(EST PUB DATE) SEMIANNUAL REPORT

• Document Type: FOIA
• Keywords: REPORT
• Keywords: OIG
• Keywords: SEMIANNUAL
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0001350827
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 79
• Document Creation Date: June 24, 2015
• Document Release Date: April 14, 2011
• Case Number: F-2007-00194
• Publication Date: December 1, 2002

Central Intelligence Agency
Inspector General
(b)(1)
(b)(2)
(b)(3)
(b)(5)
(b)(6)
SEMIANNUAL REPORT
TO THE DIRECTOR OF CENTRAL INTELLIGENCE
JULY - DECEMBER 2002
APPROVED FOR RELEASE
DATE: 25-Feb-2010
"S'EC-44E17
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 10
(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS
OUTSTANDING FROM PREVIOUS SEMIANNUAL REPORTS 29
(U) SUMMARIES OF SELECTED CURRENT AUDITS 35
(U) INSPECTIONS 37
(U) INSPECTION STAFF OVERVIEW 37
(U) SIGNIFICANT COMPLETED INSPECTIONS OR OTHER
REVIEWS 38
(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS
OUTSTANDING FROM PREVIOUS SEMIANNUAL REPORTS 46
(U) SUMMARIES OF SELECTED CURRENT INSPECTIONS 53
(U) INVESTIGATIONS 57
(U) INVESTIGATIONS STAFF OVERVIEW 57
(U) SIGNIFICANT COMPLETED INVESTIGATIONS OR
OTHER REVIEWS 58
(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS
OUTSTANDING FROM PREVIOUS SEMIANNUAL REPORTS 62
(U) SUMMARIES OF SELECTED CURRENT INVESTIGATIONS 63
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(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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"SE-C.13Z.,17,
(U) A Message from the
Inspector General
(U) The Office of Inspector General (OIG)
has completed a review of our substantive work
priorities and issued a new Work Plan for calendar
year 2003. Our audits, inspections, and special
reviews will be focused on six priority areas:
? Effective Management of Core Missions
? Information and Communications
? Covert Action
? Financial and Procurement Systems
? Accountability Issues from the Joint Inquiry into 9/11
? Proactive Investigative Initiatives
Focusing on these issues enables us most effectively to address requirements
mandated by law, the DCI's strategic priorities, requests from senior Agency
managers, and our own assessment of priority and vulnerable programs.
(U) I wish to record my appreciation to the Congressional oversight
committees, which, in response to a proposal made in our last semiannual
report, provided legislative relief from a standing obligation to produce
formal, annual audits of the Agency's Central Services Working Capital
Fund. This action will free up scarce audit resources, reducing somewhat
the number of new auditors who must be hired to prepare for
Congressionally-mandated financial statement audits in FY 04 and beyond.
I am pleased to report that a vigorous hiring program is underway and that
1
the Audit Staff has reorganized itself to focus on financial statements, the
committees' recommendation that we audit each covert action program every
three years, and important information technology programs.
(U) In this report, I again seek the assistance of the oversight
committees in correcting an apparently unintended consequence of
legislation passed at the end of the 107th Congress. Briefly, the Homeland
Security Act included provisions referred to as the Federal Information
Security Management Act (FISMA), which modified procedures for
evaluating and auditing the government's information security systems
previously contained in the Government Information Security Reform Act
(GISRA). FISMA outlined the responsibilities of Inspectors General
appointed under the 1978 IG Act, but dropped a reference that had been in
the GISRA that also placed responsibilities on statutory IGs appointed
"under any other law," as is CIA's IG. Elsewhere in this report, we propose
a simple legislative solution that will ensure CIA's OIG continues to play
the role that Congress apparently intends for statutory IGs regarding
information security.
