(EST PUB DATE) SEMIANNUAL REPORT

• Document Type: FOIA
• Keywords: INSPECTOR GENERAL
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0001311507
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 72
• Document Creation Date: June 24, 2015
• Document Release Date: April 14, 2011
• Case Number: F-2007-00194
• Publication Date: June 1, 2002

Central Intelligence Agency
Inspector General
SEMIANNUAL REPORT
TO THE DIRECTOR OF CENTRAL INTELLIGENCE
JANUARY ? JUNE 2002
APPROVED FOR RELEASES
DATE: 25-Feb-2010
John L. Helgerson
Inspector General
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TABLE OF CONTENTS
PAGE
(U) A MESSAGE FROM THE INSPECTOR GENERAL 1
(U) STATUTORY REQUIREMENTS 5
(U) AUDITS 9
(U) AUDIT STAFF OVERVIEW 9
(U) SIGNIFICANT COMPLETED AUDITS OR OTHER REVIEWS 9
(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS
OUTSTANDING FROM PREVIOUS SEMIANNUAL REPORTS 20
(U) SUMMARIES OF SELECTED CURRENT AUDITS 28
(U) INSPECTIONS 29
(U) INSPECTION STAFF OVERVIEW 29
(U) SIGNIFICANT COMPLETED INSPECTIONS OR
OTHER REVIEWS 30
(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS
OUTSTANDING FROM PREVIOUS SEMIANNUAL REPORTS 39
(U) INVESTIGATIONS 47
(U) INVESTIGATIONS STAFF OVERVIEW 47
(U) SIGNIFICANT COMPLETED INVESTIGATIONS OR
OTHER REVIEWS 48
(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS
OUTSTANDING FROM PREVIOUS SEMIANNUAL REPORTS 54
(U) SUMMARIES OF SELECTED CURRENT INVESTIGATIONS 56
(U) ANNEX SECTION
(U) STATISTICAL OVERVIEW
(U) COMPLETED AUDITS OR REVIEWS
(U) CURRENT AUDITS OR REVIEWS
(U) COMPLETED INSPECTIONS OR REVIEWS
(U) CURRENT INSPECTIONS OR REVIEWS
(U) COMPLETED INVESTIGATIONS OR REVIEWS
(U) CURRENT INVESTIGATIONS OR REVIEWS
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(U) A Message from the
Inspector General
(U) During this semiannual reporting
period, the President nominated me to be the
Central Intelligence Agency's (CIA's) third
statutory Inspector General (IG) and the Senate
confirmed the appointment by unanimous consent.
I am grateful for the honor and confidence extended
by the President and the Director of Central
Intelligence (DCI) and for the support of the
nomination shown by the Senate, especially
members and staff of the Senate Select Committee on Intelligence. I shall do
my best to carry out my responsibilities with initiative, integrity, and
independence.
(U) For some months during this period, erved with
distinction as Acting Deputy Inspector General an as e acto IG. I thank
him sincerely for carrying this extra burden and look forward to working
with him in the future as Counsel to the IG.
Other key vacancies in the leadership of the Office of Inspector
General (OIG) have been filled. a veteran CIA
operations officer now completing a tour will
become Deputy Inspector General in September. an
attorney whose career has been equally divided between the Department of
Justice and CIA, will become Assistant IG for Investigations in early
August. Vigorous recruitment efforts are underway to fill a few remaining
vacancies for auditors and investigators, drawing on candidates from within
and from outside the Intelligence Community.
(U) Looking to the longer term, OIG personnel and financial resource
needs are being addressed to prepare for Congressionally-mandated
auditable financial statements. To take best advantage of our existing audit
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personnel, we will seek legislative relief from the current obligation to
conduct annual audits of the financial statements of the Agency's Central
Services Working Capital Fund, as discussed elsewhere in this report. We
will begin hiring and training additional auditors during Fiscal Year
(FY) 2003 to prepare for expanded financial statement audit work during
FY 2004. In the budget process leading to FY 2004, we will seek to
incorporate permanently into the CIA budget the additional personnel and
related financial resources necessary to meet this requirement.
