used primarily to support the exploitation of new scientific developments and technological breakthroughs. The House and the Senate appropriations committees have both criticized the use of the fund for other than emergency purposes. In 1963 the House Appropriations Committee complained that the Emergency Fund "has been resorted to in too many instances when no scientific or technical breakthrough was involved. It seems that the Emergency Fund has been considered by some as a general purpose fund from which to finance low priority or unbudgeted programs."15 Two years later the Senate Appropriations Committee observed that the fund was tapped frequently during the closing weeks of the fiscal year: "Such action lends credence to the suspicion that the fund is being employed for other than emergency purposes which would tend to subvert the congressional review and appropriation process. From a level of $150 million in fiscal 1963, the Emergency Fund for the Department of Defense dropped to $50 million by fiscal 1972.

"16

Other sources of emergency funds are found in statutes that provide for disaster relief. The Federal Disaster Act of 1950 and subsequent statutes offer financial assistance to state and local governments whenever the President declares a major disaster. From 1951 through 1970, the President issued 338 declarations and allocated $857 million from the disaster relief fund."

19

Contingency funds are sometimes used for purposes not even vaguely contemplated by Congress when it appropriated the money. For instance, on March 1, 1961, President Kennedy issued an executive order establishing the Peace Corps.18 Not until seven months later did Congress appropriate funds for the agency. In the meantime, the President financed the Peace Corps by using more than a million dollars in contingency funds from the Mutual Security Act.20 Several years later, the sum of $450,000 was taken from the Defense Department's contingency fund to pay a portion of the expenses of the President's Commission on Civil Disorders.21

When the executive branch abuses its authority over contingency funds, Congress can reassert its control over the purse by passing more stringent legislation. As an example, in a 1959 report the Foreign Operations Subcommittee of the House Appropriations Committee specifically denied funds for an Incentive Investment Program which the Administration had proposed. The subcommittee's denial was omitted from the final appropriation bill passed by Congress, at which point the Administration proceeded to use money from the President's contingency fund to initiate the program. The House Appropriations Committee, charging that the 18 H.R. REP. No. 439, 88th Cong., 1st Sess. 63 (1963).

1 S. REP. No. 625, 89th Cong., 1st Sess. 53 (1965).

17 Act of Sept. 30, 1950, ch. 1125, 64 Stat. 1109; Act of Nov. 6, 1966, Pub. L. No. 89-769, 80 Stat. 1316; Act of Dec. 31, 1970, Pub. L. No. 91-606, 84 Stat. 1744. The number of declarations and total allocations were obtained from the Office of Emergency Preparedness. Figures include actions by the Housing and Home Finance Agency in 1951-52 when it administered disaster relief programs.

1 Exec. Order No. 10.924, 3 C.F.R. 447 (1961).

19 Act of Sept. 30, 1961, Pub. L. No. 87-329, tit. V, 75 Stat. 72.

20

See H.R. REP. No. 1115, 87th Cong., 1st Sess. 66 (1961).

21 S. REP. No. 1576, 90th Cong., 2d Sess. 28 (1968).

contingency fund was being used to mafy the actions of Congress ammended language the next year to curb this executive practice. The muring aerierzen bill stipulated that none of the funds appropriated for the Predeti deca aurtarmı and contingency fund "shall be used for any provect or avo ir what at sortate has been submitted to Congress and which estimate has been reset" The Ad des prohibited the use of any of the funds to france ar é de acts under de Investment Incentive Program."

Π

COVERT FINANCTING

Appropriations during World War II were shen lumped nerier under a gen eral heading to prevent analysis by the enemy. The atomic bome proves, for in stance, was financed for several years from funds set aside for "Engineer Service, Army" and "Expediting Production" When larger sums for manufacturing the bomb could no longer be concealed by such methods, a few legsame leaders were told of the project and asked to provide funds without lezing onering slators know how the money would be spent Accordingh, the money was tucked away unnoticed in an appropriation bill Total appropriations for the Manhattan Prosect came to over $2 billion. Members of the House Apprengn Comment void Elas Huzar that about $800 million had been spent on the provect before they knew about it.23

According to the Budget and Accounting Procedures Act of 1959, it is the policy of Congress that the accounting of the government shall provide "full disclosure of the results of financial operations, adequate financial information needed in the management of operations and the formulation and execution of the Budget, and effective control over income, expenditures funds, property, and other assets. Despite that general policy, it has been estimated that, in a fiscal 1972 budget of $229.2 billion, secret funds may amount to as much as $20 brilion 2

A. Free World Forces

20

1924

The financing of the war in Vietnam illustrates how billions can be spent for programs known to relatively few Congressmen. In September 1966, President Johnson expressed his “deep admiration as well as that of the American people for the action recently taken by the Philippines to send a civic action group of 2,000 men to assist the Vietnamese in resisting aggression and rebuilding their 22 H.R. REP. No. 712, 86th Cong., 1st Sess. 8 (1959); HR. Rip. No 1998, 86th Cong, ad Sess. 13 (1960). Act of Sept. 2, 1960, Pub. L. No. 86-704, § 166. 74 at 777 See also 6. BFP. No. 1849, 86th Cong., 2d Sess. to (1960) and W. MORROW, Congressional Committers 165 67 (1969),

E. HUZAR, THE PURSE AND THE Sworn 338 (1950). See 1. MARTIN, MY FIRST FIFTY YEARS IN POLITICS 100-01 (1960); L. GroveS, NOW IT CAN B. Toca 360 61 (1944)

"Act of Sept. 12, 1950, ch. 946. § 111, 46 Stat. 84.

