educates its yomig, interprets
its history, and sets new goals.
At the same time, Americans also recognize the legitimacy and
necessity of certain clandestine operations, particularly the collection
of foreign intelligence. To conclude that certain sectore of American
life must be placed "off limits" to clandestine operations inevitably
raises questions not only on possible intelligence loSvSes which would
result from such a prohibition, but on whether the United States can
^The material italicized in this report has been substantially abridge at the
request of the executive agencies. The classified version of this material is avail-
able to members of the Senate under the provisions of Senate Resolution 21 and
the Standing Rules of the Senate. See also p. IX.
(179)
180
afford to foreoo the clandestine use of our universities, our media, and
our religious groups in competing- with our adversaries.
In exploring this problem the Committee has given special atten-
tion to the CIA's past clandestine relationships with American institu-
tions. The Committee has examined the past to illuminate the attitudes
and perceptions that shaped these clandestine programs using Amer-
ican institutions and to determine whether tJie internal CIA regula-
tions established in 1967 are sufficient to prevent the large scale pro-
grams of the past from being reinstated in the future.
Some of these concerns were addressed almost a decade ago during
an investigation that proved to 'be a watershed in the Central Intelli-
gence Agency's relationship to Amencan institutions. President
Lyndon Johnson, moved by public and congressional uproar over the
1967 disclosure of the CIA's covert funding of the National Student
Association (NSA) and other domestic, private institutions, estiablished
the Katzenbach Committee. The Committee, chaired by the then Under
Secretai-y of State, Nicholas Katzenbach, directed its investigation
primarily at the CIA's covert funding of American educational and
private voluntary organizations. The recommendations of the Katzen-
bach Committee, although they had great impact on the CIA's opera-
tions, spoke only to the issue of tlie covert funding of institutions.
In its investigation the Committee has looked not only at the impact
of foreign clandestine operations on American institutions but has
focused particular attention on the covert, use of individuals. It should
be emphasized from the outset that the integrity of these institutions
or individuals is not jeopardized by open contact or cooperation
with Government intelligence institutions. United States Govern-
ment support and cooperation, openly acknowledged, plays an essen-
tial role in American education. Equally important. Government pol-
icymakers draw on the technical expertise and advice available fi*om
academic consultants and university-relaJted research organizations.
Open and regular contact with Government agencies is a necessary
part of the journalist's responsibility, as well.
A secret or a covert relationship with any of these institutions, how-
ever, is another matter, and requires careful evaluation, given the
critical role these institutions play in maintaining the freedom of our
society. In approaching the subject the Committee has inquired : Are
the independence and integrity of American institutions in any way
endangered by clandestine relationships with the Central Intelligence
Agency? Should clandestine use of institutions or individuals within
those ins'titutions be pennitted? If not, should there be explicit guide-
lines laid down to regidate Government clandestine support or opera-
tional use of such institutions or individuals ? Should such giiidelines
be in the form of executive directives or by statute?
In addressing these issues, the Committee's access to CIA documents
and files varied with the subject matter. In reviewing the clandestine
activities that proceeded the Katzenbach Committee inquiry of 1967.
the Select Committee had full and unfettered access to most files and
documentation, with the single exception of records on media rela-
tionships. In addition, the Committee took extensive sworn testimony
from virtually all of those involved in the management and review^ of
the pre-1967 projects. Access to post-1967 material was far more re-
181
stricted: certain of die titles and names of authors of propaganda
books published after 1967 were denied the Committee ; access to files
on the oontempoiury clandestine use of the American academic com-
munity was restricted 'to infonnation which would provide the num-
bers of institutions and individuals involved and a description of the
role of the individuals. As for the media and relationships with re-
ligious groups, the Committee inspected precis or summaries of all
operational relationships since 1951 and then selected over 20 cases for
closer inspection. The documents fix)m these some 20 files were selected
and screened by the Agency and, by mutual agreement, names of indi-
viduals and institutions were removed.
Therefore, the CcMnmittee has far from the full picture of the nature
and exifent of these relationships and the domestic impact of foreign
clandestine operations. Nevertheless, it has enough to outline the
dimensions of the problem and to underscore its serious nature. The
conclusions and reconmiendations must necessarily be considered
tentative and subject to careful review by the successor intelligence
oversight committee (s) of the Congress.
In presenting the facts and issues associated with CIA covert rela-
tions with TTnited St)ates private institutions, this report is organized
as follows : I. Covert Use of Academic and Voluntary Organizations.
11. Covert Relationships with the United States Media. III. Covert
ITse of United States Religious Groups.
A. Covert Use of Academic and Voluntary Organizations
The Central Intelligence Agency has long- developed clandestine
relationships with the American academic community, which range
from, academics making introducti(y)\8 for intelligence purfoses - to
intelligence collection while abroad, to academic research and writing
where CIA sponsorship is hidden. The Agency has funded the activi-
ties of American private organizations around the world when those
activities suppoi^ted — or could be convinced to suppoit — American
foreign policy objectives. Until 1967 the Agency also maintained
covert ties to iVmerican foundations in order to pass funds secretly to
private groups ^vhose work the CIA supported.
The relationships have varied according to whether made with an
institution or an individual, whether the relationship is paid or un-
paid, or whether the individuals are "witting" — i.e. aware — of CIA
involvement. In some cases, covert involvement provided the CIA with
little or no operational control of the institutions involved ; funding
was primarily a way to enable people 'to do things they wanted to do.
In other cases, influence was exerted. Nor was the nature of these re-
lationships necessarily static ; in the case of some individuals support
turned into influence, and finally even to operational use.
During the 1950s and 1960s, the CIA turned increasingly to covert
action in the area of student and labor matters, cultural affairs, and
community developments. The struggle with communism was seen to
be, at center, a struggle between our institutions and theirs. The CIA
subsidized, advised, and even helped develop "private" organizations
that would compete with the communists around the world. Some of
- For explanation of italics, see footnote, p. 179.
182
these organizations were foreign ; others were international ; yet others
were U.S.-based student, labor, cultural, or philanthropic organiza-
tions whose international activities the CIA subsidized.
The CIA's interest in the areas of situdent and labor matters, cul-
tural affairs, and community development reached a peak in the mid-
1960's. By 1967, when public disclosure of NSA's funding and the sub-
sequent report of the Katzenbach Committee caused a major curtail-
ment of these activities, interest in the major covert action efforts in
these areas was already waning.
There appear to be two reasons for this. First, there was considerable
skepticism within the CIA as to the effectiveness of this approach. It
differed from classical CIA "tradecraft" in that the organizations
funded were basically independent from CIA control, Richard Helms
expressed this skepticism when he remarked in testimony before tliis
committee.
The clandestine operator ... is trained to believe that you
really can't count on the honesty of your- agent to do exactly
what you want or to report accurately unless you own him
body and soul.^''
Mr. Helms contended that "the clandestine oj)erator sneered at tlie
other kind of operation" — the aiding and abetting of people or orga-
nizations who are your "friends" or "have the same point of view that
you do."
Skepticism of the clandestine operators was directed particularly
at the Covert Action Staff/International Organizations Division, the
CIA units which conducted the programs in the area of student and
cultural exchange. Second, it became increasingly difficult to conceal
the CIA funds that supported these activities as the scale of the opera-
tions grew. By fiscal year 1967, for example, over $3 million was
budgeted for youth and student programs and $6 million for labor.
Most of the funds were transmitted through legitimate or "devised"
foundations — that is, fictitious entities established by the CIA.
1. CIA Use of Private Foundations^ Pre-1967
The use of pliilanthropic organizations was a convenient way to
pass funds, in that large amounts could be transferred rapidly, and
in a form that need not alert unwitting officers of the recipient organi-
zations to their source. In addition, foundation grants bestowed upon
the recipient the apparent "blessing" of the foundation. The funding
pattern involved a mixture of bona fide charitable foundations, devised
foundations and funds, "front men" drawn from a list of America's
most prominent citizens, and lawyers representing undisclosed clients.
The CIA's intrusion into the foundation field in the 1960s can only
be described as massive. Excluding grants from the "Big Three" —
Ford, Rockefeller, and Carnegie — of tlie 700 grants over $10,000 given
by 164 other foundations during the period 1963-1966, at least 108
involved partial or complete CIA funding. More importantly, CIA
funding was involved in nearly half the grants the non-"Big Three"
foundations made during this period in the field of international
activities. In the same period more than one-third of the grants
awarded by non-"Big Three" in the physical, life and social sciences
also involved CIA funds.
"" Richard Helms testimony, 9/12/75, p. 2.")-26.
183
Bona fide foundations, rather than those controlled by the CIA,
were considered the best and most plausible kind of funding cover for
certain kinds of operations. A 1966 CIA study explained the use of
legitimate foundations was the most effective way of concealing the
CIA's hand as well as reassuring members of funded organizations
that the organization was in fact supported by private funds. The
Agency study contended that this technique was "particularly effec-
tiv^e for democratically-run membership organizations, which need to
assure their own unwitting members and collaborators, as well as their
hostile critics, that they have genuine, respectable, private sources of
income."
2. The C/A^s Fourtdation- funded Covert Activity, Pre-1967
The philanthropic fix)nts used prior to 1967 funded a seemingly
limitless range of covert action programs affecting youth groups, labor
unions, univei-sities, publishing houses, and other private institutions
in the United States and abroad. The following list illustrates the
divei-sity of these operations :
(1) The CIA assisted in the establishment in 1951 and the funding
for over a decade of a research institute at a major American univer-
sity. This assistance came as the result of a request from Under-secre-
tary of State James Webb to General Bedell Smith, then Director of
the CIA. Mr. Webb proposed that the center, which was to research
worldwide political, economic, and social changes, be supported by the
CIA in the interest of the entire intelligence community.
(2) A project toas undertaken in collaboration ivith a i^ationally
prominent Arnerican husin^ss association. The object of the project was
to promote a favorable image of America in a foreign country unfavor-
ably disposed to America and to protnote citizen-to-citizen contacts
between Americans and influential segments of that country'' s society?
(3) The cooperation of an American labor organization in selected
overseas labor activities.
(I) Support of an international organization of veterans and an
international foundation for developing countries.
(5) Support of an organiziation of journalists and an international
women's association.
(6) Partial support for an international educational exchange pro-
gram run by a group of United States universities.
(7) Funding of a legitimate U.S. association of farm organiza-
tions. Agency funds were used to host foreign visitoi-s, provide scholar-
ships to an international cooperative training center at a United States
university, and to reimburse the organization for various of its activi-
ties abroad. A CIx\. document prepared in 1967 notes that although
the organization received some overt government funds from AID, the
CIA should continue its covert funding because "programs funded
by AID cannot address themselves to the same political goals toward
which Agency operations are targeted because AID programs are
part of official government-to-government programs and are designed
for economic — not political — results."
For explanation of italics, see footnote, p. 179.
184
The Best Known Case: Covert Funding of the National Student
Association
CIA funding of the National Student Association (NSA) from 1952
to 1967 is a particularly good example of how the United States Gov-
ernment entered the field of covertly supporting "friends," of the
vulnerabilities felt by the CIA in undertaking to support organizations
and individuals that cannot be controlled, and of the operational temp-
tation to move from support to "control."
The reason the CIA decided to help NSA is clear. In the yeai-s
immediately after World War II the Soviet Union took the lead in
trying to organize and propagandize the world student movement.
The first Soviet Vice President of the International Union of Stu-
dents, for example, was Alexander N, Shelepin, wdio later became
Chairman of the Soviet State Security Committee (KGB). The
American students who sought to compete with these communist-
managed and directed student group were hampered by a lack of
funds, while the communist groups had enough money to put on
world youth festivals, conferences and forums, and regional confer-
ences. In seeking funds at home, the American students found they
were considered too far to the left in the general climate of Mc-
Carthyism and anti-intellectualism of the 1950s. Against this back-
ground, NSA officials, after being refused by the State Department
and rebuffed by the Congress, were finally directed by the State
Department in i952 to the CIA.^
The CIA maintains that its funding efforts were based on shared in-
terests, not on manipulation. CIA funding of the National Student
Association appears to have been intended primarily to permit United
States students to represent their own ideas, in their own way, in the
international forums of the day. Nevertheless, the Committee has
found instances in which the CIA moved from blank-check support to
operational use of individual students."^
For example, over 250 U.S. students were sponsored by the CIA to
attend youth festivals in INIoscow, Vienna, and Helsinki and were used
for missions such as reporting on Soviet and Third World personalities
or observing Soviet security practices. A United States student, for
example, was recruited in 1957 to serve as a CIA "asset" at the Sixth
AVorld Youth Festival in Moscow. According to CIA documents, he
was instructed to report on Soviet counterintelligence measures and
to purchase a piece of Soviet-manufactured equipment.
* Under the agreed arrangement, CIA funds would support only the interna-
tional division of the National Student Association ; only the NSA President and
the International Affairs Vice President would be Avitting of the CIA connection.
Each year, after the election of new student leaders, the CIA held a secret
briefing for tlie new officers, and elicited from them a secrecy agreement.
During the 1960s however, witting National Student A.ssociation leaders be-
came increasingly restive about the CIA sponsorship, until finally in 1967 one
of them revealed the relation.ship to Ramparts magazine.
" "Operational use" of individuals as used in this report means recruitment, use,
or training, on either a witting or unwitting basis, for intelligence purposes.
That is. the individual is directed or "tasked" to do something for the CIA — as
opposed to volunteering information. Such purposes include covert action, clan-
destine intelligence collection (espionage) and various kinds of support
functions.
185
Altliou^h the CIA's involvement with the National Student As-
sociation was limited to the oro;;anization's international activities,
CIA influence was felt to some extent in its domestic programs as well.
T)ie mo?t direct way in which such influence may have been felt was in
the selection process for NSA officers. The Summer International
Seminars conducted for NSA leaders and potential leaders in the
United States during- the 1950's and 1960's were a vehicle for the
Agency to identify new leaders and to promote their candidacy for
elective positions in the National Student Association.
The Central Intelligence Agency's experience with the NSA under-
lines the basic problem of an action-oriented clandestine organization
entering into a coved f imding relationship witli private organizations :
support of friends turns into the control of their actions and ulti-
mately to creation of new "friends."
3. Cover is Blown: The Patman and Ramparts '"''Flaps''''
In a public hearing in 1964, Congressman Wright Patman, Chair-
man of the Subcommittee on Foundations of the House Committee
on Problems of Small Businesses, revealed the names of eight of the
CIA's funding instruments — ^the so-called "Patman Eight." These dis-
closures sharply jarred the Agency's confidence in the seciirity of these
pliilanthropic funding mechanisms.
The Patman disclosures led the CIA to take a hard look at this
technique of funding, but not to reconsider the propriety of bringing
the independence of America's foundations into question by using
them as conduits for the funding of coveit action projects. According
to the Chief of the Covert Action Staff's Program and Evaluation
Group :
The real lesson of the Patman Flap is not that we need to get
out of the business of using fomidation cover for funding, but
that we need to get at it more professionally and extensively.
Despite the best efforts of the Agency throughout 1966 to shore up
its vuhierable funding mechanisms, it became increasingly clear that
Ramparts magazine, the Nein York Times, and the Washington Post
were moving ever closer to unraveling not only the CIA's system of
clandestine funding but to exposing the source of the support for the
National Student Association. In an effort to determine whether there
was foreign influence on funds behind the Ramparts expose, the CIA,
in coordination with the FBI, undertook through its own counterintel-
ligence staff to prepare extensive reports on the Ramparts officers and
staff' members.*^
At a press briefing on February 14, 1967, the State Department
publicly confirmed a statement by leaders of NSA that their organiza-
tion had i-eceived covert support from the CIA since the early 1950s.
The NSA statement and disclosures in Ramparts magazine brought on
a storm of public and congressional criticism. In response. President
"The Agency appointed a special assistant to the Deputy Director for Plans,
who was charged with "pulling together information on Ramparts, includ-
ing any evidence of .subversion [and] devising proposals for counteraction." In
pursuing the "Communist ties" of Ramparts magazine, the "case" of managing
editor, Robert Scheer, was one of the first to be developed and a report was sent
on Scheer to Walt W. Rostow, Special Assistant to President Johnson.
69-983 O - 76 - 13
186
Johnson org-anized a committee conn)osed of lindersecretary of State
Nicholas Katzenbacli, Secretary of HEW John Gardner, and CIA
Director Richai'd Hehns to review government activities that may
"endanger the integrity and independence of the edncational comnui-
nity." The connnittee's life was short — i3 days — but its recommenda-
tions, accepted by President Johnson on March '2d, 1967, Avere to have
a profound effect on the CIA's clandestine operations, both in the
ITnited States and abroad.
4. The Katzetibach Committee
President Johnson's concern for the integrity and independence of
American institutions could have resulted in the Katzenbacli Commit-
tee being charged with general review of the domestic impact of
clandestine activities and their effect on American institutions ; includ-
ing consideration of iwhether all coveit relationships should be
prohibited, and, if not, what guidelines should be imposed on the use
of institutions and individuals.
Instead, the Johnson Administration carefully and consciously
limited the mandate of the Katzenbacli Committee's investigation to
the relationship between the CIA and "U.S. educational and private
voluntary organizations which operate abroad." In a February 24
memorandum to Grardner and Helms, Katzenbacli cited the narrow-
ness of the mandate in listing problems faced by the Committee :
1. The narrow scope of this mandate, as compared with the
demands, by Senator IMansfield, et al, that this flap be used
as a springboard for a review of all clandestine financing by
CIA.
2. More specifically, the exclusion in this mandate of rela-
tionships between CIA and American businesses abroad.
3. Focusing the mandate on CIA, rather than on all private
organization relationships with government agencies.
In testimony before this Committee, JNIr. Katzenbacli said that his
committee w^as designed by President Johnson not only to deal with
the relationship of the CIA to educational and voluntary organizations,
but to head off a full-scale congressional investigation.'^
All other covert relationships were to be excluded from the investiga-
tion. In a memo to his colleagues, the Deputy Chief of the Covert
Action Staff reported :
It is stated that the country operations funded by black bag
[sterilized or laundered funds] were not to be included in the
CIA's response to the Katzenbacli Commission and empha-
sized that the focus of this paper was to be on organizations.
In addition the Katzenbacli Committee did not undertake investi-
gation of CIA domestic commercial operations, specifically those de-
signed to provide cover for clandestine intelligence operations which
'' Nicholas Katzenbacli testimony, 10/11/75, p. 5. Katzenbacli also said of the
President's decision on membership :
". . . he [the President] wanted John Gardner on it becanse he thonsht that
would help politically in getting acceptance of whatever the recommendations
turned out to be because he thought Helms would defend everything and wanted
to continue everything. Gardner would want to stop everything. It was my job to
come out with something in the middle." {Ibid).
187
the U.S. directed at such taro-ets as foreig'ii students, foi'eign business-
men, foreign diplomatic and consular officials travelling or residing
in the United States.
Despite the narrowness of its mandate, the actual investigation of
the Katzenbach Committee was vigorous and thorough. After delib-
eration, the Committee issued the basic recommendation that :
It should be the policy of the United States Government that
no federal agency shall provide any covert financial assist-
ance or support, direct or indirect, to any of the nation's
educational or private voluntary organizations.
In May 1967 the Deputy Director for Plans Desmond FitzGerald
interpreted the post-Katzenbach ground rules in a circular to the field.
He stated :
Several operational guidelines emerge:
a. Covert relations with commercial U.S. organizations are
not, repeat, not barred.
b. Covert funding overseas of foreign-based international
organizations is permitted.
He indicated that greatei- care would be needed in the conduct of
clandestine operations, in order to prevent disclosures :
a. The care required under the Katzenbach Report, with
respect to the recruitment and use of U.S. students, and U.S.
university professors, applies equally to the recruitment and
use of foreign students. . . .
In simple terms, we are now in a different ballgame. Some
of the basic ground rules have changed. When in doubt, ask
HQs.
5. A Different Ball game: CIA Response to Katzenhach
The policy guidelines established in the Katzenbach Report and
supplemental guidelines with w^hich the CIA interpreted the Report
brought major adjustments in covert action programs and methods.
Some 77 projects were examined at high levels within the CIA, and
lists were drawn up of projects to be terminated, projects to be trans-
ferred to other sources of funding, projects to continue, and projects
whose future required higher level decisions. The 303 Committee met
frequently throughout 1967 and 1968 to deal with difficult questions,
such as how to provide for continued funding of Radio Fi'ee Europe
and Radio Liberty.
At the same time the Agency was withdrawing fi'om support of
a large number of domestically-based organizations, it moved rapidly
to shelter certain high-priority oj)erations from the Katzenbach pro-
hibitions and to devise more secure funding mechanisms. This process
was facilitated by wdiat was termed "surge funding." The Katzen-
bach guidelines called for termination of CIA funding of domesti-
cally based U.S. organizations by December 31, 1967. With 303 Com-
mittee approval for the largest grants, the Agency "surge funded" a
number of organizations, giving them advances before the December
deadline which carried them in some cases for up to two years of op-
erations. Radio Free P^urope and Radio Liberty were so funded.
In adjusting to the "new ballgame," the appearance of contraven-
ing the Katzenbach guidelines, rather than specific regulations, was
188
seen as a reason not to continue relationships with certain institutions.
At the same time, at least one case suggests that even a clean termina-
tion of fundino- with a private oro-anization did not necessarily end
the CIA's support of the policies and programs of the oroanization, A
CIA report on termination plans for a large project in the Far East
indicated that, with surge funding, the organization could continue
into fiscal year 1969, and that thereafter "[the organization's] Board
of Trustees will assume full responsibility for the organization and
has pledged to continue its policies and range of activities."
Tile following are examples of the score of projects which the CIA
reviewed in 1967 and decided to contimie to fund :
(1) A publications and press institute that maintained a worldwide
network of stringers and correspondents. A CIA report on the project
asserted that it "exerts virtually no domestic influence in any quainter,
although its publications are read bv U.S. students."
(2) Several international trade union organizations.
(o) A foreigni-based news feature service.
(4) A foreign-based research and publishing institute.
In reviewing the CIA's adjustments to the Katzenbach Committee's
recommendations, the Committee found no violations of the policy
the i-eport sets foi'th. However, it is important to recognize how
narrow the focus of the Katzenbach Committee's concern was. The
problem was a):)proached by the committee and by the CIA essentially
as one of security: how to limit the dauiage caused by the revelations
of CIA relationships with private I^.S. institutions. Many of the
restrictions developed by the CIA in response to the events of 1967
appear to be security measures aimed at preventing furthei- public
disclosures which could jeopardize sensitive CIA operations. They did
not represent significant rethinking of where boundaries ought to be
drawn in a fi-ee society. Moreover, although President Johnson adopted
the Katzenbach report as policy, it was not issued as an executive order
or enacted as a statute. Thus, it has no firm legal status,
0. Post 1967 Relations with the TLS. Acadernic Oommunity
In analyzing the adequacy of the Katzenbach regulations
and of the CIA's compliance with them, the Select Committee concen-
trated much of its attention on contemporai-y relationships between the
CIA and the IT.S. academic conununity. The Committee interprets
"academic community" to include more than the Katzenbach Com-
mittee undoubtedly had in mind when it recommended prohibition of
"covert financial assistance or support . . . to any of the nation's edu-
cational . . . organizations." "Academic conununity'' has been inter-
preted by this Committee to include universities, university-related
research centers, and the full range of individual scholars and school
administrators, ranging from department heads to career counselors
and to Ph.D. candidates engaged in teaching. The Committee has
approached this inquiry with three principal questions:
(1) What is the extent and nature of CIA relationships with U.S.
academic institutions and with individual American academics^
('2) What are the guidelines and ground rules governing CIA post-
Katzenbach relations with the academic community ?
(;>) What issues are at stake; what threats, if any, do current rela-
tions pose for the independence of this influential sector of society?
189
The CIA relationships with the academic community are extensive
and serve many purposes, inchiding providino; leads and makiiig- intro-
ductions for intellioence purposes, collaboration in research and anal-
ysis, intellioence collection abroad, and preparation of books and other
propaganda materials.
The Select Committee's concentration has been on the area of clan-
destine relationships untouched by the Katzenbach Committee —
individuals.
7. Covert Relations with Individuals in the Academic Community
As already noted, from the first days of the Katzenbach Commit-
tee, the CIA proceeded on the operating assumption that the inquiry
was directed squarely at institutional relationships — not individuals in
or affiliated with those private institutions. After the Katzenbach
report, the Agency issued a basic instruction entitled "Restrictions on
Operational Use of Certain Categories of Individuals." This instruc-
tion remains in force today. The instruction states that the "basic rule"'
for the use of human agents by the Operations Directorate is that
"any consenting adult'' may be used.
While all members of the American academic community, including
students, certainly qualify as "consenting adults,'' the CIA since 1967
has been particularly sensitive to the risks associated with their use.
In order to control and confine contacts with American academics, the
handling of relationships with individuals associated with universities
is largely confined to tM^o CIA divisions of the Directorate of Opera-
tions — ^the Domestic Collection Division and the Foreign Resources
Division. The Domestic Collection Division is the point of contact
with lai'ge numbers of American academics who travel abroad or who
are otherwise consulted on the subject of their expertise. The
Foreign Resources Division, on the other hand, is the purely opera-
tional arm of the CIA in dealing with American academics. Alto-
gether, DCD and FRD are currently in contact — ranging from the
occasional debriefing to a continuing operational relationship — with
many thousands of United States academics at hundreds of U.S.
academic institutions.
It is imperative to underline that the majority of these relationships
are purely for the purpose of asking an academic about his travels
abroad or open informal consulting on subjects of the academic's ex-
pertise. The Committee sees no danger to the integrity of American
private institutions in continuing such contacts; indeed, there are
benefits to both the government and the universities in such contacts.
The CIA's Office of Personnel also maintains relationships with
university administrators, sometimes in the placement office. These
relationships, which are usually contractual, enable the CIA to ap-
proach suitable Ignited States students for CIA employment.
The "operational use" of academics is another matter. It raises trou-
bling questions as to preservation of the integrity of American aca-
demic institutions.
8. Covert Use of the U.S. AcadeTnic Co7nm/u/nity
The Central Intelligence Agency is noiv using several hundred
American academics '^'^., who in addition to ^providing leads and., on
" "Academics" includes administrators, faculty members and graduate students
engaged in teaching.
190
occasion^ rruiking introductions for intelligence purposes^ occasionally
write hooks mid other material to he used for propaganda purposes
abroad. Beyond these., an additional few score are used in an unwitting
manner for minor activities.
These academics are located in over 100 American colleges., univer-
sities., and related institutes. At the majority of institutions^ no one
other than the individual concerned is aware of the CIA link. At
tJie others, at least one university official is aioare of the operational use
made of academics on his campus. In addition., there are several Amer-
ican academics ahroad loho serve operational purposes.; primarily the
collection of intelligence.^'^
The CIA considers these operational relationships with the United
States academic community as perhaps its most sensitive domestic area
and has strict controls governing these operations. According to the
Agency's internal directives, the following distinctions govern the
operational use of individuals : the CIA's directives prohibit the opera-
tional use of individuals who are receiving support under the Mutual
Education and Cultural Exchange Act of 1961, commonly known as
the Fulbright-Hays Act. Falling under this ])articular prohibition are
teachers, research scholars, lecturers, and students who have been
selected to receive scholarships or grants by the Board of Foreign
Scholarships. This prohibition specifically does not apply to the several
other categories of grantees supported by other pr-ovisions of the Ful-
bright-Hays Act, such as artists, athletes, leaders, specialists, or par-
ticipants in international trade fairs or expositions, who do not come
under the aegis of the President's Board of Foreign Scholarships. As
far as the three major foundations — Ford, Rockefeller and Carnegie — -
are concerned, the prohibition extends to "persons actively participat-
ing in programs which are wholly sponsored and controlled by any of
these foundations. Additionally, there Avill be no operational use made
of the officials or employees of the.se organizations." (These large foun-
dations were cited by a CIA official in 1960 before the 30.'^ Committee
as "a trouble area in New York City — reluctant to cooperate on joint
ventures.")
0. Covert Relationships toith Acadameic and Voluntary Organizations :
Conclusions
With respect to CIA covert relationships with private institutions
and voluntary organizations, the Committee concludes:
(1) The CIA has adhered to the 1967 Katzenbach guidelines govern-
ing relation^jhips with domestic private and voluntary institutions. The
guidelines are so narrowly focused, however, that the covert use of
American individuals from these institutions has continued.
(2) American academics are now beiuir used for such operational
l)ur))oses as making introductions for intelligence purposes ^^^ and
working for the Agency abroad. Although the numbers are not as great
today as in 1966, there are no prohibitions to prevent an increase in the
operational use of academics. The size of these operations is determined
by the CIA.
(8) With the exception of those teachei's. scholars and students
who receive scholarships or grants from the Board of Foreign Scholar-
" For explanation of italics, see footnote, p. 170.
191
ships, the CIA is not prohibited from the operational use of all other
categories of grantee support under the Fulbright-Hays Act (artists,
athletes, leadere, specialists, etc.). Nor is there any prohibition on the
operational use of individuals participating in any other exchange
program funded by the Ignited States Government.
In addressing the issues of the CIA's relationship to the American
academic community the Committee is keenly aware that if the CIA
is to serve the intelligence needs of the nation, it nnist have unfettered
access to the best advice and judgment our universities can produce.
But this advice and expertise can and should be openly sought — and
openly given. Suspicion that such openness of intellectual encounter
and exchange is complemented by covert operational exploitation of
academics and students can only prejudice, if not destroy, the pos-
sibility of a full and fruitful exchange between the nation's best minds
and the nation's most critical intelligence needs. To put these intel-
lects in the service of the nation, tnist and confidence must be main-
tained between our intelligence agencies and the academic community.
The Committee is disturbed both by the present practice of opera-
tionally using American academics and by the awareness that the
restraints on expanding this practice are primarily those of sensitivity
to the risks of disclosure and not an appreciation of dangers to the
integrity of individuals a;id institutions. Nevertheless, the Commit-
tee does not recommend a legislative prohibition on the operational
exploitation of individuals in private institutions by the intelligence
agencies. The Conmiittee views such legislation as both unenforceable
and in itself an intrusion on the pri^'acy and integrity of the American
academic community. The Committee believes that it is the respon-
sibility of private institutions and particularly the American academic
community to set the professional and ethical standards of its mem-
bers. This report on the nature and extent of covert individual rela-
tions with the CIA is intended to alert these institutions that there is
a problem.
xVt the same time, the Committee recommends that the CIA amend
its internal directives to require that individual academics used for
operational purposes by the CIA, together with the President or equiv-
alent official of the relevant academic institutions, be informed of the
clandestine CIA relationship.
The Committee also feels strongly that there should be no opera-
tional use made of professors, lecturers, students, artists, and the like
who are funded under Ignited States Government-sponsored programs.
The prohibition on the operational use of Fulbright grantees must be
extended to other government-sponsored programs; and in this case
the prohibition should be confirmed by law. given the direct responsi-
bility of the Congress for these programs. It is unacceptable that
Americans would go overseas under a cultural or academic exchange
program funded openly by the United States Congress and at the
same time serve an operational purpose directed by the Central Intelli-
gence Agency.
B. Covert Relationships With the United States Media
In pursuing its foreign intelligence mission the Central Intelligence
Agency has used the U.S. media for both the collection of intelligence
192
and for cover. Until February 1976, when it announced a new policy
toward U.S. media personnel, the CIA maintained covert relation-
ships with about 50 American journalists or employees of U.S. media
organizations. They are part of a network of several hundred foreign
individuals around the world who provide intelligence for the CIA and
at times atteinpt to influence foreign opinion through the use of
covert propaganda. These individuals provide the CIA ivith direct
access to a large number of foreign neiospapers and periodicals., scores
of press services and n£ws agencies, radio and television stations, com-
mercial book publishers, and other foreign media outlets}'^
The CIA has been particularly sensitive to the charge that CIA
covert relationships with the American media jeopardize the credibil-
ity of the American press and risk the possibility of propagandizing
the U.S. public. Former Director William Colby expressed this con-
cern in recent testimony before the House Select Committee on
Intelligence :
We have taken particular caution to ensure that our opera-
tions are focused abroad and not at the United States in order
to influence the opinion of the American people about things
from a CIA point of view.
As early as 1967, the CIA, in the wake of the National Student
Association disclosure, moved to flatly prohibit the publication of
books, magazines, or newspapers in the United States. iNlore recently,
George Bush, the new Director, undertook as one of his first actions to
recognize the "special status alt'orded the American media under our
Constitution'' and therefore pledged that "CIA will not enter into
any paid or contractual relationship with any full-time or part-time
news correspondent accredited by any United States news service,
newspaper, periodical, radio or television network or station." ^^
In approaching the subject of the CIA's relationship with the United
States media, the Select Committee has been guided by several broad
concerns. It has inquired into the covert publication of propaganda
in order to assess its domestic impact; it has investigated the nature
and purpose of the covert relationships that the CIA maintains with
bona fide U.S. journalists; it has examined the use of journalistic
"cover" by CIA agents; it has pursued the difficult issue of domestic
"fallout" from CIA's foreign press placements and other propaganda
activities. Throughout, it lias compared current practice to the regula-
tions restricting activities in this area, in order both to establish
whether the CIA has complied with existing regulations, and, more
important, in order to evaluate the adequacy of the regulations
themselves.
1. Books and Publishing Hoioses
Covert propaganda is the hidden exercise of the power of pei-sua-
sion. In the world of covert propaganda, book publishing activities
have a special place. In 1961 the Chief of the CIA's Covert Action
' For explanation of footnotes, see p. 179.
George Bush statement, 2/11/76.
193
Staff, who had responsibility for the covert propaganda program,
wrote :
Books differ from all other propaganda media, primarily
because one single book can sigiiifieantly change the reader's
attitude and action to an extent unmatched by the impact of
any other single mediujii . . . this is, of couree, not true of all
books at all times and with all readers — but it is true signifi-
cantly often enough to make books the most important
weapon of strategic (long-range) propaganda.
According to The Chief of the Covert Action Staff, the CIA's clan-
destine handling of book publishing and distribution could :
(a) Get books published or distributed abroad \yithout
revealing any U.S. influence, by covertly subsidizing foreign
publications or booksellers.
(b) Get books published which should not be "contam-
inated'' by any overt tie-in with the U.S. government, espe-
cially if the position of the author is "delicate.'"
(c) Get books published for operational reasons, regardless
of connnercial viability.
(d) Initiate and subsidize indigenous national or inter-
national organizations for book publishing or distributing-
purposes.
(e) Stimulate the writing of politically significant books
by unknown foreign authors — either by directly subsidizing
the author, if covert contact is feasible, or indirectly, through
literary agents or publishers.
Well over a thousand books were produced, subsidized or spon-
sored by the CIA before the end of 1967. Approximately 25 percent of
them were written in English. ^lany of them were published by cul-
tural organizations which the CIA backed, and more often than not the
author was unaware of CIA subsidization. Some books, llo^yever, in-
volved direct collaboration between the CIA and the writer. The
Chief of the Agency's propaganda unit wrote in 1961 :
The advantage of our direct contact with the author is
that we can acquaint him in great detail with our intentions;
that we can provide him with whatever material we want him
to include and that we can check the manuscript at every
stage. Our control over the writer will have to be enforced
usually by paying him for the time he works on the manu-
script, or at least advancing him sums which he might have
to repay . . . [the Agency] must make sure the actual manu-
script will correspond with our operational and propagandis-
tic intention. . . .
The Committee has i-eviewed a few examples of what the Chief of
the Covei-t. Action Staff' termed "books published for operational rea-
sons regardless of commercial viability." Examples inchided :
(1) A book about the conflict in Indochina was pi'oduced in 1954
at the initiation of the CIA's Far East Division. A major I^.S. publish-
ing house under contract to the CIA published the book in French and
English. Copies of both editions were distributed to foreign embassies
194 '
in the United States, and to selected newspapers and magazine editors
both in the United States and abroad.
(2) A book about a student from a developing country who had
studied in a communist country "was developed by [two area divisions
of the CIA] and produced by the Domestic Operations Division . . .
and has had a high impact in the U.S. as well as the [foreign area]
market." The book, which was published by the European outlet of a
U.S. publishing house, was published in condensed form in two major
U.S. magazines. Eric Severeid, the CBS political commentator, in
reviewing this book, spoke a larger truth than he knew when he sug-
gested that "our propaganda services could do worse than to flood
[foreign] university towns with this volume."
(3) Another CIA book, the Penkovskiy Papers^ was published in
the United States in 1965 "for operational reasons", but actually
became commercially viable. The book was prepared and written
by witting Agency assets who drew on actual case materials. Publi-
cation rights to the manuscript were sold to a publisher through a
trust fund which was established for the purpose. The publisher was
unaware of any U.S. Government interest.
The publishing program in the period before the National Student
Association disclosures was large in volume and varied in taste. In
1967 alone the CIA published or subsidized well over 200 books, rang-
ing from books on wildlife and safaris to translations of Machiavelli's
The Prince into Swahili and works of T. S. Eliot into Russian, to a
parody of the famous little red book of quotations from Mao entitled
Quotations from Chairman Liu.
The publicity which in 1967 surrounded several CIA sponsored or-
ganizations and threatened to expose others caused the CIA to act
quickly to limit its use of U.S. publishers. In direct response to the
Katzenbach report, Deputy Director for Plans Desmond FitzGerald
ordered, "We will, mider no circumstances, publish books, magazines
or newspapers in the United States."
With this order, the CIA suspended direct publication and subsi-
dization within the United States not only of books, but also of jour-
nals and newsletters, including: a magazine published by a United
States-based proprietary for cultural and artistic exchange; a news-
letter mailed to foreign students studying in North American univer-
sities under the sponsorship of a CIA proprietary foundation ; and a
publication on Latin American affairs published in the United States.
Thus since 1967 the CIA's publishing activities have almost entirely
been confined to books and other materials published abroad. During
the past few years, some 250 books have been published abroad, most
of them in foreign languages.
As previously noted, the CIA has denied to the Committee a number
of the titles and names of authors of the propaganda books published
since 1967. Brief descriptions provided by ih^& Agency indicate the
breadth of subject matter, which includes the following topics, aniong
many others :
(1) Commercial ventures and commercial law in South
Vietnam ;
(2) Indochina representation at the U.N. ;
(3) A memoir of the Korean War ;
195
(4) The prospects for European union;
(5) Chile under Allende.
2. Covert Use of U.S. Journalists and Media Institutions
On February 11, 1976, the CIA announced new guidelines governing
its relationship with U.S. media organizations:
Effective immediately, CIA will not enter into any paid or
contractual relationship with any full-time or part-time news
correspondent accredited by any U.S. newsservice, newspaper,
periodical, radio or television network or station.^^
Of the approximately 50 U.S. journalises or personnel of U.S. media
organizations who were employed by the CIA or maintained some other
covert relationsliip with the CIA at the time of the announcement,
fewer than one-half will be terminated under the new CIA guidelines.
About half of the some 50 CIA relationships with the U.S. media
were paid relationships, ranging from salaried operatives working
under journalistic cover, to U.S. journalists serving as "independent
contractors" for the CIA and being ])aid regularly for their services, to
those who receive only occasional gifts and reimbursements from the
CIA."
More than a dozen United States neics organizaHons and coimnercial
jmMishing houses formerly 'provided cover for CIA agents abroad. A
few of these organizations ivere unaware that they provided this
cover.^^
Although the variety of the CIA relationships with the U.S. media
makes a svstematic breakdown of them almost impossible, former CIA
Director Colby has distinguished among four types of relationships.^^
These are:
(1) Staff of general circulation, I".S. news organizations;
(2) Staff of small, or limited circulation, U.S. publications ;
(3) Free-lance, stringers, propaganda writers, and employees of
U.S. publishing houses ;
(4) Journalists with whom CIA maintains unpaid, occasional,
covert contact.
Wliile the CIA did not provide the names of its media agents or the
names of the media organizations with which tliey are connected, the
Committee reviewed summaries of their relationships and work with
the CIA. Through this review the Committee found that as of Febru-
ary 1976:
(1) The first category, which would include any staff member of a
general circulation U.S. news organization who functions as a paid
undercover contact of the CIA, appears to be virtually phased out. The
^'According to the CIA, "accredited" applies to individuals who are "formally
authorized by contract or issuance of press credentials to represent themselves
as correspondents."
" Drawn from "operational case studies" provided to the Committee 12/16/75
and 10/21/75.
" For explanation of footnotes, see p. 179.
"On November 30, 1973, the Wnshinnfon Star-New<> reported that Director
Colby had ordered a review of CIA media relationships in September of that
year, and reported that Colby would phase out the first category but maintain
.iournalists in each of the other three categories. In his testimony to the House
Select Committee on Intelligence on November 6, 1975, Colby made a general
reference to these categories.
196
Committee has found only two current relationships that fit this cate-
gory, both of which are being terminated under the CIA's Febru-
ary 11, 1976 stated policy.
The Committee has also found a small number of past relationships
that fit this category. In some cases the cover arrangement consisted of
reimbursing the U.S. newspaper for any articles by the CIA agent
which the paper used. In at least one case the journalistic functions
assumed by a CIA staff officer for cover purposes grew to a point where
the officer concluded that he could not satisfactorily serve the require-
ments of both his (unwitting) U.S. media employers and the CIA, and
therefore resigned from the CIA. He maintained contact, how^ever,
with the CIA and continued, very occasionally, to report to the CIA
from the countries in w*hich he worked.
(2) Of the less than ten relationships with writers for small, or
limited circulation, U.S. publications, such as trade journals or news-
letters, most are for cover purposes.
(3) The third, and largest, category of CIA relationships with the
U.S. media includes free-lance journalists; "stringers" for newspapers,
news magazines and news services; itinerant authors; propaganda
writers; and agents working under cover as employees of U.S. pub-
lishing houses abroad. With the exception of the last group, the
majority of the individuals in this category are bona fide writei-s or
journalists or photographers. Most are paid by the CIA, and virtually
all are witting; few, however, of the news organizations to which they
contribute are aware of their CIA relationships.
(4) The fourth category of covert relationships resembles the kind
of contact that journalists have with any other department of the U.S.
Government in the routine performance of their journftlistic duties. No
money changes hands. The relationships are usually limited to occa-
sional lunches, interviews, or telephone conversations during which
information would be exchanged or verified. The difference, of course,
is that the relationships are covert. The joun^alist either volunteers or
is requested by the CIA to provide some sort of information about peo-
ple with whom he is in contact. In several cases, the relationship began
when the journalist approached a U.S. embassy officer to report that
he was approached by a foreign intelligence officer ; in others, the CIA
initiated the relationship.
The first major step to impose restrictions on the use of U.S. journal-
ists was taken by former Director Colby in the fall of 1973. According
to Mr. Colby's letter to the Committee : "
(a) CIA will undertake no activity in which there is a risk
of influencing domestic public opinion, either directly or in-
directly. The Agency will continue its prohibition against
placement of material in the American media. In certain in-
stances, usually where the initiative is on the part of the
media, CIA will occasionally provide factual non-attributable
briefings to various elements of the media, but only in cases
where we are sure that the senior editorial staff is aware of
the source of the information provided.
Letter from William Colby to the Select Committee, 10/21/75.
197
(b) As a general policy, the Agency will not make any
clandestine use of staff employees of U.S. publications which
have a substantial impact or influence on public opinion. This
limitation includes cover use and any other activities which
might be directed by CIA.
(c) A thorough review should be made of CIA use of non-
staff journalists ; i.e., stringers and free-lancers, and also those
individuals involved in journalistic activities who are in non-
sensitive journalist-related positions, primarily for cover
backstopping. Our goal in this exercise is to reduce such usage
to a minimum.
Mr. Colby's letter specified that operational use of staff — that is, full-
time correspondents and other employees of major U.S. news maga-
zines, newspapers, wire services, or television networks — was to be
avoided. Use would be less restricted for "stringers" or occasional
correspondents for these news organizations, as well as for corre-
spondents working for smaller, technical, or specialized publications.
