HEARINGS BEFORE THE COMMITTEE ON FOREIGN RELATIONS UNITED STATES SENATE EIGHTY EIGHTH CONGRESS FIRST SESSION ON S. 2136 TO AMEND THE FOREIGN AGENTS REGISTRATION ACT OF 1938, AS AMENDED

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• Publication Date: November 21, 1963
• Content Type: REGULATION

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AMENDMENTS
HEARINGS
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
EIGHTY-EIGIITII CONGRESS
FIRST SESSION
ON
S. 2136
TO AMEND THE FOREIGN AGENTS REGISTRATION ACT
OF 1938, AS AMENDED
Printed for the use of the Committee on Foreign Relations
U.S. GOVERNMENT PRINTING OFPICD
WASHINGTON : 1963
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COMMITTEE ON FOREIGN RELATIONS
J. W. FULBRIGHT, Arkansas, Chairman
JOHN SPARKMAN, Alabama BOURKE B. HICKENLOOPER, Iowa
HUBERT H. HUMPHREY, Minnesota GEORGE D. AIKEN, Vermont
MIKE MANSFIELD, Montana FRANK CARLSON, Kansas
WAYNE MORSE, Oregon JOHN J. WILLIAMS, Delaware
RUSSELL B. LONG, Louisiana KARL E. MUNDT, South Dakota
ALBERT GORE, Tennessee
FRANK J. LAUSCHE, Ohio
FRANK CHURCH, Idaho
STUART SYMINGTON, Missouri
THOMAS J. DODD, Connecticut
GEORGE A. SMATHERS, Florida
CARL MARCY, Chief of Staff
DARRELL ST. CLAIRE, Clerk
EXECUTIVE COMMITTEE
(For the purpose of the study authorized by S. Res. 362, 87th Cong.,
and S. Res. 2.6, 88th Cong.)
J. W. FULBRIGHT, Arkansas, Chairman BOURKKE B. HICKENLOOPER, Iowa
JOHN SPARKMAN, Alabama GEORGE D. AIKEN, Vermont
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CONTENTS
Statements by- Page
Chayes, Abram, Legal Adviser, Department of State--------------- 58
Dean, Arthur H., Sullivan & Cromwell, New York----------------- 43
de Seife, Rodolphe J. A., Washington, D. C _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 99
Fisher, Roger, professor of law, Harvard University -University---------------- 105
Isaacs, Norman E., executive editor, the Courier-Journal and the
Louisville Times, Louisville, Ky------------------------------- 111
Katzenbach, Nicholas deB., Deputy Attorney General------------- 9
Klein, Gen. Julius, president, Julius Klein Public Relations, Inc.,
Chicago---------------------------------------------------- 78
Lenvin, Nathan B., Chief, Registration Section, Internal Security
Division, Department of Justice_______________________________ 9
Parson, David, Deputy General Counsel, USIA------------------- 29
Stevenson, Ward B., president, Public Relations Society of America,
Inc., New York City, accompanied by Francis K. Decker, counsel-- 91
Wilson, Donald M., Acting Director, USIA ----------------------- 29
Insertions for the record-
S. 2136, to amend the Foreign Agents Registration Act of 1938, as
amended--------------------------------------------------- 2
Letter to Senator Fulbright from the Department of Justice, Novem-
ber 18, 1963----------------- - ------------- --- 6
Letter to Senator Fulbright from the Federal Communications Coin-
mission, together with letter from the Bureau of the Budget,
November 20,1963------------------------------------------ 7
Letter to Senator Fulbright from the U.S. Information Service,
November 15,1963------------------------------------------ 27
Additions to Mr. Dean's statement______________________________ 48, 50
Letter to Senator Fulbright from the Department of State, Novem-
ber 18,1963------------------------------------------------ 57
Letter to Senator Fulbright from the Agency for International Devel-
opment, November 26, 1963---------------------------------- 57
Foreign Affairs Manual Circular regarding administration of the
Foreign Agents Registration Act------------------------------- 63
Letter to Senator Symington from Senator Morse, November 19, 1963 77
Appendix-
Letter from the Department of State_______________ ___________ 119
Letter from the American Institute of Certified Public Accountants__ 119
Summary index-------------------------------------------------- 121
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
TUESDAY, NOVEMBER 19, 1963
UNITED STATES SENATE,
COMMITTEE ON FOREIGN RELATIONS,
Washington, D.C.
The committee met, pursuant to notice, at 10 :10 a.m., in room 4221,
New Senate Office Building, Senator J. W. Fulbright (chairman)
presiding.
Present: Senators Fulbright, Sparkman, Humphrey, Lausche,
Aiken, and Williams.
The CHAIRMAN. The committee will come to order.
REVIEW OF STUDY OF NONDIPLOMATIC AGENTS
We begin today the final series of hearings before the Senate Com-
mittee on Foreign Relations in its study of activities of nond'iplomat-
ic agents of foreign principals held pursuant to Senate Resolution
362 of the 87th Congress, 2d session, and Senate Resolution 26 of the
88th Congress, 1st session.
During the past 16 months, the committee has examined in detail the
activities of various registered foreign agents, their compliance with
the Foreign Agents Registration Act and the administration of that
act by the Department of Justice. Thirteen parts of published hear-
ings have been released containing 1,998 pages of testimony.
Last February when I opened the first of the hearings in this study,
I said :
Little, if any, precise detailed information has been available up to now on
what nondiplomatic agents do or how they do it.
I believe today the committee, the Senate and the American people
know a little more than they did 9 months ago about the activities of
nondiplomatic agents.
PENDING LEGISLATION RESULTING FROM INVESTIGATION
But the committee's responsibility has not been fulfilled by the
publishing of the facts concerning certain selected foreign agents
activities. The responsibility of the committee was to investigate
with an eye toward legislation and so today we begin a series of hear-
ings on IS. 2136. Introduced by Senator Hickenlooper and myself,
this bill contains amendments to the Foreign Agents Registration Act
which are intended to meet the problems and situations deemed
inimical to the best interests of our Government which were disclosed
during the. course of the committee's investigation.
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2 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
(S. 2136 follows:)
[S. 2136, 88th Cong., 1st sess.]
A BILL To amend the Foreign Agents Registration Act of 1938, as amended
Be it enacted by the Senate and House of Representatives of the United States
of America in Congress assembled, That section 1 of the Foreign Agents Regis-
tration Act of 1938, as amended, is amended as follows :
(1) Subsection (b) is amended to read as follows:
" (b) The term `foreign principal' includes-
"(1) a government of a foreign country and a foreign political party ;
"(2) a person outside of the United States, unless it is established that
such person is an individual and a citizen of and domiciled within the United
States, or that such person is not an individual and is organized under or
created by the laws of the United States or of any State or other place sub-
ject to the jurisdiction of the United States and has its principal place of
business within the United States ; and
"(3) a partnership, association, corporation, organization, or other combi-
nation of persons organized under the laws of or having its principal place
of business in a foreign country."
(2) Subsection (c) is amended to read as follows :
"(c) Except as provided in subsection (d) hereof, the term `agent of a foreign
principal' means-
"(1) any person who acts as an agent, representative, employee, servant
or in any other capacity at the order, request or under the direction or con-
trol of a foreign principal or of a person any substantial portion of whose
activities are directly or indirectly supervised, directed, controlled, financed
or subsidized In whole or in major part by a foreign principal, and who
directly or through any other person-
"(I) engages within the United States in poltical activities for or in
the interests of such foreign principal ;
"(ii) acts within the United States as a public relations counsel,
publicity agent, information-service employee or political consultant for
or in the interests of such foreign principal;
"(iii) within the United States solicits, collects, disburses, or dis-
penses contributions, loans, money, or other things of value for or in the
interest of such foreign principal; or
"(iv) within the United States represents the interests of such foreign
principal before any agency or official of the Government of the United
States ; and
"(2) any person who agrees, consents, assumes or purports to act as,
or who is or holds himself out to be, whether or not pursuant to contractual
relationship, an agent of a foreign principal as defined in clause (1) of
this subsection."
(3) Subsection (d) is amended by striking out "clause (1), (2), or (4) of".
(4) Subsection (g) is amended by inserting before the semicolon at the end
thereof the words "of such principal".
(5) Such section is further amended by adding at the end thereof the follow-
ing new subsections :
"(o) The term `political activities' includes the dissemination of political
propaganda and any other activity which the person engaging therein believes
will, or which he intends to, prevail upon, indoctrinate, convert, induce, per-
suade, or in any other way influence any other person or any section of the
public within the United States with reference to the political or public in-
terests, policies, or relations of a government of a foreign country, or a foreign
political party or with reference to the domestic or foreign policies of the
United States.
"(p) The term `political consultant' means any person, including, without limi-
tation, any economic, legal or other consultant, who engages in informing or
advising any person with respect to any matter pertaining to the political or
public interests, policies or relations of a - foreign country or of a foreign po-
litical party or pertaining to the foreign or domestic policies of the United
States."
SEC. 2. Section 2 of such Act is amended as follows:
(1) Subsection (a) is amended by striking out the second, third, and fourth
sentences and inserting in lieu thereof the following: "Except as hereinafter
provided, every person who becomes an agent of a foreign principal shall, within
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ten days thereafter, file with the Attorney General, in duplicate, a registration
statement, under oath on a form prescribed by the Attorney General. The
obligation of an agent of a foreign principal to file a registration statement
shall, after the tenth day of his becoming such agent, continue from day to day,
and termination of such status shall not relieve such agent from his obligation
to file a registration statement for the period during which he was an agent
of a foreign principal."
(2) Subsection (a) (3) is amended by inserting before the semicolon at the
end thereof a comma and the following : "or by any other foreign principal".
(3) Subsection (a) (4) is amended by inserting before the semicolon at the
end thereof a comma and the following : "including a detailed. statement of
any such activity which is a political activity".
(4) Subsection (a) (6) is amended by inserting before the semicolon at the
end thereof a comma and the following: "including a detailed statement of any
such activity which is a political activity".
(5) Subsection (a) (7) is amended to read as follows:
"(7) The name, business, and residence addresses, and if an individual,
the nationality, of any person other than a foreign principal for whom the
registrant is acting, assuming or purporting to act or has agreed to act under
such circumstances as require his registration hereunder ; the extent to
which each such person is supervised, directed, owned, controlled, financed,
or subsidized, in whole or in part, by any government of a foreign country
or foreign political party or by any other foreign principal ; and the nature
and amount of contributions, income, money, or thing of value, if any, that
the registrant has received during the preceding. sixty days from each such
person in connection with any of the activities referred to in clause (6) of
this subsection, either as compensation or for disbursement or otherwise,
and the form and time of each such payment and from. whom received ;".
