MEMORANDUM ON CENTRAL INTELLIGENCE AGENCY

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Document Number (FOIA) /ESDN (CREST): 
CIA-RDP80-01240A000100140093-5
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RIPPUB
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C
Document Page Count: 
9
Document Creation Date: 
December 9, 2016
Document Release Date: 
July 24, 2000
Sequence Number: 
93
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Publication Date: 
January 1, 1959
Content Type: 
MEMO
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Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 MEMORANEUM ON CENTRAL DITELLI ENCE AGE! CONFIDENTIAL /f/7 This memorandum has been prepared to summarize certain matters relating to the development of the Central Intelligence Agency, particularly the financial arrangements and the audit responsibility of General Accounting Office. The information in this memorandum has been obtained from the files (Legislative file on Central Intelligence Act and Amendments; B-59998, Confidential and B-74185) in the General Accounting Office. The Central Intelligence Agency was established as a successor to the Central Intelligence Group under the provisions of Section 102 of the National Security Act of 1947. Its purpose is to coordinate the intelligence activities of the several Government departments and Agencies in the interest of national security. The Agency has no police, stibpena? law-enforcement powers, or internal-security functions and its activities are almost entirely covert, carried out principally in foreign countries. Establishment of Central Intell ence Under date of Ally 30, 1946, (E-59998) a letter (received August 28, 1946, per GAO date stamp) signed by Lban Acheson, Acting Secretary of State, Robert P. Patterson, Secretary of War, James Forrestal, Secretary of the Navy., and William Do Leahy, Personal Representative of the President an National Intelligence Authority, as sent to the Comptroller General, attention Chief, Accounting and Bookkeeping Division, requesting that a working fund be establishedec-Mcneisioianion 601 0 ti $01315pil IMMO 44 civ mom 'el ii of the Act of June 30, 1932 Oa Stat. 14111Crsiors ilippllpriations to the jviOV:-1 1113 m3+114P4P." t three D partments.This working Vrati:to illeArguotifypleinent the 4A01.,.00 Presidential directive of January rrrijrafi to do with foreign /*AM& Ns* , Approved For Release 2001/09/04: CIA-RDP80-01240A000100146693-5 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 parti . 2 . tivitiee relating to national eectrtty and directed establishing a Central Intelligence Group to engage in certain centralized intelligence activities which were of common interest to the departments concerned. The working fund was deemed necessary to provide the Director of Central Intelligence with administrative and operational facilities which include expenditure of funds and furnishing of personnel and equipment. No specific reply appears to have been made to this letter by the General Accounting Office, but there ie a notation at the bottom of the letter by E. L. F. on 8/6/46 as follows! "This matter was dieeussed personally with the Comptroller General, the details and procedures were explained to him and he authorized establishing the working fund as requested." Apparently there was same doubt in GAO on the legality of the propoeed delegation to the Director, Central Intelligence Group, because the tile (13-59998) contains an unsigned draft letter set up for signature by the same parties dated August 12, 1946, (also stamped received in (1AO, August 28, 1946) confirming a working fund arrangement under a different authority. This unsigned letter refers to the letter dated July 30, 1946, and to the approval of the Treasury Department and the Comptroller General, of a working fund, War, General, 1947, which has been constituted and had been assigned the syMbol nuMber 2175900, ender the authority granted by Section 291 of the Revised Statutes, the Military Appropriation Act, 1947, and the Naval Appropriation _Act, 1947: approved JAY 8, 1946 (Public Law /922 79th Congress). At the bottom of this letter a notation initialed by E. L. F. on 4/21/46 states that: Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 25X1A "1 calledWar 76943) of Cenbsei Istaaeltgense Gmeetp about this and advised him that the proposed delegation of authority was extremely doubtful as to ems matters but that it did not lack color of authority and that under the circumstances, considering the nature of the Agency, this Office probably would go along with the delegation with the understanding the entire matter would be made the subject of specific legislation at the first reasonable opportunity*" Under date of September 5, 1946 (B49998), a letter in the same language as the draft was sent to the Comptroller General which letter was signed by Dean Aohesonl Robert P. Patterson, James Porrestal, and William D. Leahy, in their capacities respectively as Acting Secretary of State, Secretary of War, Secretary of the Navy, and Personal Representative of the President for National Intelligence Authority. No specific reply was made to this letter, 25X1A On August 35, 1946 (13-59998)? a letter signed by Colonel, Executive for Personnel. Administration for Central Intelligence Group, to the Comtroller General (received GAO, August 19, 1946) confirmed a conference between representatives of