The public statement that the CIA issued on February 11, 1976, ex-
pressed a policy of even greater restraint :
— Effective immediately, CIA will not enter into any paid
or contractual relationship with any full-time or part-time
news correspondent accredited by any U.S. news service,
newspaper, periodical, radio or television network or station.
— As soon as feasible, the Agency will bring existing rela-
tionships with individuals in these groups into conformity
with this new policy.
— CIA recognizes that members of these groups (U.S.
media and religious personnel) may wish to provide infor-
mation to the CIA on matters of foreign intelligence of
interest to the U.S. Government, The CIA will continue to
welcome information volunteered by such individuals.^^
From CIA testimony later that month, the Committee learned that
this prohibition extends to non- Americans accredited to U.S. media
organizations. Nevertheless, this prohibition does not cover "unaccred-
ited" Americans serving in U.S. media organizations, or free-lance
writers. As previously noted, the CIA has informed the Committee
that, of the approximately 50 CIA relationships with U.S. journalists
or employees of U.S. media organizations, fewer than one-half will be
terminated under the new guidelines.^^
3. Two Issues : ^^FalJout^'' and the Integrity of a Free Press
In examining the CIA's past and present use of the U.S. media, the
Committee finds two reasons for concern. The first is the potential, in-
herent in covert media operations, for manipulating or incidentally
'^ CIA instructions interpreting the new policy explain that "the term 'con-
tractual' applies to any written or oral agreement obligating the Agency to
provide financial remuneration including regular salaries, spot payments, or
reimbursement of, out-of-pocket operational expenses or the provision of other
material benefits that are clearly intended as a reward for services rendered
the Agency."
'" CIA response of March 17, 1976 (76-0315/1).
198
misleading the American public. The second is the damage to the
credibility and independence of a free press which may be caused by
covert relationships with U.S. journalists and media organizations.
In his 1967 order prohibiting CIA publication in this country, then
Deputy Director for plans Desmond FitzGrerald raised the first issue.
He stated:
Fallout in the United States from a foreign publication
which we support is inevitable and consequently permis-
sible.
In extensive testimony, CIA employees both past and present have
conceded that there is no way to shield the American public from such
"fallout." As a former senior official of the Agency put it in testimony :
There is no way in this increasingly small world of ours of
insulating information that one puts out overseas and con-
fining it to the area to where one puts it out. . . . When Brit-
ish intelligence was operating in the last century, they could
plant an outrageous story in some local publication and feel
fairly confident that no one else would ever hear about it,
that would be the end of it. . . . That is no longer the
case. Whether or not this type of overseas activity should be
allowed to continue is subject to differing views and judg-
ments. My own would be that we would be fools to relinquish
it because it serves a very useful purpose.^^
The same former CIA official continued :
If you plant an article in some paper overseas, and it is
a hard-hittina; article, or a revelation, there is no way of frnar-
anteeing that it is not going to be picked up and published
by the Associated Press in this country. ^^*
The domestic fallout of covert propaganda comes from many
sources; books intended primarily for an English-speaking foreign
audience, press placements that are picked up by international wire
services, press services controlled by the CIA, and direct funding of
foreign institutions that attempt to propagandize the United States
public and Congress.
In the case of books, substantial fallout in the U.S. may be a neces-
sary part of the propaganda process. For example, CIA records for
1967 state that certain books about China subsidized or even pro-
duced by the Agency "circulate principally in the U.S. as a prelude to
later distribution abroad." Several of these books on China were
widely reviewed in the United States, often in juxtaposition to the
sympathetic view of the emerging China as presented by Edgar Snow.
At least once, a book review for an Agency book which appeared in
the Neio York Times was written by a CIA writer under contract.
E. Howard Hunt, who had been in charge of contacts with U.S. pub-
lishers in the late 1960s, acknowledged in testimony before this Com-
mittee that CIA books circulated in the U.S., and suggested that such
fallout may not have been unintentional.
^ Thomas H. KaramesSines testimony of a former Deputy Director for plans,
10/22/75, p. 46.
*®' Former Deputy Director for plans testimony, 10/2S/75, p. 36.
199
Question. But, with anything that was publisi ed in Eng-
lish, the United States citizenry would become a likely audi-
ence for publication?
Mr. Hunt. A likely audience, definitely.
Question. Did you take some sort of steps to make sure that
things that were published in English were kept out of or
away from the American reading public ?
Mr. Hunt. It was impossible because Praeger was a com-
mercial U.S. publisher. His books had to be seen, had to be
reviewed, had to be bought here, had to be read.
Hunt, If your targets are foreign, then where are they?
They don't all necessarily read English, and we had a bilateral
agreement with the British that we wouldn't propagandize
their people. So unless the book goes into a lot of lan.quaijes
or it is published in India, for example, where English is a
lingua franca, then you have some basic problems. And I
think the way this was rationalized by the project review
board . . . was'that the ultimate target was foreign, which was
true, but how much of the Praeger output actually got abroad
for any impact I think is highly arguable.^^
An American who reads one of these books which purportedly is
authored by a Chinese defector would not know that his thoughts
and opinions about China are possibly being shaped by an agency
of the United States Government. Given the paucity of information
and the inaccessibility of China in the 1960s, the CIA'may have helped
shape American attitudes toward the emerging China. The CIA con-
siders such "fallout" inevitable.
Another example of the damages of "fallout" involved two propri-
etary news services that the CIA maintained in Europe. Inevitably
these news services had U.S. subscribers. The larger of the two was
subscribed to by over 30 U.S. newspapers. In an effort to reduce the
problem of fallout, the CIA made a senior official at the major U.S.
dailies aware that the CIA controlled these two press services.
A serious problem arises from the possible use of U.S. publications
for press placements. Materials furnished to the Committee describe
a relationship which po«es this problem. It began in August 1967 —
after the Katzenbach Committee recommendations — and continued
until May 1974. In this case, a U.S. -based executive of a major U.S.
newspaper was contacted by the CIA "on a confidential basis in view
of his access to information of intelligence and operational interests."
The news executive sers^ed as a witting, unpaid collaborator for intel-
ligence collection, and received briefings from the CIA which "were of
porfessional benefit" to him. The CIA materials state that :
It was visualized that . . . propaganda (if agreeable to
him) might be initially inserted in his paper and then be
available for reprinting by Latin American news outlets. . . .
There is no indication in the file that Subject agreed ... or
that he did place propaganda in his newspaper.^'^
"• E. Howard Hunt testimony, 1/10/76 pp. 73, 74.
•' CIA Operational case study #14.
200
The danger of CIA propaganda contaminating U.S. media — "fall-
out" — occurs in viilually any instance of propaganda use. The pos-
sibility is quite real even when the CIA does not use any U.S. journal-
ist or publication in carrying out the propaganda project. Where a
CIA propaganda campaign causes stories to appear in many pres-
tigious news outlets around the world, as occurred at the time of the
Chilean elections in 1970, it is truly impossible to insulate the United
States from propaganda fallout.
Indeed, CIA records for the September-October 1970 propaganda
effort in Chile indicate that "replay" of propaganda in the U.S. was
not unexpected. A cable summary for September 25, 1970 reports :
Sao Paulo, Tegucigalpa, Buenos Aires, Lima, Monte\ddeo,
Bogota, Mexico City report continued replay of Chile theme
materials. Items also cai-ried in New York Times^ Washington
Post. Propaganda activities continue to generate good cover-
age of Chile developments along our theme guidance. . . .^^
The fallout problem is probably most serious when the U.S. public
is dependent on the "polluted" media channel for its information
on a particular subject. When news events have occurred in relatively
isolated parts of the world, few major news organizations may have
been able to cover them initially, and world-wide coverage reflects
whatever propaganda predominates in the media of the area.
Another situation in which the effects of "fallout" in the United
States may be significant is that in which specialized audiences in the
United States — area study specialists, for example — may unknowingly
rely heavily on materials produced by, or subsidized by, the CIA. The
danger of this form of dependence is less now than it had been prior
to the freer flow of Western travelers to the Soviet Union, Eastern
Europe and China.
In its inquiry into the activities of a Vietnamese institution the
Committee discovered a particularly unfortunate example of domestic
fall-out of covert propaganda activities. The institution was a CIA-
inspired creation. The intention of the CIA, according to its own
records, was not to undertake propaganda against the United States.
Whatever the design, the propaganda effort had an impnct on the
American public and congressional opinion. The CIA provided $170,-
000 per year in 1974 and 1975 for the sunport of this institution's pub-
lications. The embassy in the United States distributed the magazine
to American readers, including the offices of all United States Con-
gressmen and Senators. The institution on at least one occasion invited
a group of American Congressmen to Vietnam and sponsored their
activities on at least part of their trip. Through this institution the
CIA — however inadventently — engaged in propagandizing the Amer-
ican public, including its Congress, on the controversial issue of U.S.
involvement in Vietnam.
One particular kind of possible "fallout" has aroused official concern.
That is fallout upon the IT.S. Government of the CIA's "black nror.a-
gnada" — propaganda that appears to originate from an unfriendly
source. Because the source of black propaganda is so fully concealed,
the CIA recognizes that it risks seriously misleading tJ.S. policy-
^ Chile Task Force Log (R597) .
201
makers. An Agency regulation specifies that the Directorate of Opera-
tions should notify appropriate elements of the DDI and the In-
telligence Community if the results of a black operation might in-
fluence the thinking of senior U.S. officials or affect U.S. intelligence
estimates. Regular coordination between the CIA and the State De-
partment's INR has been instituted to prevent the self-deception of
"senior U.S. officials" through black propaganda. It should be noted
that this procedure applies only to black propaganda and only to
"senior U.S. officials." No mechanism exists to protect the U.S. public
and the Congress from fallout from black propaganda or any other
propaganda.
The Committee recognizes that other countries make extensive use
of the international media for their propaganda purposes. The United
States public is not insulated from this propaganda either. It is clear,
however, that the strongest defense a free country has from propaganda
of any kind is a free and vigorous press that expresses diverse points of
view. Similarly, the most effective way for this country to respond to
the use of propaganda abroad is to permit American journalists and
news organizations to pureue their work without jeopardizing their
credibility in the eyes of the world through covert use of them.
C. Covert Use of U.S. Religious Groups
The Committee considers religious groups — like academia and the
press — to be among the most important of our society's institutions.
As such, any covert relationship that might either influence them or
jeopardize their reputation is extremely sensitive. Moreover, opera-
tional use of U.S. religious organizations differs from the use of other
elements of U.S. society. It is a special case, in that virtually all re-
ligions are inherently supra-national. Making operational use of U.S.
religious groups for national purposes both violates their nature and
undermines their bonds with kindred groups around the world.
In its examination of CIA relationships with domestic institutions,
the Committee has focused exclusively on the use of U.S. religious or-
ganizations.
1. RestHcticms on the Use of Religious Personnel
The CIA guidelines issued in the wake of the Katzenbach Com-
mittee report required prior approval bv the DDO for operational use
of any employee, staff member, or official of a U.S. educational or pri-
vate organization. This restriction applied to operational use of these
individuals who were affiliated with American religious organizations.
The CIA has provided the Committee with no other regulations that
apply specifically to the use of religious groups. In a letter to this Com-
mittee, however, Mr. Colby stated that the CIA used religious groups
with great caution, and that their use required special approval within
the Agency :
Denutv Director for Operations regulations require the
Denuty Director for Operations' annroval for the u«e of re-
ligious groups. He has the resnonsibilitv of ensuring that
such operational use avoids infringement or damage to the
individual religious personnel involved in their group. Such
9-983 O - 76 - 14
202
use is carefully weighed and approvals in recent years have
been relatively few in number.^^
On February 11, 1976, the CIA announced :
CIA has no secret paid or contractual relationship with any
American clergyman or missionary. This practice will be
continued as a matter of policy.
The CIA has assured the Committee that the prohibition against "all
paid or contractual relationships" is in fact a prohibition against any
operational use of Americans following a religious vocation.
£. Scope of Relationships
The number of American clergy or misionaries used by the CIA has
been small. The CIA has informed the Committee of a total of 14
covert arrangements which involved direct operational use of 21
individuals.
Only four of these relationships were current in August 1975, and
according to the CIA, they were used only for intelligence collection,
or, in one case, for a minor role in preserving the cover of another
asset.
The other ten relationships with U.S. religious personnel had been
terminated before August 1975; four of them ended within the last
five years. In six or seven cases, the CIA paid salaries, bonuses, or ex-
penses to the religious personnel, or helped to fund projects run by
them.
Most of the individuals were used for covert action purposes. Sev-
eral were involved in large covert action projects of the mid-sixties,
which were directed at "competing" with communism in the Third
World.
3. Issites : '''' Fallout^'' Violation of Trust
As several of the relationships — all terminated — involved the reli-
gious personnel in media activity, some of the same concerns must be
voiced as when U. S. journalists are used covertly. The danger of
U.S. "fallout" of CIA propaganda existed in three or four of the
relationships with U.S. religious personnel.
The more serious issue, however, is the question of the confiden-
tiality of the relationships among members of the clergy and their
congregations.
Of the recent relationships, the most damaging would appear to be
that of a U.S. priest serving the CIA as an informant on student and
religious dissidence.
Of the earlier cases, one exemplifies the extent to which the CIA
used confidential pastoral relationships. The CIA used the pastor
of a church in a Third World country as a "principal agent" to carry
out covert action projects, and as a spotter, assessor, asset developer,
and recruiter. He collected information on political developments
and on personalities. He passed CIA propaganda to the local press.
According to the CIA's description of the case, the pastor's analyses
were based on his lon<r-term friendships with the personalities, and
the agents under him were "well known to him in his professional life."
At first the CIA provided only occasional gifts to the pastor in return
=® Letter from William Colby to the Select Committee, 10/21/75.
203
for his services ; later, for over ten years, the CIA paid him a salary
that reached $11,414 annually.
4. The CIA aid U.S. Religious Organizations and Personnel: Conclu-
sions and Recom/mendations
The Committee welcomes the policy, announced by the CIA on
February 11, 1976, that prohibits any operational use of Americans
followino; a religious vocation.
The fact that relatively few American clergy or missionaries have
been used by the CIA suggests that neither this country's capacity to
collect intelligence nor its covert action capability would be seriously
affected by a total ban on their operational use. Therefore, the Com-
mittee recommends that the CIA's recent prohibition on covert paid or
contractual relationships between the Central Intelligence Agency
and any American clergyman or missionary should be established by
law.
XI. PROPRIETARIES
Proprietaries are business entities, wholly owned by the Central
Intelligence Agency, which either actually do business as private
firms, or appear to do business under commercial guise. They are part
of the "arsenal of tools" the CIA believes it must have to be an effec-
tive intelligence component.^ In recent years, particularly during the
Vietnam War, serious questions were raised about this proprietary
capability.
Much of the accompanying criticism stemmed from a lack of un-
derstanding of the role of proprietaries in both United States foreign
policy and the intelligence operations. Some of the criticism arose from
the suspected entrance of proprietaries into areas where they would be
in competition with legitimate business interests, such as the airline
industry. It has been feared that their profits were used to provide
secret funding for covert operations, thus avoiding scrutiny by the Ex-
ecutive and the Con.qrress through a "back door" funding process.
In addition, there have been allegations that the domestic impact of
these entities has effectively violated the Agency's charter, which gen-
erally proscribes domestic activity of a police or internal security
nature. Concerns have been expressed that favored treatment has been
given these proprietaries by other Government agencies, such as the
Internal Revenue Service and the Civil Aeronautics Board. The fact
that the size and number of these mechanisms is unknown has caused
concern about potentially pervasive influence on the free enterprise
system. Questions have arisen about whether Agency policy included
using these entities to engage in illegal activities to make profits which
could be used to fund clandestine operations. Most notably, the latter
charges have involved allegations that the Agency's air proprietaries
were involved in drug trafficking.^
Concern has been expressed about the Agency's financial and man-
agement control over proprietaries and about the treatment of funds
related to such entities,^ It is understandable that there would be mis-
givings and suspicion, since much that would have explained the role
of these proprietaries has remamed classified. The Committee has,
nonetheless, been able to conduct broad review of these operations.
This review has included examination of documents at the CIA, and
testimony from present and former Agency employees.
In general, these mechanisms have operated with a proper concern
for legality, propriety and ethical standards at the headquarters level.
The deviations that have occurred were in the field and generally in
'Testimony of Chief of Cover and Commercial Staff (CCS), 1/27/76, p. 20.
* The Committee found no substance to these charges.
' A careful review has revealed that the CIA's proprietaries are appropriately
limited and controlled with careful considered given to restrict their use within
the spirit and letter of the law by headquarters-level personnel.
(205)
206
the area of operators, rather than management personnel. More-
over, the use and past expansion of the proprietaries was a direct
result of demands placed upon the Agency by Presidents, Secretaries
of State and the policy mechanisms of government. This is particu-
larly true of the large air proprietary complex used to support para-
military operations in Southeast Asia. The only exception to this
pattern is the insurance complex, which was partially established on
Agency initiatives to fill a pressing need.
A conceptual problem which continually confronts the intelligence
community, applies with full force in the proprietary area. As certain
kinds of covert action were developed to deal with the perceived com-
munist threat, the use of certain mechanisms had to be limited. In a
totalitarian society for example, governmental and "private" enter-
prises are essentially one. The government can and does use these en-
tities for intelligence and other official purposes. In our society, how-
ever, that which is governmental is generally distinct from that which
is private. Traditionally, problems have developed when the govern-
ment has crossed into the private sector. Proprietaries are no exception
to this dilemma. They are, in fact, the embodiment of it.
Thus, the fundamental question presented in this portion of the Com-
mittee's inquiry is : can a free and open society tolerate such a conflu-
ence of conflicting roles? The Committee concludes that it can, pro-
vided that the Congress plays a role in the supervision of these mech-
anisms to ensure that the delicate balance struck in our society between
governmental and private actions is maintained. Wliile there may have
been a temptation to view proprietaries as "abusive" /;er se^ this atti-
tude was eschewed by the Committee. Although there are potential
problems with proprietaries, the Committee feels that aggressive over-
sight can protect the rights of American citizens and institutions with-
out the need for a ban on the use of proprietaries which serve a
legitimate intelligence function.
A. Overview
Acting under broad authority granted them by the National Secu-
rity Act of 1947 and Central Intelligence Act of 1949, the various
Directors of Central Intelligence have established proprietaries (Gov-
ernment-owned business enterprises, foundations and quasi-business
enterprises) to serve a variety of intelligence and covert action pur-
poses. Chief among those purposes have been :
1. Provision of Cover for Intelligence CoUectimi and Action Projects
Commercial firms established in foreign countries provide plausible
reasons for the presence of CIA case officers. Agency-funded founda-
tions serve as conduits of funds for a variety of purposes, including
clandestine activities and contributions to scholars conducting research
which supports United States foreign policy positions.
2. Extension of Agency Influence and Information Network in Over-
seas Business Community
The very act of establishing a proiirietary firm requires banking,
insurance, and other services. Acquiring these services entails support,
communications, and intimate business relationships with bona fide
207 /
commercial entities here and abroad. At a minimum, these relation-
ships require the clearance of those in top management positions for
access to CIA business. On occasion this relationship includes the
Agency using commercial contacts for information or assistance.
3. ProTision of Sufportinq Services for Co^^ert Operations
In paramilitary operations, airlift and sealift bv Agency-owned
carriers has many advantages : flexibility, security, ability to implant
technical collection devices, etc. CIA agents, wlio engage in haz-
ardous activities which would ordinarily make them uninsurable, can
obtain commercial insurance at standard or subsidized rates via a con-
glomerate of CIA-ownod insurance companies. In foreign locations
where actual contact with the nearest CIA station is not operationally
discreet, proprietaries provide payroll channels and other administra-
tive services for Agencv personnel. Firms based in locations with per-
missive corporate laws and regulations can also engage in many
activities unrelated to their charters. For example, insurance firms can
acquire real estate for operational purposes on a non-attributed basis.
li. Operation of Propaganda Mechanisms
In establishing the clandestine radios (Radio Free Europe and
Radio Liberty) in the 1950s, the CIA acquired a means of directly
influencing populations behind the Iron Curtain. These proprietaries
were eventually disposed of and placed under the aegis of the Depart-
ment of State.
5. Management of Private Investments
The Agency would denv that private investment is a purpose of
proprietaries. Agency officials state that standing policy prohibits the
investment of CIA operational funds in the private sector without ex-
plicit authorization by the DCI. Actually, the existence of proprietary
enterprises which occasionallv returned sizable profits, indicates that
private investment may indeed have been a widespread Agency policy.
Moreover, the Agencv has specifically authorized its insurance com-
plex to act as an institutional investor for its own funds and those of
other proprietaries. Thus, the extent of private investment by the
Agency is actually a question of definition and shading.
B. Structure
Proprietaries fall into two broad categories :
(1) Operating companies which actually do business as
private firms ; and
(2) Non-operating companies which appear to do business
under commercial guise.
These entities mav be le.crally constituted as corporations, partner-
ships, or sole proprietorships ; or they may have no such legal standing,
i.e., they may be "notional" entities financed by the Agency. Corporate
proprietaries are incorporated in accordance with the statutory pro-
visions of the jurisdiction of incorporation, are subject to the same
review as any corporate entity within that jurisdiction, file applicable
state and Federal tax returns, and obtain the necessary licenses to
conduct business.
208
Both operating and non-operating companies serve two purposes:
(1) they provide cover, attribution for funding, and administrative
assistance to agents and clandestine activities; and (2) they provide
services not available through normal commercial facilities. Because
these instrumentalities are established as private organizations, they
must be organized and managed in accordance with normal business
practices and requirements for the types of enterprises they appear
to be.
The Agency has generally employed proprietaries when they have
been the only way, or clearly the best way, to achieve an approved ob-
jective. Under Agency rules proprietaries are established or allowed
to continue only so long as they contribute to accomplishment of the
CIA's mission, and remain the most effective means to achieve
Agency objectives. While current policy does limit the use of oper-
ating proprietary mechanisms, the Agency does retain its capability
to use these mechanisms, although it limits the size of the actual en-
tities being maintained.
A review of Agency files shows that the number of operating pro-
prietaries has been consciousl}^ pared by about 50 percent since the
mid-1960s. These reductions were the result of both the Katzenbach
guidelines associated with the National Student Association disclosures
in 1967, and a survey conducted by the CIA Inspector General in that
same year. In addition, the need for proprietaries has declined as a
result of: (1) a general shift in emphasis away from covert action;
(2) the transfer of Radio Free Europe and Radio Liberty to the Board
of International Broadcasting with funding through State Depart-
ment; (8) the liquidation of the. assets of the Air America complex
as requirements for CIA support in Southeast Asia diminished ; (4)
the sale of Southern Air Transport and the liquidation of assets of
Intermountain Aviation with their exposure in the press; and (5) a
change in the Agency's approach to contingency requirements.
The evidence received by the committee indicates that the activities
of all agency proprietaries support the CIA's foreign intelligence
collection or covert action missions. Some proprietaries are located
within the I"^nited States for reasons of oi^erational or administrative
necessitv. thus there is a domestic infrastructure, but their ultimate
impact is overseas. Some of the questionable domestic uses of these en-
tities are detailed in the sections of this Report on "MERRIMAC"
and related i^rograms.* In one area, the insurance complex, serious
questions remain as to the propriety of using such a mechanism to
provide insurance and retirement benefits for agency employees.
1. Operating Proprietaries
Operating proprietaries conduct business in t^-<e commercial sphere.
"WHiile they may compete directly with privately-owned corporations
such competition is limited by tlie agency so that private companies
will not be deprived of substantial income. The Agency has been
careful to limit the amount of commercial business ensraeed in by
these proprietaries to that necessarv to support the viability of the
commercial cover. Revenues have been used to partially offset operat-
ing costs, and aggi-egate profits over the yeare have been relatively
* See the Select Committee's detailed feport on CHAOS.
209
small. Only two proprietaries have shown significant profits : the Air
America complex, primarily by fulfilling Government contracts in
Southeast Asia ; and the insurance company, by handling trust funds
and insurance.
Depending upon the functions they perform, operating proprietaries
vary in terms of capitalization and total assets. When the commercial
pur-pose of an operating proprietary is incidental to its CIA mission
(such as an export-import firm which engages in commercial opera-
tions only to the extent necessary to provide cover for a CIA officer
in a foreign country) a minimum capitalization, usually in the neigh-
borhood of $25,000 or less, is all that is required.
Operating proprietaries whose commercial purposes are in them-
selves essential to the CIA mission require much larger capitalization
and investment. They are staffed by Agency personnel and cleared
commercial employees. Among the Agency's operating proprietaries
of this type are a few management companies and non-operating
proprietaries with substantial assets. The Agency's largest operating
proprietaries have been Air America, the insurance complex, and
Intermountain Aviation, Inc.
Air America, the Agency's largest proprietary, provided air sup-
port for CIA operations in Southeast Asia. This support was under
cover of a commercial flying service fulfilling I"''nited States Govern-
ment contracts. Corporate headquarters were in Washington, D.C.,
with field headquarters in Taipei, Taiwan.
■ The insurance complex provides a mechanism for both the payment
of annuities and other benefits to sensitive agents, and self -insurance
of risks involved in covert operations. The complex was formed in
1962 as a clandestine commercial support mechanism to provide death
and disability benefits to agents or their beneficiaries when security
considerations precluded payments which might be attributable to
the United States Government. This function wns broadened to in-
clude assumption of many risks incurred by operational activities. The
complex has administered agents' escrow accounts and life insurance,
and provided annuity and pension programs for selected agent per-
sonnel employed by the Agency. These programs are solely for the
purpose of meeting the Agency's obligations to personnel who have
rendered services over a substantial period of time, and who are not
eligible for normal United States Government retirement programs.
Individuals who qualify for the CIA Retirement Svstem or the Civil
Service System are not handled through the proprietary system. The
complex has also been used to pro\ade a limited amount of support
to covert operations — specifically, for the acquisition of operational
real estate and as a conduit for the funding of selected covert
activities.
Intermountain Aviation, Inc. provided a variety of nonattributable
air support capabilities which were available for quick deployment
overseas in support of Agency activities. The assets of Intermountain
have been sold, with operations ceasing February 28, 1975, and the
corporation is in the process of being dissolved.
The combined net worth (assets minus liabilities) of the operating
proprietary companies is approximately $57.3 million. Although some
210
are commercially self-supporting, such as those in the insurance com-
plex, most of these companies usually require budgetary support.
Three of these operating proprietaries will be described in the
following pages to indicate: why they came into existence; what they
did; the management, operations and control environment in which
they operated; and what impact they may have had on the private
sector. In addition, this discussion will supply the necessary factual
rerercprf^ for the Committee's recommendations. ThCvSe recommenda-
tions reflect the considered judgments of the Committee, which were
fonnulated after hearing the views of current and former CIA em-
ployees, and those of other knowledgeable individuals.
The tiecurity froject
In 1958, at the time construction of the new CIA headquarters
building in Langley was initiated, a small counterintelligence opera-
tion was established to maintain surveillance of the site to prevent
hostile penetration and sabotage. It was successful in its objectives
and, upon occupancy of the building in 1962, the Security Project
was established.
From a single office in Virginia the project expanded to four field
offices and grew from a single firm into three separate corporations.
The parent organization operated in the greater Washington area.
This operating proprietary was a commercial corporation which per-
formed security services on a competitive basis. The firm also con-
ducted operations for the CIA's Office of Security, This operation was
successful, with customers utilizing the proprietary for document
destruction, consultation, guard work, and security clearance investi-
gations.
This company developed business contracts with agencies of the
Federal Government and commercial firms. Because the provisions
of the "Anti-Pinkerton Act" ^ prohibit a company engaged in investi-
gative work from contracting with the Federal Government, the
Agency formed a separate company to manage commercial firms as
funding mechanisms for investigative work levied by the Office of
Security. The new company was headquartered in California. As
activity expanded and work increased, a third corporation was orga-
nized and headnnartered in California.
In early 1966, the original company merged with the third
firm, which remained incorporated in the state of California. The
con^orate officers and the board of directors of all three companies
consisted of the same persons. Subsequently, the merged corporation
was sold and new legal straw men were introduced as officers, directors
and shareholders. In March 1966, a new home office was established
in Virginia to enhance administrative efficiency, monetary controls,
and cover viability. This "home office," with its investigative charter,
has been used to conduct covert investigations.
In addition to conducting investigations, the project was used in
the following activities :
(1) Covert monitoring of construction of CIA headquarters
building;
(2) Monitoring of construction of buildings which were to be
occupied by Agency components ;
'5U.S.C. 3108. \
211
(3) Covert monitoring of construction of CIA printing services
building;
(4) Surveillance of Department of Defense civilian employees
suspected of being potential defectors to the Soviet Union ;
(5) Testing security effectiveness at domestic Directorate of Science
and Technology sites and contractor facilities;
(6) MERRIMAC — monitoring of dissident groups in Washington,
D.C.;«
(7) Hiring and paying contract guards ;
(8) Contracting with a civilian firm for the guard force at an
installation ;
(9) An operation to recruit, process and train undercover internal
security agents for the Bureau of Narcotics and Dangerous Drugs ;
(10) Security support for Directorate of Science and Technology
proie-'ts consisting mainly of badging and entry controls, background
investigations, and escort of sensitive material — this is the only such
activity currently being serviced by the project;
(11) Physical surveillance of an Agency courier suspected of living
beyond his means including a surreptitious entry into his apartment ;
(12) Physical surveillance of an Agency employee "who maintained
contact with people of questionable loyalty" including an audio
penetration of the employee's apartment and a mail cover.
Only one office is currently in operation as part of the project. Over
the past years, its commercial projects have included badging opera-
tions for private companies, i.e., airlines, schools, etc. The company
has never made a true profit. To maintain its image among its competi-
tors, however, its books reflect a small profit on which Federal and
state taxes are paid. The office presently employs four staff agents,
five contract agents and fourteen proprietary employees. During fiscal
year 1974, the project expended 2.9 percent of the Office of Security
budget.
As noted, this security project has provided the Office of Security
and Agency operators support on sensitive covert operations and
investigative matters, counterintelligence and counterespionage sup-
port for Agency components, custodial support, technical and physical
support in surveillances, and Agency proprietary support. The project
has also conducted soecial nongovernmental and sensitive inquiries.
Its commercial activities have included : internal security management,
security surveys, counteraudio measures and inspection, management
of security protective equipment and devices, classified material stor-
age, secure destruction of classified waste, incinerator equipment sales,
personnel investifrations, and industrial undercover activities.
A unique example of its Agency security function was a project
which utilized both security "probes" and security "penetrations," A
security probe is a test of the current effectiveness of a security svstem
within an Agency installation. A security penetration is an internal
investigation and search which attempts to locate subversive elements
at a facility. Such a penetration seeks to detect those who may be en-
"This particular proiert and other aspects of the project's domestic activities
are treated in greater detail in the Committee's Staff Report on CHAOS.
212
gaged in foreign intelligence or sabotage, and those who, by lack of
security discipline or gross malfeasance, may be weakening the secu-
rity structure of the facility. In essence, penetrations are counterintel-
ligence against a domestic installation.
In one instance, an agent was sent under the natural cover of a
union construction man to an Agency contractor to gain employment
as a pipefitter.^ He succeeded in gaining access to the target, and de-
veloped information on the installation and its personnel. Similar
probes were also conducted against other companies contracting with
the Federal Government. The proprietaries which are part of the se-
curity project have helped maintain the security required by sensitive
Agency operations. Their utility, however, as in the case of nearly all
proprietaries is relative to policy demands and "flap" potential. As one
Agency commentator phrased it when Newsweek revealed the relation-
ship of two Boston lawyers with the CIA in setting up proprietaries :
Proprietaries have been and will continue to be an important
tool to achieve selected operational objectives. Their use, how-
ever, has been drastically cut back, more because of changes
in the international scene and in operational priorities, than
as a result of embarrassing exposures.^
As has been the case with nearly all other proprietaries, not
everyone within the Agency has been satisfied with the existing mech-
anisms of the security project. There has been constant review, criti-
cism, and internal restraint due to a fear and suspicion that entities
which are "out there" may not readily respond to the leash. For exam-
ple, in June of 1964, the Chief of the Operational Support Division
wrote to the Deputy Director of Security (Investigations and Oper-
ational Support) concerning project policy and procedures. In terms
of operational objectives, he noted that they had "created an opera-
tional support entity of dubious capability and with ill-defined ob-
jectives or purpose." He suggested that they "look this ugly duckling
in the face" and see if it could be terminated gracefully or "see if we
can nurture it into a productive and responsible bird of acceptable
countenance." ^°
The Chief of the Operations Division wrote that he "received the
definite impression that there may be some grev area with regard to the
internal channels of command and administrative direction." He
noted that there was confusion resulting from lack of a clear-cut dis-
tinction "at just what level policy matters may be decided . . . ," Man-
agement procedures for the project were such that "under the current
* He was, in fact, a legitimate tradesman.
' Newsweek, 5/19/75, pp. 25-28.
" Memorandum from Chief, Operational Support Division to Deputy Director of
Security, 6/64.
In many cases these concerns dealt with the inability of the entity to provide
adequate cover for itself in order to more adequately fulfill its role. In one in-
stance, the physical backstopping of this project was inadequate. After this was
rectified, one official noted :
"It is felt that this step has strengthened the [Corporation's] cover, [in two
East coast cities] so that now the company would withstand any inquiries, ex-
cept that of an official Government investigation."
213
status everyone may take credit but no one could be blamed." With
regard to operational capability he noted :
Quite candidly, I am somewhat concerned about the opera-
tional capability of [the] Project. It seems, as a result of its
Topsy-like growth, to be oriented toward the military and
the building trades. Quite candidly, it is felt that the base
must be broadened. Further, I am far from convinced that we
have yet developed anywhere near the professional status
necessary to "sell" this Project as one having unique opera-
tional capabilities sufficient to justify its existence. In other
words, I am not impressed with the capability as it now exists
nor am I sure that we can sell this product and then be assured
that it can perform in a satisfactory manner."
His comments concerning the attitude of Agency personnel were not
unique to this proprietary. They are included here to illustrate the spe-
cial problems posed by these entities. His remarks also show the dan-
gers inherent in some areas of this activity.
It would seem that this Agency, particularly operating com-
ponents, are insistent upon pursuing an "ostrich policy" when
it comes to their operational security procedures. I have per-
sonally witnessed almost hysterical reactions to criticisms as
well as total rejections of practical sugpestions with regard to
operational security procedures. Now it seems to me that we
are going about this in a verv awkward and embarrassing
manner. WE ARE, IN EFFECT, ALLOWING THE
WRITERS OF SENSATIONAL BOOKS SUCH AS
THE "INVISIBLE GOVERNMENT" TO PROVIDE
THE NECESSARY INFORMATION AND PRES-
SURE ON TOP AGENCY INIANAGEMENT TO COR-
RECT GLARING AND STUPID COURSES OF
ACTION BEING PURSUED AT THE WORKING
LEVEL. I have been the object of considerable personal ridi-
cule due to my stand in opposition to the unrealistic cover and
operational security procedures as they relate to certain
aspects of [CIA Operational Base] for example. IF we had
the authority and capahility to have made an objective probe
of this sensitive activity we may have been able to have sur-
faced these obviously ridiculous procedures in such a manner
that corrective action would have been taken. Now is the time
to present the case in light of the abiding fear of publicity cur-
rently permeating the Agency. I recommend that we go after
the authority to make independent (unilateral) probes and/or
probes requested and known only at the very highest levels of
the Agency with the results discreetly channeled where they
will do the most good. There necessariW follows the unpleas-
ant subject of money. As distasteful as it may be, it is no good
to have the authority without a sufficiently large confidential
214
fund set aside and earmarked for independently initiated
activities.^- [Emphasis in the original]
He emphasized that if the Agency did not take the above kind of
action to monitor its "image" at the operational level, it would "con-
tinue to be plagued with the unsolicited and uncontrolled critique
through the newspapers, periodicals and books." He critically con-
cluded :
Further, I challenge anyone to deny that such exposes to date
are largely true and usually the result of our own "ostrich
policy" and refusal to face the fact that we have operated in
some relatively amateurish manners over the years.^^
Such concerns have extended beyond these operational levels to
general issues of propriety and legality. As noted earlier, the so-
called "Anti-Pinkerton Act" prohibited the Office's continued con-
tractual relationship with private companies or their employees for
purposes of conducting investigations or providing cover. The Gen-
eral Counsel responded as follows :
I am aware that in fulfilling the responsibilities placed
upon your office in support of the Agency's mission, many
investigations must be conducted without revealing Govern-
ment interest. Absent the relationships you question, you
could not discharge your responsibilities. It is this inability
to accomplish your tasks which causes recourse to the Agen-
cy's rather broad statutory authority to expend funds as
contained in Section 8 of the CIA Act of 1949, as amended.
This authority provides
(a) Notwithstanding any other provision of law, sums
made available to the Agency by appropriation or other-
wise may be expended for purposes necessary to carry out its
functions, including —
(1) personal services, including personal services without
regard to limitations on types of persons to be employed, . . .
(b) The sums made available to the Agency may be ex-
pended without regard to the provisions of law and regu-
lations relating to the expenditure of Government funds;
and for objects of a confidential, extraordinary, or emer-
gency nature, such expenditures to be accounted for solely on
the certificate of the Director and every such certificate shall
be deemed a sufficient voucher for the amount therein certified.
It is my opinion that this authority permits the Agency to
continue the two practices as set out above without fear of
violation of the Anti-Pinkerton Statute."^
He closed, however, with the following admonitions :
There are, of course, other dimensions of the question you
raise. As a matter of policy I believe the practices should be
reviewed at the highest levels within the Agency and, per-
" Ibid.
"•Memorandum from General Counsel to Director of Security, 6/64.
215
haps, cleared with the Afrencv's oversiofht committees. In
addition, if one of these rehitionships became public, it must
be recoirnized that there will be allegations that the law has
been violated. On balance, it is my view that these considera-
tions are not so significant as to warrant a termination of the
two practices with the three companies. It is siigorested, how-
ever, that any subsequent projected association with a detec-
tive company or private investigative company beyond the
three present companies be reviewed with this Office prior to
its initiation.^*
The Insurance CoTnplex
This proprietary is a complex of insurance companies, most of
which are located abroad, operated by the Agency to provide the fol-
lowing services :
(i) Handling of risks ostensibly covered under commerci-
ally issued policies;
(ii) extending term life insurance, annuities, trusts and
workmen's compensation to Agency employees who are not
entitled to United States Government benefits;
(iii) handling escrow accounts for agents ; and,
(iv) limited operational support and investment activi-
ties.^^
Origin. — Prompted by the Bay of Pigs losses, the complex was
created in 1962 to provide death and disability benefits to agents and
beneficiaries when security considerations preclude attribution to the
United States Government. Lawrence Houston, retired General Coun-
sel of the Agency, testified that his office established the insurance-
investment complex, because his staff Avas responsible for all problems
related to the death or disability of employees during the course of
their Agency work. These problems were all handled in what Houston
called a very "sketchy way" which he felt was undesirable from all
points of view. Wlien the Agency went into air proprietaries on a large
scale, additional risks arose which simply could not be underwritten
commercially.
So somewhere in the late 1950s or around 1960, 1 think I was
the one that posed that we might organize our own insurance
entities.^®
A single event served as the catalyst for the establishment of the
complex. Houston recalled in latter testimony that
the event that brought it into focus was the death of four
airmen in the Bay of Pigs. These men were not supposed
to have engaged in the fighting and were training on the
mainland, but when the Cubans were either exhausted or
unable to fly anymore, they pitched in, went over the beach,
and were shot down.
"/bid.
^^ Escrow accounts are established when an agent cannot receive his full pay-
ment from the CIA without attracting suspicion. The funds not paid to the agent
go into escrow accounts and are invested under the complex.
" Lawrence Houston testimony, 1/15/76, p. 61.
216
We heard of this for the first time the next morning and
Allen Dulles called me over and said, you'll have to make
some provision for the families of those four fliers ....
Through [an ad hoc] mechanism we paid benefits to the
family for a considerable length of time until we were able
to turn it over to the Bureau of Employees Compensation.
This was a very makeshift arrangement, and so based on
that I came to the conclusion that we needed a much more
formal and flexible instrument. And so after long considera-
tion within the Agency we acquired the first two insurance
entities which had been in being before and then we flushed
them out a little bit.^^
Thus, the formation of this entity represented the "culmination of
experience" in tliis support area, according to Houston. Although
the complex originally operated under the Domestic Operations Divi-
sion, a special board of directors later assumed control of the pro-
prietaries and their investments. In July 1973 control of the complex
was transferred to the Commercial and Cover Staff.
The Current Status. — All of the clients of the project are Agency
employees.^^^ The complex was originally capitalized in 1962 with $4
million. Most of the assets are held outside the United States and the
companies do not write insurance in the United States. Each of the
United States companies pays little tax and is audited by a proprietary
firm. This method of self-insurance enables the Agency to funnel money
where needed in any of its project categories. Currently, 60 percent of
the investments are in long-term interest bearing securities abroad, 20
percent in off-shore time deposits in United States banks, and the bal-
ance is in common stocks, debentures and commercial paper of various
types. In the past twelve years the sale of stocks has resulted in profits
in excess of $500,000 accruing to the CIA. The combined total assets
of the complex are in excess of $30 million, including its retained net
earnings of approximately $9 million.
In 1970 the Inspector General examined the insurance complex. His
report raised questions about briefing congressional oversight sub-
committees which indicate that Congress had never been informed of
the existence or extent of the insurance complex w^hich had grown to
an organization with assets of $30 million without oversight, knowl-
edge, or approval. While annual audits of the complex were conducted,
there was no annual allotment and no annual operational review
within the CIA, because the insurance activity was no longer a true
project after its removal from the Domestic Operations Division.
" Houston. 1/27/76, p. 8.
"" The complex itself is only for covert non-staff oflScers of the CIA. In essence,
it only works for what would broadly be described as "agents", those not en-
titled to participate in the CIA retirement plan or in the Civil Service Retire-
ment Plan. They are primarily foreigners, and usually work for DDO. In the
case of most agents, the CIA contributes 7 percent and the agent contributes 7
percent, in keeping with CIA practice for regular employees. In cases where
the agent is well along in years and contributions from the Agency and the
agent would not provide enough funds to capitalize an annuity, the Agency pro-
vides the initial capitalization ; however, such an arrangement must be approved
by the DDO.
217
Houston indicated that the complex had been operating "for some
time" before
we told our committees any detail. I think it was men-
tioned as a problem that we had to make arrangements to
cope with insurance problems fairly early on. But the fact
that it was a business and a business of this substance was
not done for some time. My recollection is there was not delib-
erate avoidance; we just didn't get to it.^^
With regard to buying and selling securities, the Committee sought
to discover whether the CIA has any method of preventing personal
profit-taking by Intelligence Directorate analysts who have access of
clandestinely collected economic intelligence. The CIA has indicated
that such an analyst would be in the same conflict of interest posi-
tion as a staff member of the Securities and Exchange Commission,
Department of Agriculture, or any other Government agency for mis-
use of confidential material. Moreover, financial reporting requirements
are imposed upon CIA employees.
Similarly, the Committee attempted to determine whether financial
transactions were made by the complex to influence foreign stock mar-
kets or currencies. The 1970 review by the Inspector General found no
evidence of such influence. Neither did the Committee. All witnesses
and documentary evidence indicated that the complex was never so
used. Indeed, all agreed that the amounts involved in the fund were in-
sufficient to destabilize any currency or market, even if such an effort
had been made.