25

26

CONG. Q. WEEKLY REP., Aug. 21, 1971, at 1786

Most of the material in the following sections on covert financing first appeared in Fisher, Executive Shell Game: Hiding Billions From Congress, THE NATION, Nov. 15, 1971, at 486. This article is reprinted in 117 Cong. REC. S18,232 (daily ed. Nov, 11, 1971) (inserted by Senator Fulbright).

1. Congressional Investigations

country." "27 Other announcements from the White House created the impression that not only the Philippines but also Thailand, South Korea, and other members of the "Free World Forces" had volunteered their assistance.

However, hearings held by the Symington subcommittee in 1969 and 1970 revealed that the United States had offered sizable subsidies to these countries. It was learned that the Philippines had received river patrol craft, engineer equipment, 1 special overscas allowance for their soliders sent to Vietnam, and additional equip ment to strengthen Philippine forces at home. It cost the United States $38.8 million to send one Filipino construction battalion to Vietnam. Senator Fulbright remarked that it was his own feeling that "all we did was go over and hire their soldiers in order to support our then administration's view that so many people were in sympathy with our war in Vietnam."28

The Philippine Government denied that U.S. contributions represented a subsidy or a fee in return for the sending of the construction battalion, but an investigation by the General Accounting Office (GAO) confirmed that "quid pro quo assistance" had indeed been given. Moreover, there was evidence that the Johnson Administration had increased other forms of military and economic aid to the Philippines for its commitment of a battalion to Vietnam.2

20

The Symington subcommittee also uncovered an agreement that the Johnson Administration had made with the Royal Thai Government in 1967 to cover any additional costs connected with the sending of Thai soldiers to Vietnam. The State Department estimated that U.S. support to Thai forces-including payment of overscas allowances-came to approximately $200 million. A number of other expenses were also involved, such as modernization of Thai forces and the deployment of an anti-aircraft Hawk battery in Thailand. The Foreign Ministry of Thailand denied that the United States had offered payments to induce Thailand to send armed forces to Vietnam. Nevertheless, GAO investigators reported that U.S. funds had been used for such purposes as the training of Thai troops, payment of overseas allowances, and payment of separation bonuses to Thai soldiers who had served in Vietnam. An interim GAO report estimated that the U.S. government had invested "probably more than $260 million in equipment, allowances, subsistence, construction, military sales concessions, and other support to the Thais for their contribution' under the Free World Military Assistance program to Vietnam."31

U.S. subsidies were used once again to support the sending of South Korean forces to Vietnam. Assistance included equipment to modernize Korean forces at home, equipment and all additional costs to cover the deployment of Korean forces in

27 2 U.S. PRESIDEnt, Public PapERS OF THE Presidents: Lyndon B. Johnson, 1966, at 1029 (1967). 28 Hearings on United States Security Agreements and Commitments Abroad: The Republic of the Philippines (part 1) Before the Senate Comm. on Foreign Relations, 91st Cong., 1st Sess. 261, 358 (1969).

30

" N.Y. Times, Nov. 20, 1969, at 13 col. 1; 116 Cong. Rec, $4453 (daily ed. Mar. 25, 1970). Hearings on United States Security Agreements and Commitments Abroad: Kingdom of Thailand

(part 3) Before the Senate Comm. on Foreign Relations, 91st Cong., 1st Sess. 6a5-57 (1969).

81

" N.Y. Times, Dec. 16, 1969, at 10, col. 1; 116 CONG. Reg. S19,743 (daily ed. Dec. 9, 1970).

Vietnam, additional loans from the Agency for International Development, and increased ammunition and communications facilities in Korca. To assure that the sending of Korean forces to Vietnam would not weaken the defensive capabilities of the Republic of Korea, the Johnson Administration agreed to finance the training and replacement of forces deployed in Vietnam and to improve South Korea's antiinfiltration capability. From fiscal 1965 to fiscal 1970, U.S. costs resulting from the dispatch of Korean forces to Vietnam were estimated at $927.5 million.32.

2. Legislative Authority and Restrictions

The legal basis for this assistance to Free World Forces in Vietnam goes back to authorization and appropriation statutes of 1966. Funds were made available to support Vietnamese “and other free world forces in Vietnam, and related costs ... on such terms and conditions as the Secretary of Defense may determine." Assistance was broadened in 1967 to include local forces in Laos and Thailand. Reports on such expenditures were submitted only to the armed services and appropriations committees of each house. One would not know from the general language of the statutes what type of financial arrangements the Administration might enter into, or with what country. Staff people, who had access to the reports, told me they did not know the nature and dimension of financing the Free World Forces until hearings were held by the Symington subcommittee.