National Intelligence Authority and the General Accounting Office on August 14, 1946, relative to disbursing and accounting procedures to be established in order to insure security with respect to the confidential operations of the Central Intelligence Group and outlined a plan of a ',Voucher and Schedule of Taymentafl for submission to the Chief Disbursing Officer, Treasury apart- ment, in order to enable that official to make payments to vendors and other perms. This Voucher and Schedule of Peennents would be used as voucher(s) since all both a schedule of payments and the orAginal/basic data normally trans- mitted through channels to the General Accounting Office for poet-audit would pbraioalkv be retained in the oonfidential files of Central Intel- ligence Group* Also, there was outlined in the letter a payroll pro- Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 4 - oedure to be follaed by the agency. This letter also *'opoeed that audits by the General Accounting Office be nade at the uite by auditors approved by Central Intelligence Group from a security viewpoint and that after audit and approval for settlement by representatives of the General Accounting Office the original vouchers and basic payroll data would be retained in the confidential files of the Central Intelligence Group for a period of not to exceed five years. Under date of August 280 1946, the Comptroller General, in a letter to the Director, Central Intelligence Group, approved the procedure for and payment by the Chief Disbursing Officer of a properly prepared 'Toucher and Schedule of Poyments.# This letter atated further that in accordance with the informal discussions the names of the General Accounting Office auditors designated to perform the site audits would be submitted to the Director, Central Intelligence Group, for approval prior to the first audit* On March 27, 1947 (B49998), Hoyt S. Vandorberg? Director of Centrel Intelligence, wrote the Cemptroller General requeating approval for an arrangement under which the original vouchers' and Supporting papers related to disbureteients made at certain locations abroad through officials of the State Department who have been designated Special Disbursing Agents to the Chief Disbursing Officer, Treasury Department; would be forwarded directly to the central office of the Central Intelligence Group in Wathington, D. 04, and subeeqUentkv retained In their files for audit by representatives of the General Accounting Office. By letter dated April 1, 1947g to the Director of the Central Intelligence Group, the Comptroller General approved the requested procedure. Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 -5- letter dated July 1, 1947, the Secretary of State George C. Mai'siaU, Secretary of War Robert P. Patterson, Secretary of Navy 'James Forrestal, and Personal Representative of the President on National Intelligence Authority, William D. Leahy, requested that during the 1948 fiscal year the same authorities and arrangements apply to the activities and funds of the Central Intelligence Group as existed during the 1.947 fiscal year. No reply appears to have been made to this letter and there is a notation 'Tile E. L. F. 7/28/47ft appearing on the bottom of this letter. Enactment of National Security Act of __7biiclaw253, apth .Copeme On July 26, 19470 Senate 750 was enacted into Public Law 253 which set up the National Security Council and by Section 102 provided for a Central intelligence Agency as successorto the Central Intelligence Group. This le ialatien, however, provided no administrative authorities for obtaining expending or accounting for funds in carrying out the intel- ligence activities. 25X1A Following the enactment of this legiAlAtion Executive for Administration and Management, on October 7, 1947, 59998) wrote the Comptroller General in which it was stated that in accordance with the informal arrangements made with the representatives of the General Accounting Office and the Treasury Department, it was planned to operate and administer the funds made available to the National Security Council in the same manner as funds made available heretofore to the Central Intelligence Authority, Accordingly, the vouchers and basic oupporting papers would be retained in the files of the agency in order to enable the representatives of the Audit Division of the General Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 - 6 - Accounting Office to perform the site audit of these accounts. The letter also enclosed delegations of authority executed by the Executive Secretary and concurred in by the Director of Central' Intelligence. Reply to this letter does not seem to have been made by the General Accounting Office as it contains a notation "File, no reply necessary, ELF, 10-9-47." On July 1, 1948, Secretary of State G. C. Marshall, Secretary of the Army Kenneth C. Royal, and Secretary of the Nary John L. Sullivan wrote the Comptroller General requesting that during the fiscal year 1949 the sane authorities and arrangements apply, forthe activities and funds of the Central Intelligence Agency as existed during 1947 and 1948 fiscal years. No reply seems to have been made to this letter as it contains a notatibn "File ELF, 7-13-48." Enactment of legislation for the administration of the Central Intelligency Agency H. R. 2663 and S. 961 were introduced in the 81st Congress for the purpose of providing for the