The complex was subject to an audit in 1974 which concluded that
it "continued to be administered in an efficient and effective manner,
and in compliance with applicable Agency regulations and direc-
tives." Prior audit reports had commented on the need for a revised
administrative plan. In accordance with earlier reports, the 1974 audit
noted, a "new plan was approved in March 1975." In addition,
"minor administrative and financial problems surfaced during
the audit were discussed with [project] officials and resolved." The
audit noted that total income for that year (from interest, premiums,
gain or loss on sale of securities, dividends, rentals, professional fees,
gain on foreign exchange, gain on sale of property and from miscel-
laneous transactions) was in excess of $4 million. The total ex'penses
for that year (allocation of premium income to reserve for claims,
interest, salaries, rent, accounting fees, taxes, loss on property write-
off, legal aiid other fees, communications, depreciation and amortiza-
tion, travel, equipment rent, real estate expenses, pensions, due and
subscriptions, directors fees, entertainment and miscellaneous) were
nearly $2.5 million. These combined for a net income in excess of
$1.5 million.19
The current Chief of the Cover and Commercial Staff has focused
on the insurance-investment project in a number of interviews with
both the Rockefeller Commission and the Committee. He has sug-
gested that the real question for the complex is what its role and shape
should be after the termination of many of the Agency's proprie-
"' Houston. 1/15/76. p. 81.
" 1974 Audit of Insurance Complex.
69-983 O - 76 - 15
218
taries. With their liquidation, he believes a reorganization and re-
definition of the insurance-investment complex is needed.
As to the issue of a safeguard against misuse of project funds or
"insider" information by the Agency, the Chief of CCS has told the
Committee that the guarantees against such abuse are (1) com-
partmentation ; (2) the integrity of the Chief of CCS; and (3) dis-
play of portfolios to appropriate congressional committees.^"
Houston agreed with the three safeguards outlined by the CCS
Chief. However, he added a fourth :
When we were investing in stock, I would have the list of
stock, the portfolio, reviewed by our contract people, and if I
found we had any contract relationship with any of the com-
panies involved, we'd either refuse to — ^AVell, a couple of times
our investment advisor recommended a stock which I knew
w^e had big contracts with, and I told the board no, this in-
volves a conflict of interest. We won't touch it. And if we had
anj'thing from the Agency contract office that indicated a
relationship, we would either sell the stock or wouldn't buy
it.^^
Houston believes that the complex should continue in some form
and that the current method, while not perfect, is the best that can
be devised. The problem is that the generation of funds for these
companies must be demonstrably legitimate and nongovernmental if
beneficiaries are to be protected; i.e., the absence of investment by an
insurance corporation could well indicate to outsiders that its funding
is actually coming from the Federal Government.
Beyond '"'"Doing Business''': Peak Non-Government Security
Investments hy Proprietaries Active as of Dec. 31, 197Jf. — The insur-
ance and pension complex has sizable investments in both domestic
and foreign securities markets. Its portfolio runs the gamut of notes,
bonds, debentures, etc. But other proprietaries have also used this
investment route as a method of increasing capital and insuring ade-
quate cover.
For example, a domestic corporation purchases general merchandise
in a manner which cannot be traced to the ITnited States Government.
It provides covert procurement for the CIA Office of Logistics.
"\^niile this corporation has no outside commercial business and only
five employees, as of December 31, 1974, it had invested over $100,000
in time deposits. A second domestic corporation ]Durchases anus, am-
munition, and police-related equipment for the Office of Ivogistics. This
company has no employees and is managed by Headquarters officials
under alias. As of December 31, 1974, this corporation had iuA-ested
more than $30,000 in a certificate of deposit.
A travel service proprietary was recently sold to an Agency em-
ployee at the time of his retirement. This employee had ostensibly
owned the firm, but had in fact managed it for the Agency. As of
'" Chief. CCS. 1/27/76, pp. 15-16.
^ Houston. 1/1.V76. p. 80.
The current charter for the insurance complex and the administrative plan
forhid further acquisition of U.S. stocks and require the divesture of American
equity investments in the immediate future.
219
December 31, 1974, this corporation had invested more than $30,000
in a certificate of deposit." An investment proprietary, which was later
dissolved, had invested about $100,000 in Mexico as of March 31, 1973.
A Delaware corporation, which has provided secure air support for
Agency employees and classified pouclies between Headquarters and
other Agency facilities in the United States, has nearly $150,000 in-
vested in a certificate of deposit.
A former youth activity proprietary, in which the Agency no
longer retains an interest, had approximately $50,000 invested in time
deposits as of March 31, 1972. Another proprietary is part of a com-
plex managed by the Cover and Commercial Staff which provides
operational support for foreign operations. It is a Delaware cor-
poration used to collect proceeds from the sale of Agency pro]:)rietary
entities and to refund such proceeds to tl^e Agency. Its total assets
were nearly three-quarters of a million dollars and its total stock-
holders equity was in excess of $15,000 as of December 31, 1973. It
has no emnloyees. As of December 31, 1974, it had invested almost
half a million dollars in a convertible subordinated debenture from
the sale of a company and almost $50,000 in notes receivable.
Another company in this complex is a foreign company which has
been used as an investment vehicle for funds earmarked for new com-
mercial operations requiring Agency investment^. This investment
project has been terminated and all funds were returned to the Agency.
The company has no employees. As of December 31, 1973, it had in-
vested nearly a quarter of a million dollars in a Security Note of a
private domestic corporation.
A proprietary which was part of the air support complex had in-
vested over $200,000 in a certificate of deposit as of December 31, 1974.
This entity was later sold. Another is part of the management and
accounting complex. As of December 31, 1974, it had nearly half a
million dollai-s invested in time deposits.
The Air Proprietaries
History. — Lawrence R. Houston, fomrer CIA General Counsel,
was involved in the establishment of the first set of Agency proprie-
taries, and has concluded that they should be a mechanism of last
resort. Houston maintains that the Agency learned this "the hard
way and almost all of the lessons involved probably came out one way
or the other in connection with a major aviation proprietary in the
Far East. Others had their own special problems, but I think the Air
America complex had pretty near everything." ^*
The Agency acquired Air America in 1949 ostensibly to deny the
assets of this company to the Communist Chirece. The CIA first ar-
ranged cash advances to the company in 1949. These advances were
eventually credited to the Agency's ]:)urchase of the corporation. At
that time, Houston described the airline as follows :
This normal aviation organization, this would have no mean-
ing at all, was completely at all, it would have no standing
^' The Agency today uses this firm for the purchase of airline tickets for travel
in support of sensitive projects. It is estimated hy the Agency that CTA business
represents about 30 percent of the gross airline ticket sales of the entity on an
annual basis.
** Houston, 1/15/76, p. 5.
220
in international law, aviation rights, or any of that. But it
worked for what they wanted, which was to take supplies up-
coimtiy into inland China and then to bring back whatever
cargo they could get commercially : tallow, hides, bristles, all
that sort of trade, and then they traded that off for their own
account. And for awhile the operation was fairly successful,
the C-47's and C^G's.^^
To finance this activity the lawyer for the airline organized a com-
pany. Civil Air Transport, which was funded by a Panamanian cor-
poration. The two owners of Air America approached the Agency in
connection with a foreign operation in the spring of 1959, and in-
dicated that unless they received financial assistance, the airline would
go out of business.
A series of meetings were held subsequently in which it was deter-
mined that the Agency needed to contract for air transport in some of
its operations, particularly those involving arms and ammunition.
And so we entered into an arrangement, I think in about Sep-
tember of 1949 whereby we would advance them, the figure of
$750,000 sticks in my mind, against which we could draw for
actual use of the planes at an agreed on rate. . . . And we did
draw down, I think, all the flying time and expended the
$750,000 between September and about January, at which
time we suspended any further payments or draw-downs.
I think the money was exhausted.^^
The owners came to Washington in early 1950 for a series of discus-
sions with the CIA. As a result of these negotiations, the Agency agreed
to advance more funds, and received an option to purchase the assets
of Civil Air Transport. Any imused portion of the advances was to
be credited toward the purchase price. Air America operated under
this arrangement until the owners "came in in the summer of 1950
and said again they were in desperate straits for funds." ^^ An-
other series of meetings was held at the Agency in which it was con-
cluded that the operations in the Far East would have a continuing
need for secure airlift. There was also a general estimate that the loss
of this airlift to the Chinese Communists would substantially assist
them. Thus "the Agency then made the decision that they would ex-
ercise the option given there was no objection otherwise." ^*
The Agency felt that it was necessary to obtain approval from the
Department of State, so the head of the CIA's Office of Policy Coordi-
nation (who was responsible for conduct of covert actions) and Mr.
Houston visited the Assistant Secretary of State for the Far East :
He and I went to see [the Assistant Secretary] and explained
the situation. And [he] reminded us that it was basic U.S.
policy not to get the government in competition with U.S.
private industry. But under the particular circumstances, in
particular as there was really no U.S. private industry in-
=== Ibid., p. 6.
* Ibid., pp. 7-8.
"Ibid., p. 8.
'^ Ibid., p. 9.
221
volv'ed in the area, and they agreed it was important to deny
the assets to the Red Chinese. State would go along on the
iniderstanding that we would divest ourselves of the private
enterprise as soon as such a divestment was feasible, and
all of the circumstances that might obtain.^^
The divestiture of these air proprietaries was not initiated until
1975, and some of the entities have not yet been fully divested. Mr.
Houston noted, however, that :
We did not disregard that guidance because after very con-
siderable use of this asset during the early '50's, there was a
question of whether to continue it, and the matter was taken
up in the National Security Council. And Allen Dulles, as
Director, proposed that Ave continue the ownership and con-
trol of the assets of Air America, as it then was known includ-
ing the subsidy as needed. And there was a subsidy at that
time. ... It was about $1,200,000 per year.^"
The National Security Council considered whether this asset should
be retained in 1956 and, on Dulles' recommendation, decided to con-
tinue the subsidy to Air America.
The air proprietary's business consisted almost entirely of Agency
cargo carriage under contracts carrying military designations. The
company was not organized, according to Houston, to fly common
carriage and had no status in the international air business. The evi-
dence mdicates that during the early 1950s, there were two internal
struggles: one was where control should lie in the Agency, and the
other was what policies shoirid apply to the operation of the company
itself :
The struggle within the Agency ranged all the way from
sort of quiet management discussions as to what was good
management, to sometimes rather vociferous argun^nts of
who's in charge here. And the operators always said, "Well,
we need to call the shots because it's our operation. . . . And
this is what we were running into all the time, of red hot
operators opposed to what we would consider good man-
agement.^^
The air proprietary was managed by elements of the Office of Policy
Coordination. From the very outset there were problems in this man-
agement structure. One such example is the acquisition of Air Amer-
ica in Aup-ust 1950. Houston was participatincr in the negotiations at
the invitation of the Head of the Office of Policy Coordination.
OPC was a curious organization, determined as being
attached to the Agency for quarters and rationing with policy
=* Thid., pp. 9-10.
'^ Thid.. p. 10.
Houston indicated that there had hepn a subsidy running to the entities since
1949. ".$1.2 million represented about the maximum subsidy given until. I believe,
about 19.58 was the tumins point, and from 1958 on, there was no subsidy as such
that went into it." The reason for that, of course, was that the air complex had
become "money-making."
^ IMd., pp. 12-13.
222
guidance from State, which was an impossible situation.
Very nice fellows were doing the negotiating with
[OPC] . . . quite unknown to me, when they made the agree-
ment to purchase carrying out the option, they gave the
vendors the right to repurchase at any time within two years.
And I thought this was really inconsistent with our whole
position. And during the next two years they negotiated
out that repurchase agreement and in its place substituted
an agreement to give them a first refusal, if we were to dispose
of the airline. That first refusal plagued us for years. They
used to make all sorts of extraordinary claims under it and it
was never exercised and eventually it was sort of forgotten
when [the owners] died. It ran to them personally, whether
it ran to them and two others personally, and they all are dead
now. But this shows a part of the learning curve, which was
the thing we were going through.^-
In the summer of 1954, Houston and a consultant traveled to the Far
East to observe the operation. The consultant went "specifically to
look at the organization of the airline." At the time of the airline's
purchase, the Agency had formed a Delaware corporation to buy it.
The corporate counsel and the consultant were both very concerned
about the technical organization, or lack of it, in the operation. Accord-
ing to Houston, they demonstrated :
to my satisfaction that it was an absolute situation and that
no one out there had the slightest understanding of the
problem or what they were up against, or wanted to do any-
thing about it [in terms of airline management] .^^
Following this review, a new organization, designed to be more
responsive to the Operations Directorate, was created.
Pacific Corporation held title to 40 percent of the equity in Air
America, while the remainder was ostensibly owned by Chinese, who
gave deeds of trust to the Agency for their shares. For purposes of
international law this overt arrangement demonstrated that the com-
pany was majority-owned and controlled by Chinese.
Air America originally had several DC-4's and began modest opera-
tions between Hong Kong, Taipei and Tokyo. The corporation soon
acquired DC-6's, and it was at this time that the question of competi-
tion with private corporations first arose. Northwest Orient Airlines
was then flying to Tokyo, Seoul, and Manila. A Northwest executive
had noted the Agency's interest in this area when he was Chairman of
the Civil Aeronautics Board in the late 1.940s and early 1950s. Houston
told the Committee :
He became head of Northwest, a very tight manager, a very
capable fellow, and he used to complain that we were inter-
ferring, we were taking passengers off his airline, and we
would go to him and say, we have to keep the airline in this
business because the Chinese say they need an international
airline. They're not ready to start their own yet. And it is
*'7&7(f.,pp 13-14.
'»/6id.,p. 17.
223
necessary to its overall cover status as a going commercial
concern.^*
By 1959 the executive had decided to ask the Civil Aeronautics
Board for a decision. A meeting was held with the entire Board, where
the executive maintained "that he was a private industry, he should
not be interferred with by government competition." ^^ The Agency
explained its situation, the need for cover, and their efforts to restrict
carriage to the minimum necessary to retain their cover.
And it ended up by one of the members of the Board turning
to [the executive] and saying, "You ought to be glad that
you don't have a really good, reliable competitor in there."
He said, "If you were being competed with by private busi-
ness, you'd have real headaches. You ought to be real glad
that it's not worse than it is." ^^
In these proceedings, Houston conceded that some passengers were
traveling on CIA aircraft rather than Northwest planes, but main-
tained that the impact was minimal and unavoidable. The CAB par-
ticipated in discussions with both the Agency and Northwest. After
hearing both sides, the CAB "came down on the side of the Agency
after making a reasoned judgment." ^^
By 1960 the airline's international commercial business was not mak-
ing money. Maintenance work in Taiwan, however, was "normally a
money-maker, and this was [contracted] primarily, although not
exclusively, with the U.S. Air Force." ^^
There were management problems in the maintenance operation,
which originally stemmed from the fact that field personnel were not
particularly astute in setting costs for their contracts. Houston cited
one instance when the Agency consultant replaced a corporation comp-
troller who was very able, but "had his own ideas of bookkeeping and
controls." The consultant insisted that the corporation implement
bookkeeping practices and controls consistent with CAB and FAA
regulations. The military maintenance contracts were constantly
audited by on-site teams.^''
In the early 1960s, the CIA received an exemption from the Con-
tract Renegotiation Board on the grounds that renegotiation personnel
might recognize that Air America was not a commercial operation
and discover that the CIA was involved. The Agency went to the head
of the Contract Renegotiation Board with a letter from the Depart-
ment of Defense requesting an exemption on what it considered "per-
fectly legitimate grounds." *° There was indeed a basis for exemption
under the Renegotiation Act as the business was conducted entirely
overseas, and the exemption was granted. The Agency was concerned
that it had made a type of profit (over 40 percent on the Air Force
maintenance contracts), which may well have been the subject of rene-
" ma. p. 21.
*" ma., p. 22.
"^ Ibid. pp. 22-23.
" Ibid., p. 24.
" Ibid., p. 25.
'" Ibid., p. 26.
* Ibid.
224
gotiation, had it not been subject to the exemption. "So the question
was what to do about it. And finally, we made a voluntary repa3rment
against part of the profit on that contract to the Air Force." *^
As noted previously, the commercial airline aspect of the operation
operated mostly at a loss. While there were periods when Air America
cargo carriers were very busy on CIA contracts, the Korean War,
Diem Bien Phu, and other paramilitary operations; there were also
periods between these activities when there was nothing for the air-
lines to do. During these periods of inactivity, the airline was still
saddled with expenses such as crews' salaries and the maintenance of
grounded aircraft. To alleviate this problem,
... we finally organized the stand-by contract, which was an
apparent military entity on Okinawa. It was our entity, but
it had a military designation. I can't remember the name for
it. And that entity contracted with Air America for so many
hours of cargo stand-by to be available any time on call, and
that they would pay so much for that caDability being main-
tained ... so that is how we kept the subsidy going to main-
tain them during periods when there was not profitable
flying.*'
Another area of concern was the proprietary's relationship with the
Internal Revenue Service. From the outset, the company's manage-
ment was informed that they would be required to pay appropriate
taxes. While there were the usual arguments about whether certain
items were appropriate for taxation and whether certain deductions
should have been granted, the relationship maintained with the IRS
was basically a normal one.
Houston recalled that in the mid-1950s Air America received notice
of an upcoming; audit by the IRS. Company officials came to the
Agency and indicated that this might pose a security problem. The
CIA went to the Commissioner of the Internal Revenue Service and
indicated that thev wished to have the audit conducted by an IRS
team on an unwitting basis to see what they could learn. "We thought
it would be a good test of the security of our arrangements." ^^ Later,
the IRS personnel would be notified that thev had begun to audit an
Agency proprietary, and the audit would be discontinued :
They put a very bright young fellow on and he went into
it. Thev came up with discrepancies and things that would
be settled in the normal tax argument, corporate-IRS argu-
ment, and all of these were worked eventually, and then we
went to this fellow and said, "Now, this was owned and
backed bv the CIA, the U.S. Government. What was your
guess as to what was haDpening?"
And he said, "Well, I knew there was somethina: there, and
I thought, what a wonderful asset it would be for the Rus-
sians to have, but I came to the conclusion that it was Rocke-
feller money." **
*^ Thid., p. 27.
*" lUd., p. 29.
'*Ihid., p. 30.
** IMd.
225
As the operations of Air America developed, problems arose in-
volving large cargo carriers. In the early days of its operation the
airline used C-54's, which had an extremely limited range, but were
able to perform under demanding circumstances. Discussions pro-
ceeded during that period about modernizing the equipment and the
Agency, through Air America, bought DC-6AB's. These aircraft were
a conversion of the DC-6 with large cargo doors installed. Air
America did not maintain any jet equipment at that point.
In the early 1950's Air America became deeply involved in a mili-
tary Air Transport System. This system was originally known as
MATS, and later as MAC.
They got MATS contracts, and Air America got these, and
these were very good to keep a constant utilization at a good
rate, the MATS rates were usually good, because the policy
was not to do competitive bidding for the lowest bidder be-
cause then you got the poorest service, but give good rates to
the carriers, and then require the carrier belong to the Civil
Reserve Air Fleet.*^
In 1956 MATS changed its policy and required that bidders on their
contracts be certified. Because Air America could not become certif-
icated, the Agency decided to purchase Southern Air Transport.
While this corporation was technically a separate entity, not involved
with Air America, it was actually an integral part of the complex
from a management perspective. All management decisions for South-
ern Air Transport were made by the same CIA consultant and ad-
visory team that established Air America policy.
Eventually, MAC decided to require that bidders not only be certif-
icated, but that they also have equipment qualified for the Civil
Reserve Air Fleet, i.e., jet aircraft. As a result, the Agency acquired
Boeino- 727's and convinced Boeing to modify the 727 by enlarging the
ventral exit, enhancing its airdrop capability.
So the theory was that the 727's would be used on MAC con-
tracts to be available on an overriding basis if needed for
major national seciirity operation. The^' were u-^ed, usu-
allv when thev had spare time. To my recollection, they were
only called off once, off the actual contract time, and this was
for a possible use which didn't .<ro through. But the White
House asked if we had the capabilitv to move something from
here to there, I think from the Philippines to somewhere
in Southeast As^a, I don't recall, and so thev sent word to
manaq-ement that thev wanted a plane available at the earliest
onnortunitv at Clark Field. T>«ev nulled one of them off the
MAC contract and had it available. I think readv to go, in
twelve hours, all set for the ope^^ation. And the operation
was never called. But it showed wliat the canabilitv was. And
what thev had to do was get substitute service for the MAC
contract.*^
During the late 1960s several Chinese airlines beoran operations on
a limited scale. With the establishment of these indigenous airlines
« ThifT.. 3R.
*"/6i<f.,p.39.
226
flying Far East routes, the CIA considered reducing its international
carriage work. The Agency decided to retain the MAC contracts be-
cause they did not compete with the native enterprises, but plans to
reduce Air America's international common carriage were initiated.
Another CIA proprietary. Civil Air Transport Company, Ltd.,
which had been organized in 1954, had been the first Agency entity
to engage in common carriage. Later, Air America did the American
contracting, followed by Southern Air Transport which also per-
formed MAC and MATS contracts with planes leased from Air
America.^''
Houston noted that in the late 1960s an internal decision was made
that :
... we probably couldn't justify this major airlift, with the
big jets, and so we started getting rid of them. See, they had
no utilization to speak of down in Southeast Asia. A couple
of supply flights went into [another area] and I think we used
prop planes for that, to my recollection.*^*
So the Agency began to phase out the 727s, which contributed to the
decision to divest itself of Southern Air Transport and Air America.
Internal management was streamlined in 1963 by the establishment
of an executive committee consisting of the boards of directors of the
Pacific Company, Air America and Air Asia. The overt board of
directors in New York City passed a resolution organizing an overt
executive committee, which consisted of the CIA consultant and
two other directors. Covertly, the Agency added its own representa-
tives to this committee, which allowed representatives of manage-
ment. Agency and the operators to meet, consider policies, and give
guidance to the company. Houston indicated that this mechanism
was extremely effective in controlling the company :
So I think for the last, oh, fifteen, eighteen years, the pro-
prietary management system was on the whole pretty effec-
tive from the Agency point of view. I think we knew what
was going on. I think we were able to get things up for de-
cisions, and if we couldn't resolve them at the staff level,
we would take them up to the Director for decisions; quite
different from the early days in the early 50's that I de-
scribed, and the operators at least made the claim that they
had the right to call the tune.*^
During this period of time Operations Directorate personnel
were getting themselves involved in the acquisition of air-
craft 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 air-
craft. And so the Director of Central Intelligence set up
EXCOMAIR, of which I was Chairman, and had repre-
sentation from both the operation and management and fi-
" SAT actually owned one 727 and leased two from Air America.
"" Ibid., p. 42.
*^ Ibid., pp. 46-47.
227
nance out of the Agency, to try and coordinate the overall
control and acquisition and disposition of aircraf t.^^
A February 5, 1963 memorandum entitled "Establishment of Execu-
tive Committee for Air Proprietary Operations," noted that the com-
mittee was "to provide general policy guidance for the management of
air proprietary projects, and review and final recommendations for
approval of air proprietary proiect actions." Houston indicated that
this committee, dubbed EXCOMAIR, "was ... an amorphous
group" which worked on a very informal basis. He indicated that
EXCOMAIR was an effective metliod of achieving overall coordina-
tion ; it was responsible for conducting a thorough inventory of all the
equipment that the Agency had in the aviation field and was generally
able to keep track of who needed what.^°
According to Houston, a general shift in thinking at the Agency
occurred between 1968 and 1972 as to the desirability of maintaining
a substantial airlift capability. The records appear to indicate that
Houston convinced the Director in the early 1970s that such a capacity
was no longer necessary to retain. Houston commented on this assess-
ment as follows :
Through what knowledge I had of the utilization of the vari-
ous assets, it seemed to me that utilization, particularly
of large assets, that is, heavy flight equipment, was going
down to the point where there was very little of it. Con-
sequently, we couldn't forecast a specific requirement. Such
requirements as you could forecast were highly contingent.
But I also remember a couple of times putting the caveat into
the Director that with a changing world and with the com-
plications 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.^^
Allegation of Drug TraiflcMng. — Persistent questions have been
raised whether Agency policy has included using proprietaries to
engage in illegal activities or to make profits which could be used to
fund operations. Most notably, these charges inchided allegations that
the CIA used air proprietaries to engage in drug trafficking. The
Committee investigated this area to determine whether there is any
evidence to snbstantiate these charges. On the basis of its examination,
the Committee has concluded that the CIA air proprietaries did not
participate in illicit drug trafficking.
As allegations of illegal drug trafficking by Air America personnel
grew in the spring and summer of 1972, the CIA launched a full-
scale inquiry. The Inspector General interviewed a score of officers at
CIA headquarters who had served in Asia and were familiar with the
problems related to drug trafficking. After this initial step, the Office
of the Inspector General dispatched investigators to the field. From
August 24 to September 10, 1972, this group travelled the Far East
** Ihid., p. 51.
" lUd., p. 52.
° /Bid., p. 57.
228
in search of the facts. They first visited Hong Kong, then eleven
Agency facilities in Southeast Asia. During this period they inter-
viewed more than 100 representatives of the CIA, the Department of
State, the Agency for International Development, the Bureau of Nar-
cotics and Dangerous Drugs, the U.S. Customs Service, the Army, Air
America, and a cooperating air transport company.
This inspection culminated in an Inspector General's report in Sep-
tember 1972, which concluded that there was
no evidence that the Agency, or any senior officer of the
Agency, has ever sanctioned or supported drug trafficking
as a matter of policy. Also, we found not the slightest suspi-
cion, much less evidence, that any Agency officer, staff or
contract, has ever been involved in the drug business. With
respect to Air America, we found that it has always
forbidden, as a matter of policy, the transportation of contra-
band goods aboard its aircraft. We believe that its Security
Inspection Service, which is used by the cooperating air
transport company as well, is now serving as an added deter-
rent to drug traffickers.^^
But there were aspects of the situation in Southeast Asia which were
cause for concern :
The one area of our activities in Southeast Asia that gives
us some concern has to do with the agents and local officials
with whom we are in contact who have been or may be still
involved in one way or another in the drug business. We are
not referring here to those agents who are run as penetrations
of the narcotics industry for collection of intelligence on the
industry but, rather, to those with whom we are in touch in
our other operations. What to do about these people is a par-
ticularly troublesome problem, in view of its implications
for some of our operations, particularly in Laos.^^
The Inspector General noted that there was a need for better intelli-
gence not only to support American efforts to suppress drug traffic in
Southeast Asia, but also to provide continuing assurance that Agency
personnel and facilities were not involved in the drug business.
His report began by placing the allegations against the CIA in his-
torical perspective. It allowed that when the United States arrived
in Southeast Asia "opium was as much a part of the agricultural infra-
structure of this area as was rice, one suitable for the hills, the other
for the valleys." ^^
The record before the Inspector General clearly established that offi-
cial United States policy deplored the use of opium as a narcotic in
Southeast Asia, but regarded it as a problem for local governments.
It was equally clear that Agency personnel in the area recognized its
dangers to U.S. paramilitary operations and "took steps to discourage
^''CIA Inspector General's Report, "Investigation of the Drug Situation in
Southeast Asia." 9/72, p. 2.
^ Ibid., pp. 2-3.
« IMd., p. 5.
229
its use by indigenous paramilitary troops." ^^ For example, Meo troops
were ejected from various camps when they were caught using the
drug. But, the I. G. noted :
We did not, however, attempt to prevent its use among the
civilian population in those areas where we exercised military
control, believing that such intervention would have been re-
sisted by the tribals with whom we were working and might
have even resulted in their refusal to cooperate.^®
Nor did the Agency interfere with the movement of the opium from
the hills to market in the cities farther south. In this regard, the I.G.
remarked candidly :
The war has clearly been our overriding priority in Southeast
Asia and all other issues have taken second place in the scheme
of things. It would be foolish to deny this, and we see no
reason to do so.^^
Although it maintained this posture, the CIA was reporting in-
formation on opium trafficking long before any formal requrements
were levied upon it. As far back as the mid-i960s, when CIA case
officers began to get a picture of the opium traffic out of Burma as a
by-product of cross-border operations, they chronicled this informa-
tion in their operational reporting. As more information came to light
in Laos and Thailand, this information began to appear in intelligence
reporting. Indeed, the Agency "had substantial assets [in two South-
east Asian countries, which] could be specifically directed against this
target when it assmiied top priority in 1971." ^^
Air America
As early as 1957, Air America's regulations contained an injunction
against smuggling. This regulation later came to include opium. The
Report indicated that the airline's effort at this time was concen-
trated on preventing the smuggling of opium out of Laos on its air-
craft. Although still not a. crime in Laos, shipment of opium on
international flights was clearly illegal and was grounds for dismissal
of any pilot or crew member involved. The Inspector General stated
that:'
Air America has had a few cases of this kind (all of which
are documented in the files in the Agency) and has, in each
case, taken prompt and decisive action upon their discovery .^^
Air America was less able to control drug traffic involving its aircraft
within Laos. Although it had a rule that opium could not be carried
aboard its planes, the only thing that could be done if the rule was
violated was to put the opium and its owner off at the nearest airstrip.
^ Ibid., p. 6.
^ Ibid.
" Ibid.
The report related a statement of a case oflBeer which typified the CIA position
in the matter during the period 1966-1968. The oflScer said that he "was under
orders not to get too deeply involved in opium matters since his primary mission
was to get on with the war and not risk souring relations with his indigenous
military counterparts by investigation of opium matters."
"* Ibid, p. 7.
"^Jbid.
230
Moreover, as a charter carrier, Air America did not have full control
over its traffic. It hauled what its customers put on the aircraft. Air
operations officers, in the case of Agency traffic, were responsible for
authenticating the passengers and cargo they washed to put on the
plane. In some locations, the air operations officers had to rely on
indigenous assistants for much of the actual details of preparing mani-
fests, checking cargo, and supervising the loading of the aircraft. In
areas where active military operations were in progress, this process
could become cursory if not actually chaotic. In such circumstances, the
Inspector General concluded that : "^ —
it was hardly fair to blame Air America if opium happened
to get aboard its aircraft. There is no question that it did on
occasion.^"
With the realization that drug abuse among American troops in
Vietnam was growing and that Southeast Asian heroin was finding
its way to U.S. markets, the CIA's early attitude toward the opium
problem began to change. The Agency joined the effort that began in
1971 to halt the flow of opium and heroin from Burma, Laos, and
Thailand, and pursued a vigorous intelligence program against these
targets.
In terms of staff and contract personnel, the Inspector General was
impressed that "to a man, our officers overseas find the drug business
as distasteful as those at headquarters." ^^ Indeed, many of the CIA's
officers were restive about having to deal with Laotian officials who
were involved in the drug business :
One young officer even let his zeal get the better of his judg-
ment and destroyed a refinery in northwest Laos in 1971 be-
fore the anti-narcotics law was passed, thus risking being
charged with destruction of private property.''^
But, the I.G. reported, CIA officers generally tolerated the opium
problem, regarding it as just another of the frustrations one encoun-
ters in the area.
From what the Inspector General contingent was able to observe in
the field, "the pilots in the employ of Air America and the cooperating
air transport company merit a clean bill of health." ^^ While it was
true that narcotics had been found aboard some of their aircraft, in
almost every case the small quantity involved could only have been
for the personal use of the possessor. The Inspector General felt that
Given the strict anti-contraband regulations under which
these two airlines have been operating for years, it is highly
unlikely that any pilot would knowingly have permitted nar-
cotics or any other contraband aboard his aircraft.^*
Although they noted, "if it is a truism to say that they're in the
business for the money," the investigators concluded that these pilots
*" Ibid, p. 8.
** Ibid. p. 11.
" Ibid.
*" Ibid. p. 12.
^Ibid.
231
were deeply committed to their job, and that the subject of dnisfs was
as much an anathema to them as it is "to any decent, respectable citi-
zen in the United States." ^^
The Inspector General indicated how one pilot felt about the sub-
ject. He stated :
You ofet me a contract to defoliate the poppy fields in Burma,
and I'll take off ri^ht now and destroy them. I have a friend
whose son is hooked on dru^s, and I too have teenage chil-
dren. It scares the hell out of me as much as it does you and
the rest of the people in the States.^^
The report also established that the pilots were well paid, averaging
close to $45,000 a year. Almost half of their salaiy was tax-free. In
this context the I.G. concluded that
Although the temptation for big money offered by drugs can-
not be dismissed out of hand, it helps to know that the pilots
are making good money. Further, an American living in
Vientiane can bank a substantial part of his salary without
much difficulty, and a common topic of conversation among
pilots is how and where to invest their fairly substantial
savings.^^
The milieu in w'hicJh these pilots found themselves did serve to evoke
images of them as mercenaries or soldiers of fortune. The Inspector
General indicated that a "number of them do like their wine and
women, but on the job they are all business and very much like the
average American." ^^
The investigators, however, could not be as sanguine about the
behavior of the numerous other individuals who worked for Air
America and the cooperating air transport company as mechanics or
baggage handlers. The nature of their work allowed these employees
easy access to the airplanes, and created real opportunities for con-
cealing packages of narcotics in the airframes. The records indicated
that there were several instances where employees had been fired be-
cause they were suspected of handling drugs. The Inspector General
advisd that :
Despite the introduction of tighter security measures, it
would be foolish to assume that there will not be any further
attempts by mechanics and baggage handlers to conceal nar-
cotics on airplanes.^^
In a startling revelation concerning indigenous officials in Southeast
Asia, the I.G. bitterly reported that
In recent testimony to Agency officers in Vientiane, Laotian
officials who had been involved in the drug business stated
that there was no need for drug traffickers to use Air Amer-
ica facilities because they had their own. We certainly found
* Ihid.
* lUd. p. 13.
" lUd.
" lUd. p. 14.
" lUd.
232
this to be true. In addition to the Royal Lao Air Force
(RLAF), there are several commercial airlines in Laos, in-
cluding Royal Air Lines, Lao Air Development, Air Laos,
and perhaps others, all of which evidently have ties with
high Laotian government officials. It is highly problematical
whether these airlines have a full platter of legitimate busi-
ness.^°
Another factor which had the effect of making Air America a less
desirable target for the drug trafficker was that there were virtually
no regular, pre-arranged flight schedules for the pilots. Ordinarily,
the pilot did not know until he reported for duty which airplane he
would be flying or what his flight schedule would be for the day.
Air America's Security Inspection Service, which was established
early in 1972, also had five inspection units in Laos. Similar units
were eventually established elsewhere in Southeast Asia. Each unit
consisted of an American chief and three or four indigenous personel.
The basrgage of the pilot and all passengers traveling in CIA-owned
aircraft was inspected in the presence of an American official before
anyone was permitted to board. All cargo was inspected unless it had
been exempted under established procedures. The very existence of
the system was considered a deterrent to drug smuggling on Air
America aircraft and did result in several discoveries of drugs among
the baggage of passengers, although only one or two of these involved
quantities of sufficient size to be as commercial.
Agents and Assets
This is one area where the CIA is particularly vulnerable to criti-
cism. Relationships with indigenous assets and contacts are always
broad. In Laos, clandestine relationships were maintained in every
aspect of the Agency's operational program — whether paramilitary,
political action, or intelligence collection. These relationships included
people who either were known to be, or were suspected of being, in-
volved in narcotics trafficking. Although these individuals were of con-
siderable importance to the Agency, it had doubts in some instances.
For example, the investigators were troubled by a foreign official who
was alleflfed to have been involved in one instance of transporting
opium. He was evidently considered "worth the damage that his ex-
posure as an Agency asset would bring, although the Station insists
(a) that he is of value to the Station as an asrent of influence [deleted]
and (b) that his complicity in the [deleted] incident has never been
proved." "
Among liaason contacts, which in the military arena included vir-
tually every high-ranking Laotian officer, the Inspector General
warned that the Agency was "in a particular dilemma."
The past involvement of many of these officers in drugs is
well-known, and the continued participation of many is sus-
pected; yet their goodwill, if not actual cooperation, con-
siderably facilitates the military activities of the Agency-
supported irregulars.^2
■" lUd.
" lUd, p. 18.
233
The Inspector General concluded, that
The fact remains . . . that our continued support to these peo-
ple can be construed by them, and by others who might become
aware of the association, as evidence that the Agency is not as
concerned about the drug problem as other elements of the
U.S. mission in Laos. The Station has recently submitted, at
headquarters' request, an assessment of the possible adverse
repercussions for the Agency, if its relationship to certain as-
sets were exposed. We think that, on the whole, that assess-
ment was unduly sanguine. We believe the Station should
take a new look at this problem, using somewhat more strin-
gent criteria in assesshig the cost-benefit ratio of these rela-
tionships. We realize that it is impossible to lay down any but
the most general kind of rules in judging whether to con-
tinue, or to initiate, a clandestine relationship with Laotians.
Each case has to be decided on its own merits, but within a
framework that attaches appropriate importance to its pos-
sible effect on the U.S. Government's anti-narcotics efforts in
Laos. It is possible that the Station will need additional
guidance from headquarters as to current priorities among
our objectives in Laos.^^
2. Nonoperating Proprietaries
Nonoperating proprietaries vary in complexity according to their
Agency task. They are generally corporate shells which facilitate for-
eign operations and clearly pose no competitive threat to legitimate
businesses. The most elaborate are legally licensed and established to
conduct bona fide business.
All nonoperating proprietaries do have nominee stockholders,
directors, and officers and are generally directed by one of the Agency's
proprietary management companies. The company address may be a
Post Office box, a legitimate address provided by a cleared and witting
company official or private individual or the address of a proprietary
management company. The nonoperating proprietaries maintain bank
accounts, generate business correspondence, keep books of account
which can withstand commercial and tax audit, file State and Federal
tax returns, and perform normal business reporting to regulatory
authorities. They are moderately capitalized, generally at around
$5,000, and their net worth at any one time varies according to the
Agency task they are performing. As of December 31, 1973, more than
60 percent of the combined net worth of these proprietaries was operat-
ing capital for companies which provide cover to agency personnel.
Legally incorporated companies require less elaborate commercial
administration due to the nature of the tasks they perform for the
CIA. This kind of proprietary is directly managed by headquarters
specialists operating in alias. No commercial book or accounts are kept,
and in the event of a tax audit the Agency has to brief the auditing au-
thority.
Depending on use, administration may be as simple as maintain-
ing bank accounts and filing annual franchise taxes, or as extensive
■" Ibid, p. 19.
69-983 O - 76 - 16
234
as that required to obtain Employee Identification numbers, to pay
personnel taxes, and to file tax returns.
There are also sole-proprietorships^ which are proprietaries in the
sense of bein^ Agency-owned and administered. The Agency estab-
lishes and registers these sole-proprietorships. Arrangements are made
to provide an address for these entities. Like the proprietary corpora-
tions administered by Agency Headquarters specialists, these com-
panies provide cover, salaries, and tax attribution for Agency
personnel.
Another type of entity used by the Agency is a proprietary only
in the sense of being Agency-owned and administered. These are
the notional companies which are not legally registered, but have
names and bank accounts controlled by the Agency. The Agency
arranges domiciliary addresses and any queries are referred to the
Agency specialists concerned. These notional entities are used to pro-
vide status and operational cover for Agency personnel involved in
all types of high-risk intelligence operations.
C. Operation or Proprietaries
7. Statutory Authority
The Agency's statutory authority to spend money for proprietary
corporations in support of Agencv operations is derived from Section
8(b) of the CIA Act of 1949. This act states:
The sums made available to the Agency may be expended
without regard to the provisions of law and regulations relat-
ing to the expenditure of Government funds; and for objects
of a confidential, extraordinary, or emergency nature, such
expenditures to be accounted for solely on the certificate of
the Director and every such certificate shall be deemed a suf-
ficient voucher for the amount therein certified.^^
The language contained in Section 8(b) is adequate authority to
exclude the operation of these proprietary corporations from the law
governing Government corporations in 31 U.S.C. 841 et seq. How-
ever, the CIA General Counsel ruled in 1958 that the CIA should
comply with the principles in that act to the extent possible, and this
has been done. A classified Memorandum of Law by the CIA General
Counsel on the Agency's authority to acquire and dispose of a
proprietary without regard to provisions of the Federal Property
and Administrative Services Act, outlines the CIA's position. This
position was upheld by the U.S. District Court in the Southern
District of Florida in dismissing the suit Fanner v. Southern Air
Transport on July 17, 1974.^^ That result was not appealed and
remains the law.
2. Specific Controls
The formation and activities of proprietaries are controlled through
various mechanisms to assure their proper use. These include internal
'* 50 use 403(b).
'' See p. 246.
235
Agency regulations which establish the administrative procedures to
be followed in the formation, operation, and liquidation of proprietar-
ies. An Administrative Plan (specifying the operational purpose, ad-
ministrative and management procedures, and cost) and a Liquidation
Plan (specifying details of liquidation and disposition of funds when
liquidation is contemplated) must be coordinated among the effected
CIA components and approved at appropriate management levels.
This regulatory control along with policy memoranda are intended to
assure proper conduct by proprietaries. Each Agency component in-
volved in the operation of a proprietary enterprise is responsible for
compliance. The Chief of the Cover and Commercial Staff, the Direc-
tor of Finance, and the Comptroller are assigned particular responsi-
bilities.
The controls and procedures applicable to each operating pro-
prietary specify that a project outline and an administrative plan must
be approved at the Deputy Director level. Routine control and admin-
istration is executed by a project officer at Headquarters. The Agency
conducts semi-annual reviews to determine whether operational needs
still exist, and performs regular audits to assure proper management
and financial accountability. Proprietaries are liquidated as their use-
fulness ends and new ones are formed as needed.
3. Treaf7nent of Profits
The CIA General Counsel ruled in January 1958 that "income of
proprietaries, including profits, need not be considered miscellaneous
receipts to be covered into the Treasury but may be used for proper
corporate or company purposes." ^® This subject was reviewed and the
opinion reaffirmed by the General Counsel in July 1965. The policy of
retaining profits has continued, although onlv a very few Agency pro-
prietaries have ever been profitable. The CIA's legal basis for retaining
profits for the use of the operating corporate entities is discussed below.
Section 104 of the Government Corporations Control Act provides
that Congress shall enact legislation necessary to make funds or other
financial resources available for expenditure and limit the use thereof
as the Congress may determine. It is further provided that "this sec-
tion shall not be construed as preventing the Government corporations
from carrying out and financing their activities as authorized by
existing law . . ." ^^ The legislative history explaining this section
of the act states that "in cases where no other law required a congres-
sional authorization of expenditures, the corporation, if it had means
of financing other than annual appropriations, could continue to oper-
ate in the absence of any action by Congress on its budget program." '^^
The statute creating a particular Government corporation may provide
specifically how that corporation may use its profits in the conduct of
its business.
The Government Corporations Control Act clearly did not contem-
plate Government corporations of the type that the CIA has estab-
lished. Furthermore, it is not feasible for Agency proprietaries to be
created by act of Congress or overseen precisely as provided for normal
" CIA General Counsel Memorandum of Law, 1/6/58.
"31 U.S.C. 8^9.
^^ Senate Banking and Currency Committee Report 694, 11/2/45.
236
Grovernment corporations in the Act. Nevertheless, the Agency has
felt that the appropriate and reasonable policy would be to treat and
control proprietaries in accordance with the terms of the law. The
Agency maintains that there is no need to have more restrictive rules
applied to its corporations in the use of funds, including profits, than
are applied to government corporations under existing statute. Thus,
the Agency considers the use 'by a proprietary of its earnings to carry
on its corporate affairs without an offset against Agency appropria-
tions to be a legitimate practice which does not constitute an illegal
augmentation of appropriations.
With rare exception, operating proprietaries have not been self-
sustaining from real income. Income, including profits, is retained by
the proprietaries consistent with the usual operating practices of busi-
ness enterprises.
The use of proprietaries' profits is controlled by annual CIA reviews
and audits of the total capital, investment and profits situations in the
context of operational objectives and cover needs of the corporations.
The CIA maintains that, in effect, the annual project review is based
upon an audit as searching as that required for statutory government
corporations. While this may be technically true, such audits do not
raise broad questions of program duration and effectiveness.
There is no broad management audit in program terms, but rather only
a financial audit to determine essential security and integrity. More-
over, there have been no outside audits of any kind, especially those to
determine performance and effectiveness. One former CIA employee
intimately involved with this process suggested strongly that these
provisions were inadequate. This needs to be rectified, and the Commit-
tee recommends that such audits be reported to the new legislative over-
sight committee.'*
4. Disposition of Funds
Any proprietary with funds in excess of its current or foreseeable
needs is required to return such funds to the Agency. Funds generated
by the liquidation or termination of a proprietary are returned to the
Agency, except in a limited number of situations when they are trans-
ferred to another proprietarv for "similar use." On the basis of a CIA
General Counsel opinion of February 3, 1975, the Agency has revised
its policy on the treatment of all returns of funds from proprietaries.