(U) OIG's involvement with counterpart offices in other Intelligence
Community (IC) agencies has continued during this period, both in the IG
Forum and other settings. Consultations among the IGs have focused on
information sharing in the wake of 9/11, best practices with audits and
inspections related to information technology, and, most recently,
preparations for follow-up work on accountability issues raised in the
Congressional Joint Inquiry into 9/11. In September 2002, CIA OIG hosted
the eighth annual IC Audit Conference, attended by 170 auditors from
across the Community.
r--
Notable substantive work undertaken jointly with other Offices of
Inspector eneral during this period included a review, with the National
Reconnaissance Office IG, of the
This review was requested by the DCI. With the
Department of State, we conducted an inventoru of vronerty owned by the
Our auditors also
assis tea tne Department with an overseas inspection of the Department's
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visa program. Finally, we worked with several other agencies in a
Congressionally-directed review of the enforcement of export licensing for
dual-use commodities and munitions.
Another important audit completed during this period addressed
the Agency's covert action program on counterproliferation. Key
inspections have included work on the Agency's response to the events of
September 11, operational counterintelligence and counterespionage, the
Foreign Broadcast Information Service, and the exploitation of technical
tools.
Our Investigations Staff completed several important projects.
These included an investigation into the methodology used by CIA to
investigate the as requested by the House
Permanent Select uommatee on intelligence. A Special Assessment was
issued on Agency compliance with Executive Order 12333 with respect to
electronic surveillance and physical searches directed at US persons. The
Staff continues to devote substantial resources to a Department of Justice
inquiry into the procedures employed in the Peruvian narcotics air
interdiction program.
(U) It is notable that several investigations resulted in criminal
convictions of Agency employees during this period. In December 2002, an
employee was convicted of conspiracy to accept gratuities in exchange for
giving preferential treatment to an Agency contractor. The contractor and
another employee had previously pled guilty in this case, which had been
pursued effectively over an extended period with the US Attorney for the
Eastern District of Virginia. In an unrelated case, a former employee pled
guilty to making false statements and mail fraud. Another investigation led
to a guilty plea by a former employee to the theft of government property by
using a government credit card and submitting false vouchers.
(U) Finally, we have underway within our Office efforts to improve
the effectiveness of several of our processes. These include the timeliness of
our production, our mentoring of new employees, and our monitoring of
actions by Agency components and managers to comply with OIG
recommendations. Fortunately, I can report that the compliance process
works very well at CIA. The majority of OIG recommendations are accepted
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"S'EGREZ.....17
and implemented, in large part because the Executive Director and his staff
take timely actions?and follow up vigorously?to oversee component
responses. I very much appreciate this productive working relationship.
jonn L. tieigerson
17 January 2003
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(U) STATUTORY REQUIREMENTS
(U/ This This report is submitted pursuant to section 17 of
the CIA Act ot 194, 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
any subpoenas.
During this reporting period, the IG did not issue
(U) Legislative Proposals
(1.1) Entity Required to Perform Independent Evaluation of CIA
Information Security Program and Practices
(U) Shortly before it adjourned, the recently completed 107th
Congress passed the Homeland Security Act (HSA) and the
E-Government Act, each of which was a lengthy piece of legislation
addressing multiple issues. An apparently unnoticed and
unintended consequence of these acts was a modification of the
description of the entities required to perform an annual independent
evaluation of the information security program and practices for
various Federal agencies. We propose a technical amendment to that
"ItC-44F.1/
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legislation to restore the previous, and we believe intended,
definition of such entity as it affects the CIA Inspector General.
(U) Section 1001 of the HSA and section 301 of the
E-Government Act each contain identical provisions, referred to as
the Federal Information Security Management Act (FISMA). These
provisions amend 44 U.S.C. ?3535, the previous requirements
contained in GISRA?the Government Information Security Reform
Act?for performing an independent evaluation of an agency's
information security program and practices.
(U) The prior formulation under GISRA was that, for an
agency with an IG appointed under the 1978 IG act "or any other
law," the audit of the annual evaluation was to be "performed by the
Inspector General or by an independent evaluator, as determined by
the Inspector General of the agency." 44 U.S.C. ?3535(b)(1)(A).