(6) Subsection (a) (8) is amended to read as follows:
11(8) A detailed statement of the money and other things of value spent
or disposed of by the registrant during the preceding sixty days in further-
ance of or in connection with activities which require his registration here-
under and whch have been undertaken by him either as an agent of a foreign
principal or for himself or any other person or in connection with any activi-
ties relating to his becoming an agent of such principal, and a detailed state-
ment of any contributions of money or other things of value made by him
during the preceding sixty days (other than contributions made in connection
with activities which require his registration hereunder which are required
to be reported under the preceding provisions of this clause) in connection
with an election to any political office or in connection with any primary
election, convention, or caucus held to select candidates for any political
office ;".
(7) Such section is further amended by adding at the end thereof a new
subsection as follows :
"(f) The Attorney General may, by regulation, provide for the exemption from
registration, or from the requirement of furnishing any of the information re-
quired by this section, of any person who is listed as a partner, officer, director,
or employee in the registration statement filed by an agent of a. foreign principal
under this Act, where by reason of the nature of the functions or activities of
such person the Attorney General having due regard for the national security
and the public interest determines that such registration, or the furnishing of
such information, is not necessary to carry out the purposes of this Act."
Ssc.. 3. Section 3(d) of such Act is amended by striking out the words
"financial or mercantile" and inserting in lieu thereof the words "financial,
mercantile, or public relations".
SEC. 4. Section 4 of such Act is amended as follows :
(1) Subsection (a) is amended by inserting after the words "political propa-
ganda" the words "for or'dn the interests of such foreign principal" ; and by
striking out the words "send to the Librarian of Congress two copies thereof
and file with the Attorney General one copy thereof" and inserting in lieu thereof
the words "file with the Attorney General two copies thereof".
(2) Subsection (b) is amended by inserting after the words "political propa-
ganda" where they first appear the words "for or in the interests of such foreign
principal" ; by inserting after the words "setting forth" the words "the relation-
ship or connection between the person transmitting the political propaganda or
causing it to be transmitted and such propaganda;"; and by striking out the
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
words "each of his foreign principals" and inserting in lieu thereof "such
foreign principal".
(3) Subsection (c) is amended by striking out the words "sent to the Librarian
of Congress" and inserting in lieu thereof the words "filed with the Attorney
General".
(4) Such section is further amended by adding at the end thereof the follow-
ing new subsections :
"(e) It shall be unlawful for any person within the United States who is
an agent of a foreign principal required to register under the provisions of this
Act to transmit, convey, or otherwise furnish to any agency or official of the
Government (including a Member or committee of either House of Congress)
for or in the interests of such foreign principal any political propaganda or to
request from any such agency or official for or in the interests of such foreign
principal any information or advice with respect to any matter pertaining to
the political or public interests, policies or relations of a foreign country or
of a political party or pertaining to the foreign or domestic policies- of the United
States unless the propaganda or the request is prefaced or accompanied by a
true and accurate statement to the effect that such person is registered as an
agent of such foreign principal under this Act.
"(f) Whenever any agent of a foreign principal required to register under
this Act appears before any committee of Congress to testify for or in the
interest of such foreign principal, he shall, at the time of such appearance,
furnish the committee with a copy of his most recentregistration statement filed
with the Department of Justice as an agent of such foreign principal for inclusion
in the records of the committee as part of his testimony."
SEC. 5. Section 5 of such Act is amended by inserting after "the provisions of
this Act," the words "in accordance with such business and accounting prac-
tices,".
SEC. 6. Section 6 of such Act is amended by inserting the letter "(a)" after the
section number and by adding at the end thereof the following new subsections :
"(b) The Attorney General shall, promptly upon receipt, transmit one copy
of every registration statement filed hereunder and one copy of every amendment
or supplement thereto, and one copy of every item of political propaganda filed
hereunder, to the Secretary of State for such comment and use as the Secretary
of State may determine to be appropriate from the point of view of the foreign
relations of the United States. Failure of the Attorney General so to transmit
such copy shall not be a bar to prosecution under this Act.
"(c) The Attorney General is authorizel to furnish to departments and agen-
cies in the executive branch and committees of the Congress such information
obtained by him in the administration of this Act, including the names of regis-
trants under this Act, copies of registration statements, or parts thereof, copies
of political propaganda, or other documenrs or information filed under this Act,
as may be appropriate in the light of the purposes of this Act."
SEC. 7. Section 8 of such Act is amended as follows :
(1) Subsection (a) is amended by adding before the period at the end of
paragraph (2) a comma and the following: "except that in the case of a viola-
tion of subsection (b), (e), or (f) of section 3 or of subsection (g) of this section
the punishment shall be a fine of not more than $5,000 or imprisonment for not
more than six months, or both".
(2) Such section is further amended by adding at the end thereof the follow-
ing new subsections :
"(f) Whenever in the judgment of the Attorney General any person is en-
gaged in or about to engage in any acts which constitute or will constitute a
violation of any provision of this Act, or regulations issued thereunder, or when-
ever any agent of a foreign principal fails to comply with any of the provisions
of this Act or the regulations issued thereunder, or otherwise is in violation of
the Act, the Attorney General may make application to the appropriate United
States district court for an order enjoining such acts or enjoining such person
from continuing to act as an agent of su :h foreign principal, or for an order
requiring compliance with any appropriate provision of the Act or regulation
thereunder. The district court shall have jurisdiction and authority to issue a
temporary or permanent injunction, restraining order or such other order which
it may deem proper. The proceedings shall be made a preferred cause and shall
be expedited in every way.
"(g) It shall be unlawful for any agent of a foreign principal required to
register under this Act to be a party to any contract, agreement, or understand-
ing, either express or implied, with such foreign principal pursuant to which
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the amount or payment of the compensation, fee, or other remuneration of
such agent is contingent in whole or in part upon the success of any political
activities carried on by such agent."
SEC. 8. (a) Chapter 29 of title 18, United States Code, is amended by adding
at the end thereof a new section as follows :
613. Contributions by agents of foreign principals
"Whoever, being an agent of a foreign principal, directly or through any other
person, either for or on behalf of such foreign principal or otherwise in his
capacity as agent of such foreign principal, knowingly makes any contribution
of money or other thing of value, or promises expressly or impliedly to make
any such contribution, in connection with an election to any political office or
in connection with any primary election, convention, or caucus held to select
candidates for any political office ; or
"Whoever knowingly solicits, accepts, or receives any such contribution from
any such agent of a foreign principal or from such foreign principal-
"Shall be fined not more than $5,000 or imprisoned not more than five years
or both.
"As used in this section-
"(1) The term `foreign principal' has the same meaning as when used in
the Foreign Agents Registration Act of 1938, as amended, except that such term
does not include any person who is a citizen of the United States.
"(2) The term `agent of a foreign principal' means any person who acts as
an agent, representative, employee, servant, or in any other capacity at the
order, request, or under the direction or control of a foreign principal or of
a person any substantial portion of whose activities are directly or indirectly
supervised, directed, or controlled by a foreign principal."
(b) Chapter 11 of title 18, United States Code, is amended by adding at the
end thereof a new section as follows :
219. Officers and employees acting as agents of foreign principals
"Whoever, being an officer or employee of the United States in the executive,
legislative, or judicial branch of the Government or in any agency of the United
States, including the District of Columbia, is or acts as an agent of a foreign
principal required to. register under the Foreign Agents Registration Act of 1938,
as amended, shall be fined not more than $10,000 or imprisoned for not more than
two years, or both.
"Nothing in this section shall apply to the employment of any agent of a
foreign principal as a special Government employee in any case in which the
head of the employing agency certifies that such employment is required in the
national interest. A copy of any certification under this paragraph shall be
forwarded by the head of such agency to the Attorney General who shall cause
the same to be filed with the registration statement and other documents filed by
such agent, and made available for public inspection in accordance with section
6 of the Foreign Agents Registration Act of 1938, as amended."
(c) (1) The sectional analysis at the beginning of chapter 29, United States
Code, is amended by adding at the end thereof the following new item :
? "613. Contributions by agents of foreign principals."
(2) The sectional analysis at the beginning of chapter 11 of title 18, United
States Code, is amended by adding at the end thereof the following new item :
"219. Officers and employees acting as agents of foreign principals."
SEC. 9. This Act shall take effect ninety days after the date of its enactment.
The CHAIRMAN. Our first witness today is Deputy Attorney General
Nicholas Katzenbach. I would like to take a moment to express the
appreciation of the committee to the Attorney General and his staff-
particularly Assistant. Attorney General. Herbert Miller and Mr.
Robert Rosthal-for the assistance given the committee during the
course of its investigation.
At this point, I would like to have inserted in the record letters re-
ceived by the committee on November 18, 1963, from the Department
of Justice and on November 20, 1963, from the Federal Communica-
tions Commission in support of the bill.
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(The letters referred to follow:)
DEPARTMENT OF JUSTICE,
OFFICE OF TILE DEPUTY ATTORNEY GENERAL,
Washington, D.C., November 18, 1963.
Uhairman, Committee on Foreign Relations,
U.S. Senate, Washington, D.C.
DEAR SENATOR : This is in response to your request for the views of the Depart-
ment of Justice on S. 2136, a bill to amend the Foreign Agents Registration Act
of 1538, as amended.
The objectives sought to be accomplished by this legislation were detailed to
the Senate by you at the time the bill was introduced on September 10, 1903.
It is the view of the Department of Justice that, in general, the bill would effec-
tively accomplish the objectives to which it is directed. We are therefore
pleased to support its enactment.
However, committee attention is invited to the following considerations and
suggestions.
During the more than 20 years during which the Department of Justice has
had the responsibility for the administration of the Foreign Agents Registration
Act, we have had relatively little difficulty in applying the definitions of "foreign
principal" and "agent of a foreign principal." That the definitions have been
clear and precise is attested by the fact that during this 20-year period the
Congress has considered it necessary to amend the definition only once and that
once was to enlarge on the definition of foreign principal.
The proposed redefinition of "agent of a foreign principal" Introduces ambigui-
ties which may create loopholes in the coverage of the act. For example, the
word "substantial" on line 16 of page 2 may be held to mean "considerable or
significant"; if so, many vital registrations may be lost. To illustrate, assume
that a foreign principal retains a large public relations firm with a preponder-
antly domestic clientele to conduct a public relations program in the United
States and that the public relations firm contracts with others to assist it in the
program. Although the public relations firm would be required to register as
an agent of a foreign principal, those with whom it has contracted may not
because of the Government's inability to prove that a "substantial" portion of
the activities of the public relations firm are "supervised, directed, controlled,
financed, or subsidized" by a foreign principal. Another illustration of a prob-
lem created by the proposed redefinition of "agent of a foreign principal" relates
to the use of the words "at the order, request, or under the direction or control
of a foreign principal" on lines 14 to 16, page 2. Under existing law, the Gov-
ernment is required to submit proof of an agent's relationship and activities
but is not required to prove that such activities are being conducted "at the
order, request or under the direction or control of" the foreign principal. This
is an unreasonable burden to impose upon the Government.