All such returns are to be remitted to the United States Treasury as
"Miscellaneous Receipts." Prior to this change in policy, returns were
treated as refunds of the previously recorded expenses, up to the
amount of such expense for a particular proprietary with any excess
amounts returned to the Treasury as "Miscellaneous Receipts." ®°
D. The Disposal of Proprietaries
1. Overview
The Agency has emphasized the degree to which the extensive pro-
prietary system it has maintained in the past has been disposed of in
recent years. According to the current Chief of the Cover and Com-
■" See Recommendation 50.
^ See Recommendation 52.
237
mercial Staff, at least as far as large proprietaries are concerned,
"because of multitudinous reasons they will be viewed as the solution
of last resort.^^ Size was a problem and made it "inevitable that cover
Vv'ould not last." Moreover, there simply is not a need, according to the
Agency, for the kind of capabilities supplied by an Air America either
now or in the foreseeable future. In this regard, the Agency has also
indicated that no "real proprietaries" are in planning because there
are no such operational i-equirements before the Cover and Commer-
cial Staff.
The Committee has learned from its study that the Agency retains
the capability "in being" to create large proprietaries.*^ More-
over, numerous "shelf" corporations are kept available to provide
cover. These entities are generally of the notional variety which do
not compete with legitimate enterprises. Nonetheless, the Agency has
emphasized the need to maintain this general vehicle for at least one
purpose : to retain assets. Notionals are a very effective cover mecha-
nism when they are small, and can be very effective in securely pro-
viding various support items. In addition, the Chief of the Cover and
Commercial Staff told the Committee that, in order to carry out opera-
tional functions, the CIA needs a variety of tools :
We need a variety of mechanisms. We need a variety of
cooperating personnel and organizations in the private
sector.
Proprietaries, in the largest sense as we have used it
throughout these investigations, are part of this arsenal of
tools that the Agency must have in order to fulfill its job.
I said earlier on this morning that on the basis of our ex-
perience with proprietaries we have come to the conclusion
that wherever possible w^e try to use other means of pro-
viding cover and hiding the CIA hand than proprietaries.
But where there is no other way, or where it is the best way
in order to achieve the operational objective, we have used
proprietaries in the past and we propose to continue to use
proprietaries. So we are not getting out of the proprietary
^' Chief, CCS, 1/27/76, np. 15-16.
The Deputy Director of Operations noted recently in testimony :
"I think by and large that the day of the big proprietary is over. We have
attempted over the past few years to try to squeeze down on" those kinds of pro-
prietaries and I think we have really gone now to a fairly small number, and
a fairly tightly controlled group of proprietaries who are doing legitimate opera-
tional jobs, particularly in the media field.
"Our experience with proprietaries in the past has been if left by themselves,
they tend to absorb larger and larger amounts of government money and are not
particularly for a business. They are not very viable in the business sense and
quickly become suspect as not having any commercial validity. And we have,
I think in the past ten years, we have in this past ten years gotten rid of an
enormous number of proprietaries in this field. I don't foresee us getting in the
immediate future into any expansion of that proprietary record. I think we are
about right in terms of where we are now."
^ The DDO clospd hi<! recent testimony with a caveat :
"I can visualize, however, depending on what happens to the Agency in the
future, the po.ssibility that we might want to use more proprietaries, par-
ticularly in the field of cover if this gets terribly tight or terribly diflicult. But
the average operational purpose, except for some of these media operations, all
we need is cover and I think that most of the proprietaries that we have fall
into that category."
238
business as such. But it is true that the proprietaries that
we are using at the present time and what I can foresee for
the immediate future is going to be of a smallish variety,*^
The former General Counsel of the CIA, Lawrence K. Houston, con-
curred in this judgment. It should, he said, be used only as a "last
resort." ^* The Chief of CCS noted that these operations are run for
specific purposes unrelated to profit and that, "I am not in the business
to make money." ®^
Only two proprietaries, the insurance complex and Air America,
returned continuing profits or did large volumes of business. For
this reason, the Committee sought to discover if the CIA would ever
again seek to establish a large proprietary conglomerate such as the
Air America complex. The Chief, CCS responded in this manner :
These kind of facilities, any kind of facilities of this
kind get established and are used because they are needed in
the pursuit of an existing operational requirement.
If such an operational requirement should again arise, I
would assume that the Agency would consider setting up a
large-scale air proprietary with one proviso — that we have a
chance at keeping it secret that it is CIA.^
Mr. Houston noted that he did not believe it was possible to keep such
an activity secret :
I'll answer to that. I don't believe it's possible. The avia-
tion industry, everybody knows what everybody is doing and
something new coming along is immediately the focus of
thousands of eyes and prying questions, and that combined
with the intricacies of a corporate administration these days,
and the checks and balances, I think make a large aviation
proprietary probably impossible .... I don't think you can do
a real cover operation, is my personal assessment.®^
The Committee reviewed those proprietaries which had been sold
or otherwise disposed of during the period from 1965 to 1975. It sought
to discover which of those proprietaries disposed of in the last ten
years maintained a significant relationship with the Agency by con-
tract or informal understanding. More specifically, the Committee
sought answers to the following questions :
(1) How have proprietaries been disposed of by the
Agency ?
(2) Have proprietaries or their assets been sold to per-
sons who had previously served as directors, officers or em-
ployees of the proprietaries ?
(3) How often were proprietaries sold pursuant to an
agreement or understanding that the purchased proprietary
would provide the Agency with goods, services or other
assistance ?
«^ Chief, CCS, 1/27/76, pp. 1^20.
^ Houston, 1/15/76, p. 5.
* Chief, CCS, 1/27/76, p. 80.
^ Ibid., p. 21.
" Houston, 1/27/76, p. 21.
239
Our study revealed that during the mdicated period, a large num-
ber- of proprietaries were dissolved, sold, or otherwise disposed of,
thus substantiating the Agency's claim that it had moved decisively to
extricate itself from this area of activity. In a very real sense, it is
nearly impossible to evaluate w^hether a ''link" still exists between the
Agency and a former asset related to a proprietaiy. In some cases,
even though formal and informal Agency ties are discontinued, social
and interpersonal relationships remain. The impact of such liaisons is
difficult to assess.
At its peak, Air America, the Agency's largest proprietary, had
total assets of some $50 million and directly employed more than 5,600
individuals (the total number of employees for the Air America com-
plex was in excess of 8,000). The company is in the process of being
liquidated because it is no longer required. The Air America complex
included a number of other companies with the Pacific Corporation
as the holding company. The general plan for liquidation of Air
America is for the Pacific Corporation to sell off Air America, Inc.,
and its affiliates. A private New York firm was engaged to estimate
a fair market value for the complex. Although the Agency con-
ducted an intensive search for competitive bidders, it was able to
find buyers for only one of the affiliated companies. The sale of this
company was closed on January 31, 1975. The remaining parts of
Air America are being liquidated by sale of individual assets upon
completion of existing contracts. Funds realized from the sales could be
as much as $25 million and will be returned to the Treasury.
Agency financial support for Radio Liberty and Radio Free
Europe, both sizeable proprietaries, was terminated in FY 1971 and
responsibility for their funding and operation Avas assumed by the
Department of State.
Southern Air Transport was sold on December 31, 1973 because
its contingency capability was no longer needed. The Agency realized
$6,470,000 from this sale, of which $3,345,000 was in cash (including
a $1.2 million award in arbitration of a dispute over the proceeds of
the sale of an aircraft by Southern Air Transport after the sale of
the company by the Agency). The purchaser paid the balance to Air
America to retire a debt owed by Southern Air Transport. A group
of employees of Southern Air Transport filed a civil action disputing
the propriety of the sale of the company by the Agency, but the case
was dismissed with prejudice on July 17, 1974 by a Federal court.
Most of the entities of which the Agency has divested itself were
either sold or given to witting individuals (former officers, em-
ployees, managers, contractors, etc.). A handful were sold or given
to witting individuals who had no formal relationship with the pro-
prietary. In several cases, transfer of the entity was conditioned as an
agreement that the proprietary would continue to provide goods or
services to the CIA. Other methods which have occasionally been used
to dispose of entities include: merger with another Agency pro-
prietary; transfer or sale of a proprietary to another Government
department; and liquidation, with the remaining assets of the pro-
prietary being given to previouslv uncompensated participants in the
venture, or to other Agency proprietaries.
240
2. The Sale of Southern Air Transport, Inc.
Southern Air Transport Incorporated (SAT) is an American air
carrier, incorporated in the State of Florida on October 31, 1949.
From its inception until its purchase in 1960 by the Central Intelli-
gence Agency, it was privately owned. It was purchased by the CIA
on August 5, 1960, and owned by the CIA through December 31,
1973 when the Agency sold the ifirm back to one of its original owners.
The decision to acquire Southern Air Transport was triggered by
a change in the regulations governing the award of Military Air
Transport Service (MATS) contracts. On April 1, 1960, Air America
had begun flying a seven month MATS contract operating out of
Tachikawa Air Force Base in Japan, to other Pacific locations. In
June of 1960, the Department of Defense and the Civil Aeronautics
Board changed the regulations governing the awarding of MATS
contracts to require that bidders hold at least a Supplemental Certifi-
cate of Convenience and Necessity for an air carrier and that they
participate in the Civil Reserve Air Fleet Program. Air America
did not meet either of these new criteria and could not obtain appro-
priate waivers.
The Air America heavy airlift capability represented an American
asset for use in future operational contingencies throughout the Far
East area. Loss of the INLETS contract would result in underutiliza-
tion of aircraft and air crews, and the revenues were needed to
sustain these assets. Therefore, the CIA proposed that either Air
America should obtain the necessary certification, or that the Agency
should buy another commercial firm that already held these certifi-
cations. The October 1, 1960 contract date, the need for public hear-
ings, and lengthy proceedings militated against Air America apply-
ing for the certificate. In order to avoid lengthy public hearings,
which would be time-consuming and generate public exposure, it was
decided that the ownership of the company to be acquired must be
kept completely separate from Air America. This solution was con-
curred in by the CAB, DOD, the CIA, and Air America management.
It was anticipated that if the new company were awarded an on-
going MATS contract, it would actually perform the flying service
but would use equipment under conditional sale from Air America
and would employ personnel transferred from Air America. Under
inter-company agreements Air America would provide all mainte-
nance work, ground handling, and other services for which it would
be reimbursed by the new company. In this wav, Air America would
share in the revenues generated by the MATS contracts. The pro-
posal to purchase a supplemental carrier and operate it under the
above arrangement was approved by Director of Central Intelligence
Allen Dulles on July 15, 1960. Funds from the Clandestine Services
budfi-et for FY 1962 were made available for the purchase.
After World War II there had been over 200 supplemental carriers
in existence. By 1960 only 18 were still operating. Air America man-
agement made a survev of the 18 and determined that Southern Air
Transnort in Miami, Florida, was the most attractive as a purchase
possibility. It operated two C-46s — one owned, one leased — between
241
Miami and points in the Caribbean and South America. Its associated
company owned the four acre property on which SAT was located.
Moreover, it operated at a modest profit and had no long term debts.
Negotiations for the purchase of SAT were successful and on Au-
gust 5, 1960, the CIA exchanged $307,506.10 for all outstanding shares
of capital stock of SAT and its real property owning affiliate. The
Agency owned these shares in the name of a former board member of
Air America.
Under CIA management Southern Air Transport operated with
two semi-autonomous sections : the Pacific and Atlantic Divisions. The
Pacific Division performed the MATS contract and supported Agency
"heavylift" requirements in East Asia. The Atlantic Division con-
tinued to operate in the Caribbean and South America; doing the
same sort of flying SAT had done prior to Agency acquisition. The
Atlantic Division was also able to furnish support for certain sensitive
operations. At the peak of its activities, the SAT fleet, comprised of
both owned and leased aircraft, included Douglas DC-6, Boeing 727,
and Lockheed L-lOO Hercules aircraft.
The Sale
In 1972 it became apparent that the Agency's air capabilities ex-
ceeded its needs, and that political realities and future operational re-
quirements in the post-war era of Southeast Asia would not require
large air proprietary assets. On April 21, 1972, the Director of Central
Intelligence authorized the divestiture of CIA ownership and control
of the Air America complex and Southern Air Transport. He approved
recommendations calling for: Air America to be retained until the
end of the war in Southeast Asia ; the immediate elimination of the
Pacific Division of SAT ; the sale of two 727 aircraft leased to SAT
by Air America; and subsequent divestiture of Agency ownership
and control of the remainder of SAT.®^ Specific note was made that
conflict of interest should be avoided and that no employee should
receive a windfall benefit as a result of these transactions.^^
In May 1972, two Agency officials met with the Chairman of the
Civil Aeronautics Board and his Administrative Assistant to seek
informal advice as to the best way to disengage from SAT. Three
alternatives were discussed: (1) dissolve the company and sell the
assets; (2) sell the assets to the current operators of the company;
(3) sell SAT to, or merge SAT into, one of the other supplemental
carriers.
The CAB chairman discouraged option (3) because it would in-
volve public hearings and would be subject to criticism by the other
supplementals : Option (1), although least troublesome from the legal
^ The Director determined that "we no longer should retain air proprietaries
purely for contingent requirements and that on the record, therefore, the Agency
should divest itself of the Southern Air Transport complex entirely." He stated
that the desirable course of action would be dissolution, although he realized
that the problems were many and complex. Also, he did not rule out other solutions
which might achieve the end and yet better satisfy the interests of all concerned.
^ A condition imposed by the DCI was that "in the disposition of any of the
assets involved nothing inure to the benefit of Agency employees or former em-
ployees or persons whose relationship with the Agency has been or is of such
a nature as might raise a question of conflict of interest."
242
and security standpoints, would further reduce the shrinking num-
ber of U.S. supplementals (by 1972, there were only eleven supple-
mental carriers left) and would be unfair to SAT employees. The CAB
officials had no objections to option (2).
On May 5, 1972 the DCI was presented with the results of the meet-
ing with the CxVB chairman. He approved the recommendation to ex-
plore the sale of the equity in SAT to the current management. It
was noted that SAT had been operating as a supplemental carrier for
25 years, that none of the employees of SAT had ever been an em-
ployee of the Agency, and that both the Department of Defense and
the chairman of the CAB considered it in their best interests to keep
SAT as a viable carrier. The rationale behind selling SAT intact to
its management was :
(1) Liquidation would deprive the United States of a useful air
carrier and would be unfair to the employees.
(2) Sale of SAT on the open market would generate an unaccept-
able level of public interest and scrutiny. A publicly advertised disposi-
tion would run contrary to the Director's statutory mandate to protect
intelligence sources and methods.
(3) Although a potential for conflict of interest and windfall profit
existed, the sale of SAT to its management would best satisfy the
requirements of everyone involved.
The DCI was, apparentlv, allowed this flexibility in method of dis-
posal by statute. 40 U.S.C. §474(17) provides that nothing in the
regulations relating to disposal of surplus government property shall
affect any authority of the CIA. In addition, 50 U.S.C. § 403(d) (5)
provides that the Director of Central Intelligence is responsible for
protecting intelligence sources and methods from unauthorized dis-
closure. It was determined that sale of SAT stock to one of its former
owners in a confidential manner would prevent damage which could
result from disclosure of CIA ownership.
Agency officials began exploring ways in which SAT could be sold to
its management, without permitting a windfall to accrue to the buyer,
and in a way that could not be construed as a conflict of interest. To
establish a reasonable selling price, the Agency asked a Certified
Public Accounting firm to perform a valuation study. The accounting
firm in turn engaged an aviation consultant firm to conduct an eval-
uation of the aircraft. The following values were established :
Millions
(1) Book value of SAT $3. 900
(2) Estimated total value of SAT capital stock on open market- 2.645
(3) Disposal as going concern 2. 100
(4) Liquidation value 1.250
(5) Agency investment 1. 500
Based on these figures, the Executive Director-Comptroller on August
17, 1972, approved an asking price of $2.7 million. Sale at this price to
the management would require simultaneous payment in full of the
$3.2 million note payable to Air America through an associated land
holding compan3\ and would not include any equity in the lease pur-
chase agreement between SAT and Air America for a Lockheed L
100-30 Hercules aircraft. Although this $2.7 million price was less
than the $3.9 million book value, it did exceed the fair market value
of the company as calculated by professional appraisers. The ap-
praisals were based not on depreciated purchase prices for assets, as
243
reflected in book values, but on the earning power of the assets adjusted
to "present vakie"' and the current resale value for all assets.
On August 23, 1972, the former owner was advised that the asking
price for SAT was $5.9 million; $2.7 million for the acquisition of
stock and $3.2 million for payment of debt to Air America. A deadline
date of October 1, 1972 was established; otherwise the firm would be
dissolved and the assets liquidated. Although the former owner con-
tended the asking price should be reduced because the outstanding loan
to Air America had been reduced since the date of the study, he stated
that he would attempt to work out financing within the deadline date
of October 1, 1972. This deadline was extended by the Agency to
December 4, 1972.
On December 5, 1972, the former owner submitted an offer to buv
SAT for $5 million : $1,875 million for the acquisition of SAT and
$3,125 million to pay off the debt to Air America. On December 26,
1972, the Executive Director-Comptroller approved the recommenda-
tion that the offer be rejected and that if the former owner was unable
to raise by January 20, 1973, the additional funds required for the
original purchase price of $5.9 million, including the Air America
debt, that the Agency proceed with liquidation plans and the dis-
missal of SAT employees not later than February 1, 1973.
On January 11, 1973, a new proposal was submitted to purchase
SAT for a total price of $5,605,000. The former owner cited a tenta-
tive commitment for a loan of $4.0 million and his offer was con-
tingent upon an additional loan. The offer called for a total payment
of $5,605,000 broken down as follows :
In millions
Acquisition of SAT stock $2. 145
Payment of debt to Air America 3. 125
Credit for payments to Air America since 10 June 1972 in liquida-
tion of long term debt . 335
Total payment 5.605
Prior to accepting the offer, CIA officers again discussed the sale
of SAT with a CAB representative, who indicated that the board
would be interested in seeing SAT continued. The CAB representa-
tive stated that it would not be necessary to surface tlie Agency's name
as the true owner of SAT in the CAB proceedings, and that he did not
anticipate any problems with other supplemental carriers as a result
of the sale.
On January 19, 1973, the DCI approved the sale of SAT. It was
noted that the offer was within 5 percent of the original asking price,
was above the independent evaluation for sale as a going concern, and
was at a figure which would not seem to give the buyer windfall profit.
The sale would constitute a clean break-away of SAT from the
Agency with the exception of a one year extension on the lease/pur-
chase agreement with Air America for an L 100-30 aircraft. This
agreement for sale between the former owner and the Agency in-
cluded a provision that any profit derived from the sale of assets
within one year would constitute a windfall and would be added to
the total sale price.
On FelH-uary 28, 1973, the Board of Directors of SAT executed
corporate action on the Agreement for Sale of SAT to the former
owner. Closing date was established at not later than 30 days after
CAB approval. On March 1, 1973 application for approval of acquisi-
244
tion of control of SAT by the former owner was filed with the CAB
under Docket No. 252-64. It was anticipated that CAB approval would
be forthcoming within 60 days.
Subsequent to the agreement for sale and application to CAB, sev-
eral supplemental carriers generated a great deal of pressure to pre-
-vent SAT from being sold to the former owner and to prevent SAT
from operating as a supplemental carrier. This pressure was applied
through Congressional representatives, the General Accounting Office,
and the General Services Administration. The various supplemental
carriers objected to the sale of SAT for a variety of reasons. Basically
each supplemental objected to the portions of SAT's operating author-
ity which would allow SAT to compete with it. Specifically, repre-
sentatives of one competitor indicated that it would not oppose the
sale if the new owner would voluntarily renounce his rights to Trans-
Pacific routes.
Two other companies objected to SAT operating any aircraft as
large or larger than a 727 in the Far East. Another objected to SAT
bidding on any domestic MAC contracts. Restricting SAT to satisfy
all potential competitors could make SAT sufficiently unattractive as
a profitable investment that financing would be unobtainable. With
this in mind the Agency took the position that agreement for sale of
SAT had been executed, subject to CAB. approval. If the CAB ruled
against the sale and ownership reverted to the Agency, the Agency
would cease any bids or service under MAC contracts and dissolve
SAT.
Two supplemental expressed interest in bujdng SAT. One did not
make a cash offer, but on June 29, 1973, the other made a cash offer
of about $2 million in excess of what the former owner liad offered.
According to the Agency, there were compelling reasons not to pur-
sue these offers. Agency officers had reason to believe tliat the supple-
mentals were not interested in actually buying SAT as they were
attempting to secure a commitment from the Agency which could be
used to compromise the CIA's position in future CAB hearings. Three
reasons for not accepting either offer were :
(1) Any merger with another supplemental carrier would
necessitate a very difficult series of CAB hearings during
which all other major supplementals would certainly voice
loud and strenuous objections.
(2) To sell the firm on a sole source basis to either outside
buyer without soliciting public bids would be contrary to
sound business practice, and would attract even more adverse
publicity.
(3) Both offers were made directly to officials of the CIA
and not to the stockholders of record. Although the relation-
ship between the CIA and SAT was the subject of much
public speculation, the relationship was still classified and an
acceptance of either offer would be a violation of security
and cover.
Dissolution 6i the firm, or sale to the former owner, continued as the
most acceptable method of divestiture, subject to CAB approval.
In view of the objections by other supplemental carriere to the sale
of SAT to its former owner, and the award by the Air Force of a
Logistics Air contract to SAT, the DCI directed on July 31, 1973,
245
that SAT be dissolved, that it withdraw from the LOGAIR contract
and withdraAV its application for renewal of supplemental certificate.
The former owner was advised of this decision and made a counter
offer to purchase the company under his previous offer. He also pro-
posed that SAT return its supplemental certificate, withdraw applica-
tion for acquisition for sale from CAB, and operate as a commercial
carrier under Federal Aviation Regulation Part 121 authoi'ity. Such
action would remove SAT from direct competition with the supple-
mentals, but retain a worthwhile market in which to operate. Addi-
tionally, no CAB hearing would be necessary to obtain this type of
operating authority. On October 1, 1973, the DCI agreed to entertain
the proposal to continue the sale of SAT as a Part 121 operator, on
the condition that the former owner obtain prompt financing. Other-
Avise, the firm would be dissolved.
On October 5, 1973, the SAT Board of Directors approved and
executed a new agreement for sale including the following provisions :
(1) The former owner to acquire stock of SAT and Actus
for $2,145,000.
(2) The former owner to pay off $3,125,000 owed to Air
America.
(3) Agreement subject to the former owner obtaining
$4 million loan.
(4) Agreement to be subject to SAT withdrawing applica-
tion for renewal of its Certificate of Necessity and Con-
venience for an Air Carrier (Supplemental Certificate).
(5) Lease/purchase agreement for L-lOO between AAM
and SAT to be extended one year.
(6) Anti- windfall provision to be effective for one year
from date of sale.
On November 29, 1973, the former owner received a commitment
from The First National Bank of Chicago for a loan of $4.5 million
thereby making the October 5, 1973 agreement operative. On Novem-
ber 30, 1973, the DCI approved the sale of SAT in accordance with
the October 5 agreement for sale. On the same day, the application to
the CAB for acquisition of SAT under Docket No. 252-64 was with-
drawn and petition for cancellation of certificate and termination of
exemption authority was filed with an effective date of December 30,
1973. On December 31, 1973 the sale was closed, the note to Air
America was paid off, and the former owner became the sole owner
of SAT.
In early January 1974, CIA officials learned from Air America
management that SAT had exercised the purchase option of the lease/
purchase agreement between SAT and Air America for the Lockheed
L 100-30 Hercules aircraft. The option sale price from Air America
was $3,150,000. SAT immediately resold the aircraft to Saturn Air-
ways for $4,350,000, for a profit of $1.2 million. The Agency inter-
preted this sale as a violation of the anti-windfall provisions of its
agreement with the owner. On January 25, 1974, Air America executed
an Escrow and Arbitration Agreement on behalf of the CIA with
SAT on the disputed $1.2 million profit. The agreement called for
$750,000 to be placed in escrow with the American Security and
Trust Company of Washington, D.C. The escrow funds were to be
held as a Certificate of Deposit purchased at the prevailing market
\ 246
rate. It was further agreed that SAT would also place in escrow a
Promissory Note to Air America for the remaining $450,000 of the
disputed amount. The note was to bear interest at the same rate cur-
rently being earned on the Certificate of Deposit in escrow. It was
arranged that the escrow deposits plus accrued interest would be paid
to the party deemed in favor by an arbitrator with each party to pay
one-half of the costs of arbitration. On September 5, 1974 the arbi-
trator ruled in favor of Air America. This decision caused an addi-
tional $1,304,243 to accrue to the Agency from the SAT sale. This
was the sum of the $1.2 million under arbitration plus accrued interest,
less the Agency's share of arbitration costs.
3. Declassification of RelationsMqj With CIA
In March 1974 the employees of SAT retained an attorney and
brought a class action suit in U.S. District Court for Southern Flor-
ida against Southern Air Transport, Inc. and the Central Intelligence
Agency. The employees as plaintiffs sued for injunctive relief and
damages. In this suit the employees alleged :
(1) That the CIA sold the stock of SAT to the former
owner illegally,
(2) That SAT had embarked on a program to sell off its
assets, depriving the plaintiffs of employment,
(3) That the plaintiffs were entitled to the benefits of the
CIA Retirement and Disability System, and
(4) That their civil rights had been violated.
In view of the publicity arising from the allegations made by the
other supplemental carriers during the CAB proceedings and the
publicity arising from this suit, it was determined that no useful
purpose would be served by continuing to deny the true ownership
relationship of SAT by CIA. The operational activities performed
by SAT on behalf of CIA were and remain classified. As a part of the
Agency's defense in this suit, an affidavit of the Deputy Director for
Management and Services of the CIA was presented in court.
In the affidavit he delineated the relationship between the CIA and
SAT and the authorities for purchasing and later selling the capital
stock of SAT. He also defined the employment status of the plaintiffs
as not being government employees and not being CIA employees,
and therefore not being eligible for participation in the CIA Retire-
ment and Disability System.
In the Order Granting Motion for Summary Judgment, the court
found that the sale of SAT capital stock was not in violation of law ;
that the plaintiffs' claim to be U.S. Government employees and en-
titled to CIA retirement benefits was invalid ; and that the SAT em-
ployees were not deprived of any civil right under any state law.
As a result, the action was dismissed with prejudice as to the plaintiff.
Although this suit did cause the relationship between the Agency and
SAT to be officially disclosed, it did establish, in a court of law, two
points favorable to the Agency :
a. The sale of SAT violated no laws and was within the
authority of the DCI ; and
b. The directly hired employees of CIA owned proprietary
firms such as SAT do not necessarily enjoy the status of Fed-
eral Government employees.
247
If. Possible Confyict of Interest
In the SAT divestiture, the Agency took precautions to avoid con-
flict of interest. A retired staff agent who had been the IVIanaging
Director of Air America, Inc., made several offers to acquire SAT.
In early 1972 he and some other members of Air America management
made an informal offer to buy SAT. On August 7, 1972, the retired
staff agent told the Agency official responsible for the management
of SAT and Air America, that he, in association with two supple-
mentals, wanted to offer "book value" for SAT. He stated that they
were not interested in SAT's certificate, but rather in the equipment
and that if allowed to make an offer, it would be one that would not
require CAB hearings. In both cases, the CIA General Counsel deter-
mined that due to the offeror's close association with the Agency, the
offer was miacceptable. In later discussions, the retired staff agent
asked to be allowed to bid on SAT in open bidding. The General
Counsel's position on this request was that open bids would not solve
the conflict of interest problems. In any transaction this complex,
selecting the bid is only a preliminary to the negotiated flnal sale.
Another potential conflict of interest involved another supplemental
air carrier. From the time the Agency first decided to divest until the
sale was consummated, this company expressed continuing interest in
merging with SAT. Their representative was a former Director of
Central Intelligence, who made literally dozens of phone calls to
Agency officials and arranged many meetings ; all for the purpose of
pressing this company's case to purchase SAT. The company also
proposed to arrange "shadow financing*' for the former owner of SAT
if he would agi^ee to merge at some later time. These offers were all
rejected because merger with another supplemental was not an accept-
able solution and the apparent conflict of interest was too great.
The sale of SAT to its former owner was another area of possible
conflict of interest. "While the f onner OAvner was not an employee of the
Federal Government during any period of association with SAT or
CIA, he had been the owner prior to CIA acquisition, and had been
nominal president of SAT during Agency ownership. This potential
area of conflict had been recognized at the outset of sale proceedings,
and the Agency obtained third party professional evaluation and
restricted windfall profits to prevent such conflicts. The underlying
philosophy for sale back to the former owner was to restore the status
quo ante^ i.e. return of the corporation to its previous ownei'ship once
the need for a Government-controlled entity had terminated.
E. Financial Aspects
1. Relations with Other U.S. Government Agencies
Management and control of proprietaries often requires "coopera-
tive interface" with outside agencies to gain beneficial working rela-
tionships and appropriate authorizations. These relationships are de-
scribed briefly below.
For those proprietaries which maintain commercial books and other
financial records, commercial managers prepare United States and
State tax returns annually, based on the corporation's financial rec-
248
ords. For other entities where only internal Agency records are main-
tained, Agency specialists prepare tax returns which reflect normal
operations of a legitimate commercial business. The Agency maintains
close coordination with the Internal Kevenue Service, which is aware
of the CIA's use of proprietary commercial entities but not of specific
proprietaries' identities. In the event the IRS singles out an Agency
proprietary for an audit, the Office of General Counsel notifies IRS
of CIA ownership. The IRS then cancels the audit to conserve
manpower.
Operation of the air proprietaries has resulted in contact with the
Civil Aeronautics Board, the Federal Aviation Agency and the Na-
tional Transportation Safety Board. Specific problems have been dis-
cussed, usually between the Office of General Counsel of the agency
concerned and the CIA General Coun^l.
The air proprietaries have dealt with State Department and the
Agency for International Development, generally on a contractor/
customer basis, although senior personnel of those agencies have
been advised by the Agency of its ownership of the companies.
Those proprietaries engaged in the shipment of weapons or other
items on the Munitions Control list have required CIA assistance in
obtaining the necessary export licenses. The ownership of the com-
panies has been discussed with the State Department Office of Muni-
tions Control, and the Bureau of Alcohol, Tobacco and Firearms.
While the radio proprietaries were funded by the CIA, they received
policy guidance from the Department of State to ensure that their
broadcasts conformed to United States foreign policy. The Agency
has intervened with the Department of Labor on behalf of survivors
of employees of the proprietaries in order to assist them in receiving
the available benefits under the applicable Workmen's Compensation
Acts. The Agency has also interceded with the Defense Department
to have proprietaries' contracts exempted from the Renegotiation
Board.
The CIA has requested that the Air Force consider the interests
of the Agency in awarding com.mercial contracts to proprietaries.
Initially this was done in the mid-1950s on the basis of a policy deci-
sion by the Operations Coordination Board that Air America was an
instrument of value to national security. Air America was then oper-
ating at a deficit, and the Agency was able to maintain a standby capa-
bility without budget subsidies if it could obtain enough business to
support large commercial aircraft. Finally, the United States Forest
Service was advised of the ownership of a proprietary and asked to
award contracts to the proprietary to assist the development of a
commercial posture.
2. Magnitiide of United States Financial Stokes
Most proprietaries are small-scale operations. In many cases (the
notionals), the overseas proprietary actually conducts no business at
all ; it simply has a commercial charter, staff, and cover arrangements
for Agency collection and action projects.
Proprietary income consists of a mixture of CIA subsidy and in-
come. In some cases, the outside income is from sources outside the
United States Government income, e.g.. Air America received income
249
for aircraft maintenance of foreign airlines in Southeast Asia. For
the most part, proprietary income is in the form of "cross-orders" from
CIA and otliei- Government agencies. For example, a CIx^ paramilitaiy
project placed orders for aircraft engines and pilot services with
the Agency proprietary, Intermountain Aviation, Inc., and AID
contracted with Air America to carry rice shipments in Laos. In this
sense, many proprietaries are analogous to what are traditionally
termed "intragovernmental funds" or "industrial funds" in United
States Government budget and accounting manuals.
Compared with earlier years, the current size of proprietary ex-
penditures has markedly declined. The potential for future expansion
is nevertheless present. Indeed, new proprietaries have been formed
within the last several years.
In terms of United States budgetary impact, proprietaries do not
add significant new capital to CIA available resources, i.e., while
they have a very large expenditure level and momentum over the
years, most of these expenditures originated in the CIA and other
United States Government appropriations, and the net profits gen-
erated by outside business and investment have been relatively small.
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 the CIA.
The Committee reviewed the pattern of income, expense, and net
United States investment for the twenty largest proprietaries now
active, including their financial experience in the twelve months pre-
ceding June 30, 1975. The two largest proprietaries. Air America and
the insurance complex, dwarf the rest. While Air America will be
phased out by June 30, 1976, ending the CIA-owned airlift capability
and returning an estimated $20 million to the United States Treasury,
the insurance complex will continue.
In programmatic terms, the contrast between the current low levels
of proprietary activity and the high levels of five years ago reflects
the decline of paramilitary operations in Southeast Asia. Large vol-
umes of outside orders by Defense and AID, along with sizable levies
by CIA components, and maintenance and passenger income from
commercial operations, were generated by a covert war.
Looking toward the future, will new air proprietaries be estab-
lished? The CIA thinks not, but the matter is not resolved. The ulti-
mate question is whether there will be future United States involve-
ment in covert wars — and if so, can some substitute for CIA-owned
air support meet the operational requirements of secure, well-main-
tained local aircraft ? The Chief of CSS suggested that third-country
assets could be used instead. Another possibility is the use of United
States military aircraft, overtly or "sanitized."
One thing is clear: CIA sees itself as entering a different era of
proprietaries. It has rejected the long-held doctrine of "standby" capa-
bility, 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. Agency representatives
maintain that the CIA is keeping proprietaries focused on current
operational tasks. The test of retention is the utility of a proprietary
in executing assigned tasks instrumental to approved Agency projects.
69-983 O - 76 - 17
250
Generally, the notionals have increased by about 30 percent since
1967, This reflects a policy of increasing the number of cutout arrange-
ments to increase security, i.e., to reduce one likelihood of outside
discovery of agents or case officers working under cover of the end-
point notional by introducing intermediate notionals for payments or
identity backstops.
What are the basic distinctions of one type of proprietary from
another? First, extemal registration divides the total in half. Those
which have some form of legal standing with domestic and foreign
corporate regulatory and tax authorities are subject to external gov-
ernmental scrutiny. This occasions additional expenses and manpower
to assure that in all respects this group of proprietaries operates in
accordance with local law and commercial expectations. The second
group, the notionals, exist only as names on doors, in phone director-
ies, and on stationary. Backstopping for identification of these pro-
prietaries is provided by Agency switchboards, mailstops, and check
issuance.
The next level of distinction is within the class of legally I'egistered
proprietaries: those which carry on a commercial income-producing
operation as contrasted to those which are simply cover arrangements.
Within the class of commercial proprietaries which produce income,
there is a distinction between those which are wholly dependent upon
CIA for income (in the form of orders placed and subsidies) and
those which have mixed outside and inside income. Even for those
with mixed income, it is possible to distinguish those which have out-
side income wholly within the United States Government (i.e., a mix
of CIA-derived income and income from other Government agencies)
from those which have botli United States Government income and
income from private contracts.
3. Vwihility in the Budget
Budgetary accountability to the President and Congress depends
upon the extent to which the Federal agencies' budget requests pro^dde
information to facilitate evaluation. Circular A-11, issued by the
Office of Management and Budget, prescribes the financial schedules
and explanatory data which all Federal agencies must provide in their
budget submissions. These provisions are consistent with the Budget
and Accounting Acts of 1920 and 1950. The Central Intelligence
Agency regards itself as subject to these prescriptions. The Agency
limits the application of this principle to providing only the A-11
materials which 0MB and the Congress specifically request. This
policy has resulted in near invisibility of proprietaries in the CIA
iDudget submission.
Circular A-11 requires agencies to provide schedules and narratives
for each public enterprise or intragovernmental fund. This data is
to include all sources of funding purposes and levels of expenditure,
and approximate indications of performance through comparisons of
past and proposed funding by activity. Under these regidations, it
appears that the CIA should have been providing a complete set of
schedules for the proprietaries which actually do business, i.e., exclud-
ing notionals.
The question of the programmatic impact of proprietaries should
also be considered. While proprietaries have been heavily involved
2151
in CIA intelligence collection and covert action, these activities have
not been reflected in the CIA budget submission. A policy review
of the budget requires programmatic judgments of the necessity and
appropriate use of proprietaries in overseas areas. The Contingency
Reserve Fund is an example of why such clear budgetary information
is necessary. Recent debate concerning U.S. involvement in Angola
has brought into sharp focus the role of this fund. All United States
aid to forces in Angola came from the Contingency Reserve.
The only place in the budgets of the CIA where proprietaries have
assumed even a limited visibility is in the years when supplemental
financing was needed to establish or strengthen a proprietary. When
such financing is necessary, the budget shows, tersely, that Con-
tingency Reserve drawdowns have been made. For example, one past
budget showed a certain amount to subsidize Radio Free Europe, but
provided no justifying materials. This practice reflects the unwritten,
2)ost hoc nature of the Contingency Reserve financing process. In ef-
fect, these practices allow executive branch "supplementals" in which
Congress is informed after the 0MB has acted.
The budget does not normally indicate Agency intentions to create
a proprietary in the budget year ahead. For any other Federal agency,
establishing a new publicly owned enterprise without advance notice
to the Appropriations and substantive committees of Congress would
be proscribed. Proprietaries which require only small subsidies to get
under way are funded by the CIA without supplemental financing,
i.e., within its regular budget. Therefore, these proprietaries are com-
pletely invisible in the Agency budget submission.
F. Some General Considerations
1. The Relaticmship of Utility to Size
The Committee's review revealed a dilemma faced by CIA planners.
Proprietaries can sometimes be most effective in operations when they
are large ; indeed, as in Laos, they may be impelled toward enormity
by the very nature of the operation. Yet large size conflicts with deni-
ability. In areas of the world where there are few operating firms,
and in types of activity which have only limited commercial appeal,
where would large-scale enterprises get financing but from the United
States Government ? Operations in Laos simply could not be concealed
in the end. This experience suggests that proprietaries may have only
limited utility in future paramilitary operations.
2. The Factor of Competition with Private Enterprises
Do CIA proprietaries which produce income compete unfairly with
private United States businesses ? Is their utility to the Government of
such magnitude that CIA proprietaries should be retained regardless
of their competitive impact ? Generally, the Agency believes that op-
erating proprietaries do not compete with United States private enter-
prise because they tend to do things which private companies are not
equipped, motivated, or staffed to perform.
For example, CIA proprietaries purchase weapons, foreign arma-
ments, and technical devices; conduct security investigations; purchase
real estate ; insure uninsurable risks ; train foreign police forces ; and
252
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 contracts with the Government include highly sensitive con-
tracts with the CIA for technical intelligence collection, research, and
development. Would the abandonment of CIA proprietaries and the
cooperation of private firms be more desirable in terms of policy,
economy or flexibility ?
3. Relative Scarcity of Corrvmercial and Official Cover
The continuing CIA desire for more notionals reflects the scarcity
of United States Government official cover in many areas of the world,
and the developing desire of some United States companies not to
cooperate with the Agency.
4. Profits
Some questions concerning profits have been raised. Does proprie-
tary profit constitute a significant addition 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 diverted to projects not included in the
regular CIA budget ?
First, profits (defined as net income to a proprietary after deduc-
tion of operating expenses) are relatively small. Even in the days
when the most profitable air proprietaries were operating at peak
capacity, the most that any single firm netted was less than $4 million.
Over the entire period 1947-1975, total profits 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 proprietaries has
been completed, there is forecast to be only one profitable proprietary :
the complex of insurance companies which derives most of its profit
from investment portfolios. This entity's net income in 1974 was less
than $2 million and a profit of this general magnitude is expected in
the foreseeable future. These profits are to be used only for the in-
surance, escrow, annuity and related complex functions. Neither the
complex, nor profits accruing to it, are used for operational support of
any other projects or activities. Nevertheless profits from all proprie-
taries may be reprogrammed into CIA operations due to a "change in
policy" reflected in the General Counsel's decision of February 3,
1975.^° Thus proprietaries do not presently provide a mechanism for
"back door" funding of covert operations ; nor are they currently in-
tended to do so.^^
The current Chief of CCS noted that :
It may be the questions that have been raised by the staffs
of this Committee and of the House Committee, have kind of
energized certain action as far as our Comptroller is con-
cerned, as far as the Office of Management and Budget is
concerned, and a methodology is being developed at the pres-
ent time that the balance sheets of the salient information of
*° Chief, CCS, 1/27/76, pp. 80-81.
"" IU6,., p. 79.
253
the operation of proprietaries, particularly those that are
having earnings, are annexed to the budgetary presentation
process and review process, so that this information is avail-
able to the Office of Management and Budget, and I assume
to Congress, so that this can be taken into consideration.
And you would then have, it seems to me, a degree of safe-
guard that money cannot be taken out of there and used as
an add-on to appropriated funds.''^
According to the testimony, from 1973 to 1975, before the opinion
was rendered by the General Counsel of the CIA concerning profits
and their treatment, the Appropriations Committees were advised
that such profits existed, and "it was taken into consideration at the
time of appropriations."
In the future, I would think that any oversight committee
could very promptly bring to the attention of the DCI their
interest in this question of profit, and ask for an accounting,
and certainly could be assured that there Avas no use of funds
derived from a proprietary for an operational purpose un-
related to such activity.
I would think . . . the DCI would be under the same
prohibition using funds that were appropriated for the in-
telligence directorate for operational purposes or any other
comparable redesignation of f unds.^^
When asked whether funds built up in a complex such as the in-
surance proprietary should be used for purposes beyond those in-
cluded in an annual authorization, an Agency representatiA^e replied :
I would xiew them as segregated funds to the extent that
there was a profit, unnecessary for the purposes of the propri-
etary, that the profit would have to be turned over to the
Treasury and it could not be used for other Agency
programs.''*
As for the treatment in the budget, there are both policy and pro-
cedural aspects. The policy of CIA was changed by the February 1975
General Counsel ruling 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 operations. This ruling overturned the practice of the
past which on occasion included the transfer of proprietaries' net
proceeds to the Contingency Reserve for later release to operations.
The budgetary presentation and review procedures only partially
focus upon proprietary profits. The insurance complex's profits are
invisible in the Agency budget; they are taken into account and subject
to scrutiny only within CIA. Operationally, the Directorate of Opera-
tion's annual review has the most detailed grasp of these monies at the
Agency review levels. A standard set of public enterprise fund sched-
ules, as prescribed by OMB Circular A-11, would be appropriate for
making this complex visible in the Agency budget. Other commercial
proprietaries should show these schedules as well. The Agency has in-
'- Ibid. pp. 82-83.
"" IMd. p. 84.
" lUd. pp. 84-85.
" 254
dicated that the Comptroller is working with the Directorates of Op-
erations and Administration to develop more comprehensive budget-
ary presentation and review procedures for CIA proprietaries.
To what extent can these new procedures prevent abuses of pro-
prietary profits ? To what extent do they preclude the need for legisla-
tion in this area? What form of Congressional oversight is needed
here ; at what point should Congress exert control.
Improvement of visibility in the budget of proprietary resources
and provision for review of the major proprietaries as a regular part
of budget review by CIA, OMB, and Congressional Committees would
seem to preclude most of the dangers of abuse. On the other hand, there
is one type of abuse for which additional Congressional scrutiny and
safeguards may be needed : the possibility of a small-scale, high-risk
covert project directed by the President or DCI which is not covered
by the regular appropriation but financed by proprietary profits.