(U) The new formulation under the amendments contained in
FISMA states that "for each agency with an Inspector General
appointed under the Inspector General Act of 1978, the annual
evaluation required by this section shall be performed by the
Inspector General or by an independent external auditor, as
determined by the Inspector General of the agency . . . ." HSA section
1001(b)(1), amending 44 U.S.C. ?3535(b)(1). This leaves out the "or
any other law" language previously included in the GISRA statute.
(U) Since CIA's statutory IG is appointed under "other law" but
not the 1978 IG Act, CIA (and therefore its OIG) is not included
within this new formulation. Rather, CIA now falls into the
requirement contained in the next subparagraph, ?3535(b)(2) (as
amended by the HSA), which now provides: "for each agency to
which paragraph (1) does not apply, the head of the agency shall
engage an independent external auditor to perform the evaluation."
(U) For CIA to remain among the first category, of other
agencies that have a statutory IG, rather than being moved into the
second category, with those that have an administrative IG, Congress
'nE?4tE,14
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must pass a technical amendment to the definition of that first
category to restore the omitted reference to "any other law."
(U) It is recommended that 44 U.S.C. ?3535, renumbered as
?3545 by section 301 of the E-Government Act of 2002, be amended as
follows:
Sec. ENTITY TO PERFORM INDEPENDENT
EVALUATION OF AN AGENCY'S INFORMATION
SECURITY PROGRAM AND PRACTICES?Insert the words
"or any other law" in paragraph (b)(1) of the section after the
words "for each agency with an Inspector General appointed
under the Inspector General Act of 1978 . ."
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(U) AUDITS
(U) 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 joint reviews of Intelligence Community
(IC) programs and activities 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 evaluations
of Agency programs and activities, field stations in Europe Division,
and financial management and information technology issues.
(U/ The Audit Staff continues to plan for the
Congressi a y mandated audit of the Agency's fiscal year (FY) 2004
financial statements. This will be a significant undertaking for the
Staff, and the resource requirements will be substantial. A robust
recruitment effort is underway to attract highly qualified auditors to
assist the Staff in meeting this important requirement.
(U) The Audit Staff is also responding to a Congressional
recommendation contained in the legislative history accompanying
the Intelligence Authorization Act for Fiscal Year 2002 to audit each
covert action program every three years. The Staff does not have
sufficient personnel to audit all activities undertaken under all
findings every three years and still meet its other requirements. The
Staff has therefore implemented a strategy to select and review at
least one major covert action activity under each Presidential Finding
every three years. The order in which the Staff reviews these
activities is based on the activities' resource allocations and
sensitivity, Staff availability, and when a particular activity was last
audited. The order may change as a result of Congressional or
management input.
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(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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(U) SUMMARIES OF SELECTED CURRENT AUDITS
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(U) INSPECTIONS
(U) INSPECTION STAFF OVERVIEW
(U The Inspection Staff is responsible for conducting
inspections of Agency programs and operations to evaluate their
efficiency and effectiveness and their compliance with law, Executive
orders, and regulations.
The Inspection Staff continues to use its flexible approach
to scheduling, which utilizes a seven-month cycle (February-August)
to conduct either a single major inspection or several more focused,
less wide-ranging inspections and the traditional five-month cycle
(September-January). During the current cycle, the Staff is working
on four inspections: the Directorate of Science and Technology's
(DS&T) Office of Technical Service, the Directorate of Operations'
and Africa Division, and, Global
Support. In addition, the Staff is nearing completion of inspections of
the Agency's Counterintelligence (CI) and Counterespionage
programs?which will be published as a joint report?and of the
DO's East Asia Division, all of which were begun during the
previous cycle.
(U The Inspection Staff continues to conduct a two-
week course for new inspectors 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.