administration of the Central Intelligence Agency, established pursuant to Section 102, National Security Act of 1947, and for other purposes. Section 7(a) of the bill, renumbered as Section 10(a) in the bill as enacted, permitted sums made available to the agency by appropriation or otherwise to be expended for the purposes set forth in the section notwithstanding any other provisions of law. Nouse Report No. 160, 81st Congress, reporting on the bill (page 6) stated that this section was necessary in view of the require- ments in existing law or Comptroller General's decisions which specified Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 that such expenditureslelre not permissable unless authorized by Section 7(b)? renumbered Section 10(b), in the bill as enacted, provided followst "The swnc made available to the Agency may be expended wtth.- out regard to the provisions of law and regulations relating to expenditure of Government ilnxisj and for objects of a confidential, extraordinax7, or emergency nature, such ex- penditures to be accounted for solely on the Certificate of the Director and each Certificate ;tell be deemed a sufficient voucher for the amount therein certified," House Report No, 160 (page 6) did not amplify the meaning of this section and stated only that the sections permitted the agency to expand sums made available to it without regard to provisions of law and the expendi- ture of fends for confidential purposes could be accounted for solely by the certification of the Director. On March 4, 1949: J. Darlington Denit? Chief, Accounting and Bookkeeping Division, wrote the Comptroller General and called attention to Bills HR. 2663 and Senate 961 providing for administration of Central Intelligence Agency and particularly to the language of subsection (b) of Section 7, Mr, Denit pointed out that the general application of existing lave and the authority and responsibilities vested in this Office *Vex, the control and review of the financial transactions of various Goverment acenciee would be completely nullified insofar as the transections of the Central Intelligenmy Agency were concerned and that the legal effect of such a provision would place the 'goner in an auto- nomous position from the standpoint of accountability for the funds that may be appropriated or transferred to it, He suggested that the follow- ing language be substituted Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 -.8 . "(b) Of the sums made available to the Agency amounts shall be specified which Shall be expended for objects of confidential, extraordinary, or emergency nature, ouch 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.n On Mareh D.t, 199, (1-710-85-0.N.) the Comptroller General wrote to the Chief, Accounting and Bookkeeping Division and after referring to a letter of Narch 12, 1948, D-711185 (to Director) Bureau of the Budget cementing upon draft of the proposed bill) stated that it was ndeemed unnecessary to rake any other cement on the bills A this time." Mr. E. L. risher, Gmeral Counsel, on March 103 19491 (B-7/1155) wrote 2r. Weitzel with return of the files on Central Intelligency Agency IL . 2663 and Senate 961 and recommended that we not make a veduntary report on these bills. . Fisher stated that he honestly believed that nothing could be accomplished by such a report and we would jeopardize ourselves against an "abuse report', later on. iXe otated that we can vetch the operations under the bill and be in a better position to make an %bum" report later on if we are not disregarded an a voluntary report now. Ia.: Maher further stated that if we are going to have spies he could not conceive of a better program to be carried on than one with almost unlimited authority. On August 17) 1949, Roar Admiral R. N. Hillenkeetter, Director of Central Tntelligence wrote the Comptroller General in which be Stated that the National Security Act of 1947 provided no detailed fiscal or administrative authorities to which reference could be made in expanding or accounting for funds and that there was an obvious need for clarifi- cation of these authorities. This clarification had been accozaplished through Public Law 1101 81st Congress, which was enacted June 200 1949. Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5 The AdminiStrator want on to state in this letter that the law granted the agency and the Director certain very broad and unusual powers in a number of respects and on which helms keenly aware of his responsibilities. He further stated that so long as he held the position of Director the policies on fiscal natters and his attitude toward the Government funds under his control would in no way be ?hanged by legislative grants of rower to him. In a note to Nr. Kollar, Mr, Fisher stated no reply was necessary and rests-mended that the letter be filed. On June 29, 1951, (D-59998) the Comptroller General wrote Honorable Walter B. Smith, Director, Central Intelligence Agency, stating that subsequent to the letter of August 282 1946, which approved site audit procedures for Central Intelligence Agency such procedures have been extended to include the audit of diSbursing officers' accounts current and that accounts current reflecting transactions for the month of July 1951 and thereafter mould be retained by your agency for site audit by approved representatives of this Office. Approved For Release 2001/09/04: CIA-RDP80-01240A000100140093-5