While no foolproof preventives can be designed by law or regulation,
the possibility of such abuse, or the avoidance of congressional review,
can be minimized by requiring that all CIA proprietaries report opera-
tional activities to the congressional oversight committee.^'^
5. Private Investment hy CIA
Two types of general issues are raised by investments made by the
Agency :
( 1 ) Should the CIA engage in investments which could accumulate
funds outside the budget process and thus be available for operations
that have no public scrutiny outside CIA ?
(2) Is CIA investment policy too restrictive in regard to bank de-
posits ? Specifically, should the CIA place large amounts of money in
commercial banks without drawing interest ?
A sizable percentage of the Agency's annual appropriated and
advanced funds are deposited here and abroad in commercial accounts
on an incremental basis to fund operational needs. If accounts are
maintained at levels above the minimum balance necessary for offset
costs to the bank, the banks selected earn an interest or investment
bonus. The selection of these institutions is non-competitive, rooted in
historic circumstance, albeit in institutions that have shown them-
selves flexible and responsive in providing the Agency services. Fur-
ther investigation of this area is needed, and we encourage the new
oversight committee to study this issue in greater detail than we have
been able. This is one area where the exclusion of the General Ac-
counting Office from CIA audits has had an unfortunate effect: there
is no outside reviewer of a complex set of financial records and, con-
sequently, confidence in the Agency's role in this area may have been
eroded.
6. What is the Future for Proprietaries?
No new proprietaries are in formation or planned. This past fiscal
year, 1975, one new proprietary was created which rented office space
for an East Coast CIA base and provided cover for Agency employees.
The main provision for new growth is the plan of some years standing
for establishment in the insurance complex of several corporate
* See Recommendation 50.
256
"sliells" i.e., 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 insurance complex 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 now smaller than previously, they are
so largely for administrative reasons, i.e., response to executive branch
directions. Although the CIA may never find proprietary expansion
to be operationally desirable, there is currently no statutory constraint
on such expansion. Congress should be a partner in the process of
reviewing any such expansion by providing for changes in the charter
process. Another approach is establishing substantive guidelines for
proprietary operation. This approach is typified by the post-Katzen-
bach guidelines that prohibit CIA operation of tax-exempt foun-
dations.
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 invaluable to
the Committee in reviewing and evaluating the history and the role
of these mechanisms. In the coui'se of far-ranging testimony with the
Committee on several occasions Houston concluded that proprietaries
"should be the last resort for use to backstop Agency activities." He
grounded his 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 busi-
ness for operational purposes. There's really a built-in dichot-
omy there that leads to a continual conflict with policies. And
due to the number of people involved, there is a security prob-
lem on the old grounds that security doesn't go by the mathe-
matical increase in the number of people. It goes geometri-
cally as to the number of people, the security risk.^''
This assessment appears to be correct based on the evidence reviewed
by the committee.
The current Director of Central Intelligence has insisted on stream-
lining such operations and is keenly aware of the potential for abuse.
It is, for example, the current written policy of the Agency that "to
the degree that domestic proprietary or cover companies are required,
?. 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 Agency has moved to insure propriety even in an area
where there is no evidence that any illegal conduct has occurred. The
current policy, established as of June 1975 is :
[The project] will be operated in conformance with appro-
priate legal i-estrictions. Arrangements are being made for the
■^ Houston. 1/1.5/76. p. 4.
^ Memorandum of the DCI, 6/75.
256
briefing of the appropriate Congressional committees. Par-
ticular attention will be given to avoiding any possible con-
flict of interest situations with firms with which the Agency
has contracts. Particular concern will also be exhibited over
possible improper influence on the stock market or stock deal-
ings through the investments involved in [the project] .^^
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 overeight Committees be most
stringent.
The disposal of proprietaries has also generally proceeded along
legal and ethical lines with more than due concern for conflicts of
interest. Most notable in this spectrum of actions was the degree to
which the Agency avoided conflicts of interest in the sale of Southern
Air Transport. Such internal vigilance no doubt should and will con-
tinue. Moreover, with the establishment of a permanent oversight com-
mittee, the CIA's reporting will be made easier because it will be able
to report on its dealings on a regular basis to informed Members of
Congress.
XII. CIA PRODUCTION OF FINISHED INTELLIGENCE
The main purpose of the intelligence system of the United States is
to provide the President, his chief advisers, and the Congress in appro-
priate ways with the best information about activities abroad that can
be obtained. It is not surprising, therefore, that the quality of finished
intelligence produced by the intelligence agencies has been a source
of continuing concern and controversy. Policymakers are understand-
ably seldom satisfied with the intelligence they receive, for they want
and need intelligence which eliminates uncertainties and ensures suc-
cessful policy decisions. Since such perfection is unattainable, how-
ever, the realistic question is how to evaluate and improve the quality
of our finished intelligence. This is an extremely complicated and
difficult areia. The simple answer is that there are no objective criteria
or standards that can be universally applied. In the end, the assessment
by policymakei-s of the value and quality of our finished intelligence
is necessarily subjective. There is a record of steadily improved quality
over the years, but the need for a higher level of performance is ac-
cepted, 'both at the policy level and among the intelligence agencies of
the LT.S. Government.
The Committee's examination of the production of finished in-
telligence focused on the CIA and within it, the Directorate of In-
telligence (DDI). This is by no means the whole of national intelli-
gence, but it is the core element in the production of finished national
intelligence. The CIA's Directorate of Intelligence is by far the best
analytical organization for the production of finished intelligence
within the Government, but it does have shortcomings. The CIA for
its part has, in the view of the Committee, made creditable efforts to
improve the quality of flushed intelligence, although much remains to
be done.
Because the provision of the best possible fact and predictive anal-
ysis to our policymakers is the most important mission of our intelli-
gence system, the problems of the production of finished intelligence
will require the most searching and systematic examination by a future
oversight committee. The preliminary work of the Select Committee
in this area is based on interviews and hearings, as well as dociunents
from the Intelligence Community Staff concerning their post-mortems
of past intelligence failures. Because of the complexity and difficulty
of the subject matter, the examination of the Select Committee can only
be regarded as a beginning, onlv broadly indicative of the problems
involved, and suggestive of the areas which will require more thorough
and comprehensive attention in the future.
Although the provision of intelligence analysis to policymakers is
the major purpose of the intelligence m.ission, the production of in-
telligence has been referred to as the "stepchild of the community." ^
It is an area which has been overshadowed by the glamour of clande-
stine activities and the lure of exotic technical collection systems. Yet
(257)
2S8
the basic rationale for intelligence operations is the provision of in-
formation to the people who need it in order to do their jobs — the
President and other senior officials responsible for the formulation
and implementation of foreign policy.
The Pearl Harbor experience, which so heavily influenced the es-
tablishment of the Central Intelligence Agency in 1947, pointed to
the need for the collection, coordination, and analysis of all national
intelligence in a centralized fashion, so that policymakers could be
assured of receiving all the information they needed, when they
needed it. Finished intelligence represents the "payoif" of investment
in the plethora of collection activities.
The CIA and its predecessor body, the Central Intelligence Group,
were established to rectify the duplication and biases that existed in
the intelligence production of the State Department and the military
services. By reviewing and analyzing the data collected by these de-
partments, the CIA was to provide senior government officials with
high-quality, objective intelligence. In practice, however, the CIA
has given precedence to independent collection and production, be-
coming a competing department in the dissemination of information.
Historically, the departments resisted providing their data to the
Agency and thereby prevented the CIA from fulfilling its designated
role in the production of "coordinated" intelligence. Moreover, in-
dividual Directore of Central Intelligence have not been consistent
advocates of the Agency's intelligence production function. For the
DCIs, the demands of administering an organization with thousands
of employees and in particular, the requirements of supervising
clandestine operations encroached on the intended priority of intel-
ligence production. Only three DCIs attempted to address their pri-
mary attention to the quality of intelligence production : Walter
Bedell Smith, John McCone, and James Schlesinger. In each case, the
DCI's attitude was a function of his background, his relative strength
as Director, and the particular demands of his time in office.
In recent years, however, and particularly with the introduction of
advanced technical collection systems, the requirement for bringing
together the vast quantities of information into useable analytic forms
has become the primary concern of the intelligence community.
In the course of its investigation, certain problems and issues in the
area of the production of finished intelligence in the CIA have come
to the attention of the Committee. The Committee believes these prob-
lems deserve immediate attention by both the executive branch and
future congressional oversight bodies. These problems bear directly on
the priority given to finished intelligence by policymakers. Other issues
raised here, such as the personnel system of the DDI and the orga-
nizational structure of intelligence production, are really functions of
the larger issue of priorities.
Briefly defined, the production of intelligence is the process whereby
the data collected by the intelligence community is transformed into
mtelligence reports and studies that are relevant to the concerns of
senior policymakers. Intelligence production involves many tasks. It
begins with the collation and evaluation of incoming "raw" intelli-
gence reporting— direct from the collectors, whether from open
sources, the clandestine service, or signals intercepts and other means
^ Office of Management and Budget, "A Review of the Intelligence Community,"
3/10/71, (hereinafter cited as the Schlesinger Report) , p. 11.
259
of technical collection. The significance of new reporting is analyzed,
often in relation to intelligence already available on the subject. The
preparation of "finished" intelligence reports — the outcome of the pro-
duction process — thus entails the evaluation and analysis of the full
range of raw reporting from a variety of collection means.
Production of finished intelligence is done within the intelligence
community by the Central Intelligence Agency, the Defense Intelli-
gence Agency (DIA), and the State Department's Bureau of Intelli-
gence and Research (INR). Within the CIA (which is responsible
for the production of "national intelligence"), both the Intelligence
Directorate and the Directorate of Science and Technology (DDS&T)
produce finished intelligence. The Select Committee has focused on the
DDI, although the issues and problems cited are applicable in varying
degrees to the other production elements as well.
A. Evolution of the CIA's Intelligence Directorate
The scope of the DDI mission is global. It covers the affairs of any
foreign country from the standpoint of politics, economics, defense,
geography, cartography and biography. Scientific reporting is largely
the responsibility of the Directorate of Science and Technology.
The Directorate of Intelligence was formally established on Jan-
uary 2, 1952. Specifically, the intelligence activities which the DDI
originally administered were :
a. Production of finished intelligence by the Offices of Na-
tional Estimates (ONE), Current Intelligence (OCI), Re-
search and Reports (ORR), and Scientific Intelligence
(OSI).
b. Collection of essentially overt information by the Divi-
sions of the Office of Operations (00) : Foreign Broadcast
Information (FBID), Foreign Documents (FDD), and
Contacts (CD).
c. Dissemination, storage and retrieval of unevaluated in-
telligence information and basic reference documentation
by the Office of Collection and Dissemination (OCD).
d. Coordination of intelligence collection by the Office of
Intelligence Coordination (OIC).
In the twenty-three years since its founding, the Intelligence Di-
rectorate has gone through a number of reorganizations stimulated
by advice from external panels, changing international circumstances,
shifting requirements for finished intelligence production, and re-
duced resources with which to perform its mission.^ Changes in the
first few years were fairly rare. In 1954, the OIC was abolished, and
in 1963 the Office of Scientific Intelligence was transferred to a new
Directorate for Science and Technology.
/. Intelligence Production
Estimative Intelliqence. — Producing National Intelligence Esti-
mates (NIEs) was the function of the Office of National Estimates
" The information contained in this section on the evolution of the DDI is de-
rived primarilv from a CIA paper prepared for the Select Committee by the
OflBce of the DDI, "The Directorate of Intelligence : A Brief Description". (Here-
inafter cited as "The Directorate of Intelligence.") December 1975.
260
which was in the Intelligence Directorate until 1966, when it became
a staff under the direction of the Director of Central Intelligence.
This move was made, in part, to emphasize that the NIEs were the
product of the entire intelligence community rather than a single
agency. ONE was abolished in 1973 and its responsibilities were trans-
ferred to the newly formed National Intelligence Officers attached to
the Office of the DCI. With this move, much of the work of producing
draft estimates reverted to the production offices of the Intelligence
Directorate.
Current Intelligence. — Primary responsibilities for producing cur-
rent intelligence remains where it has been since the Directorate was
established — in the Office of Current Intelligence. Originally, OCI
was responsible for all current intelligence reporting except economic.
At present, however, it concentrates on current political reporting,
leaving the preparation of reports on economic, military, geographic
and scientific developments to the research offices responsible for these
matters. OCI coordinates and consolidates this specialized reporting
on all subjects for presentation in its daily intelligence publications.
Basic InteUigenee. — Production of basic intelligence was stimulated
primarily by the realization in World AVar II that the U.S. Govern-
ment had too little information about many of the foreign countries
with which it was required to deal. The Basic Intelligence Division
(BID) or ORR was charged with responsibility for coordinating the
production of "factual intelligence ... of a fundamental and more
or less permanent nature on all foreign countries." Because of the scope
of the subject matter, the production of this type of intelligence
required a cooperative effort involving the resources and capabilities
of several departments and agencies of the Federal Government. The
product of this government-wide effort was known as the National
Intelligence Surveys (NIS).
In 1955, BID became a separate office, the Office of Basic Intelligence
(OBI). This was in line with recommendations made in May 1955 by
the Task Force on Intelligence Activities.^ The elevation of Basic
Intelligence to Office status was an acknowledgment of the importance
that the Agency and the rest of the national security apparatus
attached to the NIS Program.
The early years of OBI were devoted mostly to the coordination
of this program. Many of the chapters Avere written by other elements
of CIA or by other government agencies on a contractual basis. In
1961, OBI took over responsibility for the production of the political
sections of the NIS from the State Department's Bureau of Intelli-
gence and Research when State claimed that it no longer had the re-
sources to do this work. OBI delegated the task of producing these sec-
tions to OCI in 1962. In 1965, the geographic research function was
transferred from the Office of Research and Reports, creating the Office
of Basic and Geographic Intelligence (OBGI) . The NISs continued to
be published until 1974 when the program was terminated because of
lack of resources. At this time, OBGI became the Office of Geographic
and Cartographic Research.
Military InteUigence. — Until the mid 1950's, the production of in-
telligence on military matters had been considered the primary respon-
^ The Clark Task Force, headed by Gen. Mark Clark, of the Hoover Commission.
For members of the task force, see Hearings, Vol. 4, p. 112-13.
261
sibility of the Department of Defense. But the "bomber gap" and later
the "missile gap" controvereies gave CIA a role in foreign military
research, an involvement which has continued and expanded. In 1960
the DDI created an ad hoc Guided Missiles Task Force to foster the
collection of information on Soviet guided missiles and to produce in-
telligence on their manufacture and deployment. The Task Force was
abolished in 1961 and a Military Research Area was established in
ORR. As a result of increasing demands for CIA analysis of militaiy
developments, a new Office of Strategic Research was established in
1967 by consolidating the Military-Economic Research Area of ORR
and the Military Division of OCI. The scope and focus of responsibili-
ties of OSR have increased over the years and in 1973 a new component
for research in Soviet and Chinese strategic policy and military
doctrine was added.
Oeographic Intelligence. — The Geographic Research Area (GRA)
of the Office of Research and Reports (ORR) originally had the re-
sponsibility for geographic intelligence production. The GRA was
transferred in 1965 to the Office of Basic Intelligence changing its title
to the Office of Basic and Geographic Intelligence (OBGI). In 1974,
OBGI became the Office of Geographic and Cartographic Research
when the National Intelligence Survey (NIS) Program was
abandoned.
Economic Intelligence. — Activity in this area remains the responsi-
bility of the organization that succeeded the Office of Research and
Reports in 1967 : the Office of Economic Research. In earlier yeai-s, the
Agency concentrated its economic research lai'gely on the Communist
states. In recent yeai-s, however, the Department of State has dropped
much of its intelligence production on the non-Communist areas, leav-
ing this job to the Agency. OER has also expanded its research into
such subject areas as interaational energy supplies and international
trade. Today it is the largest research office in the Intelligence
Directorate.
Biographic Intelligence. — The Hoover Commission Report of 1949
recommended dividing the responsibility for biographic intelligence
production within the Community to prevent costly duplicaton. As a
result, the foreign political personality files maintained by OCD
were transferred to State. In 1961, however, the Bureau of Intelli-
gence and Research claimed it no longer had the resources to provide
this service and the responsibility for reporting on foreign political
personalities and, subsequently, for all non-military biographic intelli-
gence reporting was transferred to CIA. Tlie task was taken over by
OCD's successor organization, now the Central Reference Service,
In-Deyth Political Research. — In-depth foreign political intelli-
gence reporting has not been, until recently, represented in the Office
structure of the Intelligence Directorate. Originally, whatever efforts
were made in this field were concentrated in OCI. In 1962, a modest
step toward increased foreign political research was taken with the
establishment of a Special Research Staff (SRS) in the Office of the
Deputy Director for Intelligence. In recent years, however, the dimin-
ished role of State's Bureau of Intelligence and Research in intelli-
gence community affairs, a perceived need for more sophisticated work
in this field by CIA, and the appearance of new methods of political re-
262
search, including computer applications, encouraged the Directorate to
invest more resources in this area. Accordingly, an Office of Political
Research (OPR) was established in 1974. It incorporated the Special
Research Staff, some people from OCI and the then disbanding Office
of National Estimates.
Round-the-Clock Watch/ Alert. — The Cuban Missile Crisis of the
fall of 1962 clearly spotlighted the need for a single Directorate fa-
cility for round-the-clock receipt of intelligence information and for
a center in which the expertise of all its offices could be rallied in
crisis situations. In March 1963, the DDI set up a Special Study
Group on DDI Organizational Tasks to study this and other problems.
One of the results of its work was the establishment of an operations
center under the administrative direction of the Office of Current Intel-
ligence (OCI) . Over the next ten years, the Operations Center grew in
size and capability, largely as a result of the Vietnam War. In 1974, it
was separated from OCI and renamed the CIA Operations Center, a
title warranted by the fact that all Directorates of the Agency now
maintain permanent duty officers within the Center. Today, the CIA
Operations Center provides the mechanism and facilities with which
the full information resources of CIA can be mobilized to work in
concert with the community in foreign crisis situations.
^. Intelligence Collection
At its founding in 1952, the Intelligence Directorate inherited the
Office of Operations (00) from the then Directorate of Plans — today's
Oj^erations Directorate. OO was composed of tliree main elements : the
Contact Division, the Foreign Broadcast Information Division, and
the Foreign Documents Division. The rationale for including these
components in the Intelligence Directorate was that their work was
essentially overt and thus inappropriately situated within the Clandes-
tine Service.
The Domestic Contact Service originated in the Central Intelli-
gence Group in 1946 as an outgrowth of the World War II effort to
insure that all domestic sources of information on foreign activities
were contacted by the Govei-nment. It was initially placed in OO to
kee]:) its essentially overt work separate from the clandestine activity
of the other major collection organizations. It maintained this sep-
arate status after the founding of CIA, but in 1951 joined the Di-
rectorate of PUms. This arrangement lasted for only one year, how-
ever, as the 00 and its Contact Division (CD) was moved to the In-
telligence Directorate in 1952. By 1958, CD was a network of offices
in 15 major cities and several smaller residencies established across
the U.S. With the abolition of OO in 1965, CD became an independent
office known as the Domestic Contact Service (DCS) and continued
in tliat status until the appointment of William Colby as DCI. In
1978, he decided that maintaining the separation of overtand covert
collection elements was less imj^ortant than the goal of consolidation
of all human collection capabilities in the Operations Directorate. Ac-
cordingly, the DCS was transferred to the Clandestine Service and
renamed the Domestic Collection Division.
Tlie Foreign Broadcast Information Division (FBID) had been
founded by the Federal Communications Commission in 1940. With
the advent of World War II, it was absorbed by the Office of War
263
Information n.nd, slioitly thereafter, became one of tlie original ele-
ments of the OSS. At the end of the war, it was briefly administered
by the Department of the Army liefore joining the Central Intelli-
gence Gronp in 1946. It was formally inclnded in the Agency's Direc-
torate of Plans at its fonnding in December 1950 and remained there
as part of OO until its transfer to the Intelligence Directorate in 1952.
By then it had established the worldwide network of broadcast moni-
toring bureaus which — with some alterations in location — it operates
today. FBI!) received the status of an independent office and was re-
named the Foreign Broadcast Information Service with the dissolu-
tion of the Office of Operations in 1965.
3. Infoj'mation Processing
Between the collection and production phases of the intelligence
process there is an activity known as "information processing." In-
formation processing involves special skills or equipment to convert
certain kinds of raw information into a form usable by intelligence
analysts who are producing finished intelligence. It includes things
like photointerpretation and translations of foreign documents as
well as the receipt, dissemination, indexing, storage, and retrieval of
the great volumes of data which must be available to the production
offices if they are to do their analytical work.
Information Dissemination^ Storage and Retrieval. — One of the
original offices of the Central Intelligence Group, the Office of Collec-
tion & Dissemination (OCD), began this work in 1948 when it in-
troduced business machines to improve reference, liaison and document
security services. Ultimately, this Office became CIA's own depart-
mental library and centralized document service. Its steady growth in
size and capabilities was given a boost in 1954, when responsibility
for the procurement of foreign documents was transferred to OCD
from the Department of State. Other specialized collections also
became a part of the holdings of that office, including those of motion
picture film and ]:)hotography. The systems of storage and retrieval
developed by OCD were unusually effective for that time and the Of-
fice began to gain recognition throughout the intelligence commu-
nity. In 1955, OCD was renamed the Office of Central Eeference to
more accurately reflect its Agency- wide responsibilities. In 1967, OCR
was renamed the Central Reference Service (CRS). Today, CRS can
offer intelligence analysts throughout the community some of the most
sophisticated information storage and retrieval systems to be found
anywhere in the world.
Photographic Intervretation. — CIA's work with photographic in-
terpretation began in 1952 and was initially centered in the Geographic
Research Area, ORR. In 1958, a new Photographic Intelligence Cen-
ter (PIC) Avas created by fusing the Photo Intelligence Division of
ORR with the Statistical' Branch of OCR. The new Center was given
office-level status and the responsibility for producing ])hotographic
intelligence and i)rovi(ling related services for CIA and the rest of the
Intelligence (\)ininunity. In 1961 PTC was further elevated to become
the National Photographic Interpretation Center (NPIC). This Cen-
ter was staffed by former members of PIC and DIA personnel detailed
to NPIC. All personnel were functionally under the Director, NPIC,
who continued to report to the DDL
2164
An interagency study conducted in 1967 concluded that NPIC's
national intelligence responsibilities had grown so substantially that
departmental imagery analysis requirements were not being ade-
quately served. Accordingly, the DDI established an Imagery Analysis
Service (IAS) as a separate office of the Directorate to deal exclusively
with the photo intelligence requirements of CIA. In 1973, it was
decided that NPIC would be more appropriately placed in the Direc-
torate of Science and Technology with other elements dealing with
reconnaissance at the national level.
Translation Services. — The Foreign Documents Division (FDD) of
the Office of Operations (OO) had its origin in the Army and Navy's
Washington Document Center. Founded in 1944, it was a repository
for captured Japanese and German records. It was absorbed by the
Central Intelligence Group in 1946 and, during the late forties, evolved
from a repository into an exploiter of all foreign language documents
coming into the community. It joined the Central Intelligence Agency
as part of OO in the Directorate of Plans. With the transfer of OO
to the Intelligence Directorate in 1952, FDD continued to expand its
work into the field of document exploitation, concentrating increas-
ingly on materials received from the communist countries. In 1964,
it w^as separated from OO to l)ecome part of the Office of Central
Reference (OCR). This arrangement lasted only three years, however,
as FDD was transferred again to become part of FBIS in 1967. The
intent of this move was to combine the Directorate's efforts to exploit
foreign media — radio and press — in a single service and to concen-
trate its major assets in terms of foreign language capabilities. FDD
remains in FBIS to this day, providing translation services for the
Agency, the community, and to a lesser degree, for the Government
and the general public.
DIRECTORATE 0.f= INTELLIGENCE
DIRECTOR OF CENTRAL INTELLIGENCE
0=
DEPUTY DIRECTOR FOR INTELLIGENCE
CIA Operations COMIREX
Center Stall
Coileclion Giiidancc Executive
.ind and
AsscsDmenis Slalf Management Stalls
HOwi Oll.ceol Olf.ccof Otliceol Oll.cc ot OfflCOOf
^ Gcogrjiphic and
Political _,. v.- Current
Rcsc.trch «etca)ch'" InlcUiganco
Porcign
Brcadccist
Informaltor*
Service
265
B. The Intelligence Directorate Today
In FY 1976, the DDI had a rehitively small share of the Agency's
budget and pei-sonnel. Resources allocated to intelligence produc-
tion have represented a relatively steady percentage of the intelli-
gence budget over the years. Intelligence production is a people-inten-
sive activity, requiring relatively little in the way of supplies, equip-
ment, structures, and operational funding. The Intelligence Director
spends approximately 75 percent of its budget on salaries. Of the posi-
tions in the DDI, 74 percent are classified as professional and 2'6
percent as clerical. Of the total, 54 percent are directly involved in
"intelligence production" (researching data, analyzing information
and writing repoits), 28 percent are tasked with "intelligence proc-
essing" (performing reference and retrieval functions, preparing
pu})lications, or providing other support services), and 18% are in-
volved in "intelligence collection" (monitoring overt foreign radio
broadcasts and publications).^
The most important group of DDI products consists of the daily
intelligence publications, designed "to alert the foreign affairs com-
munity to significant developments abroad and to analyze specific
problems or broadly-based trends in the international arena." ^ Tliese
include the Presidenfs Daily Brief; the National Intelligence Daily ^
prepared for Cabinet and sub-Cabinet level consumers; and the Na-
tional Intelligence Bulletin^ distributed more broadly to the defense
and foreign affairs communities. The DDI issues a number of weekly
periodicals on specialized subjects, prepared in the research offices of
the directorate.
The DDI also produces in-depth and analytical studies on a periodic
or one-time basis. These are monographs on particular problems; some
are DDI-initiated, others respond to specific requests of the policy-
makers or their staffs. In addition, DDI analysts usually provide the
bulk of the staff work for the National Intelligence Estimates (NIEs) ,
which are prepared under the auspices of the National Intelligence
Officers (NIOs).«
The Intelligence Directorate also performs a variety of coordinating
and analytical services in providing intelligence support to policy-
making. Most National Security Council (NSC) meetings begin with
an assessment of the current situation given by the DCI, and prepared
by DDI analysts. The DCI, similarly supported by DDI personnel,
also participates in an array of interagency policy groups (e.g., the 40
Committee, the Senior Review Group, the Washington Special Action
Group, and the Strategic Arms Limitation Talks [SALT] Verifica-
tion Panel). The DCI's representatives are involved in lower-level
interdepartmental groups, including geographic area groups, func-
tional area groups, and ad hoc groups.
Analysts from DDI frequently contribute to the preparation of
National Security Study Memoranda (NSSMs), which are usually
* "The Directorate of Intelligence," p. 4.
' lUd., p. 2.
« ima., p. 2.
69-983 O - 76 - 18
266
drafted by interagency groups under tlie direction of the NSC staff.
Often a NSSM will include an intelligence assessment of the problem
at hand as an annex to the memo itself ; this might also be summarized
in the text.
Three examples illustrate how the DDI contributes such intelligence
support. A SALT support staff has been assembled in CIA to coordi-
nate SALT-related activities of production offices in the DDI and
DDS&T. The staff serves as the point of contact to respond to intel-
ligence requirements generated by the NSC staff, the Verification
Panel, and the U.S. SALT delegation. The staff relies on the analytical
offices of the CIA for substantive intelligence.
In another case, after the 1973 Middle East war, the DDI was asked
to examine all aspects of possible Sinai withdrawal lines on the basis
of political, military, geographic, and ethnic considerations. Eight
alternative lines wei-e prepared for the Sinai, a number of which Secre-
tary of State Henry Kissinger used in mediating the negotiations
between Egypt and Israel.
Finally, the DDI provided assessments to the policy groups who
prepared U.S. positions for the Law of the Sea Conference in 1975,
including descriptions of the strategic straits under discussion, anal-
ysis of each country's undersea mineral resources, and information
about political positions the paiticipating countries would be likely
to take.^
The Issues
The Select Committee began its examination of intelligence produc-
tion by considei"ing the relationship between intelligence and policy,
and the limits of intelligence. These considerations served to highlight
certain problems in pi'oduction which the Committee feels deserve fur-
ther attention by both the executive branch and congressional over-
sight bodies. These problems bear on the key issues of quality, timeli-
ness and relevance of finished intelligence. They derive in large part
from the nature of presidential leadership and the particular emphasis
and preoccupations of successive Directors of Central Intelligence. In
the past, the national leadership has used the CIA more for operational
l)urposes than for its analytic capabilities. Other concerns derive from
the structure of the analytical personnel system, the intelligence cul-
ture and the nature of the intelligence process, the overload of the sys-
tem, the preoccupation with current events, and the lack of sufficient
quality control and consumer guidance and evaluation.
C. The Relationship Between Intelligence and Policy
The relationship between intelligence and policy is a delicate and
carefully balanced one. One witness told the Select Committee that
there is a "natural tension" between the two and that
if the policy-intelligence relationship is to work, there must
be mutual respect, trust, civility, and also a certain distance.
Intelligence people must proWde honest and best judgments
and avoid intrusion on decisionmaking or attempts to influ-
ence it. Policymakers must assume the integrity of the intelli-
^ Staff summary of briefing given by Edward Proctor (DDI), 4/24/7.5.
267
gence provided and avoid attempts to get materials suited to
their tastes.*
In recent years there has been a tendency on the part of high officials,
including Presidents and Secretaries of State, to call for both raw
reporting and finished intelligence to flow upwards through separate
channels, rather than through a centralized analytical component. This
has resulted in many cases in consumers doing the work of intelligence
analysts. Presidents and Secretaries of State have all too often relished
the role of "crisis managers", moving from one serious issue to another
and sacrificing analysis and considered judgment in the pressure of
events. In between crises, their attention is turned to other pressing-
matters, and careful long-range analysis tends to be set aside.
By circumventing the avaihible analytical process, the consumers
of intelligence may not only be depriving themselves of the skills of
intelligence professionals; they may also be sacrificing necessary time
and useful objectivity. In making his own intelligence judgment based
on the large volume of often conflicting reports and undigested raw
intelligence instead of on a well-considered finished piece of in-
telligence analysis, a high official may be seeking conclusions more
favorable to his policy preferences than the situation may in fact
warrant.
The essential questions about the intelligence product concern its
usefulness to the policymakers for whom it is intended. Does intelli-
gence address the right questions? Does it deliver the kinds of infor-
mation and insights policymakers need in order to make foreign policy
decisions? Is it timely ? Is it presented and disseminated in the manner
and format most useful to the consumers? Will they read it in other
than crisis situations? The answers to these questions are by no means
simple. Still, the Select Committee believes they are deserving of
examination — and periodic reexamination — in the interests of main-
taining an effective intelligence service.
While intelligence analysts have a very good record in the area
of technical assessment (e.g., hard data on foreign military hard-
ware), the record is weaker in qualitative judgments, trend fore-
casting, and political estimating. While analysts may be able to
furnish fairly complete and reliable reporting on tangible factors
such as numbers and make-up of Soviet strategic missile forces, they
are not as good at assessing such intangibles as Avhy the Soviets are
building such a force. The problem pertains to other issues, too, for
example, in analyzing the likely negotiating stance of a particular
country in economic negotiation's of intei-est to the ITnited States.
In particular, some policymakers feel that intelligence analysts
have not been especially helpful to jwlicvmakers on the more subtle
questions of political, economic, and militarv intentions of foreign
groups and leaders. The view from the top is, of course, very different
from tlie view held by analysts in the departments and agencies or
in the field. Too often analysts are not willing to address such questions
directly. Analvsts tend to believe that policymakers want answers
instead of insights. Some consumers arcfne that intelligence analysts
lack sufficient awareness of the real natuie of the national security
* .Tohn Huizenga testimony. 1/26/76, p. 14.
268
decisionmaking process — how it really works, where and how intelli-
gence fits in, and what kinds of information are important.^
On the other hand, the Select Committee is concerned that analysts
are not always kept sufficiently informed, in a timely fashion, of U.S.
policies and activities which affect their analyses and estimates. The
Connnittee is concerned that the secrecy and compartmentation sur-
rounding security policy decisionmaking affects the relevance and
quality of intelligence analysis. The analysts in the DDI may not
always be aware of what a key foreign leader has told high-level
American policymakers in private, and so they may be missing crucial
information on a particular nation's intentions in a given situation.
The Select Committee's study of covert action has revealed that on
a number of occasions in the past intelligence analysts were not told
what U.S. covert operators were doing abroad, an omission which could
seriously affect the accuracy of intelligence assessments. Likewise,
because of security compartmentation, DDI analysts sometimes did
not know about particular U.S. strategic weapons R&D programs,
and so w^ere not able to assess completely the reasons for counter-
measures that were being taken in the development of Soviet strategic
forces.
D. The Limits of Intelligence
Clearly what is needed is a realistic understanding by both pro-
ducers and consumers about the limits of intelligence : what it can
and cannot do. As a former senior analyst explained to the Select
Committee,^° what intelligence can do is to follow^ the behavior of
foreign leaders and groups over a long period of time in order to get
a sense of the parameters within which their policies move, American
policymakers are not then likely to be greatly surprised by foreign
behavior even though intelligence analysts might not be able to predict
precise intentions at any given moment with respect to a given situa-
tion. Nor can analysts be ex]:)ected to predict human events when often
the actors themselves do not know in advance what they will do. As
the Schlesinger Report said :
In a world of perfect information, there would be no un-
certainties abo\it the present and future intentions, capa-
bilities, and activities of foreign powers. Information, how-
ever, is bound to be imperfect for the most pai't. Consequently,
the intelligence community can at best reduce the uncer-
tainties and construct plausible hypotheses about these
factors on the basis of what continues to be partial and often
conflicting evidence.'^
To expect more may be to court disappointment. Des]:)ite this recoi^ni-
tion on the part of many policvmakers, if analysis is not con-ect, there
is often the charge of an "intolligonco failure." Good intelligence or ac-
curate predictions cannot insure against bad policy, in any case. For
example, as the current Deputy Director for Intelligence maintains,
the pessimistic CIA estimates on Vietnam had little oi- no effect on
U.S. policy decisions there. Vietnam may have been a policy failure.
"Staff summary of Andrew Marshall interview. 2/10/76.
'" Huizenga, 1/26/76, p. 24.
" Schlesinger Report, p. 10a.
269
It was not an intelligence failure.^- Similarly, the United States had
intelligence on the possibility of a Turkish invasion of Cyprus in
1974. The problem of taking effective action to prevent such an in-
vasion was a policy (question and not an intelligence failure.
E. The Personnel System
To some extent, problems in the quality of the analytical perform-
ance of the intelligence community are simply in the nature of things.
The collection function lends itself to technical and managerial ap-
proaches, while the analytical job is more dependent on the intangibles
of brainpower. In the final analysis, the intelligence product can only
be as good as the people who produce it.
The CIA prides itself on the c{ualifications of its analysts. The
Agency's exemption from Civil Service constraints — unlike the DIA,
for example — has enabled the DDI to attract tlie best analysts in the
connnunity. Nevertheless, those in the highest positions in the CIA
have traditionally come froui the operations side of the Agency.
The Agency's promotion system is structured in such a way that the
most outstanding lower-level people are singled out for advancement
into managerial jjositions. Such a system works well for the purposes
of the Directorate of Operations (DDO), where the skills necessary
for good management ai-e essentially the same as those required of a
good case officer. But when applied to the DDI, that system encourages
the best analysts to assume supervisory positions, reducing thfr time
available to utilize their analytical skills.
Although the CIA has several hundred "supergrade" positions " —
and very few government agencies are permitted so high a number —
there are virtually no "supergrade"' slots which involve only, or even
primarily, analytic responsibilities. The Agency maintains that DDI
supervisors are indeed analysts, since they review and critique the
work of junior analysts. In this vieAv, supervisory positions amplify
the analytical capabilities of senior personnel. Thus, there is not
"supervision" in the usual sense by DDI supervisors ; they are viewed
as participants in the analytical process.^^
The Office of National Estimates was the only place where a regu-
lar arrangement for high-level analysts existed, but that office was
abolished in 1973. Today oidy the DDI's Office of Political Research
(OPR) has been able to i-etain several supergrade staffers who do only
analysis (out of a staff of about 40 to 50 analysts.) The OPR, created
only in 1974, is treated by the DDI as an elite group. Much of its work
is interdisciplinary in nature. The emphasis is placed on keeping
OPR analysts out of the everyday routine of requests for current
intelligence woik which can be performed by other offices in the
directorate.^^
Some analysts complain that the personnel system has fostered too
much bureaucratic "layering," and that there are too many people
writing re])orts ahovt reports. The effects are ])redictable. In the words
of former DCI and Secretary of Defense James Schlesinger, "If you've
" staff summary of Edward Proctor interview, .5/16/75.
" John Clarke testimony, 2/4/76. p. .37.
"Proctor (Staff summary), 3/1/76.
270
got too much specialization aiul pigeonholing of people, you get the
kind of people m the intelligence game who don't mind being pigeon-
holed, and the entire U.8. intelligence establishment is t<)o much
bureauciatized." ^'^ The Intelligence Community (IC) stall', in its
post-mortems of major U.S. intelligence failures, has pointed in all
cases to the shortage of talented personnel. As the former deputy head
of the IC stall' pointed out to the Select Committee in his testimony,
"giving people more flexibility in pay scale and so forth doesn't always
guarantee that they hire the right people.*' ^"
F. Recruitment and Traixixg of Analysts
The Agency tends to bring analysts in early in their professional
life, emphasizing lifetime careers in intelligence work and the devel-
opment of institutional commitment. There has traditionally been
minimal lateral entry of established analysts and experts into the
profession at middle and upper levels (more in DDS&T than in
DDI.)^* This might be characterized as the "craft guild"' approach
to intelligence, where recruits are brought in to serve their apprentice-
ships within the ranks of the profession.^"
Specialized analytical training for intelligence analysts is quite
limited. The CIA~s Office of Training (OTR) has a program in
methodology and research techniques and a variety of mid-career
courses and senior seminars. About 25% of the DDI personnel Avho
receive in-house training are in management and executive develop-
ment courses. Various DDI offices sponsor couises on specific skills
such as computei'S and statist ics.^° For the most pait in the past the
Agency-run courses available were oriented tow^ard developing skills
necessary for clandestine activity. According to Dr. Schlesinger:
Within the CIA, most of the training effort in the past has
gone into training operators rather than training analysts.-^
The Agency maintains there is now an increased emphasis on the
development of sophisticated analytical skills and understanding.
JSIost of the substantive training for intelligence analysts takes place
outside the Agency, both in academic institutions and in other govern-
ment departments. Of the total number of DDI personnel participat-
ing in such external training in FY 1975, al)out one quarter were
involved in training courses longer than 6 weeks in duration.
G. The Intelligence Culture and Analytical Bias
There is a set of problems stemming from what might be called
the intelligence "culture" — ^^a particular outlook sometimes attributed
to the analysts wdiich tends to affect the overall quality of judgment
reflected in their w^ork. Although the problem of preconce]>tions is
one of the most intractable in intelligence analysis, it clearly is one
" .Tames Schlesinger testimony, 2/2/76. p. 72.
" Clarke. 2/5/76, p. 38.
" In FY 1975, 18 analysts out of 105 hired from outside the CIA h\ the DDI
were at aS-12 to 15.
"• Marsliall (Stnflf summary). 2/i^/7fi
-" Prootor (Staff summary) . 3/1/76.
^' Schlesinger, 2/2/76, p. 27.
2f71
of the most critical, and has l^een a focal point of the IC staff post-
mortems. As one former senior official told the Select Committee, '^By
and large, good intelligence production should be as free as possible
from ideological biases, and the higher the degree of ideological bias,
the greater will be the blind spots." ^^
Among the examples of analytical/intellectual bias and preconcep-
tions are the following: In 1962, some CIA analysts judged that the
Soviets would not put missiles into Cuba because such a move would
be "aberrational." ^-^ In 1973 most of the intelligence connnunity was
disposed to believe that the Arabs were unlikely to resort to war
against Israel because to do so would be "irrational," in light of
relative Arab-Israeli militaiy capabilities.^'*
The same mechanism operated — the inability to foresee critical
eveniis, in the face of mounting evidence to the contrary — during the
Cyprus crisis in the summer of 1974. According to the IC Staff' post-
mortem of that episode, the CIA analysts were again pi'cy to :
the perhaps subconscious conviction (and hope) that, ulti-
mately, reason and rationality will prevail, that apparently
iri-ational moves (the Arab attack, the Greek-sponsored coup)
will not be made by essentially rational men.^^
The charge is frequently made that intelligence estimates issued by
the Defense Department and the military ser-vices are not wholly ob-
jective, since those gr-oups have particular departmental inter-ests and
pr-ograms to advT>cate. By contr-ast, the CIA is supposed to be free
from such bias. But although the DDI is not in the position of liaving
to defend budgetary items or particular weapons systems, in the view
of ciMier parts of the intelligence community, ther-e has been a tendency
for a CIA institutional bias to develop over time. The Committee notes
that some observers have pointed to a CIA "line" on certain issues.^^*
H. The Nature of TirE Production Process : Consensus Versus
Competition
The nature of the production process can itself under^mine the
quality of tlie product. Tluit process is consensus-oriented, Aarying in
degree frx>m the formal United States Intelligence Board (USIB)
coordination involved in producing a National Intelligence Estimate ~''
to the less structured daily analyst-to-analyst coordination, which
takes place at the woi-king level. For the monographs pr'oduced on an
iri-egular basis by the Intelligence Dir-ectorate's research offices, the
bulk of the coordination effort is between these offices, although oc-
casionally sirch coordination will cix>ss dir-ector-ate lines, and less fre-
quently it will involve going outside the Agency. An analyst from the
DDI may meet with his opposite numbers in State or DIA prior to
"^Ihid.
'^ HuizenRa, 1/26/76, p. 25.
^MC Staff post-mortem on 197.3 Middle East war (January 1974), p. 14.
^' lO Staff post-mortem on 1974 CypriLS crisis, p. iv.
^""^ See Chapter V, pp. 76-77.
*" Prior to the President's February 1976 reorganization of the intelligence
community, the USIB approved all National Intelligence Estimates. See the chap-
ter of this report on "The Director of Central Intelligence" (pp. 74 ff. ) for a
fuller discussion of the estimates coordination process.
272
publishing an articie in their mutual field.^" The coordination process,
however necessary and desirable, may tend to produce a "r-einforcing
consensus," whereby divergent views of individual analysts can be-
come "submerged in a sea of conventional collective wisdom," and
doubts or disagreements can simply disappear in the face of mutually
reinforcing agreements.^^
Although the purpose of coordination is "to assure that the facts
and judgments presented therein are as comprehensive, objective, and
accurate as possible," -^ it sometimes has the unfortunate side-etfect
of blurring both the form and content of the product. The NIEs
have been criticized, on occasion, for this. The estimates undergo the
most formal coordination process, one which is integral to policy con-
sensus-building. Some consumers complain that finished intelligence
frequently lacks clarity, especially clarity of judgment, and that it is
often presentecl in watfly or "delphic" forms, without attribution of
views. Opposing views are not always clearly articulated. Judgments
on difficult subjects are sometimes hedged, or rej)resent the outcome of
compromise, and are couched in fuzzy, imprecise terms. Yet intelli-
gence consumers increasingly maintain that they want a more clearly
spelled out distinction between different interpretations, with judg-
ments as to relative probabilities.
In fact, the issue of consensus versus competition in analysis repre-
sents a persistent conceptual dilemma for the intelligence comnuniity.
Policymakers tend to want one "answer" to an intelligence question,
but at the same time they do not want anything to be hidden from
them. Consumer needs can change drastically in a short period of time,
and the same policymakers may need different kinds of intelligence for
different kinds of situations.
Some members of the intelligence and foreign policy communities
today argue that the consensus approach to intelligence production
has improperly come to substitute for competing centers of analysis
which could deliver more and different interpretations on the critical
questions on which only partial data is available. This conceptual con-
flict should be closely examined by the successor oversight committee.