S. 2136 proposes a definition of the term "political activities," beginning
on line 22 of page 3. This definition is substantially narrower than the definition
of "political activity" which is presently contained in rule 100(a) (11), promul-
gated by the Attorney General. For example, the proposed definition would not
include the furnishing of information or advice to a foreign principal with
respect to matters pertaining to political or public interests of foreign govern-
ments or foreign political parties. In our view, any definition of "political
activities" in the act should be at least as extensive as that which is now in the
rules.
Section 2(7) of the bill would add to section 2 of the act a new subsection (f)
to authorize the Attorney General, consistent with the national security, the
public interest, and the purposes of the act, to provide for the exemption of
certain persons whose functions or activities do not require that they register
or furnish information. Illustrative of the type of exemption which could be
granted pursuant to this authority, is that which might be accorded partners
who have nothing whatsoever to do with activity in behalf of a foreign principal,
although they are members of a registered law firm in which other partners
handle the account. The Department supports this change.
Section 4 of the bill would, in part, amend section 4 (a) and (b) of the For-
eign Agents Registration Act to insert after the words "political propaganda"
the words "for or in the interests of such foreign principal." At the present time,
section 4(a) of the act requires every agent of a foreign principal who transmits
any political propaganda through the U.S. mails or an instrumentality of inter-
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state or foreign commerce to file copies thereof and certain information per-
taining to the transmittal. [Emphasis supplied.] Subsection (b) requires the
labeling of such propaganda. The insertion of the words "for or in the inter-
ests of such foreign principal" may substantially impair the effectiveness of
this filing and labeling section of the act. The exchange of correspondence
between Mr. Harold Riegelman and the Department of Justice printed on page
139 of part 1 of the hearings conducted by the committee earlier this year, and
the statement of Dr. Martin Kamacho on page 980 of part 8, highlight the prob-
lem to which we refer. Under the proposed amendment an agent for one coun-
try could disseminate unlabeled propaganda on behalf of another country or
on his own behalf, and in either case claim exemption from the filing and labeling
requirements of the act on the ground that he was not acting "for or in the
interests of [his] foreign principal."
Section 7 of the bill would amend section 8 of the act to reduce the penalties
applicable to certain violations and to make available to the Attorney General,
in appropriate cases, injunctive relief to enjoin violations of the act or compel
compliance with it. The committee may wish to consider one further step to-
ward recognizing the varying degrees of culpability involved in violations of
the act and the problems involved in administering it. It is suggested that the
committee consider redesignating proposed subsection "(g)" on line 5 of page 12
as " (h) " and inserting a new proposed subsection " (g) " reading as follows :
"(g) If the Attorney General determines that a registration statement as
required by section 2(a) or a supplemental statement.as required by section
2 (b) of this Act does not comply with the requirements of this Act or the regula-
tions issued thereunder, he shall so notify the registrant in writing, specifying
in what respects the statement is insufficient. Whoever acts an an agent of a
foreign principal at any time ten days or more after receipt of such notification,
without filing an amended statement in full compliance with the requirements
of this Act and the regulations issued thereunder, shall, without regard to any
penalties provided in section 8(a), be punished by a fine of not more than $5,000
or by imprisonment for not more than six months, or both."
Finally, committee attention is invited to the fifth amendment problems which
might be posed by the interrelationship of proposed subsection 2(a) (8), which
requires disclosure by an agent of political contributions made on behalf of his
foreign principal, and the provisions of proposed section 613 of title 18, United
States Code, which would make such contributions unlawful.
The Bureau of the Budget has advised that there is no objection to the sub-
mission of this report from the standpoint of the administration's program.
NICHOLAS DEB. KATZENBACH,
Deputy Attorney General.
FEDERAL COMMUNICATIONS COMMISSION,
Washington, D.C., November 20, 1903.
Hon. J. W. FULBRIOHT,
Chairman, Foreign Relations Committee,
U.S. Senate, Washington, D.C.
DEAR CHAIRMAN FULBRIOHT : By letter dated September 13, 1963, you requested
the Commission's comments on S. 2136, a bill to amend the Foreign Agents Reg-
istration Act of 1938, as amended. In that letter you also stated that although
this bill did not meet the problem posed by the necessity for strengthening of the
labeling provision of that law, the matter was still under study by your com-
mittee and any recommendations would be helpful.
As you know, the Foreign Agents Registration Act places responsibility on
nondiplomatic representatives of foreign governments to label political propa-
ganda and identify its source. At the same time, sections 317 and 508 of the
Communications Act place a similar responsibility on broadcast licensees with
respect to identification of source. In connection with the Communications Act,
section 317, as implemented by Commission rules, requires, in substance, a spon-
sorship announcement fully and fairly disclosing the true identity of the person
or persons furnishing such material, which would include identification of the
foreign principal concerned. The act further places an obligation on Commission
licensees to exercise reasonable diligence to obtain, from those with whom they
deal directly in connection with any program, information to enable them to
make the required announcement. In addition, section 508 of the act provides
for certain disclosures where payments are made to persons other than licensees
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for the broadcast of programs in circumstances where, if the licensee had re-
ceived payment, an annoucement would be required. The purpose of these pro-
visions is to assure in these instances that the public will be informed as to the
source of sponsored broadcast material carried over the public airwaves (inclu.d-
ing, of course, matters which treat with political or controversial subjects).
As far as the present legislation, S. 2136, is concerned, we note that only sub-
section 6(c) appears to affect the Commission. That subsection, by authorizing
the Attorney General to furnish agencies such information obtained by him in
administration of the act as may be appropriate in light of the purposes of the
act, would to some degree facilitate our task of administering sections 317 and
508. Accordingly, we would favor any such provision.
With respect to strengthening the labeling provision, which you indicate is
still under study, it might be desirable to consider specific language to make
certain that foreign agents properly label all films, recordings, and printed or
typed propaganda furnished to broadcasters, and to include a requirement that
any such agent appearing personally on a radio or television program shall in-
form the broadcast licensee or his representative that he is such an agent. A
requirement of this type would better enable licensees to comply with section
317 of the Communications Act of 1934, as amended.
Consideration might also be given to imposing the labeling requirement-not
only upon the agent of the foreign principal-but upon anyone disseminating the
propaganda with knowledge of its nature and origin. The form of labeling or
announcement should be tailored to the particular medium used for its dissemina-
tion and-in the case of use over radio or television-should bear in mind the
provisions of sections 317 and 508 of the Communications Act.
When you reach this phase of your study, we can make our staff available for
technical consultation if you so desire.
This letter was adopted by the Commission on October 9, 1963.
We have been advised by the Bureau of the Budget that from the standpoint
of the administration's program there is no objection to the submission of this
report to your committee.
By direction of the Commission :
EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Washington, D.C., November '20, 1963.
Hon. J. W. FULRRIGHT,
Chairman. Committee on Foreign Relations,
U.S. Senate, Washington, D.C.
DEAR bIR. CHAIRMAN : This is in reply to your request for comments on S.
2136, a bill to amend the Foreign Agents Registration Act of 1938, as amended.
Your letter also asked for comments on the need for strengthening the labeling
provisions of the act. In regard to the latter, the Bureau of the Budget concurs
in the recommendations made by the Federal Communications Commission in its
report.
Responsibility for the administration of the Foreign Agents Registration Act
rests with the Department of Justice. In its report to your committee, the
Department of Justice supports enactment of the bill. However, the Depart-
ment raises a number of problems in connection with certain provisions of the
bill. The Bureau of the Budget has no objection to enactment of the bill, but
recommends to the attention of the committee the reservations raised by the
Department of Justice.
Your attention is called to an apparent minor technical omission : On page
14, line 18, the words "of title 18" appear to have been omitted after the words
chapter 29".
Sincerely yours,
PHILLIP S. HUGHES,
Assistant Director for Legislative Reference.
The CHAIRMAN. Mr. Katzenbach, we are very pleased to have you
this morning. I believe you have a prepared statement?
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS 9
Mr. KATZENNBACH. I do, Mr. Chairman. I have a short prepared
statement.
The CHAIRMAN. Would you proceed, please, sir.
Mr. KATZIcNBACII. Yes, sir.
STATEMENT OF HON. NICHOLAS deB, KATZENBACH, DEPUTY ATTOR-
NEY GENERAL; ACCOMPANIED BY NATHAN B. LENVIN, CHIEF,
REGISTRATION SECTION, INTERNAL SECURITY DIVISION
I wish to express my appreciation to the committee for affording
me this opportunity to express my views with respect to the proposals
to amend the Foreign Agents Registration Act as contained in S.
2136. As you know, prior interest and concern manifested by the Con-
gress toward this act have been directed primarly toward its internal
security aspects.
INVESTIGATION HAS REVEALED SHORTCOMINGS IN ACT
A significant result of the investigations by this committee has been
an analysis and elucidation of the widespread and myriad activities
of nondiplomatic representatives of foreign principals. Because of
these investigations, we are now better informed as to the nature, char-
acter, and extent of such activities and the problems which they present.
Much light has been shed by your hearings on the activities of public
relations firms on behalf Of foreign governments or agencies and upon
the large amounts of money dedicated to these purposes, often without
substantial concern for the value of the services received in exchange.
In addition, shortcomings in the act have been disclosed and a bill
prepared and offered to meet the needs found.
The proposed legislation now before the committee as S. 2136 is
basically sound and we are pleased to support it.
The provisions of the bill designed to lend flexibility to the Depart-
ment's hand in its administration and enforcement of the act are
especially welcome. Both the experience gained in administering and
enforcing the act and the information gathered by your committee dur-
ing the course of its hearings make it clear that the act's single criminal
penalty is an unwieldy device with which to cope with problems which
arise in the day-by-day administration of the statute.
Particularly desirable is the proposal which grants the Attorney
General the authority to seek from the district court an injunction
against violations of the act. Another provision which would facili-
tate enforcement is the proposal to allow the Attorney General to pre-
scribe the manner and method by which a registrant shall maintain the
financial records pertaining to, the representation of his foreign
principal.
ADDITIONAL AMENDMENT SUGGESTED
In keeping with the aims of the committee to provide for more effec-
tive and useful enforcement of the act, I would like to suggest for the
consideration of the committee one additional amendment which would
somewhat parallel those already proposed. It would be beneficial, I
think, to amend section 2 of the act to enable the Department to require
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1O FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
an agent of a foreign principal to cease acting as such until he has made
the full disclosure required by the act. Violation of such a requirement
would be punishable as a misdemeanor.