(U) SIGNIFICANT COMPLETED INSPECTIONS OR OTHER REVIEWS
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(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS OUTSTANDING
FROM PREVIOUS SEMIANNUAL REPORTS
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(1.) SUMMARIES OF SELECTED CURRENT INSPECTIONS
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(U) INVESTIGATIONS
(U) INVESTIGATIONS STAFF OVERVIEW
The Investigations (INV) Staff investigates
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 also provides
general oversight of the Agency's grievance system and reviews
appeals of various Agency board decisions.
(U In addition to initiating and completing a number
of routine criminal and administrative investigations, the INV Staff
completed one major investigation and a significant special
assessment during this semiannual period. The Staff is also devoting
considerable resources to an ongoing investigation led by the
Department of Justice. Apart from investigations predicated on
specific allegations of wrongdoing or abuse, the Staff is completing
one effort and has initiated other efforts to ascertain fraud
vulnerabilities in Agency programs and activities.
(U
The Staff is involved in several continuous
internal improvement initiatives. An assessment of our existing
approach to report preparation focuses on streamlining the process
without sacrificing product quality. An evaluation of the
investigative report structure measures the value of the current
product to consumers and considers alternate forms of investigative
reporting. The Staff continues to research and test an appropriate
replacement for the investigation database to improve case
management by managers and investigators. The success of a formal
mentoring program for new investigators implemented during the
last reporting period resulted in its expansion to a Staff-wide
informal mentoring program for all investigators and support
personnel. Also, Staff training continues to improve with mandatory
57
*Sltefigl.
semiannual in-service training sessions and the development of
training plans that include core and elective courses for journeyman
investigators.
(U/ The grievance unit is updating the process for
collecting Agency-wide statistical information on grievances. A new
database, scheduled to be available by the end of January 2003, will
enable each directorate grievance officer to manage cases, create
forms, and write reports online. The database also will provide a
vehicle to standardize case management procedures and forms, and
allow OIG to capture the full extent of grievance activities throughout
the Agency.
(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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(LI) SUMMARIES OF SELECTED CURRENT INVESTIGATIONS
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(U) CURRENT INVESTIGATIONS OR REVIEWS
As of 31 December 2002
Category Number of cases
Grievances
Compensation 1
Management and Supervision ? Grievance 1
Medical 1
Other 1
General Investigations
Criminal and Prohibited Acts
Conflicts of Interest 6
Embezzlement 3
False Claims ? Other 5
False Claims/Statements/Vouchers 3
False Claims - Time & Attendance 20
Management and Supervision ? Administrative 1
Megaprojects 1
Misconduct ? Employee 4
Misconduct ? Management 3
Procurement Fraud 12
Regulatory Violations 2
Theft and Misuse of Government Property 9
Waste 3
Other - Administrative/Criminal 14
Total Ongoing Cases 90
SE
(U) Conversion of US Government Property
(U) False Claims/Billings
(U) Imprest Fund Credit Card Fraud
(U) Misuse of Agency Cellular Telephone
(U) Misuse of Agency-Leased Telephone
(U) Possession of Child Pornography
(U) Possible Shifting of Costs
(U) Time and Attendance Fraud
(U) Waste of Funds and Abuse of Authority
(U) COMPLETED INSPECTIONS OR REVIEWS
1 July ?31 December 2002
(U) The Exploitation of Technical Tools
(U) The Agency's Response to the Events of 11 September 2001:
A Look Forward
(U) Directorate of Science and Technology's Foreign Broadcast
Information Service (FBIS)?A Follow-on Inspection
(U) Global Support's Special Training Center (STC)?A
Follow-on Inspection
(U) CURRENT INSPECTIONS OR REVIEWS
31 December 2002
(U/
(U/
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Office of Technical Service (OTS), DS&T
Global Support, MSO
Africa Division (AF), DO
(U) The Directorate of Operations' East Asia (EA) Division
(U) Operational Counterintelligence Program
(U) Counterespionage Program
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(U) COMPLETED INVESTIGATIONS
OR REVIEWS
1 July -31 December 2002
Alleged Concealment of Terrorist-Related Information
(U) Alleged Inappropriate Relationship with a Subordinate
(U) Alleged Misconduct in the Workplace
(U) Alleged Misuse of Agency Funds
(U) Alleged Procurement Fraud
(U) Alleged Time and Attendance Fraud
(U) Alleged Waste in Renovations of an Agency Facility
(U) Approving Officer Misconduct
Assessment of Compliance with E0 12333 -
* (U) These investigations resulted in a Disposition Memorandum rather than a Report of
Investigation.