34

Legislation in 1969 and 1970 tightened up the language of the statutes somewhat by placing a ceiling on the funds that could be given to Free World Forces. Standards were also established for payments of overseas allowances. The ceiling of $2.5 billion, which exceeded the amounts spent in previous years, did not constitute much of a restriction. The fiscal 1971 appropriation bill for the Defense Department included a proviso stating that nothing in the Act should be construed as authorizing the use of funds "to support Vietnamese or other free world forces in actions designed to provide military support and assistance" to the governments of Cambodia and Laos. The force of that restriction was diluted by another provision which declared that nothing in the Act should be construed "to prohibit support of actions required to insure the safe and orderly withdrawal or disengagement of U.S. Forces from Southeast Asia, or to aid in the release of Americans held as prisoners of war." On February 8, 1971, after the United States had provided support for South Vietnam's intervention in Laos, the State Department justified the U.S. support partly on the ground that it "will protect American lives."36

35

32 Hearings on United States Security Agreements and Commitments Abroad: Republic of Korea (part 6) Before the Senate Comm. on Foreign Relations, 91st Cong., 2d Sess. 1529-47 (1970).

** Act of Mar. 15, 1966, Pub. L. No. 89-367, § 401. 80 Stat. 37; Act of Mar. 25, 1966, Pub. L. No. 89-375, § 102, 80 Stat. 82; Act of June 5, 1967, Pub. L. No. 90-22, § 301, 81 Stat. 53; Act of Sept. 29, 1967, Pub. L. No. 90-96, § 639, 81 Stat. 248.

24

Act of Nov. 19, 1969, Pub. L. No. 91-121, § 401, 83 Stat. 206; Act of Oct. 7, 1970, Pub. L. Na. 91-441, 502, 84 Stat. 905.

* Act of Jan. 11, 1971, Pub. L. No. 91-668, § 838(a), 84 Stat. 2037.

36 N.Y. Times, Feb. 9, 1971, at 17, col. 6.

The fiscal 1972 authorization bill for the Defense Department repeated the ceiling of $2.5 billion for Free World Forces, along with the restriction on actions by Vietnamese and other Free World Forces in Cambodia and Laos. Despite those restrictions, the Administration had provided funds to support thousands of Thai forces in Laos. The State Department denied that this support represented a violation of legislative restrictions. The State Department explained to Senator Symington that the "Thai forces in Laos are composed exclusively of volunteers, most of whom have served in the Thai Army, but have been discharged."38 Another explanation rested on the theory that the soldiers were not really Thais but rather ethnic Lao from northwest Thailand. After a trip to Vietnam, Congressman Jerome Waldie said that Souvanna Phouma, in the presence of Ambassador Godley, told him "those troops aren't Thais-they are really Laotians living in Thailand.' And he told us this with a straight face!"39

The theories of "volunteers" and "ethnic Lao" were not supported by newspaper accounts. Reports in the Washington Post 'and in the Washington Evening Star described the Thai soldiers serving in Laos as regular army troops of Thailand who had been asked to accept special assignment in Laos for extra pay.1o

B. CIA Financing

40

Covert financing has been used to finance, through the Central Intelligence Agency, such diverse activities as military operations in Laos and the broadcasting of U.S. information to Eastern Europe and Russia. The CIA can do this because of its extraordinary authority over the transfer and application of funds. The Central Intelligence Act of 1949 provides that the sums made available to the CIA “may be expended without regard to the provisions of law and regulations relating to the expenditure of Government funds . . . ." For objects of a confidential nature, such expenditures are accounted for solely on the certificate of the CIA Director, with each certificate deemed a sufficient voucher for the amount certified." The Act also authorizes the CIA to transfer to and receive from other government agencies "such sums as may be approved by the Bureau of the Budget" for the performance of any functions or activities authorized by the National Security Act of 1947. Other government agencies are authorized to transfer to or receive from the CIA such

37

Act of Nov. 17, 1971, Pub. L. No. 92-156, § 501, 85 Stat. 427 (repeated in the fiscal 1972 appropriations bill for the Defense Department, Pub. L. No. 92-204, § 738, 85 Stat. 734 [Dec. 18, 1971]). 117 CONG. REC. S15,769 (daily ed. Oct. 4, 1971).

ля

30 117 CONG. REC. E4910 (daily cd. May 24, 1971).

Newspaper accounts by D. E. Ronk in the Washington Post, Aug. 9, 1971, and Tammy Arbuckle in the Washington Evening Star, Sept. 23, 1971, appear in 117 Cong. REC. S15,768-69 (daily ed. Oct. 4, 1971). Staff members of the Senate Foreign Relations Committee reported in 1972 that Thai irregulars were "recruited by the Royal Thai Army from all over Thailand" and that "no special effort was made to recruit ethnic Lao as distinct from other Thai." The cost of maintaining the Thai irregular force for a year in Laos was estimated at approximately $100 million. STAFF OF THE SENATE FOREIGN Relations Comm., 92d Cong., 2d SESS., THAILAND, LAOS, AND CAMBODIA: JAUNARY 1972, at 19-20 (Coının. Print 1972).