Both the Department and this committee have recognized that the
penalties now imposed in the act may be too severe to be effectively in-
voked in all instances-for example, in those cases in which there has
been partial compliance and the violation consists only of a failure
to give all the details required by the registration form. These situa-
tions may not be sufficiently grave to warrant the seeking of an in-
junction or the return of an indictment, but real enough to require
some action beyond an exchange of correspondence.
Other provisions of the bill also meet with the approval of this De-
partment. I shall not, however, take the time of the committee to
detail each of these.
Instead, it may be useful to refer briefly to a problem raised by some
language changes which would be made by the bill.
The proposed amendments to section 4 of the act would provide
that only political propaganda disseminated for and in the interests
of the foreign principal must carry the label and must be filed with
the Department. Under the present law, any political propaganda
disseminated by an agent of a foreign principal must be labeled and
filed. These revisions would have a real and significant narrowing
effect upon the obligations of an agent. They would open the door for
an agent of a particular foreign government or foreign political party
to disseminate unlabeled political propaganda favoring that country
or political movement under the claim that it is in his own behalf and
an expression of his own personal views.
Thus, the burden of proof would be appreciably increased by the
need to disprove the truth or sincerety of this claim; and, as we all
know, proof of a state of mind is particularly difficult, especially,
when as here, a willful violation of the act must be shown for success-
ful prosecution.
Finally, as indicated in my letter, the narrowing of the term "poli-
tical activities" as contained in the proposed bill may unduly narrow
the application of the statute and seriously hamper its enforcement.
I would suggest that any definition of political activity should be at
least as extensive as that which is now in rule 100 (a) (11) promulgated
by the Attorney General.
Let me emphasize that I do not intend the few technical reservations
to which I have referred today and in my letter to obscure the fact
that the Department regards S. 2136 as desirable legislation. We sup-
port its enactment.
AGENT CEASE ACTING UNTIL ACTIVITIES DISCLOSED
The CHAIRMAN. Thank you, Mr. Katzenbach.
I think your suggestion on page 2 about the power to require an
agent to cease acting as a representative until he has made full dis-
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closure is a very good one. Do you mean to enforce this by adminis-
trative action or by the injunction?
Mr. KATZENBACII. Yes; or by the injunction. I think it might be
helpful if we were to use an injunctive route on it, that it be made
clear that there was a remedy that would authorize the court to order
a person to cease and desist. I am rather inclined to think we could
do it under the phrasing as is presently contained.
The CHAIRMAN. We certainly could easily enlarge that to make
that power more specific. I think it is a good idea.
I noticed in the list, that you have supplied to the committee, of con-
victions obtained under the act (most of which were obtained prior to
1944, when emphasis was on subversion), that even in those cases where
you obtained a conviction, the penalties were very light. I think the
penalties usually ran about $500, which was the normal fine imposed
upon an, agent who was, in the early days, a Nazi or a Communist. So
that even though you had the power to impose heavy fines, it was not
usually done, is that not correct?
Mr. KATZENBACII. That is correct, Senator; and, of course., the
standard defense is that, it is a very technical act, and that this is
simply a technical violation and should not be regarded too seriously.
The CHAIRMAN. The other defense is that "everybody is doing it.
Why do you pick on me," is it not? I think that your suggestion is a
very good one.
LABELING PROVISIONS OF ACT
On page 3 of your statement you refer to a problem raised by the
committee amendment relating to the labeling provisions of the act.
Do I understand your position to be that once a person becomes a
registered agent, thereafter, any political literature he puts out which
falls within the act's definition of "political propaganda," whether
or not it is in the interest of his principal, should be labeled as the
product of a registered agent?
Mr. KATZENBACII. That is what we are proposing, yes. The applica-
tion of that, would be mainly in the field of internal security or sub-
version which would be the place that, it woud be most useful to re-
quire that.
I am not unsympathetic to what I think was the objective in doing it
the other way with respect to the problems that your committee has
primarily concentrated upon, and I think there has to be a balancing
there. I do not feel strongly about it. I think with respect to Com-
munist literature and propaganda that it might be helpful to continue
to have the labeling provisions.
PROBLEMS OF NARROWING LABELING PROVISIONS
The CHAIRMAN. I was thinking of one case where a man,
registered in behalf of Germany, for example, wished to put in
an advertisement expressing his opinion about our relations with the
Philippines. He would say, "I am an American. citizen. The fact
that I am representing Germany has nothing to do with the Philip-
pines, and I ought to be able to express my opinion the same as any-
one else."
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1G I+O N AGENTS REGISTRATION ACT AMENDMENTS
Isn't that the kind of difficulty that would arise?
Mr. KATZENBACHI. Yes. I think it might, and even if the opinion
was expressed with respect to Germany, and lie was an agent of the
German Government, it is always open to him to say, "This is my ow+ ii
opinion. It is not one that I did on behalf of my foreign principal."
DIFFICULTIES OF PROVING PRIVATE OPINION OR PAID PROPAGANDA
There is an indication in at least one of the cases that that sort of
thing might be a good defense. But it does make some difference in
terms, Mr. Chairman, of what we have to allege and prove initially,
that is, under the present provisions as they are administered they
would be enough to establish the fact that he did this and did not label
it, to require him to come forward as part of his defense and say, "I
did this on my own and not on behalf of the foreign principal." It
is a difficult thing at best to establish. I would suppose then when it
was taken to the jury, the proper instruction from the judge to the
jury under present law would be, "If you believe that this was done on
his own behalf and not on behalf of the foreign principal your finding
should be not guilty."
Whereas, if you put this burden on us, then I think the proper
instruction would be to the jury, "You must believe beyond a reason-
able doubt that this was done on behalf of the foreign principal and as
part of that arrangement." We would have that additional burden of
proof upon the Government.
BURDEN OF FACTUAL; INFORMATION ON DEFENDANT
The CHAIRMAN. Yes. I was a little puzzled by this, because as I re-
call, in your previous testimony to the committee, you had, in effect,
read into the act a limitation somewhat similar to what the committee
now proposes. I believe it is on page 136 and page 137 of part I of
these hearings. We were discussing at that point the so-called Riegel-
man letter to the New York Times which was unlabeled. You will
recall that Mr. Lenvin said, and I quote :
We inquired about one when there was: not, and the answer we got, of course,
was that this was being written "in my private capacity as a private citizen
and as a lawyer and as an interested person in public affairs, and it had no
connection whatsoever with my representation of the foreign principal." That
is another problem with which we are faced.
Mr. Katzenbach, you replied :
That, Senator, is one of the more difficult problems involved in the act.
In other words, I take it both you and Mr. Lenvin have already
read the act to mean that a person is required to label his correspond-
ence on political matters only when it is written in his capacity as an
agent of a foreign principal, and I agree, as I have said, this involves
a very difficult problem of proof.
Mr. KATZENBAOII. The point that I am making here is not incon-
sistent with what I said before. It is merely that I do believe it is
possible to put the burden of showing that factual situation upon the
defendant. If it is a burden that the Government has to bear, then in
some instances it would be difficult, if not impossible, to prove beyond
a reasonable doubt that it was written in his capacity as an agent of
the foreign government.
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS 13
SUFFICIENCY OF PRESENT LEGAL REQUIREMENT
The CHAIRMAN. Under the present law, a public relations firm rep-
resenting Germany that puts out a press release for a domestic client
on a political matter would be required to label the press release as
coming from a foreign agent, would it not?
Mr. KATZENBACH. Yes, I would think so; yes.
The CHAIRMAN. I think the difficulty would be if you broaden the
authority too much; it would be too difficult to enforce. If you nar-
row it then it would be easier, would it not?
Mr. KATZENBACH. I should think, in general, that would be true,
Mr. Chairman.
The CHAIRMAN. It is a difficult problem. I would not minimize the
difficulty of it.
Mr. KATZENBACH. It is a tough one. I thought on this particular
matter that it might be easier to leave it as it presently is because
that would, a least, make the cases that we chose to prosecute some-
what easier to prosecute. It does leave more discretion in the prose-
cutor.
The CHAIRMAN. We will certainly give it very serious consideration.
During the course of our hearings we came across a number of
situations which members of the committee believed were covered by
the act as presently written, but to which, for one reason or another,
the act had not been applied. Since we believe those cases to be cov-
ered by the present language of the act, we have not drawn up amend-
ments to deal with these specific cases.
However, in order to avoid the appearance of sanctioning non-
enforcement of these situations, we wish to address a, number of ques-
tions to you, Mr. Katzenbach, in order to confirm our impression that
the act does cover these cases, and that amendment is not required.
May I say, incidentally, I do not believe the Department of Justice
is uniquely responsible for the failure of enforcement in these cases.
The lack of any congressional hearings on this act for a long period
of time has no doubt made it difficult not only for the Department but
also for the persons to whom the act applies to understand the pur-
poses of the act and the need for its application in particular cases.
I wanted to put a few questions to you. to try to elucidate some of
these problems.
Can an agent representing his foreign principal on a. legal matter
successfully claim the attorney-client privilege with respect to any of
the records relating to his activities on behalf of the principal which
he is required to maintain under the terms of section 5 of the act?
Mr. KATZENBACH. I should think not, Mr. Chairman. I think the
extent of the attorney-client privilege is one that Congress can regu-
late in this respect, and it merely becomes a question as to what the
intention of the act is in this respect; and I would think that it was
the intention of the act to say that the attorney-client privilege could
not be claimed in that regard, and I would think these hearings and
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14 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
the report that might be written with respect to this act could make
that even clearer.
The CHAIRMAN. You see no inhibition in any constitutional or
other way that would prevent it from being applied, do you?
Mr. KATZENBACH. No, I do not, not in terms of what we require
under section 2 to be divulged.
Now, I can see the point where the intrusion into the attorney-client
privilege could be so great hypothetically as to amount to a denial of
a man's right to counsel, but not in terms of the sort of matters to be
revealed or the books to be kept or anything of that kind.
The CHAIRMAN. That attorney-client privilege really is an out-
growth of the common law, is it not? It has no relation really to this
kind of activity.
Mr. KATZENBACH. Well, that is certainly true, Mr. Chairman. I
suppose that at some hypothetical point it has a relationship to the
right to counsel.
The CHAIRMAN. It could have. In any case, I am glad to have
your view for the record.
Where an agent is required to furnish in his registration statement
information which may be in the exclusive possession of his principal,
as, for example, under section 2(a) (3), information concerning the
extent to which the principal is under the control of a foreign prin-
cipal and, as General Klein claimed in our hearing happened in his
case, the principal refuses to disclose the information, is it the effect of
the act, as you understand it, to prohibit the agent from acting as an
agent unless he is able to elicit that information from his principal?
That is a. rather involved question, but are you familiar with the
circumstances to which I am referring?