"nt?44.1,4
(U) CURRENT AUDITS OR REVIEWS
31 December 2002
(U) Financial Management
(U) Fiscal Year 2002 Financial Statements of the Central
Services Working Capital Fund
(U) Payroll Expense Processing and Reporting
(U) Agency Controlled Bank Accounts
(U) Financial Management Within the Europe Division
(U) Operations
(U) Support Provided to a Sensitive Project by the
(U) Operations (Continued)
(U) CIA Support to Agencies Responsible for the Enforcement
of Export Licensing for Dual-Use Commodities and
Munitions
(U) Personnel and Security
(U) Survey of the Agency's Security Clearance Process
(U) Procurement and Technology
Directorate of Operations Operational Records System-
(U) Security of External Connections to the ADSN
(U) Commo 21 Program
(U) Continuity and Contingency Planning for Critical Agency
Information Systems
(U) Review of Contract Invoicing Allegations
(U) Information System Certification and Accreditation Process
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(U) COMPLETED AUDITS OR REVIEWS
1 July ?31 December 2002
(U) Financial Management
(U) Agency Cash and Other Monetary Assets
(U) Operations
(U) Counterproliferation Covert Action Activities of the
Central Intelligence Agency
(C) Surveillance Detection Training Administered by the
Kisevalter Center
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(U) Personnel and Security
(U) Review of Allegations Regarding the Sentry System
(U) Financial and Fiduciary Administration of the Thrift
Saving Plan
(U) Procurement and Technology
(U) Future Imagery Architecture Optical Growth Alternative
(U) Compliance With Foreign Ownership, Control, or
Influence in Acquisitions Policies
(U) The 2002 Intelligence Community Chief Information
Officer's Independent Evaluations of the Central
Intelligence Agency and the Intelligence Community Chief
Information Officer Security Programs and Practices
Required by the Government Information Security Reform
Act (GISRA)
(U) Electronic Time Reporting on Notes
(U) Other
(U) Internal Quality Control Review of the Audit Staff
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(U) STATISTICAL OVERVIEW
(U) Audit Staff
(U/ During the period 1 July to 31 December 2002, the
Audit Staff issued 21 reports and memoranda and made 78
recommendations to improve accounting and financial management;
procurement, supply, and property management; and information
systems and program management.
The Audit Staff had 19 audits and reviews ongoing at the
end or ui reporting period. Two of the audits involve the Europe
Division field stations and two of the audits are focused on Agency
covert action programs. The remaining audits address topics such as
the enforcement of export licensing policies, a joint inventory of
equipment managed by the Diplomatic Telecommunications Service
Program Office, and the DO's operational records system, StarBase.
(U) Inspection Staff
During the last six months of 2002, the Inspection Staff
completed four inspections, two of which were compliance
inspections to determine the effectiveness of recommendations made
in 2000 to improve the and the Foreign
Broadcast Information Service. The Staff also had seven ongoing
inspections at the end of the reporting period that include reviews of
the
East Asia Division/ DU, the
/DO, Africa Division/DO, the Office of 1ethnical
service/DS&T, and an inspection of Global Support?one of the new
MS0s?to determine whether support has improved under the new
MSO structure.
(U) Investigations Staff
(U The Investigations Staff completed work on 137
matters of various types during this reporting period. Of this
number, 27 cases were of sufficient significance to be the subject of a
final report---12 Reports of Investigation and 15 Disposition
Memoranda.
(U/ During this period, 14 matters were referred
formally to ased 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 $211,173.
(U/ As of 31 December 2002, 90 matters were in
various stages of review by the Investigations Staff.