LETTER TO MR. BUSH FROM (SANITIZED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79M00467A002700080008-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 10
• Document Creation Date: December 20, 2016
• Document Release Date: December 5, 2007
• Sequence Number: 8
• Publication Date: May 16, 1976
• Content Type: LETTER

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STAT
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CENTRAL INTELLIGENCE AGENCY
WASHINGTON, D.C. 20505 -
Thank you for your thoughtful letter. It is good
to hear that you still have a keen interest in Cambodia.
I hope you will understand that I have a pretty full
schedule and do not profess to be an expert in the
area. Consequently, I have asked Anus Thuermer
to make arrangements for you to meet f
my staff.
Sincerely,
George Bush
Director
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-N0. 237 Use previous editions :- GPO ! 1974 0 - 535-857 (40)
roIsy67
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CENTRAL INTELLIGE0 AG
OFFICE of THE D~REC1
If possible to determine
I'would like to know why Houston gave this
interview?????
GB 6-5
Last Saturday Tony Lapham had lunch with
Larry Houston, and the latter simply men-
tioned that he was going to be interviewed
on this matter and would say as little as
possible. The ranks of 0GC are puzzled by
Houston's remarks, and we will have a problem
with SEC. Lapham will be reporting to you
on this Monday.
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. ? - air ?..x ueclnwn w
et into trio. Insurance I
g
Insurance Venture.
O CIA Produced
Awkward Situations=
New Light Shed on Problems,
;, Including Rebuff to Bid for
.Acquisition, SEC Inquiry
By DAvM-IOrsxuis-'7.
Staff Reporterof'f'as WALL STRssT JOURNAiI
The Central Intelligence Agency got. into
the insurance business .in 1962. Since then,
the insurance business has got the CIA into
some awkward predicaments.
The agency's original idea in setting up a
complex of Insurance companies was.to'pro-
vide a discreet means of paying retirement,
disability and death'. benefits for double
!agents and other top-secret operatives, who
couldn't receive regular CIA. benefits in the
form of U.S. Treasury--checks because. of
possible exposure..-..'-..-),, ? :...;~...-
Lawrence R. Houston;. who helped create
the {nsurance operation and who directed it
until' he. retired as -the agency's general
counsel in 1973, said the CIA on several oc-
casions even had to rebuff. investors. inter-
ested in acquiring what appeared to be, a
healthy insurance operation. Another, time;
company" officials had to fend off a Secur
ities and Exchange- Commission: insider-,
trading inquiry that touched peripherally oni
one concern's purchases of a stock.. Further.
complicating matters, these headaches-had, to be handled publicly- by CIA employes who
were merely posing-, -as-. executives - and
hadn't any independent authority even to
sign checks.
These glimpses inside the CIA's insur-
ance complex, which eventually grew to sev-
eral companies, emerged from an Interview
with Mr. Houston. While the existence o3Zlie'
310 million "5-su-tance complex was dis-
closed in an April report by the Senate Intel-
ligence Committee, Mr. Houston shed new
light on the problems of managing the agen-
cy's conglomerate. .
Mr. Houston declined, however, to name
j specific companies in the CIA insurance
complex, which he believes is serving a
"perfectly legitimate and absolutely neces-
sary purpose." He, expressed concern that
publication, of such specific Information
could result in exposure and "serious harm"
for individuals who have received payments
through the project. ,. ;
to the families of four American pilots shot
down-over Cuba in the Bay of Pigs incident.
The insurance complex was established the
executives and lawyers, who apprised the
CIA of two existing "shell" companies and
offered advice on how to "flesh them out,"
Mr. Houston recalled.
While the CIA tries to write contracts
with its covert operatives that specify regu-
lar employe contributions for pensions and
Insurance benefits, many of the' payments
by'the insurance complex have taken a
more irregular form, Mr. Houston said. For
example, when an "uninsured" operative re-
tired:or died, it was often necessary to back.
date elaborate phony benefit policies and
fund: them with lump sums from the CIA.
But. it's clear that the role of the insur-
ance- complex hasn't been limited to provid-
ing. insurance. The Senate Intelligence re-
port, while approving the general intent of
the project, . noted cryptically: "The com-
plex also provided a limited amount of sup-
port ,to clandestine operations-specifically
for the; acquisition of operational real estate
and a a conduit for the funding of selected
covert adtt Ities.
