“Agency and the National Transportation Safety Board. Specific problems were discussed, usually with the Office of General Counsel of the agency concerned by the CIA General Counsel. The Air Proprietaries dealt with State Department and the Agency for International Developmen”
“TOP SECRET 62d n others they would ostensibly take the risk and we P hone (A re a 2 0 2 ) 5 4 4 -6 0 0 0 1 would stand behind them. 2 Mr. Wikes. So that was indemnification? 3 4 Mr. Houston. Complete indemnification. And by and large this arrangement worked extremely”
“ethical standards. What slippages have occurred were in the field and generally in the area of air opera tors, not management. Moreover, their use and past expansion was a direct result of the demands placed upon the Agency by Presidents, Secretaries of State and the policy ”
“- 82 - e! TAB D Page 7 LADYCHAPEL This proprietary was established to purchase an apartment building in Europe for Agency office GMenT and residential use. In 1968, then the build ing was of no further use to the Agency, the entity with the apartment building was ostensi”
“employee. On two occasions the Agency turned over proprietaries to other government departments and on one occasion it sold a proprietary to another government department. There were several instances where the Agency gave the assets of a proprietary after liquidation (books,”
“for the purpose of purchasing an apartment overseas which was used for operational purposes. When the apartment was no longer of operational use in 1970, the company (and the apartment) was sold to a non-Agency connected party. No agreement for the continued use of the corp”
“Andreas’ firm, the Archer Daniels Midland Company, Decatur, Illinois, provided cover for five operation- al assets of this Agency between 1964 and 1969. In arranging for this activity, a total of 11 of the firm’s employees were briefed over the years. The Agency’s principal c”
“firms such as SAT do not necessarily enjoy the status of U.S. Government employees. CONFLICT OF. INTEREST 1 In the SAT divestiture, the Agency took precautions to avoid conflict.of interest. Mr. George A. Doole, Jr., retired Staff Agent and retired Managing Director of Air”
“spent by the proprietary f. for salaries, purchase of equipment, or for other purposes. The Agency 1 either supplemented its original expenditure with additional monies or the proprietary might have made a profit during these years. This proprietary, at Agency direction, now ”
“The question was as ked whether we e ver us ed p riv ate investigators, and I said we norma lly used our own investigators. We have so me relation ship s wi th p ri va te i nv es tig ato ry fir ms whi ch provide cover for our investigators and, secondly, we have a few firms which”
“urity investigations in the United States. The question was asked whether we ever used private inves tigators, and I said we normally us ed our own invest iga tors. We have some relationships with private investigator y f irm s which provide cover for our investigators and, secon”
“94-4- (a) Notwithstanding any other provision of law, sums made available to the Agency by appropria tion or otherwise may be expended for purposes necessary to carry out its functions, including -- (1) personal services, including personal services without regard to limi”
“or not there was a written or informal agreement of such a relation ship at the time the proprietary or its assets were acquired from the Agency? Indicate for each instance the nature of the business, the dollar amounts of the transactions involved and the period of years d”
“entity, which provided status and, access cover for several case officers in the Far East, was sold in 1975 to unwitting purchasers.. There have been no Agency contacts with the purchaser since then. All sale pro ceeds were returned to the Agency. CALANCET This proprietary”
“he question was asked whethe r w e ever used private investigators, and I said we normall y u se d o ur own investigators. We have some relationships with private investigatory firms which pro vi de cov er for our investigators and, secondly, we have a few firms which we own whic”
“investi gat ors, and I said we normally used our own investigators. We have some relat ion ship s w ith private investigatory firms which provide cover for our investigators and, secondly, we have a few firms which we own which are proprietary' if you will, whereby our investigat”
“1000 (th i 2-/1 ri CLVlL ! IVE9 OM1 LILO 2. Interprogres Interprogres is a new subsidiary of the Mullen Company formed in 1971, as a result of contacts developed at the Zagreb Trade Fair in Yugoslavia. It is a pilot operation aimed at expanding East West commercial r”
“stringent in the extreme. ’ The disposal of proprietaries has also generally proceeded along legal and ethical lines with more than due concern for con flicts of interest. Most notable in this spectrum of actions was the degree to which the Agency tried and did in fact avoid”
“and Services of the CIA, was presented in court. In the affidavit the Mr. Brownman delineated the relationship between 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 b”
“21 - IV. A DESCRIPTION OF THE VARIOUS PROPRIETARIES The operational needs of the Agency have required it to venture forth into many areas where proprietaries were a perceived necessary vehicle. These areas have included air support, media publications. proprietary manageme”
“FORD LIBRAR NW 66000 Docld :3 21 12 72 4 Pa ge 7 2 13 4 5 6 But I did want to clarify that. I t hin k I mentioned it last time that there have been occasions on which this was done. Chairman Church. Mr. Colby, would you in connection with your review of this matter supply the Com”
“deny the true ownership 4 relationship of SAT by CIA. It is noted, however, that the opera- the tional 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 Mr. Harold L. Brownman, Deputy Dir”
“- 29 - States Government. The complex also underwrites, insurance risks of certain proprietary organizations and administers the pension plans of these organizations. In addition, the complex has been used to provide a limited amount of support to other Agency operations --”
“- 19 - Those proprietaries which engaged in the shipment of weapons or other items on the Munitions Control list required Agency assistance in obtaining the necessary export licenses., The ownership of the companies was discussed with State Department Office of Munitions Co”
“settlement of all liabilities were transferred overseas to other parts of the operation and were used to meet a approved operational expenses. Some of the remaining stock of foreign language books was given to a .cleared and witting contact who had served without compensat”
