STAFF STUDY--RELIEF FOR AGENCY ACCOUNTABLE AND DISBURSING OFFICERS FOR SHORTAGES AND LOSSES AND CLARIFICATION OF AGENCY PROCEDURES CONCERNING SHORTAGES AND OVERAGES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP59-00882R000100010073-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 9, 2016
• Document Release Date: January 19, 2001
• Sequence Number: 73
• Publication Date: March 29, 1954
• Content Type: MF

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OGC HAS REVIEWED.
MEMORANDUM R: Acting Deputy Director (
SUBJECT:
29 March 195k
U's
Staff Study -- Relief for Agency Accountable and
Disbursing Officers for Shortages and Losses and
Clarification of Agency Procedures Concerning
Shortages and Overages
1. You have requested our concurrence Or recommendations on
the staff study submitted by the Office of the Comptroller, recnd-
ng that a policy be established to provide relief for individuals ac-
countable for confidential funds Where losses or deficiencies occur
without their neglect or malfeasance, and recommending the adoption
of certain procedures for the disposition of such cases.
2. This study apparently assumes that Agency regulations, as
interpreted by this office, do not permit relief from liability though
funds be lost without fault or neglect, with the result that employees
of C/A are in a position less favorable than that of other Government
officers. It say, therefore, be stated at the outset, that it is not
our view that Agency regulations require that an employee be held re-
sponsible for a loss or deficiency in a confidential funds account
regardless of the circumstances. However, it is our interpretation of
the law, as it relates to a custodian of Government funds, that in a
case of loss or deficiency, the individual accountable has the burden
of Shoving his freedom from fault or neglect; i.e., the explanation
submitted must be such as will permit the inference to be made that
reasonable diligence was used in the perfermance of his trust; and that
this burden may not be considered as being met by the mere submission
of self-serving statements to the effect that 'due diligence was used
or that reasonable safeguards' were taken,
It will probably assist the application of our subsequent com-
ets to here prologuize by expanding the views asserted in our opinion
dated 24 July 1953 on the subject of 'Shortage in 11111110, Station
Funds . It is the importance and innuendo imputed to that opinion which
has given rise to the present proposals and staff study. It is to be
noted that that case involved a definite factual situation which was
submitted for decision. There, confidential funds were found to be
missing which must be accounted for to Congress by certification of the
Director. The latter has seen fit to delegate to the Deputy Director
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(Administration) by Confidential Funds Regulation 1.4(c), those questions
of shortages arising fro* the peculiar accounting practices necessitated
by operational activities. In thallilltre we merely decided that 25X1A6a
the facts there ahowed no basis for requiring a lesser standard of care
because no operational necessity existed. The heels for excusing short-
ages in all instances is that the responsible employee affirmatively show
two things; (1) that he vas not negligent, and (2) that there was no mml-
feasance on his part. The file reciting the facts of that case showed that
reqoirement nuMber (2) had been met. The first requirement was not met
because the money was quite possibly lost incident to its safe-keeping
or in the disbursement procedures. In either instance it would amount
to negligent handling on the part of the employee. We repeat, the burden
is upon the employee to show there was no negligence.
4. If the Director should see fit to adopt the recommended procedures,
ye find no legal objection. We are neither holding brief for the present
procedures nor asserting that no changes of the regulations are needed.
The purpose of this commentary is simply to dispel the mistaken impression25X1A6a
that our opinion in the case meant that there vas no remedy for
relief of shortages arising from non-operational activities, and to offer
constructive criticism based upon legislation and legislative history on this
problem in other branches of Government. All Government funds are vested
with a character of high trust when deposited in the hands of employees.
Confidential funds are MOO more so, because they are subject to no account-
ing control beyond CIA. What constitutes negligence in the benAling of
these funds must be judged by the peculiar circumstances resulting from
operational activity. Where no such operational circumstances exist the
ordinary criteria at apply. We perceive no inadeqoacy under the present
status of the regulations end are thus opposed to a further delegation of
this authority below its present high position in Agency structure. More-
over, we most likewise dissent to a delegation of this authority to more than
one office of the Agency, even for the smaller amounts. Such a condition
would result in establishing different standards of care and trust in
various parts of the Agency and produce inequities between stations. Thus,
we cannot concur in the efficacy of procedures which would permit either
a local determination of the basic issue of care and diligence, or author-
ize the disposition of a case to be made on the recommemdmtion of a board
compoeed of members from the -affected' offices. We do not believe that
such procedures can be deemed to observe adequately the high obligation of
trust placed upon this Agency by the Comgress.
5. The matter of the loss of funds or deficiency in accounts as such
is not peculiar to this Agency. It is a problem of such general nature
throughout the entire Government that the Congress has seen fit to estsblish
procedures for the relief of disbursing and accountable officers or agents
under certain circumstances. The Act of August 1, 1947, 61 Stat. 720 (31
USC 32a-1) authorises the General Accounting Office after consideration of
the pertinent findings and, if in concurrence with the determinations and
reoommendations of the head of the department concerned, to relieve account-
able officers or agents charged with responsibility for the loss or short-
age of Government funds, if the head of the department determines (1) that
such loss or deficiency occurred while the officer was acting in the discharge
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Of his official duties, or that such loss or deficiency occurred by reason of
the act or omission of a Whordinste of such officer or spent wad (0) that
such lose or deficiency occurred without remit or negligence on pert
of such officer or agent. A copy of the statute, together with the report
of the cognisaut Semite committee is attached as Tab A.
6. While admittedly the procedures set forth in the Act mey not
be used to process a case of loss or deficiency of confidential fUnds
we suggest that vonsideration be given to adopting the substance of
the statute to the internal processing of such cases. This could be
accompliehed by revising the regulations to entrust to the Office of
the Comptroller the functions allocated to the laud of the department
with respect to finding* and recommendations, and to confer upon the
Deputy Director (Administration) the responsibilities fora final decision,
otherwise exercised by the Comptroller General. Such a procedure would have
a two-fold advantage in that it is more conducive to an objective determine
'Lion of the question of personal liability, while also affording the cpcortu-
nity to only the same geoeral principles to the consideration of each case.
This, we believe, would do nucb. to ensure that Agency employees receive the
same consideration as afforded other Government officers, and at the same
time preserve the integrity of the confidential funds system.
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Office of General Counsel
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Attackseut
Tat A
0OC/RJB/RCK:afb
Distribution:
Orig & 1 - Addressee
1 - cbromo
1 - subject v//
1 - signer
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