(U) In my first months on the job, I have introduced myself to fellow
IGs and contacts at the US Attorney's Office for the Eastern District of
Virginia, as a fair proportion of our work is performed in collaboration with
other agencies and the US Attorney's Office. The Intelligence Community
IG Forum has met twice during this reporting period, primarily to focus on
information sharing among agencies and departments in the wake of the
9/11 tragedy. I have also involved myself in the broader undertakings of the
President's Council on Integrity and Efficiency, the body made up of all
Federal statutory IGs. This has included a visit to the Inspector General
Academy at the Federal Law Enforcement Training Center in Georgia,
where many CIA OIG investigators are trained.
(U) Concerning information systems and technology, to which a
large proportion of CIA resources are devoted, we have underway a review of
OIG' s recent production and the capabilities of our personnel to conduct
appropriate audits, investigations, and inspections. Our findings will help
guide future recruitment, training, and work programs related to this
important business activity. In fact, the office has done considerable work in
this area, but we will strive to increase its impact by making our reviews
more focused and systematic.
High priority, substantive work underway during this period has
included ongoing audits of the Agency's covert action programs and of
overseas stations. Investigations have included two that are focused on
current or former senior officers and were, therefore, reported to the
Congressional oversight committees pursuant to the CIA statute.
Inspections completed included one addressing promotions to the Senior
Intelligence Service, as requested by the Congress, and another on the
(LI) In the early months of my tenure, I have been gratified that the
DCI, CIA's Executive Director and the Congress have shown continuing
close interest in the activities of the OIG and have actively encouraged our
work. We will seek to repay that support with useful deliverables that
further the oversight process: audits, investigations, and inspections that
demonstrate unassailable fact-finding; thoughtful, well-documented
conclusions; and concrete, actionable recommendations.
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31 July 2002
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(U) STATUTORY REQUIREMENTS
(U/ This report is submitted pursuant to section 17 of
the CIA Act of 1949, as amended, which requires the Inspector
General to provide to the DCI, not later than 31 January and 31 July
of each year, a semiannual report summarizing the activities of the
OIG for the immediately preceding six-month periods, ending
31 December and 30 June, respectively.
(U) All audit activities of the OIG are carried out in accordance
with generally accepted government auditing standards. All OIG
inspection and investigation activities conform to standards
promulgated by the President's Council on Integrity and Efficiency.
(U) The OIG has had full and direct access to all Agency
information relevant to the performance of its duties.
(U) Subpoena Authority
(U/ During this reporting period, the IG did not issue
any subpoenas.
(U) Legislative Proposals
(U) Requirement for a Separate Financial Statement Audit of
the Central Services Program
(U) Section 21(g)(1) of the CIA Act of 1949 [50 U.S.C.
403u(g)(1)] provides: "Not later than January 31 each year, the
Inspector General of the Central Intelligence Agency shall conduct an
audit of the activities under the [Central Services] program during
the preceding fiscal year." We have conducted four annual audits
since this requirement was levied on the CIA OIG in 1998. Since that
time, the Agency has made significant progress in managing the
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Central Services Program. In fact, the most recent audit resulted in
the issuance of unqualified opinions for all of the Program's fiscal
year 2001 financial statements.
(U) The Senate Report 107-63 to accompany S. 1428,
Intelligence Authorization Act for Fiscal Year 2002, directed the DCI,
in consultation with the Secretary of Defense, to ensure that all
agencies in the Department of Defense-National Foreign Intelligence
Program aggregation, including the CIA, receive an audit of their
financial statements by 1 March 2005. The audits are to be performed
by a statutory Inspector General or a qualified Independent Public
Accountant, at the discretion and under the direction of the
appropriate Inspector General.
urrently, OIG does not have the staff resources necessary
to pert orm an audit of the Agency's financial statements, maintain
sufficient oversight of Agency programs and activities, and meet
other mandatory audit requirements. In order to continue essential
programs and meet the requirement to audit the Agency's fiscal year
2004 financial statements, the OIG will need to augment its staffing
level. This will require an increase to the OIG's authorized personnel
ceiling and additional funding for nonpersonal service costs, such as
office space, computers, and training.