“- 89-20 - precautions taken and the procedures established by the CIA consi dered the varying factors of responsibility for public funds, con flicts of interest, U.S. Government interests for the aviation industry and its employees, and national security. The CIA actions ”
“fund" (presumably referring to MHMUTUAL), the procedures for reimbursing the State Department for cover and support, proprietaries (how created, their justification, value and effectiveness), safe houses and."CA cadres." Mr. Anderson reluctantly agreed to Mr. Shackley’s re”
“Phone (A rea 202) 544-6000 TOP SECRET 58 1 or the corporation or country whose securities were being 2 invested in? o Mr. Houston. There were about two or maybe three recom- 4 mendations from the Investment Counsel we had at the time we 5 were turned down - 6 Mr. Wide”
“ple of clarifi cat ions I would like to make. One, with' respect to the se cur ity in ves tig at ion s in the United States. The question was asked whether we ever used private investigators, and I said we normally used our own investigators. We have some relationships with priva”
“first step in what became the MUTUAL project. Simultaneously, the decision was made that if the Agency was going to maintain such a capability, they had to have enough body and backstopping so that if a suspicious foreign intelligence outfit tried to investigate, they would ”
“Office of General Counsel. This internal board of the project made investment decisions. * Escrow accounts are established when an agent cannot receive his full payment from the CIA without attracting suspicion. The funds not paid to the agent go into escrow accounts and are”
“ould like to make. One, wit h' respect to the se cur ity investigations in the United States. Th e q uestion was asked whether we ever used private investigators, and I sai d w e normally used our own investigators. We ha ve some rel ati onships with private investigatory firms w”
“dissolved or sold as a going enterprise or otherwise disposed of by the Agency? Mr. Nelson closed his recent testimony with a caveat: I can visualize, however, depending on what happens to the Agency in the future, the possibility that we might want to use more proprietarie”
“14-00000 : - waint kn is mwamloLdin on 29 15. [Council on Race and Caste in World Affairs, Inc. - Manhattan, New York (48) 0% 24 Proprietary funding conduit established by CA/B3 for covert funding of the exposed AMSAC (24) (TPFOUMART).C O 79 16. [Governmental Affairs”
“•LU I, 84 - DEINHAUL (Cont’d) in concert with the original objectives of the pro ject.. In 1967 under the terms of the Katzenbach Report, it was necessary for the Agency to discon tinue its support to the bona fide U.S. foundation (ostensible former owner of the bank as m”
“a nd , secondly, we have a few firms whi ch we own which are proprietary' if y ou will, whereby our investigators appear to be private. I said that in the past it i s cl ea r that on occasion we did ask for private investigator firms to help us to some degree. It was usually the ”
“Phone (A re a 2 0 2 ) 5 4 4 -6 0 0 0 TOP SECRET 55 1 Mr. Houston. It was a memo of DITEL’s that I saw. 2 I think it was dated after I left. I saw it in draft after- 5 ward. It had to do, I recall, with operations in the Trust 4 Territories. 5 Mr. Wides. Inrother words,”
“- 6 - attributable to the U.S. Government. This function was broadened to include self-insurance for many risks involved in covert operations , including property risks incurred by operational activities of Agency- owned air and marine companies. From an early date, the comp”
“rms which provide cover fo r o ur investigators and, seco ndly, we have a few firms whi ch we own wh ich are proprietary' if you will, whereby our investigators appear to be private. I said that in the past it is clear that on occasion we did ask for private investigator firms to”
“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 Stanley G. Williams became the sole owner of SAT. I”
“to the White House or other Government agency has been carefully considered and approval at a higher level obtained when professionals were involved. 4. Project TWOFOLD: I believe the support we are providing to Project TWOFOLD is an activity that should be • reported under”
“asked whether we ever used private investigators, and I said we normally used our own investigators. We have some relationships with private investigatory firms which provide cover for our investigators and, secondly, we have a few firms which we own which are proprietary' if you”
“useful function within the scheme of necessary security required by sensitive Agency operations. Their utility, however, as in the case of nearly all proprietaries is relative to policy and "flap" demands. As one Agency commentator phrased it. when Newsweek revealed the relat”
“nd I said we normally used our own investigators. We have some relationships with private invest iga tory firms which provide cover for our investigators and, sec ond ly, we have a few firms which we own which are proprietary, if you will, whereby our investigators appear to be p”
“-147- the current written policy of the Agency that "to the degree that domestic proprietary or cover companies are required, a clear justification will be developed as to the relationship of their support of our overseas operations. re In the one area of continuing large-s”
“TOP SECRET 59 rather than going ahead. P hone (A re a 2 0 2 ) 5 4 4 -6 0 0 0 0 1 2 And incidentally, the outside investment counsel would 3 not know why we turned it down. Jr 4 Mr. Wides: Were all of the investment decisions for the assets of MH MUTUAL and you use that i”
“-104- ment. The IG looked at the investments from a security (i.e. cover) point of view in terms of MHMUTUAL’s operational support function. His concern was that each time MHMUTUAL bought a safehouse, for example, there was the possibility that audio surveillance of the hou”
“- 12 - for the proprietary are compatible and consistent with normal practices and requirements for the type of instrumentality being established. The Director of Finance representative is the Chief of the Commercial Systems and Audit Division, a position normally occupied b”
“facility enables site audits of Agency covert projects by experienced Agency auditors. 67. VWCADENZA A Maryland company located in Bethesda, which is used as cover for an Agency employee who provides electoral and political analysis on South American and European elections; ”
“the United States. The question was asked whether we ever used private investigators, and I said we normally used our own investigators. We have some relationships with private investigatory firms which provide cover f or our investigators and, secondly, we have a few firms which”