Mr. Houston conceded that the insurance
company has, been used to channel money
for covert operations, as a "sterilized fund-
"
ing
device to make the payments difficult
to trace: (Most of the covert funding appar..
l
ent
y was .carried on the books as invest-
ment.) But he denied that this was the real
reason the complex was created. "If the
complex later got into other,. agency pur-
?poses, he said, '.'It: was because-it proved
-itself a useful- instrument.", He wouldn't
elaborate.
Recruited About 50 Businessmen
To help build a cover for the insurance
complex. of foreign underwriting concerns,
based.in such places as Bermuda and the
Cayman Islands, and domestic Investment
concerns, the CIA once recruited about 50
businessmen and retired government and
military employes as directors for the com-
panies, Mr. Houston said. They were, paid
$50 to $100 a board meeting, with a maxi-
mum of four meetings a year. Aware that
they were working for the agency, the direc-
tors would sometimes be asked to advise on
investment portfolio decisions. But Mr.
Houston said he supervised every detail of
the operation, including management of the
investment portfolios, from CIA headquar-
ters in Langley, Va.
To make the Insurance complex believa-
ble, it had to show healthy profits. The com-
plex, according to the Senate report,. has re-
tained accumulated net earnings of about $9
million since 1962, with its profit from stock
sales topping $500,000.'In managing the port-.
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folio, Mr. Houston apparently was able to fi-
nesse the-end of the go-go market. By the
early 1970s. he said. "we were' mainly out-of
stocks and ;into ' time ? deposits and. Euro-
Mr.-Houston said he; gathered Investment
tips. from "some witting and some unwit-
ting" consultants and friends and- agency
contacts., All stock purchases were made
through.: regular' brokerage firms. and, to
avoid potential conflicts of interest, he didn't
invest in any companies with which the CIA
had 'contractual relationships... .
. But:.: profits - on . the stock dealings and,
other transactions haven't been used as a
slush Lunde to supplement money approprl=
aced for CIA activities by. Congress, the law,
yet maintained.. Money beyond that needed
to support the underwriting costs is returned'
to the U.S'.,.Treassury through various arcane
procedures.he said:: "
To preserve the-cover for the insurance
complex; the'CIA sought to operate, the com
panies as normally as possible. This meant:
among other things "laying off"' some of Its
pollcies,' to regular commercial Insurance
concerns"in' so-called reinsurance transac-
tions. Mr. Houston,. however, would quietly
notify the chief executives of these compa-
nies that they were actually buying spook In-
surance. The CIA companies also reinsured
policies, from the commercial , -'concerns,
again to maintain appearance of normality. .
Sometimes, however, the profit-making,
business-as-usual cover proved to be an em-
barrassingly successful decoy.. on several
occasions, . investor-s approached, CIA . em-
ployes who nominally headed companies in
the insurance complex and suggested that
the units looked like .good acquisition possi-
bilities. "We simply never let it come to the
point of negotiation," Mr. Houston obser\~d.
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June 4, 1976
STAT
hat a very thoughtful note. I
really did enjoy being on your campus.
Barbara and I were most impressed with
what we saw there.
It was a pleasure meeting you.
1 again for your kind words.
Yours very truly,
George Bush
STAT
Randolph-Macon College
Ashland, Virginia 23005
DCI/GB/dlg
Distribution:
Orig - Adse
1 - DCI (w/basic)
--1- - ER
1 - A/DCI (w/basic)
Zuscutive fRsgistry
Roan 7-M?42
11R.adgiisrtsrs
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d;.tnZd7 I
RANDOLPH-MACON COLLEGE
ASHLAND, VIRGINIA 23005
June 1, 1976
Mr. George Bush, Director
Central Intelligence. Agency
Washington, D. C. 20505
Dear Mr. Bush:
It was a very special pleasure to have you and Mao
Bush on our campus Sunday, and we all appreciate your
taking the time to come to our College and for preparing
you
such a thoughtful and provocative address-.---We-hope
and your wife had as nice a day as you made for us, and
we will continue to follow your career with deep interest.