I. The "Current Events" Syndrome
The task of producing current intelligence — analyzing day-to-day
events for quick dissemination — today occupies much of the resources
of the DDT. Responding to the growing demands for information of
current concern by polic^ymakers for more coverage of more topics, the
DDI has of necessity resorted to a "current events" approach to much
of its research. There is less interest in and fewer resources have been
devoted to in-depth analysis of problems with long-range importance
to policymakers. The Directorate has had to devote considerable re-
sources in order to keep up on a dav-to-day basis with events as they
happen. To some extent, analysts feel they must compete for time-
liness wnth the considerable amount of raw reporting which reaches
consumers.
"The Directorate of Intelligence." Annex A. p. 2.
IC Staff post-mortem on tlie 1073 Midd'e-East "War. p. 18.
' "The Directorate of Intelligence." Annex A, p. 1.
273
Accorclino; to some observers, this syndrome has had an unfavorable
impact on the quality of crisis warning and the recognition of longer
term trends. The "current events" approach has fostered the problem
of "incremental analysis," the tendency to focus myopically on the
latest piece of information without systematic consideration of an
accumulated body of integrated evidence. Analysts in their haste to
compile the day's traffic, tend to lose sight of underlying factors and
relationships.^"
For example, the lUBG Cunningham Report points out that the
CIA's sinologists were so immersed in the large volume of daily
FBIS ^^ and other source reports on Comnumist China in the early
1960s that they failed to consider adequately the broader question of
the slowly developing Sino-Soviet dispute.^^
The Intelligence Directorate is now turning more attention to
such increasingly important long-term (and inter-disciplinary) prob-
lems as world food balances, raw material supplies, population pres-
sures and pollution of the environment. Nevertheless, the DDI itself
feels that an even greater effort should be made in these areas. "Such
mattei-s have not ])een the focus of national security interest in the
past, but they clearly will be within the next ten years and this Direc-
torate should be building its capacity to analyze and report in these
fields." ^^
J. Innovation
The CIA is thought by many observers to be technologically one
of the most innovative research centers in the country, and it allocates
considerable funds to continue the search for new technology. But
despite recent increases, the in.telligence community still expends rela-
tively little effort on R&D in the analytical field — in contrast to in-
tensive effort in new and costly collection methods.
The analytic community has suffered from the secrecy that sur-
rounds the work of the intelligence community as a whole. This
insulation is recognized to have had a detrimental effect on the quality
of analysis. The Agency recognizes the need for conducting a free
exchange with academics, contractors, and consultants. For example,
in FY 1976, 17 analysts were on leave at private institutions with
an additional 14 people in various Government pr-ograms (e.g., the
State Department senior seminar, or the Congressional Fellows
program).^*
Some DDI offices have panels of consultants (outsiders) to review
major papers, and outside speakers are on occasion brought in for
special seminars. There have been efforts like the one made by OPR
to arrange for one-year sabbaticals for visiting academics during
which the visitor could produce both government and public papers.
Such efforts have been only partially successful.
^ See IC Staff post-mortems on Middle East war and Cypras crisis.
^The Foreign Broadcast Information Service, run by the Intelligence Direc-
torate, monitors foreign media and open source material and pul)li,shes daily
surveys by area.
^ CIA Inspector General. "Foreign Intelligence Collection Requirements,"
December 1060 (The Cunningham Report), pp. VII-13, 14.
^ "The Directorate of Intelligence," p. 12.
** Proctor (Staff summary), 3/1/76.
274
The question of CIA relations with academics and private groups
like foundations and research organizations is a controversial one.^^
The Committee notes the desirability of a more open attitude on both
sides, one which both i-ecognizes the legitimacy of the analytic work
of the intelligence community and refrains from the secret use of
academics and others for operational purposes.
K. Overload on Analysts and Consumers
Few observers would dispute the fact that as consumer demands
have grown and the amount of data collected has burgeoned, the
analysts' work load has become a serious problem. But ten years ago
the Cunningham Report expressed the concern that :
In the long run it is not the crude question of work load which
matters most, nor even the point that each item uses up cus-
tomers' time and attention which cannot be given to any other
item, so that each of our products must receive steadily less.
What matters most is the question whether this quantity of
information is degrading the quality of all our work.^'^
And the 1971 Schlesinger Report said that it was "not at all clear that
our hypotheses about foreign intentions, capabilities, and activities
have improved commensurately in scope and quality as more data
comes in from modern collection methods." ^^
Yet today tlie intelligence establishment remains structured in such
a way that collection guides production, rather than vice versa; avail-
able data and "the impetus of technology'' tend to govern what is
produced. ''^ To be sure, much of the proliferation in data collected has
l^roven invaluable to the analytic effort. Technical collection systems
have provided "hard" data, e.g., on missile silos which have con-
tributed to the generally acknowledged high quality of CIA assess-
ments of Soviet and Chinese strategic forces.
In 1971, the Schlesinger Report said, "It has become commonplace
to translate product criticism into demands for enlarged collection
efforts. Seldom does anyone ask if a further reduction in uncertainty,
however small, is woi-th its cost." '*" The community's heavy emphasis
on collection is itself detrimental to correcting product problems, said
the report,, for each department or agency sees the maintenance and
expansion of collection capabilities as the route to survival and strength
within the community. Thei'e is a "strong presumption" that additional
data collection rather than impi'oved analysis will pr-ovide answers to
particular intelli.<ience problems.*"
Analysts naturally attempt to read all the relevant raw dota reports
on the subjects they are working on, for fear of missinf? an important
piece of information. The Cunningham Report referred to this as the
^' Sep Chantpr X of tliif=! report on the CTA's relations with these groups in sup-
port of intellip:ence collection and covert action.
^^ runningham Report, p. VITT-13.
^^ Schlesintrer Report, p. 10a.
=" Ihid., p. 10a.
'*/ft(V7..p. 11.
'" Ihi(h, p. 11.
275
"jigsaw theory" of intelligence — that one little scrap might be the
missing piece.*^ The present trend within the DDI is to reduce the
amount of raw data coming to analysts by more effective screening
processes.
In the opinion of one intelligence community official, analysts in
the future are going to have to rely to a greater extent than here-
tofore on others' judgments. The collectors themselves may have to
present their output in summary form, with some means of highlight-
ing important information,*^ despite the community's sensitivity to
the distinction between "raw" and "finished" intelligence reporting.
On the other hand, consumers tend to treat the intelligence product
as a free good. Instead of articulating priorities, they demand infor-
mation about everything, and the demand exceeds the supply. And
analysts, perhaps for fear of being accused of an "intelligence fail-
ure," feel that they hai^e to cover every possible topic, with little re-
gard for its relevance to U.S. foreign policy interests. The community
must part with the notion tliat it has to i3eat the newspapers in re-
porting coups in remote areas of the world if what happens in those
areas is only of marginal interest to U.S. policymakers. In this regard,
there are serious efforts being made by DDI to focus analysis on major
areas of importance to the United States.
The community has looked increasingly to the advent of auto-
mated information-handling systems to solve the problems of systems
overload, but the impact of computerization is not yet clear. In 1966
the Cunningham Report warned that "great technological advances
in storage and retrieval" of information can do more harm than good
if "drastically higher standards" for what is to be stored and re-
trieved are not instituted.^^
It has often been pointed out that not only are analysts swamped
with information, but the consumers also are inundated with intelli-
gence reporting, both "finished" and "raw." The volume of paper
degrades the overall effectiveness of the product, since there is simply
too much to read, from too many sources. In addition to the daily DDI
publications and the A"arious DDI Offices' specialized weeklies and
other memoi-anda, a variety of other intelligence publications, regu-
larly cross the desks of senior Government officials. As former DCI
Richard Helms has told the Select Committee :
It seems to me that one of the things thafs tended to happen
is that almost every agency has got to have its national pub-
lication. In other words, it's got to have a publication that
arrives in the White House every morning.^*
Policymakers receive DIA's Defense Intelligence Notices (DINs),
produced on particular subjects as the occasion demands — sometimes
several per day on a given topic. NSA sends out a daily SIGINT Siun-
mary, whicli is not classed as finished intelligence. And a consid-
" Cunningham Report, p. VIT-19.
*^ Staff summarv of Rioliard Shryock interview, 2/10/76.
" rnnnineham Report, p. VTI-12 (footnote).
'* Richard Helms testimony, 1/30/76, p. 29.
276
erable amount of raw reporting of clandestine human source intelli-
gence is routinely distributed to consumers on tlie NSC staif, at the
Departments of State and Defense, and in the military services.
This glut of paper raises a number of issues which the Select Com-
mittee feels deserve further attention. The proliferation of depart-
mental publications tends to undermine the centralized natui'e of the
system for the production of national intelligence. It contributes to
confusion rather than clarity in the decisionmaking process, since
different publications often present different conclusions. Often the
reasons for the differences are only clear to a sophisticated intelligence
analyst. And direct reporting from the collectors usually arrives be-
fore the analytical reporting can, preempting the analysts' work in
evaluating the data.
L. Quality Control
In 1972 a "Product Review Division" (PRD) was established
within the IC Staff. It has the task of regularly appraising intelligence
articles and studies, "testing them for objectivity, balance, and respon-
siveness." *^ The Intelligence Directorate has no formal or independent
system for quality control, depending instead upon its regidar review
and coordination process.*^
Most of PRD's attention to date has been directed to the conduct of
communitywide post-moi-tems on particular crises — for example, the
1973 Middle East war, the Cyprus crisis in 1974, the Indian nuclear
detonation, and the Mayaguez incident. The Division was involved in
changing the old daily Central InteJJigence BuUetin from a CIA pub-
lication into a commmiity publication (now called the National Intel-
ligence Bulletin). PRD participated in discussions leading to the
transformation of the old Watch Committee into the DCI's Special
Assistant for Warning, with a Strategic Warning Staff.
PRD has not yet been significantly involved in the development of
new analytical methods, in resource allocation for production elements,
or in training or recruitment issues. Contact with the consumers of
the intelligence product has been on an irregular basis (mostly for
post-mortems) , although PRD is currently at work, through the NIOs,
collecting consumer reactions on particular papers of concern to the
USIB.
The Division has no authority to order changes in the management
of production which might affect the quality of the product; rather,
it has been in the position of making recommendations to the USIB
and encouraging their implementation.
M. Consumer Guidance and Evaluation
The DDI manages its production planning by compiling a Quar-
tei-ly Production and a Quarterly Research Schedule, outlining those
finished intelligence studies slated for publication in the following
tliree months as well as projects which support other intelligence
efforts, but which may not be published. The quarterly schedules are
prepared by DDI's Executive Staff based on inputs received from
*" Shryock (staff summary), 2/10/76.
"^ Proctor (staff summary), 3/1/76.
277
eacli office witliin the Intelliaence DiT-ectorate, and the Associate DDI
reviews them to ensure tliat the i)laiined projects are responsive to
consumer needs.'''
While there is no formal or institutionalized review by consumers of
the quarterly schedules, there are frequent Directorate-level contacts
with policymakers Avho expi'ess an interest in intelligence information
and assessments on {)articular foreign policy issues.
Evaluation of the intel licence product by the consumers themselves
is virtually nonexistent. The NSC Intelligence Committee, which was
supposed to perform that function, was laroely inactive and has now
been abolished in the President's reorganization plan. Rarely, if ever,
do high officials take the time to review the product carefully with the
analysts and explain to them how the product could be improved and
made moi-e useful to policymakers. The intelligence community, then,
by default, evaluates its own })erformance without the benefit of any
real feedback. One former senior analyst told the Select Committee :
I believe there ought to be requirements on the policy side to
respond by connnent or otherwise to major intellioence prod-
ucts, obviously not the whole (low of stuif, and I think that
there ought to be a responsibility at an appropriate level, say
at an Assistant Secretary level, to do this, and at the NSC
level. This kind of recognition, the sense of participation in a
serious process is, I think, the best thing that can be done for
analysts.*®
N. The Congressional Role
Congi'ess does not at present receive National Intelligence Esti-
mates, although some of the estimative material is presented to the
Congress in occasional briefings bv intelligence officials. In the past,
the Senate Foreign Relations and Armed Services Committees re-
ceived the National Intelligence Daily ^ which could be cut off at exec-
utive will, and has been on some occasions, most recently in January
1976.^^ In 1975, the DDI began publishing a daily Intelliaence Chech-
list specifically tailored to what it perceived to be the intelligence needs
of the Congress.
With the resurgence of an active congressional role in the foreign
and national security policymaking process comes the need for mem-
bers to receive high quality, I'eliable, and timely information on wdiich
to base congressional decisions and actions. Access to the best avail-
able intelligence product should be insisted upon by the legislative
branch. Precisely wdiat kinds of intelligence the Congress requires to
better perform its constitutional responsibilities remains to be worked
out between the two branches of government, but the Select Commit-
tee believes that the need for information and the ricjht to it is clear.
*^ "The Directorate of Intelligence," p. 8.
"Huizenga, 1/26/76. p. 23.
*" Laurence Stern, "CIA Stops Sending Daily Report to Hill," Washington
Post, 2/4/76.
XIII. THE CIA'S INTP:RNAL controls : THE INSPECTOR
GENERAL AND THE OFFICE OF GENERAL COUNSEL
Both the General Counsel and the Inspector General have played,
and will continue to play, vital roles in the internal management of
the Central Intelligence Agency. Both report directly to, and provide
guidance to, the Director of the Central Intelligence Agency. As the
principal legal officer of the Agency, the General Comisel provides
legal advice to the Director of Central Intelligence ; he also provides
counsel and guidance to employees at all levels within the Agency on
legal issues connected with the conduct of the CIA's mission. The In-
spector General serves as the investigative arm of the Director and,
when necessary, of the General Counsel, as well as assisting the Director
and Deputy Directors in improving the performance of CIA offices
and personnel.
Under the mandate of Senate Resolution 21, the Senate Select Com-
mittee studied both offices with particular attention given to the role of
each in assuring that CIA activities are consistent with the Con-
stitution and lav\^s of the United States,^ A number of current and
former officials of the Central Intelligence Agency were interviewed or
deposed. A far greater number were asked to, and did, respond in writ-
ing to a detailed questionnaire on the work of these offices.^ On the
basis of this investigation, the Committee is convinced of the im-
portance of these offices and the need to maintain and strengthen them.
^ Several provisions in the Resolution seem particularly applicable to a review
of the Offices of the General Coinisel and the Inspector General. Among them are :
1) Section Four which mandates examination of the extent to which Federal law
enforcement or intelligence agencies coordinate their activities and the extent
to which a lack of coordination has contributed to illegal, improper, or ineffi-
cient actions; 2) Section Five which mandates examination of the extent to
which the operation of any activities in the United States by the Central Intelli-
gence Agency conforms to the legislative charter of that agency and to the
intent of Congress; 3) Section Six which mandates an examination of the
relationship l)etween the Director of Central Intelligence's responsibility to pro-
tect "intelligence sources and methods" and the prohibition on the Agency's
exercise of police, subpoena, law enforcement powers, or internal security func-
tions; 4) Section Eight which mandates an examination of the nature and extent
to which Federal agencies cooperate in exchanging intelligence information and
the adequacy of any regulations or statutes which govern such cooperation; 5)
Section Nine which mandates an examination of the extent to which the
intelligence agencies are governed by executive orders, rules or regulations, and
the extent to which tliese regulations contradict the intent of Congress; 6)
Section Ten which mandates an examination of the violation or suspected viola-
tion of state or Federal statutes; 7) Section Eleven which mandates an examina-
tion of the need for improved, strengthened or consolidated oversight of the
United States intelligence activities by the Congress; and 8) Section Twelve
which mandates an examination of whether any of the existing laws of the
United States are inadequate either in their provisions or in enforcement to
safeguard the rights of American citizens.
" Some 24 questionnaires were sent out. There were 15 responses ranging from
3 pages to 14 pages.
(279)
280
A. The General Couksel
The General CounseFs work and responsibilities have changed over
time, reflecting changes in CIA activities and the needs and desires of
different Directors. The Geneial Counsel's Office had originally, a staff
of ten to twelve attorneys whicli was concerned with enactment of the
Agency charter and enabling legislation, and with creation of regula-
tions and administrative and financial procedures under which the
Agency would operate. In the 1950s and 1060s, the Office was largely
directed toward assisting clandestine activities overseas, (^urrently the
Office of the General C^ounsel, with a staff of roughlv oO attorneys, is
primarily concerned Avith "proposals for legislation, executive orders
and other directives governing Agency activities; legal input into
planning and approval of operations, stricter management and finan-
cial controls; litigation. Freedom of Information Act and Privacy Act
matters; and response to requirements of Select and standing com-
mittees of the Congress." ^^
1. The Organization of the Ofjice of General Counsel
Between January 19, 1951, and April 1, 1962, the General Counsel
was technically a part of the Directorate of Administration, but
in fact the General Counsel reported directly to the Director of Central
Intelligence on most matters. In 1962 the Office was moved to the
Office of the Director.^
The organization of the Office of General Counsel remained basically
unchanged from the inception of the Agency until October 1975.
The Office was then reorganized internally into four specialized divi-
sions in order to permit more effective handling of the legal problems
of the Agency. The four divisions are : General Law division, Opera-
tions and Management Law division, Freedom of Information and
Privacy Law division, and Procurement and Contracts Law division.
Two attorneys are presently assigned as Special Assistants to the
General Counsel. One of these has been assigned to the Deputy Direc-
tor for Operations to provide more timely and effective counsel in
the earliest stages of sensitive operational matters. The other has been
assigned to the Office of Logistics, which requires continuous legal
assistance in its responsibility for managing most CIA contracts.
The Agency is considering assigning attorneys to the other direc-
torates and independent offices.
Until this year most of the lawyers in the Office of General Counsel
had been recruited from within the Agency. Although some of these
attorneys had had legal experience outside the CIA, the Rockefeller
Commission recommended, and the CIA has spent considerable effort
in recruitiuff lawyers from outside the Agencv.^
Lawrence Houston, the General Counsel of the Central Intelli-
"""The Role and Functions of the General Counsel," CIA papei* prepared for
the Senate Select Committee, 12/7,'^. p. 2.
^Ihid. 12/75. p. 2. With the exception of one year in the lOnOs. the General
Counsel was also responsible for sunervision of the CIA's liaison with Congress.
In IDGfi, a separate Office of Leisrslative Counsel was created. Tlie Leigslative
Counsel is responsible for the CIA's liaison with Congress, and reports to the
Director of Central Intelligence.
^According to the CIA, as of April 1976. over half of the attorneys employed in
the Office of General Counsel will have come from outside the CIA.
281
gence Agency from 1947 until 1974, agreed with the Rockefeller Com-
mission recommendation, noting that legal experience, particularly in
private practice, would help Agency attorneys exercise index^endent
judgment.
Mr. Jiouston also recommended that attorneys be rotated from the
Office of (ieneral Counsel to other government agencies.*^ Such rota-
tion would lessen the possibility that these attorneys would become
part of a culture which assumes that, for reasons of national security,
the CIA is not governed by the normal processes of the law.
Just prior to his leaving the CIx4., then Director Colby elevated the
Inspector General to an executive rank equal to that of the Deputy
Directors of the CIA. He agreed that the General Counsel should be
similarly promoted but no action was taken, leaving the General Coun-
sel below the Deputy Directors and the Inspector General in rank.
2. The Functions of the O'ffice of General Counsel
The General Counsel has a wide range of responsibilities. As noted
above, his primary responsibility is to advise the Director of the
Central Intelligence Agency, although he also provides legal advice
and guidance to employees at all levels. Under CIA regula-
tions, he is also responsible for reviewing all new projects and activi-
ties unless they are clearly established as legal ; insuring the legality
of the expenditure of confidential funds;" reported possible violations
of the U.S. criminal code by CIA employees to the Department of Jus-
tice; passing upon all regulatory issuances; coordinating legal issues
involved in CIA relations with non- Agency individuals and institu-
tions; determining legal standards for all requests made to the CIA by,
or made by the CIA to, other government agencies; and establishing
proprietaries and cover mechanisms for operations. Under Executive
Order 11905 he is also required to report to the Intelligence Oversight-
Board any activities which raise questions of legality or propriety.
3. The General CounseVs Role in Determining the Legality or Pro-
priety of CIA Activities
As the Director's chief legal adviser, the General Counsel is respon-
sible for determining the legality or propriety of CIA activities. CIA
regulations recognize this and provide that "to ensure that CIA ac-
tivities are in compliance with the law. Deputy Directors and Heads of
' The CIA has endorsed the idea but has told the Committee that organiza-
tionally it would be difficult to implement. (Letter from AVilliam Colby to the
Select Committee. 1/27/76. p. 7.)
"Section R(b) of the CIA Act of 1049. as amended, .50 U.S.C. 403j(b) pro-
vides : "The sums made available to the Agency may be expended without regard
to the provisions of law and reeulations relating to the exjienditure of Govern-
ment funds ; and for objects of a confidential, extraordinary, or emergency na-
ture, such expenditures to l)e accounted for .solely on the certificate of the Di-
rector and every such certificate shall be deemed a sufficient voucher for the
amount therein certified." Normally the General Counsel of the General Ac-
counting Office would rule on the legality of the expenditure of government
funds, but given 50 U.S.C. 403.1(b) and the decision by the General Accounting
Office to cea.se even the partial audits of CIA expenditures which he had con-
ducted UD until the early 1060s. the CIA's General Counsel has the responsibility
for determining the legality of unvouchered expenditures. "The Role and Func-
tions of the General Counsel," 12/75, pp. 3-4.
69-983 O - 76 - 19
282
Independent Offices shall consult with the Office of General Counsel
on all activities whose legality is not clearly established." ^
While responsible for making determinations about the legality or
propriety of CIA activities, the General Counsel also has an obliga-
tion to assist in the accomplishment of the Agency's missions. As the
Rockefeller Commission Eeport put it, "he is subject to pressures to
find legal techniques to facilitate proposed activities." ^ This dual
responsibility with its potential for conflict is not in itself unique —
almost any "inside" counsel is in a similar position — but the secret and
often sensitive nature of CIA activities doe« make protection of the in-
dependence of his judgment particularly important.
As can be seen from the regulation, the role of the Office of the Gen-
eral Counsel is essentially passive.^" He does not initiate inquiries, but
rather consults upon request.
In the past, the General Counsel has not been asked for his opinion
on certain sensitive Agency programs. During the 20-year course of
the CIA's mail opening program, the General Counsel was never
asked for an opinion on its legality or propriety. When the Di-
rector of Central Intelligence had doubts about whether Operation
CHAOS violated the Agency charter, he did not turn to the General
Counsel. As former DCI Helms stated, "Sometimes we did [consult
the General Counsel] ; sometimes we did not. I think the record on
that is rather spotty, quite frankly." ^^
Wlien the General Counsel was asked for an opinion about CIA
activities which were "questionable" his advice was heeded. For exam-
ple, when the CIA participated in an NSA program to monitor tele-
phone calls to and from Latin America, the General Counsel was asked
for an opinion. The opinion he issued described the telephone intercept
program as illegal, with the result that the program was immediately
terminated.^^*
The principle reason for tlie lack of consultation was that a review
by the General Counsel was not required for the initiation of Agency
activities. As James Angleton has testified, ". . . [I]t is my impres-
sion that one of our weaknesses is that we did not have the General
Counsel work into the ])lanning phases of operations. I^sually we went
to the General Counsel when something was going wrong, but not in
the inception of operations." ^^
* CIA Headquarters Regrilation, "Restrictions on CIA Activities Within the
Tlniterl States or Related to U.S. Citizens and Organizations," 11/2S/75, 7-la(3).
p. 1.
* Report of the Commission on CIA Activities Within the United States, 6/6/75,
p. 87.
^^ As Lawrenre Houston wrote. "[t]he role could he almost completely i)assive
hut as a matter of practice it is and should he active in the sense of keeping in-
formed as far as possihle and feeling free to raise possihle prohlems at what-
ever level seems appropriate." (Letter from Lawrence Houston to the Senate
Select Committee, 1/76, p. 1.)
The present Deputy General Coun.sel has noted that given the General Coun-
•sel's new responsihilities imder Executive Order 11905 and changes in attitudes
at the Agency the role will he anything hut passive.
" Richard Helms testimony. 9/10/75, p. 50.
"" See the Committee's detailed report on NSA Monitoring for a detailed dis-
cussion of this activity and its termination.
^^ .Tames Angleton testimony, 9/17/75, p. 48.
283
The CIA has explained that :
Because of the infinite variety of matters arising which
would be susceptible to or might benefit from legal advice,
there has been no established mechanism requiring or per-
mitting the General Counsel to advise or rule in all cases.
Some of his responsibilities are set forth in regulations or
other procedures or are well known, whereas others depend on
the initiative of the individual office seeking advice. Each Di-
rector of Central Intelligence has had his own preferences
in methods of operating the Agency and seeking advice from
the various components of the Agency. Because of the ex-
tremely sensitive nature of some activities^ there' have been
times lohen Directors have chosen to carry them out directly
rather than through the noiinally responsible components of
the Agency., in order to involve as feio people as possible. In
some cases a Director may not think to seek legal advice or
Tnay choose not to do so. In choosing to operate in this man-
ner^ the Director is carrying out to a degree he deems neces-
sary his charter responsibility to protect intelligence sources
and methods froin unauthorized disclosure. On the other
hand., he must then make his oion determination as to whether
this respon.nhility justifies some aspect of the operation which
might otherioise be questionable under law. [Emphasis
added.] "
Under this view, the Director can still withhold from his counsel the
very existence of a particular activity. The DCI could be in the posi-
tion of deciding, without advice from his counsel, whether the DCI's
legal responsibility to "protect intelligence sources" justified activities
which would be "questionable under law."
Even under the present regulation requiring consultation with the
General Counsel "on all activities whose legality is not clearly estab-
lished" it is possible that the General Counsel would not be asked for
an opinion about the legality or propriety of a major CIA activity. The
Director could waive the regulation and instruct the appropriate offi-
cial not to consult with the General Counsel. In addition, the stand-
ards in the regulation itself may cause cei+ain difficulties.
The regulation leaves the determination of whether an activity has
been clearly established as legal to the deputy directors and the heads
of independent offices. Thus, these officers must interpret past deci-
sions by the General Counsel and decide their applicability to new
activities. They must interpret the regulation itself and in particular
the phrase which reads "whose legality is not clearly established" in
order to detennine whether consultation is required. Because the regu-
lations are prospective, activities which were legal in the past, but
which have become illegal due to changes in the law, might not be the
subject of consultation.
" "The Role and Frinctions of the General Coinisel. 12/7.">. p. 6.
284
It would certainly be possible to require consultation with the Gen-
eral Counsel on all "significant" activities.^* The General Counsel
would be given a description of the activity. The referring office's
reasons for believing the activity is legal might be included to enable
the General Counsel to avoid a de novo review.
Certain acts undertaken by the CIA which may not appear signifi-
cant because they do not require the expenditure of a great deal of
money or the efforts of large numbers of personnel are nonetheless
"significant" due to their potential for abuse. Consultation with the
General Counsel should be required before the initiation of any such
act.
For instance, under present regulations, the Director may approve
investigations of allegations of unauthorized disclosure of classified
information by individuals presently or formerly affiliated with the
CIA, if he determines that intelligence sources and methods may be
jeopardized by the disclosure.^^
There have been a number of such investigations in the past which
resulted in the extensive surveillance of newsmen, as well as a "break-
ing and entering" by CIA with the assistance of local police officials.
Thus even though the CIA recognized that such investigations re-
quired special procedures there is no requirement that the chief legal
officer of the Agency be consultecl.^*^
The CIA has taken the position that the General Counsel's approval
is not required for each such act. The General Counsel's approval of
the regulations governing such acts is considered sufficient. This under-
estimates the difficulties deputy directors or heads of independent
offices might have in interpreting regulations, and creates the possi-
bility that actions not consonant with regulations could be approved
and undertaken.
Requests for assistance made by the CIA to other governmental
agencies and requests to the CIA from other agencies raise similar
" While the Deputy Directors and lieads of independent offices would have to
interpret the meaning of "significant," they are in a better jwsition to do this
than to make judgments about the applicability of past opinions of the General
Counsel. Some threshold is required in order that the General Counsel's Office
not be swamped by a requirement to review every action by every employee.
" The investigation must be coordinated with the FBI, when substantial evi-
dence suggests espionage or other violation of a federal statute. CIA
T-lc(2) (b)(1).
" As the CIA's former General Counsel has noted, the Office of General Counsel
"should be eonsulte<l in connection with investigations of disclosure of classified
information, or for any surveillance within the U.S." (Houston letter. 1/76, p. 1.)
Present regulations provide that the Office of General Counsel must be con-
sulted when equipment for monitoring conversations is being tested in the
United States. (CIA Headquarters Regulation, 11/28/7."). H.R. 7-ld5.) As that
testing raises many of the same issues as does an investigation of unauthorized
disclosure of cla.^sifled information, there seems to be no reaon for excluding the
Office of General Counsel from the approval process for an investigation.
285
issiies.^^ While the General Counsel must eoncnr with the Deputy
Director for Operations on the provision of technical equipment to
the Drug Enforcement Administration (DEA) for overseas opera-
tions,^^ and must approve CIA requests for federal income tax infor-
mation,^^ he is not involved in the approval process for seekino- assist-
ance from state and local police org^anizations.-" It should be remem-
bered that such assistance has been provided in circumstances which
were highly questionable.^^ The General Counsel is not involved in
the approval process for providing technical guidance, training,
equipment, ancl other assistance to the Department of Defense for
intelligence activities within the United States.^^ Such equipment
might be used by the Defense Department for illegal surveillance of
citizens. In each of these situations, the Central Intelligence Agency
has established special procedures for approval and monitoring; where
such procedures vvere imposed because of the sensitivity of the opera-
tions, the procedures should specifically include consultation with the
General Counsel.
4. The General CounseVs Role m'fh Regard to Repo7'fs of Activities
that Raise Questions of Legality or Propriety
a. The General Counsel's Responsibilities. — Present regulations
provide that ". . . any activities or ))roposed activities that may raise
questions of compliance with tlie law or CIA regulations or that
otherwise appear improper will be brought directly to the attention
of the Director by any of the command or staff components or by
the IG and will be subject to the Director's decision." ^^ In the past,
questionable activities which came to the attention of the Director
or the Inspector General were not always referred to the General
Counsel. For example, during a survey of the Technical Services
" Under present regulations, the Inspector General is required to obtain a
written opinion from the General Counsel on requests for "continuation or
initiation of activities in support of or in cooi>eration with state, local, or other
federal agencies whose legality and propriety have not been previously estab-
lished." (CIA Headquarters Kegultion, ll/28/7.">. 7-lb(l).) Tliis language has
the same shortcomings noted above : the deputy director or the head of the
independent ofiice must interpret the regiilation and previous decisions of the
Office of General Counsel ; the regulation ignores the possibility of a change in
legal standards.
Written opinions of the General Counsel are generally not required by regu-
lation or .statute. The absence of a written opinion does not mean that the
General Counsel did not provide advice. In many situations oral opinions
have l>een offered. Given proi>er security restrictions, however, an increase in
the number of situations in which written opinions are required might be
desirable, as it might tend to increase the level of scrutiny by the Office of
General Counsel.
" CIA Headquarters Regulation, 11/28/75, 7-lb(5) (c).
"CIA Head(iuartcrs Regulation, 11/28/75, 7-lc(0).
^ CIA Headquarters Regulation, 11/28/75, 7-lb(3) (b).
^ In one instance, local police assisted the CIA in a "breaking and entering."
"CIA Headquarters Regulation, 11/28/75, 7-lb(4).
='CIA Headquarters Regulation. 11/28/75. 7-la(4).
Similar regulations require that any employee "who has knowledge of past,
current or proposed CIA activities that might be construed to be illegal, im-
proper, or outside CIA's legislative charter, or who believes that he or she has
received instructions that in any way apiiear illegal, improper, or outside CIA's
legislative charter, is instructed to inform the Director or Inspector General
immediately." (CIA Headquarters Regulation, 11/28/75, 7-la(6).)
286
Division in 1957, the Inspector General discovered activities which
he labeled "unethical and illicit," but he did not notify the General
Counsel. Nor was the General Counsel informed about the surrep-
titious administration of LSD to unwitting human subjects, discovered
by the Inspector General in 19(53.^*
Under the recently issued Executive Order =^, the General Counsel
is personally responsible for reporting to the Intelligence Ov^ersight
Board any activities that raise questions of legality or ]:)ropriety.-®
However, CIA regulations do not explicitly require the Director or
the Inspector General to notify the General Counsel of question-
able activities reported to them. Tlie Director may waive the regula-
tion and may instruct tlie Inspector General not to infoim the Gen-
eral Counsel.-' While the Inspector General is required by regula-
tion to refer to the General Counsel "all matters involving legal
questions that come to the attention of the Inspector General'' -® an
additional, more specific, regidation onlv requires that the Inspector
General refer to the General Counsel "information, allegations, or
complaints of violations of the criminal provisions of the ITnited
States Code by CIA officers and employees, or relating to CIA af-
fairs "
h. Investigation 8 hy the Oifice of the General Counsel. — If the
General Counsel does learn of questionable activities, he must rely
on the Office of the Inspector General to investigate. Unlike the
Inspector General who, as the DCI's investigative arm. is authorized
to review^ all CIA activities, the General Counsel does not have
general investigatory authority.
The Office of General Counsel can initiate an iuAestigation, with the
specific authorization of the Director. This requirement might pre-
vent the General Counsel investigation of an activity about which the
Director sought to restrict knowledge.
If the Director refused to authorize an investigation by the General
Counsel, the General Counsel could resign and notify the "appropri-
ate authorities." ^^ Alternately the Director could be required to pro-
vide an immediate explanation in writing to the appropriate commit-
^*A former IG explained that his reason for withholding from the Agency's
Oeneral Connsel information on CIA's mail opening, which he believed to he
"illegal," was that the General Counsel has already been excluded by other
senior officials.
"An operation of this sort in the CIA is riin — if it is closely held, it is run
by those people immediately concerned, and to the extent that it is really
possible, according to the practices that we had in the fifties and sixties, those
persons not immediately concerned were supposed to be ignorant of it." (Gordon
Stewart deposition, 9/.30/7r), p. 29. )
^^' Executive Order 11905.
™The Inspector General has an identical responsi))ility to that of the Gen-
eral Counsel, under the terms of the Executive Order.
^The Inspector General would still have to report the questionable activity
to the Intelligence Oversight Board. If the Director instructs him not to, he
must inform the lOB of that instruction.
™ CIA Headquarters Regulation, "Office of the Inspector General," l-3a.
™ These could include the lOB or its successor and the appropriate congres-
sional committees.
287
tees of tlie Con<iross and tlie Executive ])i'anch of tlie reasons for denial
of invest ip:atorv authority.''''
The General Counsel could be provided by regulation with jjeneral
invest i<>atorv authority within the CIA, but this Avould have certain
drawbacks. It could strain tlie General Counsel's i-elationship with the
DCI. Lawrence Houston aroued that "to o-ive OGC investio-ative au-
thority similar to that of the IG would . . . pervert its counsel-
inof role and therebv inhibit or destroy its ])rinie usefulness." ^^
Houston noted that even if the General Counsel has tlie support of
the DCI he will not be aware of everythino; ooino; on at the Aoency.
"Investigative authoi'ity would not oive him much more and would
. . . iidiibit his relations with his clients." ^^
Provision of <reneral investigative authority to tlie Office of General
Counsel miolit also involve duplication of work now done by the In-
spector General. Duplication of etfort in detectino- and preventino;
abuses mi<jht be helpful rafher than hai-mful. In all lilcelihood. how-
over, in the usual course of events the General Counsel would ask the
Inspector General to investioate i-ather than relyino- on his own
resources.
c. The Gei^eraJ CounHeVf^ AecesH fo Informafwn. — Even if the Gen-
eral Counsel is consulted about all sionificant activities and if he is
notified of all rejiorts of questionable activities, it remains to ensure
that the Genei-al Counsel will have access to necessary information.
The foi-mer General Counsel does not recall ever being- denied infor-
matirii. The record, however, is clear that a good deal of information
bearing directly on the legality or propriety of Agency operations was
never given him.
According to the Central Intelligence Agency, "If an Office should
'question' the request of the General Counsel foi- access to any particu-
lar information, any limitations would be im])osed by the Director."
Thus, even today, the Director remains able to deny information to
the General Counsel bearing on the legality or propriety of CIA ac-
tivities. Executive Order 11905, howeA^er, requires that the Director
ensure that the General Counsel has "access to any information neces-
sary" to perform his duties under the Order.
Lawrence Houston has suggested that the General Counsel could
resign if denied acces'^^ to information. The Director might be required
to provide an immediate explanation, to the appropriate bodies of
the reasons for such a denial. '''*
(1. Reporting Poft.si^^le y/olafion.H of the TLS. CpJmrval Code to the
Attorvev General. — Finally, it should be noted that in the past the
General Counsel did not alwavs report nossible violations of the IT.S.
Criminal Code to the Denartment of Justice. lender the terms of a
1954 agreement with the Department of Justice, the Central Intelli-
^^ A report to the Tntpllieencp Oversight Board may already be reonired.
Execntive Order 1100.5 requires the General Counsel to report to the TOB any
oooasion f)n which he was directed by the DPI not to report any activity to the
TOR.
^ Houston letter. 1/76, p. 1.
^ /?))>/., p. 1.
"'^ Thid.. p. 2. The Oeneral Counsel mieht he required under the terms of Exeou-
time Order 11005 to report the refusal of access to the lOB.
288
gency Agency was essentially delegated the Department of Justice's
power to determine whether criminal prosecution should be initiated
against individuals who violated federal law. This delegation was
and is unacceptable. The agreement has now been terminated.
Under present regulations, the Inspector General must inform the
General Counsel of "information, allegations, or complaints of vio-
lations of the criminal provisions of the United States Code by CIA
officers and employees, or relating to CIA affairs . . ." ^* The Inspector
General must also report to the General Counsel results of the Inspec-
tor General's investigation which is aimed at developing "sufficient
facts to determine if a crime has been committed, and whether prose-
cution may compromise international relations, national security, or
foreign intelligence sources and methods." ^^ The General Counsel
will refer those cases where sufficient information has been developed
to determine that a crime has been committed, as well as the Inspector
General's report on the effect of prosecution, to the Department of
Justice.^^
Under Executive Order 11905, the General Counsel is not required
to report to the Attorney General, but rather must report to the Intel-
ligence Oversight Board.^^
Because of the suspicions aroused by the disclosure of the CIA-
Department of Justice agreement and the need to renew public con-
fidence, it may be necessary to require that the appropriate congres-
sional committees be given notice of CIA referrals of possible criminal
violations to the Department of Justice. If this were to be done, great
care would have to be taken to avoid any possibility of prejudicing
the investigation or prosecution.
5. Oiiersightof the Ofpce of General Counsel
Because the General Counsel's principal duty is to provide legal ad-
vice and guidance to the Director of Central Intelligence, the Director
must be primarily responsible for evaluating his work. Unlike other
CIA offices, however, the Office of the General Counsel has never been
the subject of inspection by the Office of the Inspector General.
The General Counsel's work has not gone totally unreviewed. In
1951 a New York law firm conducted a brief review of the Office of
General Counsel. Within the last year the Department of Justice
conducted a management survey of the Office at the request of the
Director. Given the importance of the General Counsel's Office, the
absence of regular formal reviews is to be regretted.
6. Executwe Branch Oversight of the Office of General Counsel
At present the General Counsel is required to "transmit to the
Oversight Board reports of anv activities that come to [his] atten-
tion that raise questions of legality or propriety." ^^ He is also re-
'* CIA Headquarters Regulation, 11/28/7.5. 7-la (7), p. 1.
'"CIA Headquarters Regulation, 11/28/7.5, l-,Sa(2) (e).
* Jh\({. The regulations further provide that "reporting of the fact of a crime
will not he delayed for an evaluation of whether the prosecution will raise ques-
tions of national security."
'''The General Counsel may already be required to report to the Attorney Gen-
eral under provisions of the U.S. Code.
'' Executive Order 11905.
289
quired to report to the Department of Justice all incidents involving
possible violations of the U.S. Criminal Code as well as the results
of investigations by the Inspector General. There are no requirements,
hovrever, that he provide General Counsel opinions or regular reports
on the work of the Office to anyone outside the CIA.
According to the Central Intelligence Agency, regular provision of
General Counsel opinions outside the Agency might raise serious
problems. "To place such requirement would be violative of command
relationships and lawyer-client privilege . . . [T]he Director, at his
option, could make such reports available as he deemed necessary," ^^
It has also been argued that because many of the opinions are on
technical matters, regularly supplying them to those outside the CIA
Avould not be useful.
Walter Pforzheimer, formerly the Legislative Counsel of the CIA,
suggested that "a general report, oral or in writing, on major legal
problems facing the Agency, or the need for additional statutory
support" ^° could be provided to such groups as the National Security
Council. The lOB or other such groups could be supplied legal
opinions in especially sensitive areas, such as those dealing with activi-
ties that might infringe on the right of Americans.
7. Congressional Oversight of the Office of General Counsel
The same chain of command and lawyer-client privilege problems
might arise if General CounseFs opinions were regularly provided to
congressional oversight committees. Yet similar solutions which
would greatly aid congressional oversight — regular, more general re-
ports," and the provision of particular opinions or all opinions in
specific sensitive areas — -could be devised.*^
The Senate has another means by which to oversee the General
Counsel, the confirmation process. Congress could require that the
General Counsel be nominated by the President subject to confirma-
tion by the Senate. This might increase the independence and
stature ^^ of the General Counsel ; it would parallel provisions for
Presidential nomination and senatorial confirmation of the General
Counsels of executiA^e branch departments and independent regu-
latory bodies. But eliminating appointment by the DCI might reduce
the confidence which the Director has in his chief legal advisor.
B. The Office of the Inspector General
The Inspector General reports to the Director and assists him in
his attempts to assure that CIA activities are consistent with
the Agency's charter regulations and the Constitution and laws of
'* Letter from William Colby to the Senate Select Committee, 1/27/76, p. 7.
'"Letter from Walter Pforzheimer to the Senate Select Committee, 1/26/76,
p. 9.
" In order not to short-circuit the chain of command, such reports could be
made to Congress by the DCI.
*^ The properly eliarged congressional oversight committees must have access
to the decisions of the General Counsel, but it may be that not all the General
Counsel's opinions neetl he sent to them.
*'At present the General Counsel ranks below the Inspector General and the
Agency's Deputy Directors.
290
the United States. In addition, the Office of the Inspector General has
a wide range of res^^onsibilities designed to improve the performance
of CIA offices and personnel. The Inspector General now holds rank
equal to that of the Deputy Directors of the CIA.
1. Organizational History
.The Office of the Inspector General had its origin in the establish-
ment of an Executive for Inspections and Security (EIS) in the
Central Intelligence Group (CIG) on July 1, 1947. EIS was charged
to provide "overall inspection, audit, and security for CIG." By 1951,
audit and inspection functions had been separated; an Audit Office
was established under the Deputy Director for Administration.
In November 1951, a Special Assistant to the Director assumed the
inspection function. He was appointed to the newly established posi-
tion of Inspector General on January 1, 1952. In March 1953, the mis-
sion and functions of the Inspector General were formally defined.^*
In 1953, the DCI appointed Lyman B. Kirkpatrick as Inspector
General.**^ Mr. Kirkpatrick obtained appix)val from the Director in
April 1953 for an inspection program which included planned, pe-
riodic inspection of Agency components (component inspections) . Sev-
eral inspectors were added to the IG's staff to perf oi-m this function ;
however, the Inspection and Keview Staff in the Directorate of Plans
retained responsibility for reviewing DDP components. By mid-1954,
the IG s staff had expanded to fifteen, and a program of component
inspections was under way. In January 1955, the DCI authorized the
IG to conduct independent inspections of DDP components, separate
from the DDP's Inspection and Review Staff inspections. By Decem-
ber 1959, the Office of the Inspector General had completed the first
cycle of component inspections.