Mr. KATZENBACH. Yes, I am, Senator, and my answer to that
would be this : I do not believe that if an agent is unable to furnish
the information that is required he really can continue to act in that
capacity. I think it is reasonable for Congress to prescribe, indeed
I think it has prescribed, that certain information has to be furnished.
In terms of criminal penalties, where a man has acted and then
has to file a subsequent statement but is unable to secure the necessary
information, I think we would have a rather poor case to prosecute.
But it seems to me at that point he no longer can continue to act.
Now, there is some doubt as to that, I suppose, which arises out of
the litigation such as the Interhandel litigation where that defense has
been raised. But I really do not think that is persuasive in the con-
text of this legislation, and I believe that you can require a man to
cease and desist when he is unable to provide that information or
even to be able to prosecute him subsequently.
I think this is an example of where the injunctive power would be
extremely useful because I do think that is a tough criminal prosecu-
tion when he says, "How could I provide it? I did everything in good
faith, and the foreign government wouldn't provide it to me." I
think that would be another one of your minor fine situations. But
that would be a jury problem rather than a legal problem. I think
he really is required to do it.
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The CHAIRMAN. It is quite clear in your mind that where the agent
does not make clear in the information he files who his principal is
that the injunction would lie, that the agent could not act?
Mr. KATZENBACH. That is right.
The CHAIRMAN. I agree with that conclusion.
Mr. KATZENBACH. You may get a different question as to the ac-
curacy of that information where it is provided by him, and which he
cannot vouch for in any other way. That information could be quite
inaccurate, and I do not think he would be subject to penalties in view
of the source of it.
The CHAIRMAN. Of course, the way the problem arose was when the
government was the undisclosed principal or the disclosed principal
was a commercial enterprise or a sort of vague committee which ac-
tually was dominated by a government which did not appear as the
principal.
Mr. KATZENBACH. Yes; which could raise considerable problems of
proving that relationship from our viewpoint.
The CHAIRMAN. It is difficult. But with the proper injunctive
process, if you were not satisfied that it was clear who the foreign
principal was, you could then stop their agent from being an agent.
Mr. KATZENBACH. Yes.
The CHAIRMAN. Does the fact that a foreign agent puts a label,
as required by the act, on political propaganda he disseminates relieve
him of any obligation he may have under other Federal or State
statutes to label le propaganda? For example, as paid advertising?
Mr. KATZENBACH. No, I do not see any reason, Senator, why this
Taw would be or should be interpreted as supplanting any other
statute.
The CHAIRMAN. It does not stand in place of, it is only in addition
to, then, any other act.
Mr. KATZENBACH. I would think so, and I cannot see any occupa-
tion of a field by this kind of statute except possibly with respect to
the labeling of propaganda as propaganda. If a State were to pass
that kind of a statute it would be conceivable that a court would say
that with respect to the activities of the agent of a foreign principal,
the Federal Government occupied the entire field, but not with respect
to labeling as paid political advertising or some other purpose.
The CHAIRMAN. Mr. Katzenbach, assuming the Attorney General
exercises authority under section 2(7) of the bill to permit the filing
of short form registration statements, would you advise the Attorney
General to require that such short forms be filed within 10 days of the
date upon which the registrant became an agent, and that the short
form, like the long form, be periodically renewed every 6 months?
Mr. KATZENBACH. The answer certainly would be, as to the first
point where a short form is used, it certainly ought to be filed within
10 days, and any time there is a change in that situation, where other
people are included, they ought to file within 10 days.
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16 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
As to a periodic check every 6 months, which is what, I take it, the
question envisages, I think it would probably be a good idea to make
sure that the people are complying with the short form by calling their
attention to it every 6 months and checking the persons involved to
see whether there have or have not been any changes.
The CiIAn MAN. Suppose an American corporation and a foreign
government, as I believe was the case with the Jewish Agency, Ameri-
can Section, and the Israel consulate act together in a joint project to
send observers abroad to witness conditions in the foreign country.
Suppose the Government takes care of transportation to the foreign
country and the American corporation does the selection of the visi-
tors. Would this sort of joint venture between the foreign government
and an American corporation constitute the American corporation an
agent of the foreign government?
Mr. KATZENEACII. I think under the present law there would be
enough there for a technical agency to exist; that is, simply reading the
language of the law. I think that in light of at least one of the cases
involved there it might be necessary to show other indicia of an agency
relationship. The German-American Vocational League case sug-
gested that some of the normal criteria of agency were incorporated
into the act, and on taking the facts of your question simply as stated,
my answer would be, "Yes," I think that under the language of the
act an agency is created. However, I am not confident that a court,
without something more being shown, would agree with that literal
reading of the act in the light of that one decision.
The CHAIRMAN. That is just one aspect of it.
Mr. KATZENBACH. Yes. I think that is enough to create the agency
relationship. But to show other activities would be desirable in order
to bring them within the scope of the act.
The, CHAIRMAN. Suppose a foreign principal owns all the shares
of an American corporation which puts out a newsletter -this is a
case somewhat like the Jewish Agency, American Section, which owned
all of the shares in the Jewish Telegraphic Agency-is it necessary
to show that the foreign principal directly interfered in the newslet-
ter's editorial policy in order to establish that the foreign principal
controlled the newsletter which was for that reason its agent, or is it
sufficient merely to show that the newsletter was wholly owned by the
foreign principal in order to establish that the newsletter is an agent
of the foreign principal?
Mr. KATZENBACTI. I would think the ownership of all of the shares
would be indicative of the control of the newsletter.
The act, as the exclusion contained in section 1(d) is drafted, re-
quires you to establish that, to be within the exclusion, none of its
policies are determined by a foreign principal. I suppose that there
is something of an inference the other way. In other words, it would
be a defense in such a case, Mr. Chairman, even with the complete
100-percent ownership to say that this is a newsletter, a publication,
and none of its policies are controlled by the foreign principal.
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I would think the fact of ownership would at least raise the infer-
ence that they were, but I think it would be a defense to show that they
were not in fact, and were completely free in their editorial views.
I confess that kind of freedom from the ownership would seem to
me to be a rare bird indeed, and it is not within. any experience that
I have had.
MOTIVE FOR SUPPORTING A PUBLICATION
The CHAIRMAN. It seems to me it would be a little farfetched. I do
not know what would be the motive of supporting a newsletter
at a loss, unless the principal had some influence in what was said.
Mr. KATZENBACH. I would tend to ao?ree with that, Mr. Chairman.
I say this : It is at least by othetically possible that I would have
such confidence in you, sir, and in your. views, and in what you would
say, that I could put you in charge of a newspaper and never inter-
fere whatsoever, even though I owned all the shares, and treat it
merely as a business enterprise, or that I would have such confidence
that your views would coincide with mine, that I would never have
to exercise any control. The issue would be whether the fact of all
of the ownership and the fact that you could any minute cut it off,
or change the management or interfere, would, be such a, threat as to
almost insure that your views would coincide with mine.
The CHAIRMAN. I do not know of any case where a newsletter or
publication is a moneymaking operation, and that one could subscribe
to the idea that it was done for that purpose. It might be persuasive
if it really was a profitable undertaking, if they were in it just for the
amount of money that they made.
Mr. KATZENBACH. No. At least it is possible, Senator, to believe
that a certain group so shares, certain people so share, your general
views and approach as to make it a profitable thing from the view-
point of the principal, not profitable necessarily in money terms but
to make it serve your purposes, merely to finance their activities with-
out seeking any further control.
But I do think that the fact of financing their activities, and the
possibility of suddenly withdrawing that financial support does create
a situation where it is hard to believe that the independence is that
complete.
The CHAIRMAN. Of course, the usual reward in this case is not mone-
tary but political opinion which may eventually affect indirectly some
other monetary or political purpose.
Mr. KATZENBACH. It is difficult, if you draw a parallel, Senator, it
is difficult, to believe, for example, that a legislator, in forming his
own independent judgment, remains completely oblivious to the
views of those who put them in office, something of a parallel to that
situation.
The CHAIRMAN. You do not think of any case offhand, do you?
Mr. KATZENBACH. No.
The CHAIRMAN. Section 2(a) (5) of the act presently requires an
agent periodically to make a "detailed statement" of the money or
other things of value spent or disposed of by the registrant on his
principal's behalf. I wonder whether, as that requirement is presently
interpreted by your Department, a "detailed statement" would require,
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for example, a statement showing payments to a Senator or Congress-
man or to the Public Printer for reprints of speeches in the Congres-
sional Record or could such payments be lumped without itemization
under mailing or printing expenses?
Mr. KATZENBACH. I think as it is presently done, if we had any
reason to believe that payments to the Public Printer, things of that
kind, had been made, I think we would say that certainly ought to be
itemized.
The CHAIRMAN. It ought to be itemized?
Mr. KATZENBACH. It ought to be. I think if it is to a lot, a variety
of different printers for just printing expenses unconnected with the
situation as you gave it in the question, probably we would not care
whether they used the Brown Printing Co. for one document, the
White Printing Co. for another. So I think the difficulty there is
that we might not under the present rules require itemization in every
case, though-we could require under the present rules that that sort
of thing be itemized. We probably, should.
It would be a question of specifying what sort of thing ought to
be itemized, because it only becomes important who prints it if there
is some further relationship such as suggested in your question. Other
than that we would not object to their lumping printing costs by
several different private printers.
The CHAIRMAN. Does the Department currently have regulations
giving instances of, or interpreting the requirement of, detailed
reporting?
Mr. KATZENBACH. No, we do not, and I think we should. I think
we can do so in the light of the sort of problems that this committee
has brought out, and we will attempt to do so, sir.
The CHAIRMAN. Would you agree that the degree of detail re-
quired should depend on the importance of each detail in achiev-
ing the agency's purpose, and that purchases of congressional re-
prints should not be allowed to be lumped together with other print-
ing expenses because they naturally and inherently have a somewhat
different significance from the printing of their own stationery, for
example?
Mr. KATZENBACH. I agree entirely, Senator.
The CHAIRMAN. Your regulations could do that?
Mr. KATZENBACH. We could take steps to do that.
SIGNIFICANCE OF ITEMIZING "THINGS OF VALUE"
The CHAIRMAN. Would the requirement of section 2(a) (5) which
I just quoted, that the disposition of "things of value" as well as
money be reported, oblige an agent to disclose as an expenditure
taking an example which arose in the Hamilton Wright organization
hearings, the fact that Hamilton Wright gave away films, one of
them, I believe, worth up to $50,000, to U.S. film distributors who
thereafter showed them to theater audiences?
Mr. KATZENBACH. Yes.
The CHAIRMAN. Would the requirement of a detailed report in
these instances require the itemized listing of the names of the film
distributors receiving such gifts?
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Mr. KATZENBACH. Yes, they should, Senator.