(U) A portion of the needed personnel resources could be
made available if OIG were relieved of the statutory obligation to
conduct a separate audit of the Central Services Working Capital
Fund. The activities of the Working Capital Fund are included in the
Agency's financial statements, and they would be subject to review
during the annual audit of those statements. In order to achieve the
most effective use of resources and avoid redundancies in our audit
work, the OIG requests a legislative change to remove the
requirement for a separate annual audit of the financial statements of
the Working Capital Fund.
(U) It is recommended that section 21 of the CIA Act be
amended through the Intelligence Authorization Act to reflect this
proposal. Suggested legislative language is as follows:
Sec. SEPARATE FINANCIAL STATEMENT AUDIT OF
CENTRAL SERVICES PROGRAM?Section 21(g) of the Central
Intelligence Agency Act of 1949 (50 U.S.C. 403u(g) is stricken in
its entirety.
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(U) AUDITS
(11) AUDIT STAFF OVERVIEW
(U) The Audit Staff conducts performance, financial-related,
and financial statement audits of Agency programs and activities. In
addition, the Audit Staff provides oversight of Agency interests
through its participation in reviews sponsored by the Intelligence
Community Inspectors General Forum and responds to requests for
audits or reviews from Congressional and Executive Branch officials.
In the last six months, the Audit Staff has focused its efforts
on Agency covert action programs, financial management and
information technology issues, and evaluations of Agency programs
and activities. For the remainder of 2002, the Staff plans to continue
its oversight of covert actions and field stations, review information
technology systems that affect the Agency's financial statements, and
conduct a joint inventory of the assets of the
(U In response to direction from the Senate Select
Committee on Intelligence in the Senate Report 107-63 to accompany
the Intelligence Authorization Act for Fiscal Year 2002, the Staff
completed an audit of the form and content of the Agency's fiscal
year (FY) 2001 financial statements in preparation for an audit of the
Agency's FY 2004 financial statements. In response to that same
direction, the Staff provided the Community Management Staff an
estimate of the audit resources that will be required to conduct the
audit of the Agency's FY 2004 financial statements. The audit of the
FY 2004 financial statements will be a significant undertaking for the
Staff, and the resource requirements will be substantial.
(U) SIGNIFICANT COMPLETED AUDITS OR OTHER REVIEWS
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(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS OUTSTANDING
FROM PREVIOUS SEMIANNUAL REPORTS
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(LI) SUMMARIES OF SELECTED CURRENT AUDITS
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(U) INSPECTIONS
(U) INSPECTION STAFF OVERVIEW
(U/ he Inspection Staff is responsible for conducting
inspections o A gency programs and operations to evaluate their
efficiency and effectiveness and their compliance with law, Executive
orders, and regulations.
he Inspection Staff has continued its flexible approach to
sche u mg, which has enabled us to schedule more effectively and
work more productively. During a seven-month cycle (February-
August), inspection teams conduct either a single major inspection or
several more focused, less wide-ranging inspections. The second
cycle (September-January) remains five months in length. During the
current cycle, the Staff is working on or has completed six
inspections: The Agency's Response to the Attacks of 11 September,
Counterintelligence (CI), Counterespionage, the Exploitation of
Technical Tools, the Directorate of Operations' East Asia Division,
and Promotions Into and Within the Senior Intelligence Service (SIS).
In addition, we intend to conduct follow-up ins ? ections of th
Forei Broadcast Information Service and the
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The Inspection Staff continues to conduct a two-
week New Inspectors' Training Course and a seminar for team
leaders before the start of each inspection cycle. The Staff also
conducts seminars for OIG inspectors and research assistants during
the course of each cycle, instituted in response to the increasing
sophistication of our methodology. These seminars build on the New
Inspectors' Training Course and address topics such as interview
strategy, the exploitation of databases, electronic focus group
methodology, research and analysis, process mapping, and drafting.