On April 1, 1962, the Audit Staff was transferred from the Direc-
torate of Support (DDS) to the Office of the Inspector General, and
" The issuance read :
"Mission :
"The Inspector General is charged with conducting investigations throughout
the Agency on behalf of the Director and with inspecting throughout the Agency
the performance of missions and exercise of functions of all CIA offices and
personnel.
"Functions :
"The Inspector General shall :
"a. Make recommendations with resi)ect to the missions prescribed for the
several Offices of the Agency and with respect to such procedures and methods
as may assist the Offices of the Agency more fully to perform their respective
functions.
"b. Make recommendations with respect to the proper assignment of missions
and functions in the overall interests of the Agency.
"c. Provide a forum where Agency personnel may, on a highly confidential
basis, confide suggestions or complaints which have not received satisfactory
considerations through regular channels of command or through the procedures
provided for in CIA Regulation No. 20-8.
"d. Perform such other functions as may be determined by the Director."
^ In December of 1961, upon Kirkpatrick's transfer, Deputy Inspector General
David R. McLean was named Acting Inspector General ; John Earman was
appointed Inspector General in May 1962. In March 1968, John Earman retired
and Gordon M. Stewart was appointed Inspector General. He, in turn, retired
in January 1972, and was replaced by William V. Broe. In June 1973, on William
Broe's retirement, Donald F. Chamberlain, the incumbent, was appointed
Inspector General.
291
the Inspector General was given responsibility for coordinating and
directing the activities of the Audit Staff. The Audit Staff then had
about 40 positions — its present authorized strength.
In May of 1962, the positions of Chief of the Inspection Staff
and Chief of the Audit Staff were established within the Office of
the Inspector General. At the same time the DCI approved an increase
in the Inspection Staff from 15 to 29 positions so that all Agency
components could be inspected on a two to three year cycle, and all
foreign field installations could be visited at least once a year. In De-
cember 1963, in response to a call for economy measures, the Inspector
General reduced inspector positions from 18 to 14.
In 1964, the Inspector General became concerned that the office
lacked continuity because inspector positions were always filled by
rotational assignment. He obtained approval from the Executive Di-
rector to establish two Executive Career Service permanent positions
in the Office.
In June 1973, the Director abolished the component inspection pro-
gram *^ and reduced the Inspection Staff to five positions, includ-
ing two positions to work on Equal Employment Opportunity
matters. The Inspector General's role was limited to conduct-
ing special investigations and studies, investigating charges of mis-
feasance, malfeasance, and nonfeasance, and handling grievance cases.
In November 1974, the Audit Staff's functions were expanded to in-
clude independent program audits *~ of Agency operations which in-
cluded "some of the same things that the inspection staff had done
previously . . ." **
In July 1975, following the Rockefeller Commission recommenda-
tions, the component inspection program was reinstituted. The EEO
function positions were transferred to a new staff in the Office of the
Director. As of April 1976, the staff of the Inspector General was au-
thorized to include approximately twenty inspectors and a new series
of component inspections had been initiated.
2. The Functions of the Office of the Inspector General
The responsibilities of the Office of the Inspector General are quite
broad. Under CIA regulations the Inspector General is charged with :
— [djirecting and coordinating the activities of the Inspec-
tion Staff and the Audit Staff in conducting special investiga-
** According to the present Deputy Inspector General, the program was ended
because Mr. Schlesinger and Mr. Colby believed '^that a good deal of the kind of
information that we had produced in the preceding years was not recurrent, that
we had had most of the serious problems in the Agency and that Mr. Colby
more sx)ecifically felt that he had new management approaches that he felt
would match what the inspection staff had provided in the past." (Scott Breckin-
ridge testimony, 3/1/76, pp. 4-5. )
*'' This function, as published in Agency regulations on May 30, 1975, is
described as follows :
"Conduct supplementary, independent program audits of Agency operations
pursuant to the audit standards established by the Comptroller General. Such
audits will cover Agency-wide subject matter selected in coordination ^ith the
Comptroller or directorate programs selected in coordination with the Deputy
Director concerned. For purposes of coordinating independent program audits,
substantially qualified officers will be detailed to the Audit Staff." (CIA mem-
orandum. "Organizational History of the Office of Inspector General, 12/75,
p. 3.)
** Breckinridge. 3/1/76, p. 5.
292
tions, inspections of organizational components, and audits on
behalf of the Director throughout the Agency, both at head-
quarters and in the field, and performing such other functions
as may be prescribed by the Director.
Under the same regulations, the Chief of the Inspection Staff will :
— Conduct periodic inspections of all CIA offices for com-
pliance with CIA authority and regulations, as well as for
effectiveness of their programs in implementing policy objec-
tives ; conduct unannounced inspections of any organizational
component of CIA when it appears necessary.
— Survey and evaluate any problem area or subject called
to his attention . . . reporting his findings and conclusions as
appropriate.
— Provide a forum wherein CIA personnel may, on a highly
confidential basis, confide grievances or complaints tliat have
not received satisfactory consideration through normal chan-
nels of command. . . .
— Investigate all reports from employees or other sources
of possible violations of CIA's statutory authority.
— Investigate charges and reports of fraud, misuse of funds,
conflicts of interest, and other matters involving misfeasance,
malfeasance, nonfeasance, or violation of trust. In all cases
involving possible violations of the U.S. criminal code, the
investigation will be limited to developing sufficient facts to
determine if a crime has been committed, and whether pro-
secution may compromise international relations, national
security, or foreign intelligence sources and methods. The re-
sults of such investigations will be reported to the General
Counsel for further reporting to the Department of
Justice. . . .
— Kefer to the General Counsel all matters involving legal
questions that come to the attention of the Inspector General.
— Coordinate with the CIA Director of Equal Employment
Opportunity concerning grievance cases. . . .
— Review with the General Counsel proposals for support of
other government departments or agencies. . . .^^
Over the years, the principal activities of the Inspector General's
Office have remained relatively constant. They have been component
inspections, investigations into activities wliich might be construed as
"illegal, improper, or outside CIA's legislative charter," ^^ and the
review of employee grievances.
Component Inspections
Component inspections are studies conducted by the Inspector Gen-
eral's staff' of offices within the Agency. They have ranged from
specific surveys focusing, for example, on the Technical Services Divi-
sion in the Deputy Directorate of Plans, to broader surveys such as
those conducted on the Agency's major proprietaries. They include
^^CIA Headquarters Regulation.
^ CIA Headquarters Regulation, 11/28/75, 7-la(6).
293
examinations of documents located at Headquarters, field visits over-
seas by members of the Inspector General's staff, and interviews of
personnel within the component.^^
As one former member of the Inspector General's staff noted, a com-
ponent survey should include :
a review of existing policy, effectiveness and economy of
operations, security, compliance Avith regulations and proce-
dures, adequacy of personnel as to qualifications and numbers,
morale, and any specific problem areas identified by the com-
ponent itself, individuals within it, or . . . external sources.^^
According to the CIA, the present schedule of component inspec-
tions "will cover both field and headquarters activities . . . [TJhey
should cover all Agency components every two to four years with more
frequent attention given to sensitive activities.^^
The precise schedule for the component surveys is determined by
the Inspector General in consultation with the Director.^^ According
to Lawrence Houston, even the scheduling of the inspection is "salu-
tary." ^^ As one former Inspector noted :
what the component does in anticipation of the survey and
during the course of the survey as problems are surfaced is
often (if not usually) of more significance than are the actions
taken in response to the report's recommendations. In fact,
" In the past all, or almost all, of the personnel in the component were inter-
viewed. According to the Deputy Inspector General, this was because "there were
a lot of unresolved problems in the Agency that were hangovers from its early
days of growth and development . . . and the feeling then was that a very detailed
review of everything was required." (Breckinridge, 3/1/76, p. 6.) Although
several former Inspectors remarked on the usefulness of this technique, par-
ticularly as it improved the morale of lower ranking employees (see e.g., Letter
from John O. Lawrence to the Senate Select Committee, 2/18/76, p. 1 ) it has now
been halted because of the "tremendous amount of repetitiveness," and because
the interviews were no longer finding things that were "startling," but rather
"the sort of problems that would probably turn up" anyway. (Breckenridge,
3/1/76, p. 6.)
During future component insjxections, there will be selective interviews focus-
ing on "management and policy issues" ; larger numbers of personnel will be
sampled in overseas stations because the Inspectors will be "looking not only
for "management and policy questions", but also "for operational conduct."
(Ibid., p. 7.)
In the past the Inspector General also interviewed randomly selected return-
ing field personnel. According to one former Inspector, this "was useful in alert-
ing the Inspector General to routine problems." (Lawrence letter, 2/18/76, p. 2.)
The Deputy Inspector General told the Committee that the Agency had dropped
this program but was now reinstituting it. He noted that it had provided useful
information but the information had to be used as "leads," as one person usually
did not have the whole story, (Breckinridge, 3/1/76, p. 47.)
^ Letter from Christian Freer to the Senate Select Committee, 1/22/76, p. 2.
^^ If this schedule were maintained, it would compare favorably to the pre-1973
schedule under which the CIA attempted, unsuccessfully, to review each compo-
nent every three to five years.
•■* One former Inspector has suggested that the schedule be fixed by the Inspector
General, an Executive Branch oversight committee such as PFIAB, and the con-
gressional oversight committees, after consultation with the Director of the CIA.
(Letter from Thomas Holmes to the Select Committee, 1/19/76, p. 3.) Another
former Inspector noted that the tendency was to follow a fixed schedule
"slavishly" instead of keeping "generally informed" of developments in all
components on a continuing basis." (Lawrence letter, 2/18/76, p. 1.)
^ Letter from Lawrence Houston to the Senate Select Committee, 1/76, p. 1.
294
if the inspectors do their work properly, and if the component
is cooperative, there should be little to put into the report
of survey.^®
On the whole it appears that past component surveys increased the
effectiveness of the Agency. A former Inspector described their re-
sults as follows :
Close scrutiny of any element of the Agency by the Office of
the Inspector General, preceded by anticipatory review and
self-examination Avithin that element, stimulated useful recon-
sideration of goals, objectives, and procedures. By providing
occasions for all employees in the component to talk freely
and in confidence with one or more inspectors, and thus to
voice securely any comments, criticism or complaints they
might have, these surveys constituted a valuable morale fac-
tor, while accomplishing the primary task of bringing to the
Director's attention the overall performance and possible de-
ficiencies of a given component as well as chronic or develop-
ing problem areas within or related to it.^'^
However, the Senate Select Committee's investigation of the Office
of the Inspector General found several problems. They include :
a. Access to Info7vnation. — On certain occasions in the past, the
Office of the Inspector General was denied access to material about par-
ticularly sensitive Agency activities. In the most striking example, the
Inspector General was precluded from even reviewing Operation
CHAOS files.^«
At present, CIA regulations provide that the Inspector General
"shall have access to any information in CIA necessary to perform his
assigned duties." ^^ The CIA has informed the Senate Select Com-
mittee that only the Director can refuse the Inspector General access
and such refusal must be in writing.^"
Thus, even under present regulations, particular Agency activities
could be exempted from IG review by the Director.
If denied access to information, the Inspector General could, of
*■ Letter from Kenneth Greer to the Senate Select Committee, 1/20/76, p. 1.
One former Deputy DCI, however, has suggested that the office to be inspected
should not be informed. (Letter from Vice Admiral Rufus C. Taylor to the Sen-
ate Select Committee, 1/13/76, p. 1.) This would however, eliminate any "antici-
patory" changes due simply to the scheduling. A former Inspector has written
suggesting consultation with the Deputy Director involved as he would know of
factors "relevant to the timing of the inspection, not known to the Inspector
General." (Lawrence letter, 2/18/76, p. 1.)
^' Freer letter, 1/22/76, p. 1.
^ The substance of the program, gleaned from overseas inspections by the
Office, was the subject of a paper by the Inspector General : consequently
Operation CHAOS was reviewed by the Agency's Executive Director-Comptroller.
A second exclusion noted by Scott Breckinridge involved access to mate-
rials on an Agency proprietary. (Letter from Scott Breckinridge to the Senate
Select Committee, 1/12/76, p. 4.)
®'HR 1-3. Executive Order 11905 requires the Director to ensure that the
Inspector General will have access to material needed to perform his duties
under the Order.
*' CIA memorandum, "Comments on the Office of Inspector General in the CIA",
3/25/76. p. 2. One former Inspector suggested that if the Director did choose to
deny access to the Inspector General, it should be communicated by the DCI
to the Inspector General in person. (Freer Letter, 1/22/76, p. 4.)
295
course, resign. The Director should be required, however, to notify the
appropriate congressional and Executive branch committees of the
denial immediately and to provide a written explanation for it.°^
h. Pvohlenns of Emphasis. — In the past, as the Rockefeller Com-
mission noted, "the focus of the Inspector General component reviews
was on operational effectiveness. Examination of the legality or pro-
priety of CIA activities was not normally a primary concern." ®-
According to the current Inspector General, more attention is now
being paid to possible improper or illegal activities as well as to the
legal authority for any given activity. This change in emphasis should
be reinforced by the provisions of Executive Order 11905 which
place personal responsibility on the Inspector General for reporting
to the Intelligence Oversight Board any activities that raise questions
of legality or propriety.''^
c. Discovering Potential Prohlem Areas. — As the Rockefeller
Commission noted, "even with complete access, not all aspects of an
office's activities could be examined".*** While this is clearly true given
the scale and complexity of CIA's activities, the Committee found that
certain questionable practices which should have been uncovered did
not come to the Inspector General's attention during past inspections.
For instance, the CIA's project of surreptitious administration of
LSD to non- voluntary unwitting human subjects continued from the
early 1950s until 1963, but escaped the notice of the Inspector General
in 1957, when a broad survey of the Division responsible was con-
ducted. The project was discovered by the Inspector General in 1963 ;
the discovery led to its termination.
d. Referring Improper or Illegal Activities to the OGC and the
DC I. — Even when improper or illegal activities were discovered in
the course of a component inspection, these activities were not always
referred to the Office of General Counsel.
During a survey which included a review of the CIA's research pro-
gram to develop agents which could be used to control human behavior,
the Inspector General discovered activities which he labeled "unethical
and illicit." *'^ Although this language was in his report, he failed to
notify the Office of General Counsel and failed to call for the elimina-
tion of the questionable practices. In surveys of the CIA's New York
mail opening program, the Inspector General reported on issues of
management and security, but failed to raise any question about the
program's legality with either the General Counsel or the Director,
even though the Inspector General "knew" the program was
"illegal." <*«
'^ Under Executive Order 11905 the Inspector General is required to report to
tlie Intelligence Oversight Board on any occasion when the Director instructs
him not to report to the lOB on an activity.
^^ Report of the Commission on CIA Activities within the United States, 6/6/75,
p. 89.
•^ Executive Order No. 11905. Under the Order a similar responsibility is laid
upon the General Counsel.
** Report of the Commission on CIA Activities within the United States,
6/6/75, p. 89.
^ CIA Inspector General's Report on the Technical Services Division, 1957.
*" The IG under whose auspices the survey was conducted believed it was "un-
necessary" to raise the matter of illegality with the Director "since everybody
knew that it was [illegal]. . . . and it didn't seem . . . that I would be telling Mr.
Helms anything that he didn't know." (Gordon Stewart deposition, 9/30/75, p.
32.)
296
The present Inspector General told the Select Committee that "the
Inspector General does have to be certain that he leans over backward
to assure that all reports which might interest the General Counsel
are brought to his attention ... it is also important that . . . legal
advice is sought before a report goes to the DC I or Deputy Director,
so that any legal advice becomes part of the Report." *"'^ Under present
CIA regulations, the Inspector General must refer to the General
Counsel all matters involving legal questions that come to the atten-
tion of the Inspector General."^
e. Folloio-up and hnplementation of Recommendations hy the
Office of Inspector General. — ^A former Inspector noted one phase of
the inspection process which he believed needed improvement. This
involved :
getting a decision when the component head noncon-
curred in a recommendation about which the Inspector
General felt strongly. If the recommendation was of
major importance, there was no problem, because the Di-
rector w^ould decide. However, on recommendations of lesser
importance — those not worth bringing to the attention of
the Director — there was no really effective mechanism for
deciding which view was to prevail.^^
The present Deputy Director for Operations has suggested to the
Committee that the DCI should be required to infonn the Inspector
General as to what action has been taken on his recommendations.^"
Problems apparently have existed not only in obtaining a decision
but in obtaining one consistent with the Inspector General's recom-
mendation. As a former Inspector General wrote :
. . . [i]t is necessary that the DCI fully back the Inspector
General in his recommendations unless there are overwhelm-
ing reasons to the contrary.^^
•^Letter from Donald Chamberlain to the Senate Select Committee, 1/13/76,
p. 4. The CIA has written the Committee that "when there are legal issues in-
volved in an IG investigation, the formal opinion of the General Counsel is sought
and made part of the Inspector General's report to the Director. Comments on
the Office of the Inspector General of the CIA, 1/25/76, p. 4.
It would be possible to require that all IG reports go to the Office of General
Counsel. As many of these reports deal with poor management, reorganization,
or grievances, this might prove more of a burden than a boon. (See e.g., letters
to the Senate Select Committee of Lyman Kirkpatrick, 1/13/76, p. 5 and Thomas
Holmes, 1/19/76, p. 7.)
^ CIA Headquarters Regulation 1-3. Under Executive Order 11905, the Inspec-
tor General has a personal responsibility to report to the Intelligence Oversight
Board any activities that come to his attention that raise questions of legality
or propriety.
®* Greer letter, 1/20/76, p. 2. The IG's Office has now established new proce-
dures "designed to reinforce the final effect of the inspection report." (CIA
Memorandum, "CIA Inspector General FoUow-Up Procedures," 1/29/76.)
'° Letter from William Nelson to the Senate Select Committee, 1/13/76, p. 2.
" Kirkpatrick letter, 1/13/76, p. 2.
207
Yet another former Inspector General wrote :
I did not feel that the recommendations made in I.G.'s sur-
veys commanded the attention and support at the Director's
level that they merited."^
A former Inspector wrote :
Too often have IG recommendations been either brushed
aside or emasculated as the result of negotiations or plead-
ings. More unfortunate has been the growing tendency of IG
reports to adjust their recommendations to the IG's estimate
of what might be acceptable under the circumstances."
The IG has now be^n promoted to the same rank as the Deputy Di-
rectors, which may help the Inspector General obtain support for his
recommendations. The present Deputy Director for Operations has
suggested that if the DC I does not acxiept a recommendation by the
IG, the IG be empowered to inform the Attorney General of the
United States on matters concerning U.S. law, and the Assistant to
the President for National Security Affairs on all other matters.^*
Even where the recommendations of the Inspector General are
accepted, compliance has on occasion been an issue. The present Dep-
uty Inspector General told the Committee about "two inspection
reports in which the recommendations appear to have been accepted,
but the compliance was below expectation. In the first case the IG
subsequently headed a general investigation in the area, which had
substantial results. In the second, the results of the fii*st inspection
" Letter from Gordon Stewart to the Senate Select Committee, 1/20/76, p. 1.
A former Inspector described the principal defect of the Inspector Gteneral's
Office as "the absence of IG clout." (Holmes letter, 1/19/76, p. 13.) Another
former Inspector wrote that if a survey were "controversial (i.e. if it encountered
oiyposition from the Deputy Director [s] affected) as a rule nothing: came of the
survey report's recommendations." (Lawrence letter, 2/18/76, p. 2.) The present
Deputy Inspector General noted that after recommendations are drawn up, the
Directorates may come back with "new information or additional considerations
that will modify our understanding of the problem . . . They may persuade us in
their reply that they are right . . ." (Breckinridge, 3/1/76, pp. 30-31.)
He also noted that the "IG raises the isisue . . . and hopes he explains it ac-
curately and clearly, but there may be other considerations that we are not
aw^are of that make it impractical at least at that time." (Ibid., p. 38.)
"Letter from Peter Heimann to the Senate Select Committee, 3/18/76, p. 4.
The Rockefeller Commission noted :
"The Inspector General frequently was aware of many of the CIA's activities
discussed in this report, and brought them to the attention of the Director or
other top management. The only program which was terminated as a result
was one in 1963 — involving experiments with behavior-modifying drugs on un-
knowing persons." (Rockefeller Commission Report, p. 89.)
It should be recalled that the Rockefeller Commission dealt only with abuses ;
many IG recommendations have been accepted by the Director. Moreover, the
termination of programs is not the only measure which can be taken. Programs
can be changed, and controls tightened.
■'^ Nelson letter, 1/13/76, p. 2. The Rockefeller Commission recommended that
the IG have the authority "when he deems it appropriate, after notifying the
Director of Central Intelligence, to consult with the executive oversight body on
any CIA activity." (Rockefeller Commission Report, p. 94.) Under Executive
Order 11905, the Inspector General has a personal responsibility to report to the
Intelligence Overight Board "any activities that come to [his] attention that
raise [s] questions of legality or propriety."
-983 O - 76 - 20
298
were minimal and the staff which had been reviewed eventually was
totally reorganized."
/. I'he Scope of the Cotivponent Inspection. — In the past component
inspections have, in general, been directed at organizational units
within the CIA, with much less time and attention being focused on
programs or issues that cut across organizational boundaries. For
example, the CIA's mail opening program was analyzed in part dur-
ing the Inspector General's survey of the Office of Security, and in
part during the Inspector General's survey of the Counterintelligence
Staff, but it was never reviewed as a program. Consequently, the
issues which the program raised were never fully explored and
presented to the Agency's management.^^
There are other programs cutting across component lines as well as
issues which affect the Agency as a whole. These deserve attention from
the IG. Although surveys of these have been done in the past, the
surveys have not been done on a "systematic basis as were component
inspections." "
g. Detailed Reporting Versus Issue Highlighting. — Past compo-
nent inspections have been detailed and quite thorough. However, the
very breadth of the surveys might have made them less useful than
more selective reporting. The present Deputy Director for Intel-
ligence, Edward Proctor, noted that :
In the past IG component surveys have been extremely
detailed and involved every aspect of the component being
surveyed and interviews with almost every person assigned
to the component. As a result the repoits resulting from these
surveys contained a lot of detailed information which was of
only marginal utility to the managers of the component or
the Director. If IG component surveys of the future are to
be focused on the important issues and activities of the more
sensitive components, I would endorse them fully because they
have surfaced some problems for management attention . . .^^
h. The Compositimi of the IG Sm^^ey Team. — The bulk of the
Inspector General's staff has always been rotated to that Office from
the various CIA Directorates for two or three year tours. In order
to have the most qualified personnel, it was, and is, necessary to ensure
that the stint with the Inspector General did not damage the individ-
''^ Breckinridge letters, 3/1/76, pp. 23-25. In order to measure compliance the
IG now requires the comjwnent to report on its progress in implementing agreed-
upon recommendations.
^' Domestic Report on Mail Opening.
^ Lawrence Letter, 2/18/76, p. 2.
^* Letter from Edward Proctor to the Senate Select Committee, 1/15/76, p. 1.
One former Inspector noted that "Some surveys, especially surveys of DDO
components, have tended to deteriorate into recitations of unit-by-unit organiza-
tional and administrative detail instead of providing programmatic overviews
and evaluations and giving incisive descriptions of problem areas with specific
recommendations." (Heimann letter, 1/18/76, p. 6.)
290
ual's chance for promotion.'^ It is also important that the survey team
be unprejudiced. As a response to these needs, according to one former
Inspector, there was :
an unwritten rule that if you came from a particular Direc-
torate, you would not be asked to work on a team that was
doing a survey of any component in that Directorate . . .
[a]nd that was a hell of a good rule . . . so that if you w^ere a
youngster — or not a youngster but somewhere in the middle of
your career, with a clear intention that you were going back
to your parent Directorate after your two-year tour of duty
or your three-year tour of duty, what the hell do you care if
you come from the DDI [Directorate for Intelligence] and
you call them as you see them in CI [Counterintelligence]
Staff.««
This rule was apparently not always followed. The same Inspector
said that he believed that an agreement had been worked out between
the Inspector General and the Chief of the Counterintelligence Staff,
under which every member of the team inspecting the CI Staff had
a background in the then Directorate for Plans before coming to the
Inspector General's office.^^ One member of that team had actually
served as Deputy Chief of the Counterintelligence Staff.
Another way to preserve the impartiality of the Inspector General's
staff would be to, as one fonner Inspector suggested, make appoint-
ments to the Inspector General's staff "career culminations" with no
officer assigned to the Inspector General's staff being permitted to
return to another Agency post.^^ While the need for "career culminat-
ing" appointments and more permanent positions in the Inspector
General's office were repeatedly suggested,^^ eliminating the rota-
tion system would bar talented younger officers from serving in the
Office.^*
Another former Inspector has suggested that in some cases the com-
position of the teams did not reflect the expertise needed to analyze
'" One former Inspector has written that the IG had "insufficient authority
in staff selection and promotion" and suggested that he should "have the author-
ity to eoopt, subject to approval by the Deputy Director concerned, any officer"
for assignment to the IG Staff. (Lawrence letter, 2/18/76, pp. 6-7.) The present
Deputy Inspector General argued against this "shopping around the building"
stating that "rather than using my subjective and personal preferences, which
are subject to some errors, I would prefer to have people nominated that I can
reject forcing the Deputy Director to put up new people." (Breckinridge letter,
3/1/76, p. 16.)
^ Staff summary of Joseph Seltzer interview, 1/75, pp. 14-15, Sec also letter
from Thomas Holmes at 10.
^ Seltzer (staff summary), 1/75, p. 14. Present Agency policy would not allow
an individual to take part in an inspection of his parent office because his
"objectivity" might be affected by his being "imbued with its practices," but
would allow him to be used in insi>ections of other offices within his parent
Directorate. (Breckinridge, 3/1/76, pp. 18-19.)
*^ Heimann letter, 1/18/76, p. 2. Since Lyman Kirkpatrick, all the Inspectors
General have taken that office as their last post with the CIA.
** See e.g.. Letters from Gordon Stewart 1/20/76, p. 2, and John O. Lawrence
2/18/76, p. 6.
^A permanent staff might also mean, as the Deputy Inspector General noted,
that the IG's staff would have "less and less firsthand experience with what is
current in the Agency." (Breckinridge, 3/1/76, p. 12.)
300
potential problem areas. As an example, he noted that inspection teams
in the Deputy Directorate for Science and Technology were composed
of engineers and general scientists, and thus might not be qualified
to deal with certain questions, such as those involving conflict of
interest, which might arise.^'^
3. Investigations into Activities That Raise Questions of Legality or
Propriety
The Office of Inspector General has traditionally examined allega-
tions of questionable activities. Under the terms of Executive Order
11905, the Inspector General shall :
(1) Transmit to the Oversight Board reports of any activi-
ties that come to their attention that raise questions of legality
or propriety.
(2) Report periodically, at least quarterly, to the Oversight
Board on its findings concerning questionable activities, if
(3) Provide to the Oversight Board all information re-
quested about activities within [the CIA].
(4) Report to the Oversight Board any occasion on which
[he was] directed not to report any activity to the Oversight
Board by [the Director].
(5) Formulate practices and procedures designed to dis-
cover and report to the Oversight Board activities that raise
questions of legality or propriety.
At present CIA regulations provide that :
any employee who has knowledge of past, current or proposed
CIA activities that might be construed to be illegal, improper,
or outside CIA's legislative charter, or who believes that he or
she has received instructions that in any way appear illegal,
improper, or outside CIA's legislative charter, is instructed to
inform the Director or Inspector General immediately.^^
Thus, all CIA employees are now on notice that they are required to
provide either to the Director or to the Inspector General any informa-
tion which they possess about questionable activities.*^
^ Holmes letter, 1/19/76, p. 2. However the inspection teams are presently con-
stituted, the Inspector General can also request assistance from the Audit Staff,
which reports through him to the Director. As the auditors check components,
including overseas installations, much more frequently than does the inspection
staff, they can be asked to assist the inspection staff in the course of their audits.
(Letter from William Broe to the Senate Select Committee, 1/17/76, p. 4.)
*®CIA Headquarter Regulation, 1/28/75, l-7a(b). In the past, employees were
only asked to provide information about activities in which they were directly
involved which might be construed to be illegal, improper, or outside the CIA's
legislative charter.
^ Under Executive Order 11905 activities which raise questions of legality or
propriety must be reported to the Intelligence Oversight Board. In March 1976,
George Bush, Director of the CIA, called on CIA employees to report questionable
activities directly to him or to the IG.
One former Inspector suggested that the reporting of such acts would be fa-
cilitated by having a particular Inspector designated as a contact point for each
major element in the Agency. (Freer letter, 1/22/76, p. 12.) The Deputy Inspector
General told the Committee that at one time Inspectors were assigned to "dif-
ferent components, and this didn't work. They got no business. . . ." (Breckin-
ridge, 3/1/76, p. 56.)
301
As previously noted, the Inspector General's discovery of question-
able activities has not always led to their referral to the Office of Gen-
eral Counsel. There can be little disagreement with the recommenda-
tion of Lawrence Houston that any question of violation of law or le-
gal authority should be referred immediately by the Inspector Gen-
eral to the Office of General Comisel.®^ CIA regulations now pro-
vide that all matters involving legal questions that come to the atten-
tion of the Inspector General shall be referred to the General
Counsel.^^
There is one aspect of the Inspector General's role in investigating
questionable activities which may cause controversy. The present reg-
ulations provide that the Inspector General is authorized to :
Investigate charges and reports of fraud, misuse of funds,
conflicts of interest, and other matters involving misfeasance,
malfeasance, nonfeasance, or violation of trust. In all cases in-
volving possible violations of the U.S. criminal code, the in-
vestigation will be limited to developing sufficient facts to de-
termine if a crime has been committed, and whether prosecu-
tion may compromise international relations, national
security, or foreign intelligence sources and methods. The
results of such investigations will be reported to the General
Counsel for further reporting to the Department of Justice.
Reporting of the fact of a crime will not be delayed for an
evaluation of whether prosecution will raise questions of na-
tional security, as outlined above. If both reports can be made
at the same time without delay, they may be so reported.^"
There is an obvious need to insure that a prosecution does not jeopar-
dize important United States interests. The IG appears to be well-
suited to evaluate its effect. It should be remembered that confidence
in the judicial system is important and it can be undermined if people
believe that individuals are exempted from prosecution solely
because of their connection with the intelligence community.
Conducting preliminary investigations to determine if a crime has
been committed may however, raise difficult issues. Great care must be
taken so that later and fuller investigations will not be hampered. The
level of care must be such that there can be no suspicion that Agency
officials have failed to impartially investigate allegations of wrong-
^ Houston letter, 1/76, p. 2.
®* CIA Headquarters Regulation, 1/28/75, 7-la(7), p. 1. The Agency regulations
dealing with the reporting of questionable activities only require the IG to refer
such reports to the General Counsel when allegations of violations of Title 18 of
the U.S. Code are received. While the regulations may reflec't a desire not to have
to refer disciplinary matters to the General Counsel (e.g., see Breckinridge,
3/1/76, p. 43), the importance of preventing future violations of the law by the
CIA comi)els General Counsel participation in the process of reviewing reports
of questionable activities.
®* CIA Headquarters Regulation, 1-3. In certain instances in the past, the
Office of Security has investigated individual allegations. (Breckinridge letter,
1/12/76, p. 3.)
Prior to the decision in Miranda v. Arizona, 384 U.S. 436 (1966) tiie Inspector
General conducted complete investigations of alleged violations of law by Agency
employees. After the decision in order to protect individual rights and to avoid
compromising future prosecution the Inspector General limited his investigations
to the determination of whether a crime had been committed.
302
doing by their coUeagues.^^ To prevent suspicion it might be desirable
for the Inspector General to maintain a list of allegations and the re-
sults of the IG's preliminary investigations for periodic inspection by
the Department of Justice and the appropriate congressional com-
mittees.
If.. Investigation of Grlevarhces
CIA regulations provide for the airing of grievances through the
normal chain of command to the Director of Personnel and finally to
the Director of Central Intelligence Agency through the Inspector
General. In addition, the regulations direct the Inspector General to
provide a forum for grievances which have not received satisfactory
consideration through the normal channels and empower him to accept
direct appeals when appropriate.^^ In certain circumstances this griev-
ance machinery may facilitate the detection of illegal or improper
activities by Agency officials.^*
It is Agency policy that "relief first be sought in the chain of com-
mand," ^^ but direct recourse to the Inspector General is available
"where an employee feels he cannot go through normal channels with-
out jeopardy to his career, or other rare exceptional circumstances." ^®
This direct channel for the airing of grievances should be main-
tained with the IG being provided the "authority to counter the pos-
sibility of reprisal against the employee." ^^ The mechanism might be
more heavily publicized.^^ Because of the importance of having a
mechanism outside the CIA, employees should be aware that they can
go to the appropriate congressional oversight committees.
* It would be possible for any "information, allegations, or complaints of vio-
lations" to be referred to the Department of Justice immediately, without a pre-
liminary investigation by the OflSce of the Inspector General. This might, how-
ever, result in a substantial number of unfounded complaints being referred to
the Department of Justice. As the present Deputy Director for Operations wrote
the Committee:
"[t]here are in any organization individuals who are quick to allege miscon-
dU'Ct or imjwroper adtivity on the par't of their sui)eriors or peers. The question as
to whether these allegations have any substance can best be initially determined
by the Inspector General. Immediate referral to another body will result in
harassment-type invesitigations, will in certain cases broaden the security dam-
age and even eventually result in i>oor follow-up on real charges When enough
other cases have proven to be unsubstantiated." (Nelson letter, 1/13/76, p. 1.)
** CIA Headquarters Regulation, 20-7.
" CIA Headquarters Regulation, 1-3.
^ Holmes letter, 1/19/76, p. 11.
*" Memorandum from Scott Breckinridge to Chief, Review Staff, 3/17/76, p. 2.
" Holmes letter, 1/19/76, p. 11.
®* The present Deputy Director for Intelligence has recommended that the
normal chain of command grievance procedures be publicized, and the Inspector
General instructed to "resist the temptation to get involved prematurely in
grievances." (Proctor letter, 1/15/76, p. 7.)
One former Inspector has noted that :
"[w]henever an employee challenges the Agency itself, as contrasted to a com-
ponent or an Agency official, he is also challenging the Inspector General, since
the latter is necessarily a representative of the Agency. Thus, the Inspector Gen-
eral can not be an impartial arbiter between the Agency and the employee. This
was a source of frustration to employees who brought such cases to the Inspector
General. Such employees should have an external administrative appeal avail-
able either in addition to or as a bypass of the Office of Inspector General." (Law-
rence letter, 2/18/76, p. 7.)
303
C. Internal and External Review of the Office of the Inspector
General
The Inspector General reports to the Director of the Central In-
telligence Agency, and the Director has the primary responsibility for
evaluating this office. The Office has not, however, been regularly or
formally reviewed. Some mechanism for internal inspection of the
Office of the Inspector General should be devised.
The Inspector General was aware of questionable activities, some of
which continued for many years with the approval of the Agency's
top management. This underscores the importance of outside reviews
of the Agency. To be effective, the reviewing bodies must have access
to the Inspector General's work.
A number of individuals familiar with the work of the Office of the
Inspector General have argued against the Inspector General's having
a direct reporting responsibility outside of the CIA. Lawrence Hous-
ton noted that if the Inspector General reported directly to anyone
other than the Director, two crucial elements would be lost: "first
the absolute candor that should exist in his relations with the Director
and second the ability to protect the integrity of his files and the con-
fidentiality of his findings and recommendations." ^^ The Committee
has also been told that "any arrangement which would separate the
Inspector General from his present relationship to Agency manage-
ment would tend to result in a lack of candor and a resistance to reveal-
ing sensitive details in investigations and this would inevitably result
in diluting the authority and effectiveness of the Inspector General.^""
A start in outside reporting has been made. Under Executive Order
11905 the Inspector General must report to the Intelligence Oversight
Board any activities that raise questions of legality or propriety. ^°^
But Executive Branch oversight of the CIA or the CIA's Inspector
General is not sufficient. The Inspector General should be available
to the appropriate congressional oversight committees.^"^ And some
form of reporting on the work of the Office of the Inspector General
should be made, with appropriate safeguards, to the appropriate
congressional committees.
The present Inspector General believes that :
[t]he I.G. could and perhaps should provide our oversight
committees with the following: (1) a summary of our find-
ings on each component survey, one which would reveal prob-
^ Houston letter, 1/76, p. 1.
^"° Comments on the Office of the Inspector General, 1/2.5/76, pp. 2-3. However,
Scott Breckinridge wrot« that "If so directed by the DCI, elements 'being in-
spected will continue to be as forthcoming as in the past. There is no reason to
expect that this will not be the case." (Breckinridge letter, 1/12/76, p. 5.) Mr.
Breckinridge noted, however, that if reports wei'e to be made available to outside
bodies, less detail might be provided "in support of conclusions and recommen-
dations."
^^ Ibid. Prior to the issuance of the Executive Order, CIA regulations, amended
to conform to the recommendations of the Rockefeller Commission, required
reports to be sent to the NSC and PFIAB.
"^Letter from John McCone to the Senate Select Committee, 1/30/76, p. 2.
Former DCI McCone wrote that the IG should not report to anyone outside the
Agency such as the PFIAB. the NSC or congressional oversight committees. The
IG, should be however, "available to all of these groups." (Ibid., p. 2.)
304
lems and recommended solutions but not give operational
details; (2) a semi-annual summary of all other cases, em-
phasizing trends, general problems, etc., but not giving names
of individuals or sensitive details which might identify
■ individuals.^°^
Such reports, coupled with access, where necessary, to the results
of particular inspections or reviews by the Inspector General, would
greatly aid congressional oversight of the CIA.^°^ Congressional
evaluation of the work of the Office of the Inspector General might be
facilitated by requiring the Inspector General to provide the over-
sight committee with a plan of action setting out "priority surveys to
be done and why, the schedule to be followed, the dates reports would
be completed, [and] the actions taken on reports (or the non-actions)
and why." "^
A second means for Congress to oversee the work of the Inspector
General would be to make the Inspector General subject to presidential
nomination and senatorial confirmation. Presidential appointment,
however, might inadevertently give position of Inspector General a
political coloration which would diminish the effectiveness of the
Office.
^•"^ Chamberlain letter, 1/13/76, p. 4. In order to reinforce the chain of command
such reporting could be done A'ia DOI's reports to the oversight committees.
^°* One former Inspector argued against congressional access without the DCI's
concurrence as leading to "congressional involvement in Agency minutiae," the
erosion of security, and the reduction of the candor of Agency employees vis a
vis the IG. (Heimann letter, 1/18/76, p. 2.) Another former Inspector wrote that
if ail IG's reports were to be sent to Ck>ngress they would "become less candid
and more conservative." (Lawrence letter, 2/18/76, p. 5.) Another former In-
spector suggested that "an active and strong congressional oversight committee
would be my first choice" as an "outside authority" which would correct problems
that the IG discovers. (Holmes letter, 1/19/76, p. 6.)
^°^ Holmes letter, 1/19/76, p. 12. The submission of such a plan would allow the
IG to be evaluated on the basis of his own plan, which would be approved by
the IG and the committees. The committee "would be assured that the IG was
planning to do what the committee expected them to do." Ibid.
The IG is required, under Executive Order 11905 to report to the Intelligence
Oversight Board the "practices and procedures" formulated to discover ques-
tionable activities by the CIA.
XIV. THE DEPARTMENT OF STATE
In addition to strengthening our defense, the purpose of U.S. intel-
ligence activities is more effective foreign policy. Intelligence informs
foreign policy decisions and in the role of covert action seeks to attain
foreign policy objectives. In sum, intelligence is a service, a support
function, indeed it is so designated and structured by the military
services. However, in the field of foreign policy, intelligence activities
have sometimes become an end in themselves, dominating or divorced
from policy considerations and insulated in important respects from
effective policy oversight.
The Department of State is responsible for the formulation and
execution of foreign policy. Yet unlike the Department of Defense, the
State Department has no command over intelligence activities essential
to its mission except the Foreign Service.
The Department of State and the American Foreign Service are the
chief producers and consumers of political and economic intelligence
in the United States Government. The Department participates
actively in the interagency mechanisms concerned with collection and
production of intelligence. However, it has been unable or unwilling to
assume responsibility over clandestine intelligence activities.
The Foreign Service competes with the Clandestine Service in the
production of human source intelligence, but operates openly and does
not pay its sources. The State Department, as well as American ambas-
sadors abroad, is called upon, at least in theory, to exert a measure of
control over certain aspects of CIA's secret overseas activities. Indeed,
the State Department through U.S. embassies and consulates offers the
only external check upon CIA's overseas activities ; they are the only
means abroad that can help assure that America's clandestine activi-
ties are being carried out in accord with the decisions made at the
highest level in Washington.
The primary purpose of the Select Committee's inquiry was to exam-
ine the effectiveness of the Department of State and the Foreign Serv-
ice in this role. The Committee also examined the Foreign Service
intelligence collection efforts.
To this end, the Select Committee visited several overseas missions,
embassies and consulates and conducted extensive interviews with
a.mbassadors, Foreign Service officers and State Department person-
nel as well as taking sworn testimony. From this investigation it is
evident that the role of the Department of State is central to funda-
mental reform and improvement in America's intelligence operations
overseas.
A. Origin's of the State Department Intelligence Function
It has been the traditional function of the Department of State and
the Foreign Service to gather, report and analyze information on for-
eign political, military, economic and cultural developments. That
(305)
306
intelligence function, like most of the responsibilities of the Depart-
ment, IS not established by statute. The basic statement of the duties
and responsibilities of the Secretary of State is contained in an Act of
Congress of July 27, 1789, as follows :
The Secretary of State shall perform such duties as shall from
time to time be enjoined on or intrusted to him by the Presi-
dent relative to correspondences, commissions, or instructions
with public ministers from foreign states or princes, or to me-
morials or other applications from foreign public ministers
or other foreigners, or to such other matter respecting for-
eign affairs as the President of the United States shall assign
to the department and he shall conduct the business of the
department in such manner as the President shall direct.^
The statutes are no more precise about the functions of the Foreign
Service, and the members which
shall under the direction of the Secretary [of State], repre-
sent abroad the interests of the United States and shall per-
form the duties and comply with the obligations resulting
from the nature of their appointments or assignments or im-
posed on them by the terms of any law or by any order or
regulation issued pursuant to law or by any international
agreement in which the United States is a party.^
Most Presidents have chosen to use the Secretary of State as their
principal advisor and agent in foreign affairs; foreign intelligence
activities of the Department and Foreign Service have developed in
a logical pattern from that practice.
Today the President's Executive Order assigns to State responsi-
bility for collecting overtly "foreign political, political-military, socio-
logical, economic, scientific, technical and associated biographic in-
formation." 2^ The reporting of the Foreign Service, together with that
of the military attache system, based on firsthand c^bservation and
especially on official dealings with governments, makes up the most
useful element of our foreign intelligence information. Clandestine
and technical sources provide supplementary information, the rela-
tive importance of which varies with the nature and accessibility of
the information sought.
While clandestine and technical sources of information are today
the responsibility of the CIA and other agencies. State is not without
past experience in such matters. The Department operated one or more
clandestine intelligence networks during and after World War II
and closed them down, at CIA insistence, only in the 1950s. The De-
partment engaged in such activities in earlier 'times. On the technical
side, the State Department operated a cryptanalytic unit called the
Black Chamber during the inter-war years. It was abolished by Sec-
retary Stimson in 1929 on the ground that "gentlemen do not read
each other's mail."
^R.S. §202, 22 U.S. 2556.
'22 U.S. 841.
'" Executive Order No. 11905, 2/18/76.
307
Although foreign intelligence has always been a major function
of the State Department, the Department had no separate — and ac-
knowledged — intelligence unit prior to World War II. At the end of
the war, the researcli and analysis branch of the Office of Strategic
Services (OSS) , numbering over 1,500, was transferred to the Depart-
ment, and the position of Special Assistant to the Secretary for Re-
search and Intelligence was established to head the new organization
into which was incorporated as well certain existing State units.