The CHAIRMAN. The use of these valuable gifts as an inducement
for cooperation with the foreign principal raised another question
for the committee. Are you able to conceive of circumstances. under
which the receipt of these so-called gratuities or the signing of a
contract whereby property rights in a valuable film were given a film
distributor in consideration of $1 in hand paid, would be evidence
that the recipient of the gratuity or the party to the contract was, in
fact, an agent of the foreign principal whose duties were to write
favorable stories or to disseminate the film?
Mr. KA?TZENBACH. Yes, certainly I can conceive of those circum-
stances. I do not think there is any question about it, if he agrees,
in return for the receipt of the film, to distribute it, for example.
There is some difficulty posed here if he makes no agreement what-
soever when he ,gets the film. The receipt of a valuable gift, followed
by its subsequent use and distribution, would be evidence that an
agency relationship existed. Whether it would. constitute adequate
proof of that without something more I think is more doubtful.
The CHAIRMAN. Does the Department have any spot check system
to review these expenses of agents?
Mr. KATZENBACZI. We do, Senator, by the fact that when the ex-
penses come in and we believe that they are not adequately broken
down, we then request some further itemization and further clarifica-
tion. But we have not used a spot check similar, for example, to an
Internal Revenue spot check. We have rather followed the idea that
we keep an eye on the ones where the expenses are large. But it is
very difficult where the expenses are fairly well itemized, and this has
been our experience, even with some of the people who came. up and
testified here, where we would regard the statement of financial ex-
penses, expenditures, as being a very good one in terms of all of the
detail that it went into, and then subsequently discover it is not a
very accurate one.
It is very hard to spot that without some further information where
you find that one of the items was, for example, an item to pay the
expense of newspaper reporters to travel, but is not carried as such in
the form, yet in the form as you read it, the expenditure is a plausible
one.
EFFORTS BY DEPARTMENT REGARDING FILM DISTRIBUTORS
The CHAIRMAN. Has any effort been made by the Department to
have the film distributors involved in the Hamilton Wright case reg-
ister? Have you had any contact with them?
Mr. KATZENBACH. No, we have not.
Mr. Lenvin tells me we have no evidence of any agreement to dis-
tribute, which raises the difficulty. Perhaps some further investiga-
tion would bring to light an agreement of that kind. But there is the
problem of proof that I indicated, and it is not completely an implaus-
ible situation, that is, I can understand if I made up a pretty good
film which did have value, and I offered to give it to someone, and he
was in the film distributing business, I would not necessarily have to
secure an agreement from him that he would, in fact, distribute it. I
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might simply rely upon the fact that it was a valuable piece of prop-
erty, a good film, and I thought by making him this gift he would, in
fact, distribute it, which would raise the difficulties that I suggested
before.
The CHAIRMAN. Of course, I think some of the distributors may
not have realized just what the purpose of the film was.
Mr. KATZENBACii. That is possible.
The CHAIRMAN. An inquiry, a suggestion, even on your part or the
Department's part, that this is part of the foreign agent's activities
might in itself be effective.
Mr. KATZENBACH. I think you are quite correct about that, Senator.
We have done this in the case of TV films in some instances.
The CHAIRMAN. You have done it?
Mr. KATZENBACH. Yes.
The CHAIRMAN. I would ask the same question with respect to
so-called subsidies or, as they were called by the Jewish Agency, Amer-
ican Section, grants and subvention. Can you conceive of circum-
stances under which something called grants or subsidies by a foreign
principal to a domestic group would make that group an agent of the
foreign principal?
Mr. KATZENBACH. Well, I do not think there is any question again
in terms of the act that the receipt of money of that kind does bring
you within the agency definition of the act, but you may be within one
of the exemptions contained in the act.
DISTINCTION BETWEEN RELIGIOUS AND POLITICAL ACTIVITIES
The CHAIRMAN. What would be an exemption in this case?
Mr. KATZENBACH. Religious, scholastic, academic, scientific pur-
suits, pursuits of the fine arts, and so forth.
The CHAIRMAN. Of course, here again the distinctions are very
difficult because very often these activities are related to religious
activities.
Mr. KATZENBACH. Yes, that is right, Senator; and it again goes
back to what I have said before, that being able to test this in the
context of an injunctive suit is far easier than testing it in the context
of an alleged felony because there could be quite sincere differences
of view as to what constitutes a religious activity and what does not.
The CHAIRMAN. This is particularly true where you have govern-
ments which are identified so closely with certain religions.
Mr. KATZENBACH. That certainly complicates it greatly.
The CHAIRMAN. The distinction between the political and religious
aspects of their activities is often very difficult to determine. But
where they clearly do have political objectives and overtones, it seems
to me it ought to be resolved in favor of their itemizing and register-
ing under these circumstances.
Mr. KATZENBACH. I would think so, Senator. Again I think where
sincere differences exist as to this, to be able to test it by our con-
tending that they ought to register and their being given the oppor-
tunity to contend they should not, without facing the penalties of a
felony, is going to make that aspect of clarification a lot easier in
the future.
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS 21
The CHAIRMAN. I agree. I think that is a very good illustration
of the proper action.
ISRAELI DIGESTS AGENCY RELATIONSHIP
Along the same lines, we had, as I recall some cases, one involving
a newsletter called the Israeli Digest, in which a domestic publication,
in this case the Digest, received a sum of money from a foreign source
to pay for subscriptions for approximately 50 percent of the news-
letter's circulation.
Can you conceive of circumstances in which arrangements such
as these could be evidence of an agency relationship?
Mr. KATZENBACH. I certainly think that they are evidence of an
agency relationship. I think the answer to that question again is
whether or not it comes within the exclusion. A contention can be
made that there is no control by the foreign principal over the con-
tents of the publication, and it may be difficult to disprove that. I
really go into the same inferences we raised before with respect to
this.
The CHAIRMAN. The same. As a matter of fact, without the ar-
rangement for subscription there would probably not be any publica-
tion. That is what really kept them going.
Mr. KATZENBACH. Yes. I am sure that almost any publisher would
like to have half of the subscriptions paid for.
FREE TRIPS ABROAD TO NEWSMEN AND OTHERS
The CHAIRMAN. During the course of the committee's investigation
we came across the use of free trips for American newsmen by public
relations men in foreign governments as a means of getting favorable
stories into the American press.
To meet this situation I believe the foreign agent or the Government
Information Office should be required to list in his filing with Justice
the fact that they arranged such a trip along with the name or names
of the people receiving the trip.
I might add that the giving of such trips is not limited to newsmen.
We saw in some cases these Free trips going to university professors,
local public officials, and even religious leaders. People were appar
ently chosen because of their standing in their respective communities.
Our intent is not to stop such trips. Certainly anyone is well within
his rights either to offer or accept such a trip.
There is a feeling, however, that such trips should be reported as
an activity along with the names of those taking the trips and any
expenditures paid by the agent.
My question, Mr. Katzenbach, is, Do you believe Without specific
language in the act the Department of Justice can, by regulation, re-
quire these particular facts to be reported?
Mr. KATZENBACH. Yes, I do, Senator; and we now do it.
The CHAIRMAN. As you know, the USIA is suggesting an amend-
ment to this bill which would have the effect of exempting foreign
government information officers from reporting in detail on their
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2G FOREIGN AGENTS REGISTRATION ACT AMENDMEN
activities and expenditures. The committee, as you know, has not
studied the situation involving diplomatic representatives, and has
few facts in this area. Does the Department of Justice support the
adoption of this amendment?
Mr. KATZENBACH. I think that Mr. Wilson will be a far better wit-
ness than I on that; and, like this committee, I have very little in the
way of fact to base my view on, and I suspect that he has a great deal.
The CHAIRMAN. You do admit that this could open up some prob-
lems in getting enforcement of the act as we suggest in the proposed
amendment, could it not?
Mr. KATZENBACH. Unquestionably it will from our domestic view-
point, and I think the committee would have to consider the balancing
of what we would like to do in this country as against what we would
like to do abroad, and there may have to be a sacrifice in one area or
the other, and it may be difficult to accomplish both objectives.
The CHAIRMAN. It seems to me that some distinction might be
drawn between the activities that are wholly directed and controlled
from the embassy itself, and these other activities of information
officers who are maintained separate from the embassies. Some coun-
tries do that, as you know, and some of them are not registered.
Mr. KATZENBACH. Well, we presently draw that kind of a distinc-
tion in the enforcement of the act. That is, if it is wholly directed
from the Embassy there is no registration requirement.
The CHAIRMAN. The only thing that bothers me about it is whether
or not this would open up a loophole which would enable evasion of
the registration requirements.
Mr. KATZENBACH. Well, Senator, I think that risk is there, and that
possibility certainly exists.
I think the difficulty, I would guess, would be this : That we are in-
terested in engaging in various informational activities in foreign
countries, and we feel that these activities would in some ways be in-
hibited if detailed requirements were imposed upon us by the foreign
governments. We suspect at least this is the position. It is likely that
it will occur if we do that with respect to somewhat similar informa-
tion activities conducted in this country I think what one has to do is
to make a judgment about the two. While there is a question of mak-
ing the administration of the act somewhat more difficult here, I think
it might be possible to refine the exceptions that were given, and I
think it might be possible for this committee to come to the conclusion
that it was more important for us effectively to encourage penetra-
tion in the various more closed societies than it was to enforce this act
here in a society where there is an opposite point of view.
The CHAIRMAN. The question has been raised concerning the appli-
cation of the committee's amendment to foreign corporations which
are either wholly owned subsidiaries of a U.S. corporation or majority
owned by U.S. citizens.
My first question is whether it is true that the act, as presently writ-
ten, treats such foreign corporations as foreign principals whose agents
must register under the act unless exempted?
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Mr. KATZENBACH. Yes, that is correct.
The CHAIRMAN. The problem raised with respect to these U.S.-
owned foreign corporations is that some difficulty is anticipated in de-
ciding when the activities of a particular agent are on behalf of the
foreign subsidiary and when they are on behalf of the American
parent.
I wonder, first of all, whether it would be, in your opinion, an in-
surmountable problem to differentiate between these two cases.
Mr. KATZENBACH. You have to assume, first, that none of the ex-
emptions apply to this particular activity. Most of these, I suspect,
are within the commercial exemption.
The CHAIRMAN. Most of them are, but some are not.
Mr. KATZENBACH. Then I would think it would not be an insur-
mountable difficulty. I think that really in this sort of instance one
can go along fairly well on form. If you are acting for and being paid
by the foreign subsidiary of the domestic corporation that in itself
ought to really be enough, and I would think there is no particular
advantage to the Government in that instance in piercing corporate
veils or attempting to decide which way it would be done.