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(U) SIGNIFICANT COMPLETED INSPECTIONS OR OTHER REVIEWS
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(U) STATUS OF SIGNIFICA11T RECOMMENDED ACTIONS OUTSTANDING
FROM PREVIOUS SEMIANNUAL REPORTS
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(U) INVESTIGATIONS
(U) INVESTIGATIONS STAFF OVERVIEW
(U/ The Investigations (INV) Staff is responsible for
investigating possible violations of statutes, regulations, policies, and
procedures, as well as potential waste of funds, mismanagement,
abuse of authority, and substantial dangers to public health and
safety related to Agency programs and operations. The INV Staff is
also responsible for general oversight of the Agency grievance system
and for reviewing appeals of various Agency board decisions.
(U/ In addition to completing a number of routine
criminal and administrative investigations, two major investigations
were initiated during the reporting period, and work continues on
two other substantial investigations that require considerable
investigative resources.
(U/ A significant number of personnel assignments
were made in INV Staff management, including an Assistant IG for
Investigations who will join the staff in the near future, a Deputy
Assistant IG for Investigations, and two Supervisory Special
Investigators. Additionally, seven investigators were hired, many of
whom have extensive investigative experience. These investigators
completed five weeks of formal instruction sponsored by the Federal
Law Enforcement Training Center and OIG's Investigations Staff.
They are currently under the tutelage of a senior investigator who is
serving as their mentor. It is anticipated that the formal mentoring
program implemented recently will enhance the career development
of the new investigators.
(Uij OIG continues to provide grievance resolution
training to component and directorate grievance officers. Three
individualized training sessions were conducted in February and
May 2002, providing eight new component grievance counselors
with the skills necessary to successfully resolve issues. OIG's
grievance unit also provided advice and guidance to employees with
47
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various concerns. Fifteen employees sought advice from OIG during
? this reporting period, and 14 of these were referred directly to the
management level appropriate for their complaint, or to a directorate
grievance officer. OIG received one grievance appeal for review
during this reporting period.
(U) SIGNIFICANT COMPLETED INVESTIGATIONS OR OTHER REVIEWS
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(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS OUTSTANDING
FROM PREVIOUS SEMIANNUAL REPORTS
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(U) SUMMARIES OF SELECTED CURRENT INVESTIGATIONS
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(U) STATISTICAL OVERVIEW
(U) Audit Staff
(U/ During the period 1 January to 30 June 2002, the
Audit Staff issued 14 reports and memoranda and made 35
recommendations to improve accounting and financial management;
supply, property, and personnel management; information systems;
general management; and procurement management.
The Audit Staff had 25 audits and reviews ongoing at the
end or me reporting period. Four of the audits involve Agency
financial management issues. The remaining efforts address topics
such as the Agency's information systems certification and
accreditation program, surveillance detection training, and the
defector resettlement program.
(U) Inspection Staff
n During the first six months of 2002, the Inspection Staff
completed six inspections, including one that was Congressionally
directed. The Staff also had seven ongoing inspections at the end of
the reporting period that include two compliance inspections to
determine the effectiveness of recommendations made in 2000 to
improve the and the Foreign Broadcast
Information Service. Other ongoing inspections include reviews of
the East Asia Division/DO, the Agency's response to 11 September
and evaluations of the Agency's counterespionage and operational
counterintelligence postures, as well as an evaluation of the Agency's
exploitation of technical tools in improving "speed, connectivity and
volume" problems as they pertain to data collection, analysis and
sharing.
(U) Investigations Staff
(U/ The Investigations Staff completed work on 169
matters th various types during this reporting period. Of this
number, 21 cases were of sufficient significance to be the subject of a
final report-7 Reports of Investigation and 14 Disposition
Memoranda.
(U/ During this period, six matters were referred
formally u me i.jejartment of Justice based upon a reasonable belief
that violations of Federal criminal law may have been committed.
(U/ Recoveries on behalf of the US Government
during this reporting period, as a result of the Investigations Staffs
efforts, totaled approximately $48,829.
(U/ As of 30 June 2002, 71 matters were in various
stages of review by the Investigations Staff.