President Truman initially contemplated a much more significant
intelligence role for State and directed Secretary Byrnes to
take the lead in developing a comprehensive and coordinated
foreign intelligence program for all Federal agencies con-
cerned with that type of activity. This should be done through
the creation of an inter-departmental group, heading up
under the State Department, which should formulate plans
for my approval.""
Although Dean Acheson, as Under Secretary, moved promptly in the
fall of 1945 to develop such plans, he soon
encountered heavy flak. It came from three sources : congres-
sional opposition to professional intelligence work, civil dis-
obedience in the State Department [i.e. the geographic divi-
sions opposed "intelligence work not in their organizations
and under their control''] and indecision in high places
brought on by military opposition to both unification of the
services and civilian control of intelligence.^
In the end Secretary Byrnes bowed to this opposition and joined in
recommending to the President what Acheson calls "an odd plan for
a National Intelligence Authority and a Central Intelligence Group,
. . . thus moving primacy in intelligence from the State Department
to the Executive Office of the President." *
Byrnes also adopted the recommendations of the Department's
geographic di\'isions and broke up the OSS research and analysis
unit which State had inherited, dispersing its personnel to those divi-
sions. However, this decision Avas reversed by General Marshall shortly
after he became Secretary of State in January 1947 and State has
since then had a central intelligence unit, now generally known as
INK (Bureau of Intelligence and Research). INR's stature and
influence in the Department have gradually increased, though its size
has been greatly reduced, numbering today some 325 with a budget of
less than $10 million. The reduction has resulted in part from budget-
ary pressures, in part from the transfer of certain functions (e.g., con-
tributions to the now-defunct National Intelligence Survey, biographic
reporting) to the CIA.
The organization is made up of two directorates reflecting the two
basic responsibilities of the organization. The Directorate for Research
produces finished intelligence (reports and estimates) to meet the
operating and planning requirements of the Department. The Direc-
'"Dean Acheson, Present at the Creation (New York: W. W. Norton and Co.,
1969), p. 158.
^IMd., p. 159.
* Ibid., pp. 160-161.
308
torate also participates in the production of National Intelligence
Estimates. The Directorate for Coordination is concerned with
the Department's relations with the other intelligence agencies
on matters other than the production of substantive intelligence. This
includes (a) the provision of Departmental guidance on operational
intelligence questions, including staff support for State participation
on the 40 Committee; (b) management of assignment of Defense
Attache personnel; and (c) development of positions on intelligence
requirements and the allocation of intelligence resources.
However, INE has no personnel abroad and is not responsible for
the collection of intelligence overseas. The substantive direction of
the U.S. embassies and consulates, which are the intelligence collec-
tors, is the responsibility of the geographic bureaus.
B. Command and Control
In viewing the role of the Department of State in command and
control of intelligence operations, it is necessary to distinguish between
Washington and the embassies abroad. The authority and responsi-
bility of the Secretary of State in this area differs markedly from
that of the Ambassador. Secondly, a distinction must be made between
covert operations, where the influence of the Department and the
Ambassador is normally substantial, and clandestine intelligence and
counterintelligence operations (espionage and counterespionage),
where the role of the Department, and sometimes but not always
that of the Ambassador, is minimal.
1. Role of the State Department in Washington
The duties and responsibilities of the Secretary of State, in general,
and for the direction and supervision of U.S. foreign intelligence oper-
ations in particular, have not been defined by statute. Proposals after
World War II to put the Secretary of State in overall control of U.S.
foreign intelligence activities were rejected. The role of the Secretary
appears to be further downgraded in the President's Executive Order
of February 1976. The State Department is not represented on the
new Committee on Foreign Intelligence and the Secretary is only
authorized to "coordinate with" the DCI to ensure that United States
intelligence activities and programs are useful for and consistent with
United States foreign policy.
Nevertheless, the Secretary is the senior Cabinet member, his pri-
macy within the executive branch in foreign relations has usually been
accepted, and his Department is the only one with knowledge, person-
nel and facilities abroad to exercise effective control over foreign
operations. A Secretary who is disposed to assert his potential influence
and who has the support of the President can exercise considerable con-
trol over CIA activities. This is clearly the situation today. It is
equally clear that it was not the situation under the previous Secretary
of State, William Rogers, who not only did not play an active role in
the intelligence area but on at least one occasion, the Committee found,
was systematically and deliberately kept in the dark regarding im-
portant CIA operations.^
^Senate Select Committee, "Alleged Assassination Plots Involving Foreign
Leaders," p. 231.
309
Apart from his relationship with the President, however, the Secre-
tary of State has had only limited influence upon the CIA. The Sec-
retary of State does not have access to CIA communications, except as
prescribed by the DCI. This privileged position, it is contended, is sanc-
tioned by the provision of the National Security Act of 1947 making
the DCI responsible for protecting intelligence sources and methods
from unauthorized disclosure. The Secretary of State knows only as
much about CIA operations as CIA elects to tell him. Secondly, except
for covert action operations considered by the 40 Committee, he has
had no voice in the expenditure of CIA funds abroad. This is in con-
trast to the role the Secretary of State has with regard to expenditure
of Military Assistance Program funds.
The Secretary of State's influence or control over CIA operations
varies greatly, depending upon the nature of the activity. It has been
greatest in the area of covert action, least in the area of espionage. In
the setting of intelligence requirements and the allocation of intelli-
gence resources, the Secretary of State has a voice but it is only one
voice out of many.
Authority for State influence over covert operations derives from
NSC directives and is exercised through membership on the 40 Com-
mittee (now the Operations Advisory Group — OAG), which reviews
and recommends approval of such operations and certain sensitive
reconnaissance programs. Until the Kennedy administration. State
chaired the Committee. During the Kennedy and Johnson adminis-
trations, even without the chairmanship, State often had a virtually
controlling voice, through its veto power. Covert action and sensitive
reconnaissance operations are normally not presented to the Commit-
tee unless cleared in advance with (or originated by) State and, where
this is not the case, a negative State position has rarely been over-
ridden. There have, however, been important exceptions, notably dur-
ing the first Nixon term when State influence declined markedly. On
one occasion the 40 Committee itself was bypassed.''
The leading role which State has normally plaj^ed in the 40 Com-
mittee stems from the fact that covert actions are designed to further
foreign policy objectives. But operations clearly have driven policy
in many instances. It is the CIA, not State, which is called on, in the
first instance, to explain and justify these programs to Congress. In
part this has been due to a desire to preserve State's "deniability."
However, that has apparently ended with President Ford's Executive
Order which formally requires Secretary of State attendance at OAG
meetings.
In contrast to the 40 Committee mechanism for covert action opera-
tions, there is no systematic procedure for Washington review and
approval of clandestine intelligence and counterintelligence (espion-
age and counterespionage) operations outside CIA. The distinction
was made by former DCI Richard Helms in this way :
Mr. Helms. Exactly. Now this was one kind of approval for
the so-called political action projects. They had to be
approved not only once a year, but as they came forward
each time. And thus they had to be sent to the Approval Com-
" Ibid., p. 225.
310
mittee, you know, it has been variously known as 303 and
Forty and Special Group and so forth. So there was a special
mechanism to have those projects cleared in the Special
Group.
The intelligence projects had a different kind of clearance
mechanism, because they could be done under the Director's
own authority. As you recall, NSCID Number 5 gives the
Director the authority to do foreign intelligence [checks?]
and counterespionage on his own recognizance, he doesn't
have to check it out with anybody as to whether he did this
or that or something else.
Q. Is that a good system ? When you were Director you had
a sensitive collection program or counterintelligence program.
Did you often or sometimes check with the President or some-
body in the White House or the Secretary of State about the
advisability or risks? Did you regard that as really basic to
your job?
]\Ir. Helms. It was left to my judgment when I was Direc-
tor as to whether I cleared it with anybody or not.
Q. Did you very often ?
Mr. Helms. From time to time I did. I was involved with
that Berlin Tunnel, for example, and I remember, we did
check that out before we went ahead with it.
Q. You did or did not ?
Mr. Helms. We did. And there were certain others that
we checked out before we went ahead with them. I don't
rememl^er what they all were now. But there was a rule of
reason that was permitted to prevail here. And I think most
directors were sensitive enough fellows that if yoii w^ere really
going to run a serious risk to our diplomatic life or our
foreign policy life, you might want to go to see the Secretary
of State or somebody to hold hands on those things."
Thus State is effectively excluded from the decision to carry out
espionage operations unless CIA elects to consult. Because in practice
State is rarely consulted,^ it does not have institutional arrangements
to develop advice and guidance in this area — as it does for covert
action operations.
The Committee is strongly of the view that these informal arrange-
ments, which leave consultation to the discretion of the DCI and which
do not fix any responsibility on the Secretary of State, have proved
to be harmful. Two areas of concern can be cited : First, some espionage
operations, e.g., the attempted recruitment as an agent or an official of
a friendly government, can have major adverse foreign policy
repercussions. Second, certain types of espionage operations have
had the effect of covert political action. For example, a subsidy to the'
leader of a dissident group to facilitate the collection of information
about the group, has been taken by the leader (and the government in
power) as support for his dissidence. Thus a DCI cannot be subject to
■^ staff summary of Richard Helms interview. 9/11/75, p. 62.
®Out of hundreds of agent recruitment efforts last year the Secretary of State
was consulted on less than five.
311
40 Committee or other controls by defining an oj)eration with signifi-
cant political impact as espionage. State Department review of espion-
age operations is needed to provide support and advice to ambassadors
in field supervision of CIA activities.
2. Coimnanid and Control in the Field
In contrast to the uncertain authority of the Secretary of State, the
authority of the Ambassador with respect to U.S. intelligence activi-
ties in his country of assignment is clear, and, since 1974, has had a
statutory basis.
In 1961, President Kennedy addressed a letter to each Ambassador
stating that he expected him "to oversee and coordinate all activities of
the United States Government" in his country of assignment.^
That letter appears to have remained in force until it was super-
seded, in December 1969, by a similar letter from President Nixon
which included the following :
As Chief of the United States Diplomatic Mission, you
have full responsibility to direct and coordinate the activi-
ties and operations of all of its elements. You will exercise
this mandate not only by providing policy leadership and
guidance, but also by assuring positive program direction to
the end that all United States activities in (the host country)
are relevant to current realities, are efficiently and econom-
ically administered, and are effectively interrelated so that
they will make a maximum contribution to United States
interests in that country as well as to our regional and inter-
national objectives.^°
This letter was supplemented by a classified State Department
instruction," concurred in by the Director of Central Intelligence,
which advised the Ambassador how the President's letter should be
interpreted with regard to CIA. The effect of this instruction is to
make the Ambassador's access to information on intelligence sources
and methods and his authority to approve or disapprove CIA opera-
tions subject to the agreement of the Chief of Station and, in the
event of disagreement, to Washington for decision. It may well also
have had the effect of inhibiting ambassadors in seeking to inform
themselves fully in this area.
In 1974, the authority of the Ambassador was given a statutory
basis. The following new section was added to "An Act to provide
certain basic authority for the Department of State," approved Au-
gust 1, 1956, as amended : ^-
Authority and Responsibility of Ambassadors. Under the
Direction of the President — •
(1) the United States Ambassador to a foreign country
sliall have full responsibility for the direction, coordination,
® "Tlie Ambassador and the Problem of Coordination, A Study Submitted by
the Subcommittee on National Security Staffing and Operations (Pursuant to S.
Res. 13, S8th Cong. ) to the Committee on Government Operations, United States
Senate."
^" State Department Foreign Affairs Manual, 1 FAM 011.2, 1/27/70.
"CA-6693, 12/17/69.
"22 U.S. 2680a.
312
and supervision of all United States Government officers and
employees in that country, except for personnel under the
command of a United States area military commander ;
(2) the Ambassador shall keep himself fully and currently
informed with respect to all activities and operations of the
United States Government within that country, and shall in-
sure that all government officers and employees in that coun-
try, except for personnel under the command of a United
States area military commandei', comply fully with his direc-
tives; and
(3) any department or agency having officers or employees
in a country shall keep the United States Ambassador to that
country fully and currently informed with respect to all ac-
tivities and operations of its officers and employees in that
country, and shall insure that all of its officers and employees,
excei)t for i)ersonnel under the command of a United States
area military commander, comply fully with all applicable
directives of the Ambassador.
The legislative history indicates that this statute was intended to
give statutory force to existing directives. However, under any rea-
sonable construction, it goes well beyond the Nixon letter, i)articularly
as interpreted by the State Department instruction cited above.
Xevertheless, more than a year after its enactment, no new regulation
or directives have been issued by the executive branch in implemen-
tation of the statute, nor does it appear that it necessarily plans to
take any action to modify present guidelines. In response to the
(Committee's inquiry, the White House has advised the Chairman as
follows :
As you know, the issues addressed by this legislation were
encompassed in President Kennedy's letter of INIay 29, 1961,
President Nixon's similar letter of December 9, 1969, and the
Department of State Circular Airgram 6693 of December 17,
1969. In addition, the Department of State in July 1975 sent
the relevant section of Public Law 93-475 ^^ to all major em-
bassies in confirmation and reinforcement of existing guide-
lines. The President is considering further steps and we Avill
keep you informed of any additional action that is taken.^*
So far as the Committee knows, no Ambassador has sought to in-
voke the statute in seekino- information on CIA operations. One
senior Ambassador testified that the statute is not really in effect Avitli-
out implementing regidations in the executive branch :
Ambassador Porter. Yes, but when you get the legislation
but you don't get the regu'lation based on it, vou're not much
better off. That '74, yes, sir, that '74 addition to the basic
State Depai-tment Authorization Act, that really isn't in force
because the implementin<T regulations have not been issued.
Senator Mondalk. Well, Mr. Ambassador, when a law is
passed, that is the law, is it not ?
" Ibid.
" Letter from Philip Buchen, Counsel to the President, to Senator Chiircli,
12/22/75.
313
Ambassador Porter. Yes, sir.
Senator Mondale. Can a law be repealed by failing to issue
regulations?
Ambassador Porter. Repealed ?
Senator Mondale. Suspended.
Ambassador Porter. Suspended ? I would say yes.
Senator Mondale. I think the word is "inoperative." ^^
The statute is apparently also "inoperative" so far as the CIA is con-
cerned, as indicated by the following CIA written responses to Com-
mittee questions :
— // the ATnbassador asked to see every o])erational repoy't
(as opposed to intelUge^ice report) ivhat loould the Chief of
Station say ?
The Chief of Station would inform the Ambassador that
he is referring the Ambassador's request immediately to his
headquarters for guidance.
— Is there any place lohere agent recruitments are cleared
hy the Ambassador or the Secretary of State^ including real
nanmjes%
Individual agent recruitments are not cleared with either
the Ambassadoi-s or the Secretary of State.^"
The Committee staff has learned that there are divergent views
within the executive branch regarding implementation of the new
statute. It is clear from the testimony that CIA opposes giving the
Ambassador the unrestricted access to its communications and other
operational information that the law would appear to authorize. In
the past, the Agency has argued that this would conflict with the pro-
vision of the National Security Act making the Director of Central
Intelligence responsible "for pi'otecting intelligence sources and meth-
ods from unauthorized disclosure." However, the statute resolves any
doubts as to whether disclosure to the Ambassador is authorized.
There are also other problems, of a practical nature, in implement-
ing the statute. Can an Ambassador, without additional support from
Washington, effectively direct and supervise the work of CIA per-
sonnel? The basic responsibility of the Ambassador is for United
States relations with the country to which he is accredited. The Am-
bassador is expected to be highly knowledgeable about the country to
which he is assigned. For CIA operations conducted within his coun-
try of assignment, the Ambassador should be a good judge of the risks
of such operations, and of their possible usefulness to the U.S. It is
often the case, however, that CIA espionage operations mounted from
his embassy are directed against a tMrd country, more often than not
a denied area country .^^ There is no assurance that the Ambassador is
qualified to assess fully the risks or benefits of such operations. Nor, if
he perceives that an operation directed from his embassy in Country
X against the denied area country poses a risk to U.S. relations with
Country X, is he able to weigh that risk against the potential benefits
of the intelligence to be gained. Such judgments often can only be
^^ William .T. Porter testimony, 11/11/75, pp. 45-46.
'* William Nelson testimony, 12/10/75, Attachment B.
" Essentially the communist countries.
69-983 O - 76 - 21
314
made in Washington. AVashington is where the problem arises. No
one outside the CIA, unless it be the President liimself, is responsible
for directing and supervising CIA clandestine intelligence operations
or is autliorized access to t]ie information necessary to do so.
A logical corollary to 22 U.S. 2680a would, thus, be to assign to a
Washington authority responsibility for control and supervision of
clandestine intelligence collection paralleling that assigned to the
ambassadors. The responsibility might be assigned to the Secretary
of State or to the 40 Committee. Either Avay, the Department of State
would have to have access to operational and source information to
which it is not privy today, if meaningful supervision and control is
to be exercised.
Ambassadors interWewed by the Committee all recognize some
degree of responsibility for supervision of CIA activities and cite
President Nixon's letter of 1969 as the governing document. Most ex-
press misgivings about their ability to do so with confidence of sup-
port from Washington. The lack of access to CIA communications
leaves a residue of doubt that the Ambassador really knows what is
going on. Vigor and initiative on the part of Ambassadors seems lack-
ing. Most Ambassadors the Committee has talked with have not ap-
peai'ed inclined to request detailed information, paiticularly regard-
ing espionage operations.
Supervision of intelligence activities by Ambassadors is in fact un-
even and, when exercised, the methods used differ widely. Much de-
pends on the knowledge and experience of the Ambassador, and the
suj)port lie has or believes he has in Washington. Further, the Com-
mittee's inquiries have turned up no evidence that the State Depart-
ment today attaches more than routine importance to this ambassa-
dorial function.
In the absence of detailed guidance or indication of support from
Washington, ambassadorial performance varies widely. One Ambas-
sador, who generally is known to "I'un a tight ship," exercises detailed
supervision and control over the CIA Station. Foi' example, he insists
on knowing source identities and on approving any sensitive espionage
operation in advance and CIxV, or at least the Station Chief, has ac-
cepted such control. This Ambassador, a career Foreign Service Offi-
cer, tends to attribute his good working relationship with the CIA
Station in large measure to the fact that he has had a great deal of
prior experience with CIA in Washington and in the field. Such ex-
perience is clearly required by Ambassadors assigned to important
countries, though in practice, the assignment of Ambassadors has not
considerably reflected this requirement.
For whatever reason, this degree of detailed supervision ajjpears to
be unusual, if not unique. Our inquir-ies suggest that Ambassadors
rarely seek to learn source identities. In this area they seem to be
affected by what one Ambassador has called "self-inflicted intimida-
tion." In one post — where there is a serious terrorist problem — the
Ambassador explained that he preferred not to know source identities
because of the possibility of being kidnapped. However, the same
Ambassador has taken a very strong stand that control of communi-
cations is essential if the Ambassador is to exercise effective super-
vision over CIA. Still another senior Ambassador does not consider
that control of communications would really ensure that the Ambassa-
315
dor knows everythins^ that is going on. This Ambassador controls by
what amonnte to a threat; he informs each Chief of Station that he
expects to be consulted in advance about any operation which could
cause embarrassment. If any CIA operation about which he has not
been consulted causes difficulties, the Station Chief can expect no sup-
port from the Ambassador. This would appear to be a more typical
procedure.
It should be noted that these are techniques designed to forestall
surprise and embarrassment. There is no body of doctrine or stand-
ards against which judgments can be made on whether to approve a
given operation, nor are Ambassadors given any basic instruction on
espionage techniques and risks. It is hardly surprising, therefore, if
there is a wide variation in practice and that judgments tend to be
ad hoc and subjective. This is not likely to change so long as the matter
is left to individual Ambassadors.^"*
C. Support: Communications
In the early 1960s, responsibility for most U.S. diplomatic com-
munications was assigned to CIA. This came about as the result of a
decision to bring about radical (and costly) improvements in existing
facilities. It was judged that CIA could obtain the necessary funds
more easily and quickly than State. Furthermore, CIA already had
its own communication facilities, and, as it was accepted that the
Agency would have to have such facilities in the future, it also seemed
more efficient to give CIA responsibility for a single network serving
both agencies. To permit some privacy in State communications, the
new system provided for a State superencipherment capability.
The situation today is that State has access to CIA communi-
cations only as determined by CIA, whereas CIA has access to all
State communications, except in those cases where State takes the
initiative (and the trouble) to encipher the message giving it to CIA
for further encipherment and transmission. Control of communication
is a key element of command ; the existing arrangements are not com-
patible with the role of \\\q. Ambassador prescril3ed in 22 U.S. 2680a.
The Ambassador cannot be sure that he knows the full extent and
nature of CIA operations for which he is held responsible by law.
D. Production of Intelligence
Surveys carried out by the Director of Central Intelligence make
clear the importance of Foreign Service reporting in the production
of national intelligence. In these surveys analysts are asked which
collection sources had most often made a key contribution to the Na-
tional Intelligence Bulletin and national intelligence memoranda and
reports. The ranking reflects intelligence inputs regarded by the ana-
lysts as so essential that basic conclusions and findings could not have
"° At the request of the CIA, the Committee has deleted a section of this report
entitled "Support : Cover" to protect sensitive intelligence sources and methods. A
classified version of this section is available to Members of the Senate under the
provisions of S. Res. 21 and the Rules of the Senate.
316
been reached without them. The State Department's collection inputs
have consistently led the ratings.^^
Of course, collection of overt intelligence is only one function of the
Foreign Service Officer, who is charged also with representation of
IT.S. interests, negotiations, etc. It is, in fact, the latter functions,
which put him in contact with responsible and knowledgeable officials
and politicians of the local government and with other diplomats,
that give him access to the most important information. Foreign Serv-
ice reporting generally includes analysis pointing up the significance
of particular events. These factors probably account in large measure
for the high ranking accorded FSO reports by the intelligence analysts.
In any event, the Committee has found no evidence of any correla-
tion between the importance attached by the intelligence community
to the Foreign Service collection operation and the application of
resources in men and money to that operation. Indeed, political and
economic reporting positions abroad have been steadily reduced for
some years. In one major European country crucial to America's
security there is only one Foreign Service political reporting officer
located outside the capital due to such cutbacks. The Ambassador said
that if he had additional resources, the first move would be to re-
establish political reporting officers in the several consulates in the
country. The Ambassador explained that by law the Foreign Service
must carry out a number of consular functions and that with ever-
tightening resources the political reporting function has been squeezed
out. The Committee determined, however, that the CIA has sufficient
resources to consider a major new clandestine collection program in
that same country.
For the past thirty years, the Department of State has been short of
resources. Its reporting functions have been taken up by the rela-
tively more prosperous CIA. Within State or in the intelligence com-
munity, there is no systematic or clear allocation of resources for the
reporting task — except for commercial information. Overseas posts
get a "representation allowance," generally meager, which is used in
part to cultivate reporting sources and contacts but which also must
be shared with other sections of the post, including the administrative
and consular sections. When there is a choice between paying for the
costs of a visiting distinguished official, such as a Congressman, or
supporting the work of a junior political officer, the only source for
this outlay is the so-called "representation fund."
The State Department's "representation allowance" is a favorite
target for Congressional reduction in part because it has become
synonymous with diplomatic "cocktail parties." As a result, the CIA
with its "operational funds" and even the Military Attaches have a
mucli greater degree of funding and flexibility. In one post, for ex-
ample, the allowance of the Defense Attache nearly equaled that of
fl^e Ambassador and the political and economic sections combined.
There is no separate fund to facilitate overt collection of political and
economic information. The Department of State budget contains no
line items for such purposes and continues to show only salaries and
expenses with no indication of their objectives. The Department has
" "Key Sources of Selected CIA Publications," Annual Survey done by Direc-
torate of Intelligence of CIA (197,5).
317
been unwilling to press the Congress for more funding, particularly
for expansion of the so-called "representation allowance." As a result,
the largest, most important, and least risky source of political and
economic intelligence for the United States Government is neglected
in the Federal budget and severely underfunded.
Secondly, the Department itself seems to have made little effort to
direct the Foreign Service collection effort in a systematic way. The
Department itself levies no overall requirements. Most regional bureau
Assistant Secretaries send periodic letters to field posts indicating sub-
jects of priority interest and these letters are supplemented by "official-
informal"' communications from the Country Director (desk officer).
In addition the Department participates in the development of inter-
agency intelligence requirement lists, and those lists are transmitted
to the embassies and consulates abroad. The Department believes that
these procedures suffice, and does not favor the development of a more
elaborate requirement mechanism for the Foreign Service.
The Department has made no significant effort to train junior For-
eign Service Officers in the techniques of political reporting. The record
is somewhat better for economic reporting. A recent report of the
Department's Inspector General concluded that the Department has
generally been remiss in setting and maintaining professional stand-
ards through systematic training, assignment, and promotion policies.
These judgments go well beyond the mandate of the Select Committee,
but the Committee would strongly endorse measures designed to maxi-
mize the usefulness of this key collection source.
XV. DEPARTMENT OF DEFENSE
The Department of Defense is the nation's primary consumer of
intelligence information. It controls nearly 90 percent of the nation's
spending on intelligence programs, and most technical collection sys-
tems are developed, targeted, and opefated by DOD personnel. The
sheer size and complexity of the Defense intelligence establishment
make it difficult to comprehend the problems and issues which con-
front policymakers and intelligence managers. Overall security needs
and bureaucratic interests, as well as differing intelligence needs, fur-
ther complicate the quest for solutions to the community's substan-
tive problems and impede efforts aimed at implementing management
reform.
This section of the report summarizes the Committee's investiga-
tion into the intelligence activities of the Department of Defense.
It is limited in content to information that can be released publicly.
Although many significant factual details about the national intelli-
gence apparatus are thus not included, the Committee does not believe
that such omissions seriously detract from a clear presentation of the
central findings of its work.
The Committee focused on national intelligence activities, i.e., those
which produce information primarily of interest to national decision-
makers. Tactical intelligence activities, which are organic to or in
direct support of operational units, received less attention. This area
could not be ignored, however, because new collection and processing
technology has significantly affected the relationship between the na-
tional intelligence systems and the operational commands.
After an initial review of the entire defense intelligence program,
based on documents, briefings, and studies provided by the executive
branch, the Committee investigated the following issues of particular
interest :
— The resource manajjjement and organizational dimensions
of the Defense national intelligence community.
—The role of the Defense Intelligence Agency in relation to
the CIA and intelligence functions of the military depart-
ments.
— The monitoring and reporting activities of the National
Security Agency.
— Military counterintelligence and investigative activities of
the Department of Defense.
— The chemical and biological research of the Department
of Defense as it relates to intelligence missions.
The investisration revealed abuses of authoritv in all these subject
areas, some of which were alreadv known to the intellijrence com-
munity. Congress, or the public. After a brief review of the relation
(319)
320
of intelligence to the major objectives of U.S. military forces, and
the history and evolution of intelligence organizations, this report
addresses these specific Defense intelligence issues in turn. The con-
cluding section assesses the future requirements for Defense intelli-
gence, particularly as they are affected by technological developments.
A. Objectives and Organization or the Defense Intelligence
Community
The mission of the Department of Defense intelligence apparatus
is to provide the defense establishment with accurate and timely in-
formation on the military capabilities or political intents of foreign
states to assure that U.S. policymakers are forewarned of, and U.S.
military forces prepared for, any event which threatens the national
security.
There are several important consumers of Defense intelligence.
National security policymakers are interested in three areas of national
importance: crisis management, which calls for not only advance
warning of possible military, economic, or political disruption, but
also continued, detailed tracing of developments once they are under-
way; long-range trends in foreign military, economic, and scientific
capabilities, and political attitudes which might warrant a major
U.S. response; and the monitoring or verification of specific inter-
national agreements which are either in force, such as the SALT
agreement or the Middle East ceasefire, or contemplated, such as
Mutual and Balanced Force Reductions talks in Europe.
Defense planners, responsible for designing the structure of U.S.
military forces, constitute a second important group of intelligence
consumers. Although their interests are less far- ranging than those of
the policymakers, their demands for insights into the capabilities of
opposing military forces are generally phrased in broader terms than
other DOD intelligence consumers, if only because the macroscopic
analysis which supports major force structure decisions is seldom
sensitive to detailed intelligence inputs.
In contrast to the estimative character of the intelligence products
most required by policymakers and defense planners, two other con-
sumer groups, the developers of weapon systems and the operating
field forces, have greater interest in detailed, factual information.
Satisfaction of these demands is generally more a matter of col-
lection and compilation than analysis and inference. The major
distinction between the two groups lies in their subject interests.
The weapon systems developers emphasize scientific and technical
detail regarding the operating characteristics and performance
parameters of foreign weapon systems (knowledge of which can
be useful in optimizing the design of U.S. systems). The military
field commands emphasize "order of battle" data, or the unit identities
and the strength, equipage, and disposition of opposing field forces.
The sequence of operations in meeting the intelligence demands of
these disparate groups of consumers involves three (or, in the case of
signals intelligence, four) basic steps: (1) collection — the gather-
ing of potentially relevant data; (2) production — the translation of
321
these data into finished intelligence products through screening,
analysis, and drawing of inferences; and (3) dissemination — delivery
of the finished products to the right consumers at the right time.
If the collected data are in the form of electronic signals, another
step, "processing," between the first and the second, is required to
refine the raw signals before they are submitted for human evaluation
during the production phase.
A brief review of the major objectives of U.S. military forces may
help to place the intelligence contribution in perspective.
1. Ohjectives of U.S. Military Forces
The paramount objective of U.S. forces is to deter nuclear attacks
upon the United States and its allies by maintaining an unambiguous
capability to inflict massive damage on the attacker, even after absorb-
ing a first strike by the aggressor's nuclear forces. The defense intel-
ligence conununity supports this objective by monitoring the technical
developments and force deployments of potential enemies, especially
those which might attempt to gain the capability for a disarming first
strike. U.S. technical collection systems are able to alert leaders to an
imminent attack by detecting movement or changes in the status of the
Soviet Union's strategic forces. Thus warned, the United States can
counter and react to such changes. This so-called strategic warning
may be essential to the survival of some components of the U.S. retalia-
tory force.
Tactical warning, based on indications that a nuclear attack has
actually commenced, is the primary responsibility of the alert and
warning networks of the operational military commands. Although
U.S. intelligence collection systems are not designed specifically to
provide such warning, they have some inherent ability to do so.
It is generally agreed that no measures would prevent a nuclear
exchange from devastating all the participants; thus, relatively
little attention has been devoted to developing intelligence systems
designed to improve the outcome of an all-out nuclear war for the
United States or its allies.
The second purpose of U.S. forces is to deter conventional (i.e., non-
nuclear) military attacks on its allies. Although U.S. nuclear forces,
both strategic and theater, contribute to this objective by introducing
the threat of escalation into a potential aggressor's calculation, the
general purpose forces (land combat, naval, and tactical air) of the
United States and its allies are considered the prime deterrent to con-
ventional military attack. Planning for the general purpose forces
focuses on being able to defend Western Europe, while at the same
time being able to conduct a lesser war in the Pacific theater. Again
intelligence plays an important role in following the technical and
force-level changes of potential enemies, and in predicting future
trends. Current intelligence is also relied, upon to provide adequate
warning of the massive redeployment of men and materiel that would
precede a conventional attack.
In the event of war, it will be critical to adapt the missions of
the national intelligence-gathering systems to the needs of opera-
tional commanders. The planning for such contingencies poses a major
challenge for leaders of the defense intelligence community.
322
The ongoing arms limitations negotiations on strategic and
theater forces in Europe are guided by the principle of rough equality
between opposing capabilities. Asymmetries in such factors as geog-
raphy, technology, and manpower must be accommodated so that both
sides believe there is an overall balance. Intelligence systems play a
critical part in monitoring this balance since they are the only reliable
means available for verifying the status of forces of potential adver-
saries. In fact, advances in technical intelligence collection systems
have made the current arms limitation agreements feasible. Establish-
ing compliance with the strategic arms agreements in force, as well as
providing assistance in current negotiations, is now among the most
vital missions of the national intelligence apparatus.
The technical capabilities of U.S. intelligence systems are prob-
ably now adequate to meet the demands of present agreements. Whether
they can meet the needs of future agreements is unclear and de-
pendent upon the specific terms negotiated. Some of the proposals
advanced in connection with the Vladivostok Agreement and the
Mutual and Balanced Force Reduction (MBFR) talks would test
the abilities of current or envisioned intelligence systems to detect
or verify with high confidence. Three of the most difficult enforce-
ment areas which could arise under future agreements and which
pose major problems for the intelligence community are :
— MIRV missiles w^hich are concealed in silos or submarines;
— Cruise missiles whose launchers are easily concealed in
bombers and submarines, and which may carry either conven-
tional or nuclear warheads ;
— Mobile forces and weapons (particularly nuclear systems)
in Europe which can be transferred quickly to and from the
theater, and are also readily concealed.
2. Evolution of Defense Intelligence Organizations
The complexities of modern defense have burdened the intelligence
community wnth issues and responsibilities which could hardly have
been anticipated when the United States emerged as the world's fore-
most militaiy power three decades ago. In endeavoring to fill its ex-
panding role in support of the nation's security interests, the defense
intelligence apparatus has undergone periodic reorganization, gen-
erally leading toward more centralized management control. The
desire to make the defense intelligence community more responsive
to the needs of policymakers has motivated this trend.
At present, the most likely near-term prognosis is for a continua-
tion of the general peace, interrupted at times bv regional conflict and
crisis, but not erupting into a major war or likely to involve direct
U.S. military participation. The problem has been that in order to
avert the big war, the U.S. has had to project a credible appearance of
being able to win it, or, at least, not lose it decisively. This means
it could not permit its war-fighting capacity, for which the military
services hold the final responsibility, to erode unilaterally. Since the
defense intelligence apparatus is a major contributor to that capacity,
and since most of the important intellip-ence assets are operated by the
armed forces, it is not surprising that the services have resisted efforts
to channel these resources in different directions.
323
The existing organization of the defense intelligence community
will be discussed in the following section. It is important to appreciate
that it was not designed expressly to serve today's intelligence re-
quirements or to manage today's intelligence functions. Rather, it
should be perceived as basically a service to the military, adjusted
through several decades of institutional compromise.
3. Early Beginnings
The first traces of U.S. military intelligence activities appeared in
the Revolutionary War, when General George Washington, as com-
mander of the colonial Army, recruited and trained a corps of intel-
ligence agents to report on British activities. This effort, which in-
cluded the use of codes, secret ink, and disguises, was short-lived,
and the agents were mustered out of service with the rest of the
Continental Army. Following Washington's precedent, commanders
of U.S. military forces in later conflicts created ad hoc intelligence
units on their own authority to serve tlieir individual needs. Andrew
Jackson had an intelligence operation in the War of 1812, and Win-
field Scott had an intelligence unit in his command in the Mexican
War. A niunber of the military commanders in the Civil War
organized their own intelligence networks, and two autonomous
organizations, both named the United States Secret Service, engaged
in intelligence activities for the Union, although neither had any legal
authority to operate.
In 1882, the Secretary of the Navy established an Office of Naval
Intelligence to collect and record "such naval information as may
be useful to the department in the time of war, as well as in peace." ^
This office developed a naval attache system to overtly collect informa-
tion on foreign naval activities. It initiated a series of publications
summarizing the information it had collected to keep the Navy abreast
of foreign naval developments, and specifically provided the Naval
War Board with information during the Spanish-American AVar.
The first comparable Army unit was the Military Intelliafence Di-
vision of the Office of Adjutant General, established in 1885 to gather
information on forei.qm armies. It, too, was active during the Spanish-
American War, but by the outbreak of World War I the entire Di-
vision had shrunk to two officers and two clerks.
Both the Armv and Navy greatly expanded their intelligence com-
plements durino- World War I. The Army alone had more than 300
officers and 1,000 civilians engasred in intelligence work. In 1917,
a War Department Cipher Bureau was created by administrative di-
rective. This unit, sometimes referred to as the "American Black
Chamber," solved more than 45.000 crvptograms (including one from
the Sundav Times) and broke the codes of more than twentv nnfions.
It was dissolved at the specific direction of Secretary of State Henry
L. Stimson in 1929. wlio reportedly said : "Gentlemen do not read each
other's mail." ^ This and similar measures left the service intelligence
arms poorly prepared for World War 11.
^ A. P. Nibla^k, The Hi'-fory nvd Aiwi nf the Oflice of Naval Infelliperice,
Division of Opera^^ions. United States Navy Department (Washington, D.C. :
U.S. Government Printing Office, 1920).
* Herbert O. Yardley, The American Black Chamher (Indianapolis: Bobbs-
Merrill, 1931) , pp. 332, 348.
324
One of the first steps taken by President Roosevelt in the aftermath
of Pearl Harbor was to order the creation of the Office of Strategic
Services (OSS) in June 1942 under the direction of General William
Donovan. During World War II, OSS, together with tlie Army and
Navy intelligence organizations, was coordinated by the Joint Intelli-
gence Committee of the Joint Chiefs of Staff.
A list of the functions of the principal OSS branches demonstrates
the scope of its activity. The Research and Analysis section produced
economic, military, social, and political studies, and estimates for stra-
tegic areas from Europe to the Far East; the Secret Intelligence group
gathered information from within neutral and enemy territory ; Spe-
cial Operations conducted sabotage and worked with the various re-
sistance groups; Counterespionage protected United States and al-
lied intelligence oj^erations; Morale Operations created and spread
"black propaganda" ; Operational Groups trained, supplied, and some-
times led guerrilla groups in enemy territory ; the Maritime Unit con-
ducted marine sabotage ; and Schools and Training was in charge of
the overall training and assessment of personnel, both in the United
States and abroad. In addition, OSS was directed to plan and con-
duct such "special services as may be directed by the United States
Joint Chiefs of Staff." Only Latin America, the FBI's bailiwick, and
the Pacific Theater, General MacArthur's, were outside the OSS
sphere of operations.
Jurisdiction over subjects of tactical military interest, such as order
of battle data and enemy weaponry estimates, was left with the
traditional service arms. OSS alpo did not prevail completely over
other intelligence operations of the services, which achieved a number
of notable wartime successes. Army Intelligence, for example, cap-
tured a high-level Nazi plamiing group in North Africa, obtained a
map of all enemy minefields in Sicily, and captured the entire Japa-
nese secret police foix^e on Okinawa. Naval Intelligence, soon after
United States' entiy into the war, deduced the impending appearance
of German guided missiles, such as the HS 293, the V-bomTbs, and
homing torpedoes.
After World War II, President Truman issued an Executive Order
abolishing the OSS on September 20, 1945. The Department of War
absorbed some of its functions, such as the work of its Secret Intelli-
gence group and of its Counterespionage program. The State Depart-
ment assumed others.
The demise of tlie OSS did not, however, end the concept of a
central intelligence organization. On January 22, 1946, President
Truman established a National Intelligence Authority to advise him,
and created a Central Intelligence Group to assist the NIA in coordi-
nating national intelligence matters. These two organizations evolved,
through the National Security Act of 1947, into the National Security
Council and Central Intelligence Agency.
The rapid demobilization of the armed forces after the war, the crea-
tion of the first peacetime central intelligence organization, and Presi-
dent Truman's conviction that the military must be suboi-dinated to
civilian conti'ol were all factors which seemed to portend a diminished
role for the armed forces within the post-war intelligence community.
325
The National Security Act of 1947, which created the CIA and NSC,
also strengthened civilian authority over military services by drawing
the War and Navy Departments together under a single Secretary of
Defense. The new Secretary was given authority ovei- all facets of the
administration of the defense establishment. The identities of the
Army and the Navy were preserved, however, under separate civilian
secretaries w^ho now^ reported to the Secretary of Defense rather than
directly to the President. At the same time, the air elements of the
Army were reformed under a new Department of the Air Force, with
the same status as the two older service departments.
The broad powers granted the Secretary of Defense permit him
to effect major organizational changes within the Defense Department
by the simple expedient of issuing a directive. The Defense Intelligence
Agency was created by such a directive in 1961. The Eisenhower
administration had concluded in the late 1950s that a consolidation
of the services' general (defined rather awkwardly as all non-SIGINT,
nonoverhead, nonorganic intelligence activities) was needed, an idea
which the Secretary of Defense in the new Kemiedy administration,
Robert F. ISIcNamara, quickly endorsed.
The Joint Chiefs of Staff and Secretary McNamara disagreed on
the form the new agency should take. The JCS were concerned with
presei"ving the responsiveness of the service efforts to the militaiy's
tactical intelligence requirements. They therefore wanted a joint
Military Intelligence Agency subordinate to them, within which the
independence of the several military components, and hence their
sensitivity to the needs of the parent service, Avould be retained.^
McNamara Avanted a much stronger bond. He was determined to
utilize better the service assets to support policymakers and force
structure planners, and to achieve management economies.
The Defense Intelligence Agency which emerged was a compromise.
It reports to the Secretary of Defense, but does so through the JCS.
The Joint Staff Director for Intelligence (the J-2) was abolished
and replaced by the Director of the new DIA. The functions of the
Office of Special Operations — the Small intelligence arm of the Office
of the Secretary of Defense (OSD) — were absorbed by DIA.^ There
has been continuing controversy among the services due to their
reluctance to cede responsibilities to DIA because they feared down-
grading wartime combat capabilities. Moreover, the OSD level of the
Defense Department has pressed continuously for greater centraliza-
tion; both of these controversies have hampered DIA throughout its
existence.
ITnlike the DIA, the National Security Agency (NSA) is a presi-
dential creation. Established in response to a Top Secret directive
" Memoranda, from Secretary of Defense Robert McNamara to Chief, Joint
Chiefs of Staff, Lyman Lemnitzer, 2/8/61 ; from Lemnitzer to McNamara, 3/2/61 ;
from McNamara to Lemnitzer, 4/3/61 ; from Lemnitzer to McNamara, 4/13/61.
* Memorandum from Deputy Secretary of Defense Roswell Gilpatric to Secre-
taries of the Military Departments; Director of Defense Research and Engineer-
ing ; Chief, Joint Chiefs of Staff ; Assistant Secretaries of Defense ; General Coun-
sel : Special Assistant ; and Assistants to the Secretary, 7/5/61 ; DOD Directive
5105.21, 8/1/61.
326
issued by President Truman in October 1952, NSA assumed the respon-
sibilities of its predecessor, the Armed Forces Security Agency
(AFSA), which had been created after World War II to integrate
the national cryptologic effoit. NSA was established as a separate
agency within DOD reporting directly to the Secretary of Defense.
In addition, it was granted SIGINT operational control over the three
Service Cryptologic (collection) Agencies (SCAs) : the Army Se-
curity Agency, Naval Security Group Command, and Air Force
Security Service. Under this arrangement NSA encountered many of
the same jurisdictional difficulties which were to plague DIA. In an
effort to strengthen the influence of the Director of the National Secu-
rity Agency (DIRNSA) ov^er their activities, the SCAs Avere confed-
erated in 1971 under a Central Security Service (CSS) with the
DIRNSA as its chief. The mission of NSA/CSS is to provide cen-
tralized coordination, direction, and control for the United States
Government's Signals Intelligence (SIGINT) and Communications
Security (COMSEC) activities.
Jf.. Current Organization
Describing the management structure of the Defense intelligence
commmiity would be a difficult task under the best of circumstances.
Authority and influence within any big organization are often deter-
mined as much by personalities and working relationships as by formal
chains of commands or job descriptions. For the sprawling and
complex Defense intelligence network, the task is particularly
chiallenging. Moreover, the community is in the midst of an executive
branch-directed transition which may alter second-level management
relationships throughout the Department of Defense. The executive
branch has not yet revealed exactly wdiat kind of structure it intends,
if indeed its full reorganization plan has been decided.
Of necessity, the description which follows applies to the organiza-
tion of the Defense intelligence community as it existed during most
of 1975.^
As the Defense intelligence community is presently organized, the
Secretary of Defense has three groups of assets : (1) the Defense agen-
cies reporting directly to him, of which the National Security Agency,
the Central Security Service, and classified national programs are the
most significant (but also including the Defens 
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