I think the more difficult cases are those in which one is where you
are acting on behalf of and paid by the American entity, whereas the
activities really are more closely related to the foreign subsidiary. I
think that is the more difficult case, and I suspect one could get by in
that instance, in most instances, without a registration.
DETERMINING APPLICABILITY OF LAW TO POTENTIAL REGISTRANT
The CHAIRMAN. What procedure does the Department have in gen-
eral to aid a person who is not certain whether the act applies to him
or not, to resolve complicated factual situations of this sort, short of
resorting to litigation in the courts?
Mr. KATZENBACIi. Well, this is one of the few areas in which the
Department of Justice gives gratuitous advice. The office is avail-
able, too, and it is very, frequently used by, people either writing
or telephoning or coming in personally and saying, "Here is my situa-
tion. Do I have to register or not?"
Where they divulge candidly all of the facts we have told them
either that they did or did not have to register. I think we have, in
general, advised them that if it was a close situation there was no
particular reason not to register, and that they would be better off
to register in such a situation because the facts of the relationship
may shift a little bit in the future, and it is on the facts at a given
time that you advise them they do not have to register.
Six months or twelve months later they may be doing something a
little bit different or be in a little different relationship, and still
think they are exempt, and actually have gone across the line.
So with close instances I think we normally advise them that it
would be better to register. But we do give advice, and I think that
is indispensable in this kind of an act to continue to do it. Our
problem has been when our advice is not followed, and it is a close
case.
The CHAIRMAN. You have no injunctive problem that you think
would go far enough?
Mr. KATZENBACI. Yes, I think in many ways that is the most valu-
able tool that we could get, because--well, I think of an example of
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24 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
people who have insisted that they are not obligated to register when
we believe that they are and where their counsel is willing to advise
them they have no obligation to register. That, is a poor criminal
case.
ADOPTION OF SPECIFIC ACCOUNTING PROCEDURES
The CHAIRMAN. One provision of the bill which the committee is
considering will give the Attorney General the power to provide by
regulation for the adoption of such accounting practices by persons
registered as foreign agents as the Attorne General may decide are
necessary or appropriate to facilitate compliance with the act. This
has been brought up in more than one case of an agent who had not
reported his expenditures-the Davidson case was an example of
this-because he believed his expenditures could not be directly traced
to his foreign principal. He, in effect, claimed his expenditures were
made on his own behalf and not on behalf of his foreign client.
We believe many of these expenditures were made specifically to
assist the client, and we hope through this amendment to assist the
Attorney General in his effort to require an agent to segregate and,
therefore, report all expenditures for or in the interest of his foreign
principal.
Would you care to comment as to how far you think the Attorney
General can go under this language to require the adoption of the
specific accounting procedures?
Mr. KATZENBACII. I think A is a very valuable provision and I think
that it gives the Attorney General all of the authority that would be
needed to uncover and bring into the orbit of our knowledge and the
public's knowledge what these expenditures are.
I do not envision any difficulties in prescribing uniform accounting
methods that have to be used, and I do not see any difficulty with our
being able to do it. It is done all the time by other agencies in other
contexts who insist that books and records be kept in a certain way.
I do not see why the Attorney General should not be able to prescribe
it equally as well.
The CHAIRMAN. Do you have any other suggestions that you care
to make? We appreciate very much your cooperation, and if you
wish to submit any additional amendments, we would welcome them
before finally taking any action on this bill.
Mr. KATZENBACII. Thank you, Mr. Chairman. I believe that with
the exception of the points we have already raised for your considera-
tion. and, perhaps, for some clarification possibly of the. injunctive
power or the power to have somebody cease and desist, that the amend-
ments that the committee has proposed are excellent ones and should
do much to clarify and improve the situation in the future.
The CHAIRMAN. Senator Sparkman, do you have any questions?
Senator SPARKMAN. Do you not have any injunctive powers now
in connection with this law? I assume if there is a clear violation of
it, you do have, do you not?
Mr. KATZENBACII. I think not, Senator. There have been a couple
of instances of a declaratory judgment, but this is where the action is
brought not by the Government but by a potential defendant, and he
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has the capacity to go into court and say that the Government is
threatening him with a criminal prosecution if he does what he is
entitled to do, and he can get a declaratory judgment on it. We do
not have the same sort of power, and it is not normally possible to
enjoin the commission of a crime. Normally your remedy is to prose-
cute for the crime when it is committed.
Senator SPARKMAN. Is it just prosecution or not?
Mr. KATZENBACH. Pretty much in those terms.
I quite sincerely believe, as I think I said when I testified before to
this committee, that that choice of doing nothing in an unsatisfactory
situation or prosecuting for a felony has led to some of the difficulties
with enforcement whict have come to the attention of this committee.
Senator SPARKMAN. What you are asking for here is really the right
to start a court proceeding that would have for its purpose a cease-
and-desist order.
Mr.. KATZENBACU. That is right.
Senator SPARKMAN. But it would be a court proceeding.
Mr. KA TZENBACII. Yes ; come in and show cause why you should not.
register.
Senator SPARI{.MAN.Show cause in court.
Mr. KATZENBACII. In court.
Senator SPARKMAN. In other, words, it is not an administrativet
agency proceeding.
Mr. KATZENBACII. No. We have contemplated, and I think thh
committee might consider, the possibility of allowing us to say, "Cease
and desist," and require a defendant to go in. to remove that cease-and-
desist order in court rather than require us to go into court in the first.
instance. But I do not feel strongly about it. We can go into court,
with injunctive proceedings.
Senator SPARKMAN. I certainly would feel that your- first sugges-
tion is correct, that is, to go into court and seek an order to cease and
desist.
Thank you, Mr. Chairman.
CLARIFICATION OF INADEQUATE REGISTRATION
The CHAIRMAN. For example, where the details are clearly inade-
quate or there was no itemization. at all, you should be able to have in-
junctive relief. It, should be. so clear that you might be given the
power to just not ,acceppt it and say, "This is not an adequate regis-
tration and until you do file an adequate one or reasonably adequate
one, it is not approved." You have never rejected or declined to
receive a registration, have you
Mr. KATZENBAOH. Yes, we have upon occasions.
The CHAIRMAN. What happened in a case like that?
Mr. KATZENBAOH. In some of those instances they have taken it back
and filed a more adequate one. I do not mean that the threat of Vo-
tential prosecution has been totally' inadequate to get compliance with
the act. I do not want to overstate the case for. that either, Senator,
but more often than not where the registration statement has been
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80 percent a good registration statement, but some provisions of it we
thought were inadequate, it has been accepted, but we have asked them
to clarify or expand on the other.
The difficulty there is that they have not taken us very seriously
about it, and sometimes you run into very long, delays. So that is the
reason for wanting something that says, "All right, you stalled around
on this long enough. Now stop acting until you comply in all the
necessary detail."
I believe that the threat of injunctive relief here will, in most in-
stances, be adequate to get the complete statement and to get it pretty
quickly.
I think we will actually have to ask for injunctive relief in those
instances we talked about before where there is a completely sincere
difference of opinion as to what the activities consist of, and I think
there is going to have to be evidence and a trial and a judicial deter-
mination.
The CHAIRMAN. I have already remarked concerning your earlier
cases that even with having the power to use rather severe penalties,
the penalties were very slight. They have not been severe enough to
deter anybody very much. I think $500 was the largest fine I saw. I
did not know that any of them were imprisoned.
Since 1944 how many caseshave you had?
Mr. KATZENBACH. I have forgotten the number; less than 10 cer-
tainly.
Mr. LENVIN. About nine, I think, since that time. But of that nine,
the Rumanian American Publishing Association was fined, it is my
recollection, $2,000.
The CHAIRMAN. $2,000?
Mr. LENVIN. Yes.
The CHAIRMAN. I glanced through the list, and the largest, to my
recollection, was $500.
Mr. LENVIN. Actually the only $500 fine was in the case of John
Joseph Frank.
Mr. KATZENBACH. Certainly most of them have been minor _penal-
ties. Of course, Senator, the penalty of being convicted of a lony,
even if the fine was small or if no jail sentence was imposed can,
in many instances, be a very heavy penalty indeed, just simply to have
a conviction. This is not true in the corporate situation but in the
individual situation to have been convicted of a felony, for example,
in the case of a lawyer, amounts to automatic disbarment in most
instances. I do not know whether a year in jail added to that adds
very much when he has that kind of a penalty, and it has been a pretty
heavy penalty that he has had, and this may be in the mind of the
courts in terms of their sentencing.
I suppose the same thing is true of a public relations firm, something
of that kind.
The CHAIRMAN. Have not a large number of them pleaded nolo
contendere?
Mr. KATZENBACH. Yes.
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The CHAIRMAN. In other words, you never brought the case until
it was open and shut. When there was no doubt, they pleaded nolo
contendere.
Mr. KATZENBACH. Yes.
Well, in regard to the nolo contendere plea, the Department of Jus-
tice has tended to oppose them less in this area because the purpose of
the act is to put the facts on public view and display, and in the in-
stances where a nolo plea has been made under this act, it has always
been accompanied with a full disclosure within the terms of the act,
so that one can argue that the purpose of the act has been served by
that disclosure.
The CHAIRMAN. Has Mr. Cassini filed a full disclosure of his rela-
tions as a result of his nolo contendere plea?
Mr. KATZENBACi. I believe that before sentence in that case and
before the nolo contendere plea is formally accepted by the court,
such a registration statement will be filed.
The CHAIRMAN. Will be filed?
Mr. KATZENBACH. He has not yet presently filed one. It is in the
process.
The CHAIRMAN. He has not yet filed?
Mr. KATZENBACH. It is in the process.
The CHAIRMAN. But he will file one before the plea is accepted?
Mr. KATZENBACH. I assume that will be true. That, of course, is
up to the court, not up to us. It would be our position that such a
statement should be filed.
The CHAIRMAN. That has been in the past?
Mr. KATZENBACH. It has been in the past.
The CHAIRMAN. Thank you very much, Mr. Katzenbach. You have
been very helpful.
Mr. ATZENBACII. Thank you, Senator.
The CHAIRMAN. Our next witness is Mr. Donald M. Wilson, Deputy
Director, U.S. Information Agency.
Mr. Wilson, we are very pleased to have you.
Before we proceed, I would like to insert in the record a letter
received by the committee from the U.S. Information Service on
November 15, 1963, in support of the bill.
(The letter referred to follows:)
1k U.S. INFORMATION AGENCY,
Hon. J. W. FULBRIOHT,
Chairman, Foreign Relations Committee,
U.S. Senate.
DEAR MR. CHAIRMAN : Thank you for your letter to Mr. Murrow enclosing
Senate bill 2136 and your explanatory statement.