(U) COMPLETED AUDITS OR REVIEWS
1 January ?30 June 2002
(U) Financial Management
(U) Assessment of the Financial Condition of the Langley
Children's Center
(U) Fiscal Year 2001 Financial Statements of the Central
Services Working Capital Fund
(U) Form and Content of the Agency's Fiscal Year 2001
Financial Statements
(U) Emergency Supplemental Funds
(U) Operations
Covert Action Activities in Response to the
Covert Action Activities Initiated in Response to the
11 September 2001 Terrorist Attacks Against the United
States
(U) Personnel and Security
(U) Administration of the Security Protective Service
(U) Administration of Corporate Development Training
Courses Provided by the Office of Training and
Development
(U) Procurement and Technology
(U) Outsourcing of Agency Activities
(U) Travel Reengineering, Integration, Automation, and
Development (TRIAD) System
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(U) CURRENT AUDITS OR REVIEWS
30 June 2002
(U) Financial Management
(U) Cash and Other Monetary Assets
Financial Management Within European Division
(U) Agency-Controlled Bank Accounts
(U) Internal Quality Control Review of the Audit Staff
(U) Payroll Expense Processing and Reporting
(U) Operations
Counterproliferation Covert Action Activities
(U) Personnel and Security
The Agency's Surveillance Detection Training
(U) Thrift Savings Plan for Calendar Years 1997-2000
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(U) Personnel and Security (continued)
(U) Survey of the Agency's Security Clearance Process
(U) CIA Support to Agencies Responsible for the Enforcement
of Export Licensing for Dual-Use Commodities and
Munitions
Review of Sentry Program
(U) Procurement and Technology
(U) Information System Certification and Accreditation Process
(U) Automated Time and Attendance Systems
(U) Compliance with Foreign Ownership, Control, or Influence
Policies in Acquisition
(U) Continuity and Contingency Planning for Critical Agency
Information Systems
(U) Review of Contract Invoicing Allegations
nEfficiency of the Covert Procurement Process
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(U) Procurement and Technology (continued)
(U) Audit of the COMMO 21 Program
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(U) COMPLETED INSPECTIONS OR REVIEWS
1 January -30 June 2002
(U)
)irectorate of Operations
(U) Collection Requirements and Evaluation Staff, Directorate
of Intelligence
(U)
/Directorate of Operations
(U) Promotions into and within the Senior Intelligence Service
(SIS)
(U) CIA's Approach to Warning
(U) CURRENT INSPECTIONS OR REVIEWS
30 June 2002
East Asia Division, DO
The Agency's Response to the September 11
ttacks
Counterintelligence
ounterespionage
Exploitation of Technical Tools
Foreign Broadcast Information Service, DS&T
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(U) COMPLETED INVESTIGATIONS
OR REVIEWS
1 January -30 June 2002
Allegations of Unauthorized Disclosure or Release of
ellite Imagery to a Foreign Government
(U) Alleged Conflict of Interest
(U) Alleged Contract and Ethics Improprieties
U Alle ed Contract Fraud
(U) Alleged Improper Authorization of Compensatory Time
(U) Alleged Privacy Act Violation
(U) Alleged Regulatory Violations
(U) Briefing of US Congressman on Perm 35 Labor Camp
(U) Conversion of US Government Property
* (U) These investigations resulted in a Disposition Memorandum rather than a Report of
Investigation.
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U Mana ement Misconduct
(U) Procurement Fraud
(U) Theft and Misuse of Government Property
(U) Time and Attendance Fraud
(U) CURRENT INVESTIGATIONS OR REVIEWS
As of 30 June 2002
Category Number of cases
Grievances
Board Appeals
Management and Supervision
General Investigations
1
5
Criminal and Prohibited Acts
Conflicts of Interest 3
Embezzlement 1
False Claims - Other 3
False Claims - Time & Attendance 22
Megaprojects 1
Misconduct - Employee 2
Misconduct - Management 4
Procurement Fraud 11
Regulatory Violations 2
Theft and Misuse of Government Property 5
Waste 3
Other - Administrative/Criminal 8
Total Ongoing Cases 71