It is indeed helpful to my own personal commitment stoh ur
government to hear men o
od fr e and
c
I observe in you and my g
I find myself'p'!oJecting you into all sorts of places in
gracious
Washington. Anyway, you have. been very
here at Randolph-Macon, and we are very much in your
debt.
I hope you and your lovely wife and family have a
very pleasant summer.
Sincerely,
Enclosure
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lief Urg-es 'freealom Coi'mifmen
CrenshawGytnnasium,awards DaviABsh and) BrianyCarter SBege~
?
"But.the . look at: us and I and honors were, present(d to Barry y Bowman Gabayandj3rucePatrick
Ganey (Mechanicsvile)
Thedirectorof theCentralIn. that America export its system .
has told but said It has an obligation to
telligence . Agency.
,
Randolph Maoga'Coilego ,,"countrle :that want to be tree.
graduates he is concerned',?""Asyouleavebere,don'tgive:
about the `credibility of, the " up your interest do learning
United States and urged them to Bush told the nidre than
make a "commitment to 160-member, class. "Expand
freedom." your intgrests to include a com
parative look 'at, the world.
George H W..: Bush:'said iln ? ',.."We've got ' problems :here
,'.,yesterday's commencement, ` ptit how are we compared to the
,speech in Ashland that he is'r , other 154 "countries around the
"worried about the credibility world?"
of the United States as seen He said. he hoped the..
through foreign countries
"They're trying ' to decide graduates would make a "com.
where were at;" he said x.1 4 mitme{tt to"domore than sit on
the sideflnes and criticize" this
Bush who was special envoy . country `atril would make a
to China before President Ford , "commitment to freedom."
appointed, him. to head the CIA;.. .Dur ng.the commencement
said China is committed" and : exercises in .the college's
really wonder I Wonder
what they think, of the United
States," Bush said...
China and other countries are
asking whether the United
States;:is?committed and
whether the people still believe
enough to sacrifice, Bush said..
,
They wonder about the United .. port News, the David Trent. - Richmond area students:
States' commitment to "on-' ?, Prize In English' Richard Kehl ' Deborah Jean Woolard, Roger Todd??,
'
GEORGi.HA BUSH:ADDRESSING R-MC GRADUATES';
Davies of Culpeper, the
Smithey Mathematics Medal;
Ingrid. Kimberlee Chucker of
Clifton Forge, the Noble R.
McEwen Award, and Steven.
Oliver Owens of Ashland, the T.
MCN. Simpson Jr. Scholarship
Award.
Dr, George Daniels Watkins
received an honorary doctor of
science degree, Dr, Watkins is a
Sherman Fairchild professor of
solid-state studies-in the
physics department of Lehigh
University and a graduate.of
Randolph?Macon _ ? 's
The following Richmond area
students: received bachelor of arts-degrees:
Jo Anne Lewis (Chesterfield), Barbara ? ,
Dale Shelburne, Brian Clifton Adams,
1"mot
Crew, David Kelth Crossen, David Dixop f
pose,,the;.gspor f : pt c4m- ' Littleton of Virginia Beach the Lentz, David Goodwin Saintslag; Eddie
munism;" he continued Hall Center MemorialAwardla Reeves Smith (Hanover), Wiuiam'
: r Chemistry, Lea, Pu'rdum' MortoSQcrnandC6adespuvalWaddeq
Hesaiat;ewa
ot
e
ti
sn
sugg
s
n
six students and one:honorary Also, Michele Clarice Garrigaq; Mark,i
degree was conferred 'Stephen Giragosian (Glen Allen); Terry
The-I(.W. Murray Medal for, Patrick Guldt (Sandston), Stephen Cary"
Hundley. Sharon Pope James
Scholarship went, to ,Michael, .(Mechanicsville); Elizabeth Anne Jonas
Lee'' ` Lewailen f. Newport: (Ashland). Jay Gentry Prom P Patterson
News, who delivered the? Gerry Smith (RutherClen),.andSharon ?
valedictory address ' Wayne Woodle (Mechanicsville).
Other students honored were Bachelor of science degrees
were awarded to the following
Timothy Hurst Justice of New-
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