As you state in your comments, the bill meets situations disclosed during the
committtee's investigation into the activities of nondiplomatic representatives
of foreign principals. We are in complete agreement with your attempt to
more thoroughly enforce the Foreign Agents Registration Act in its control
of the activities of nondiplomatic agents through more effective disclosure.
Mr. Murrow's letter to you of August 15, 1963, spelled out the intense interest
of our Agency is amending the Foreign Agents Registration Act as it deals with
diplomatic agents of foreign governments. The State Department agrees with
us that official Government information offices, officials, and staff members
of such offices should be exempt from the requirement that they register as
foreign agents. These would be under the direction, supervision, or control of
a duly accredited diplomatic or consular officer, and would be engaged exclu-
sively in activities recognized by the State Department as within the scope and
functions of such office, official, or staff member.
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I am attaching a proposed amendment to the Foreign Agents Registration Act
which would accomplish this result. We have consulted with the Department
of Justice and it has no objection to this amendment.
I am pleased that the Agency will have the opportunity to discuss this pro-
posed amendment before the committee.
Senate bill 2136 does not, at the present time, in our opinion, distinguish be-
tween the activities of nondiplomatic agents and diplomatic agents. Should the
Congress amend the Foreign Agents Registration Act to exempt official govern-
mental information offices, officials, and staff members, the other sections of the
Foreign Agents Registration Act will have to be modified accordingly. Should
this exemption not be passed, the attached comments on Senate bill 2136 are
apropos.
The Bureau of the Budget advises that it has no objection to the submission
of this letter and its enclosures from the standpoint of the administration's
program.
Sincerely,
DONALD M. WILSON, Acting Director.
MEMORANDUM FROM TIIE U.S. INFORMATION AGENCY TO SENATE FOREIGN RELA-
TIONS COMMITTEE, ATTACHED TA LETTER DATED OCTOBER 1963 TO SENATOR
FULBRIGIIT FROM DONALD M. WILSON, ACTING DIRECTOR
lie comments on S. 2136, a bill introduced on September 10, 1963, by Senator
Fulbright and Senator Hickenlooper to amend the Foreign Agents Registra-
tion Act of 1938, as amended
The Agency is in complete agreement with the main purpose of the bill to
insure a more thorough enforcement of the activities of nondiplomatic agents
of foreign principals. The Agency is deeply concerned, however, that the bill
does not distinguish between the activities of nondiplomatic agents and the
official governmental information offices, officials and non-American employees
of foreign countries.
The Agency has encountered difficulties with certain governments when they
are requested to comply with the Foreign Agents Registration Act, because
they consider it demeaning. For example, they object to registering with the
Department of Justice, our counterpart of their Ministries of Justice, the crim-
inal aria of their governments; whereas they would not object to coordination
and control by the Department of State, the recognized diplomatic vehicle, with
which they customarily file notification of status and personnel (form D.S. 394).
The provisions of the bill would tighten the requirements of registration and
ailing and would, doubtlessly, if applied to governmental information offices,
increase the friction already generated by the act. If the bill does not distin.
guish between nondiplomatic agents of foreign principals and official govern-
mental information offices, we cannot predict categorically that reprisal will not
occur against the USIA missions abroad.
A review of the bill evokes the following comments anent this problem.
"Subsection 2 (3) and (4) which amend subsections 2(a) (4) and (6) Of the
act by requiring 'a detailed statement of any such activity which is a political
activity.' "
In view of the extremely broad definition of "political," virtually every govern-
mental information office will be so engaged. The prospective forced declaration
by diplomatic information missions that they are engaged in political activity
will likely augment to a great,degree the difficulties we have described. This
problem would become moot, of course, if the'Congress would enact the Agency's
proposed exemption of governmental information offices, officials, and personnel
or would require their registration only with the Department of 'State.
"Section 4 (4) of the. bill which amends section 4 of the. act by 'adding a new sub-
section (e) requiring in effect that a foreign agent preface any statement, fall-
ing within the extremely broad. definition of "political propaganda," which he
makes to a member of the U.S. Government (Congress or the Executive) with a
statement that he is registered as a foreign agent under the act."
Obvious and painful would be the consequences in the relationships of our offi-
cers abroad with foreign ministries of information should foreign governments
enact such a requirement.
The exemption authority granted the Attorney General by section 2(7) of the
bill is a step in the right direction, but is inadequate. It is limited to instances in
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which there is an existing registration. We urge that it be broadened to make
possible exemption by or upon the recommendation of the Secretary of State and
independently of any other registration.
You invite our recommendations for amending legislation to strength the label-
ing provisions of the law. Disclosure, the true purpose of the act, would be
effected by official governmental information offices by the requirement that all
material disseminated be identified as emanating from that office. Further, each
office would supply copies of all material disseminated to the Secretary of State,
who in turn would supply copies to the Attorney General. The Secretary would,
in this area as in others, determine when the material exceeds the permissible
range of the diplomatic function, and would exercise his authority to declare
offending foreign officials persona non grata.
As to nondiplomatic agents, the Agency finds it entirely appropriate to require
labeling not only to identify the source to the various media or other inter-
mediary parties, but also to the general public.
AMENDMENT TO SECTION 3 OF THE FORE'IGN AGENTS REGISTRATION ACT PROPOSED
BY THE U.S. INFORMATION AGENCY
Section 3 is further amended by adding a new subsection (d) as follows, and
renumbering the succeeding subsections accordingly.
"(d) Any official information office of a foreign government under the direc-
tion, supervision or control of a person exempted from registration under section
3(a) hereof, and any official or member of the staff of such office who is not a
citizen of the United States and whose name and status and the character of
whose duties are of public record in the Department of State, provided that said
office, official or member of the staff is engaged exclusively in activities recog-
nized by the Department of State as within the scope and functions of such
office, official or member of the staff ; and provided further that copies of any
material disseminated by such office, official or member of the staff shall be iden-
tified. as being disseminated by such foreign government and shall be filed with
the Department of State."
Section 3 (b) and (c) are further amended by inserting "unless such informa-
tion-service employee is exempted under subsection (d) below" after the words
"information-service employee" and before the comma.
The CHAIRMAN. You have a prepared statement, I believe?
Mr. WILSON. Yes, I do, Senator.
The CHAIRMAN. You may proceed, sir.
STATEMENT OF DONALD M. WILSON, ACTING DIRECTOR, U.S. INFOR-
MATION AGENCY; ACCOMPANIED BY DAVID PARSON, DEPUTY
GENERAL COUNSEL
Mr. WILSON. We appreciate the opportunity to appear before this
committee on S. 2136 as it relates to our oversew information activi-
ties. We hope particularly to discuss our proposed amendment to the
Foreign Agents Registration Act. As I am sure the committee knows,
we have recommended that the official information offices of foreign
governments, their officers, and staff members be covered by specified
State Department procedures, rather than by registration with the
Department of Justice.
We are in wholehearted agreement with the efforts of this commit-
tee to legislate the greatest degree of disclosure. This is the objective
of Foreign Agents Registration Act, it is the objective of S. 2136, and
we fully support S. 2136 as it relates to nondiplomatic agents.
Although this committee has occupied itself with nondiplomatic
activities, we are concerned that the amendment now before the com-
mittee, if enacted, would include and inhibit legitimate diplomatic
activities.
25-990-5'3-3
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:j0 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
We are convinced, Mr. Chairman, that the amendment we have
offered would in no way lessen or weaken disclosure, the prime ob
jective of the act. At the same time, it is in keeping with established
diplomatic procedure and it would lessen the possibility of retaliatory
action against the oversea information activities of our own
Government.
The act now exempts from registration in subsection 3(.%)-
a duly accredited diplomatic or consular officer of a foreign government who is
so recognized by the Department of State, while said officer is engaged exclu-
sively in activities which are recognized by the Department of State as being
within the scope of the functions of such officer.
This exemption is consistent with the international law and prac-
tice, and it recognizes the statutory immunity of ambassadors and
ministers from arrest and service of process. Further, it is consistent
with the practice of most nations to respect the confidential nature of
diplomatic and consular archives, and to exempt diplomatic and con-
sul ar officers from prosecution for acts performed in the course of their
official duties.
But more important, this exemption of diplomatic and consular
officers from registration, even though engaged in information work,
has not weakened the objective of the act-disclosure. Information.
about these officers is on record at the Department of State.
EXEMPTION FOR OFFICIAL GOVERNMENT OFFICES, ETC.
We propose to carry this concept a step further, while at the, same
time providing procedures for the identification of the source of in-
formation materials from foreign sources and the foreign persons en-
gaged in information activities.
Thus, we would exempt from registration the official, and I em-
phasize "official," Government information offices, officers, and staff
members in the United States
Provided, first, that they are not Americans;
Provided, second, that their activities are recognized by the Depart-
ment of State as being within the normal scope o'f official information
activities;
Provided, third, that all their material is identified as to source; and
Provided, fourth, that copies of all their material are sent to the
Department of State.
We believe that this amendment will accomplish the objective of full
disclosure. The names and addresses of officially accredited foreigners
engaged in information activities and copies of all materials they
disseminate would be on public record. Further, all materials di-
rectly disseminated would be identified by source.
Further, to assure that the purposes of the act are carried out, we
and the Department of State propose that official Government infor-
mation offices operating here, although not registering with the De-
partment of Justice, be required administratively to provide the State
Department with other information about their activities.
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
This information would include the names of public relations peo-
ple and firms and other contractors employed for services and goods,
giving the Department of Justice a check against its list of Foreign
Agents Registration Act registrants. It would also include the total
volume of distribution for each item disseminated. The State Depart-
ment would provide copies of this information to the Department of
Justice where, with the registrations of nondiplomatic agents, there
would be a complete and central public record of information distrib-
uted by or on behalf of foreign powers under the law.
CURTAILMENT OF GOVERNMENT'S OVERSEA PROGRAMS
We are convinced that this approach would achieve the purposes
of the act, as you propose to amend it, Mr. Chairman, without risk-
ing curtailment of our Government's oversea information activities.
Except in totalitarian countries, our official information activities have
not been subjected to the kind of controls imposed by the Foreign
Agents Registration Act.
We are recognized as part of the diplomatic establishment whether
or not we are housed in the chancery and whether or not all Ameri-
can USIA employees bear diplomatic passports. As a matter of fact,
most of them do not.
Our USIS offices have not been required to submit financial state-
ments and the listing of speeches, lectures, broadcasts, publications,
et cetera. We have not been required to make the periodic statement
that we have or have not engaged in political activity that would be
required under S. 2136. If we were subject to similar requirements
in other countries, it could seriously reduce our effectiveness.
I recognize, of course, the passage of S. 2136 in its present form
might not lead immediately to the adoption of similar legislation or
regulation in the countries where USIA works. In many countries,
the authorities welcome our activities in the common cause of a com-
munity of free nations, and restrictions on USIA would be self-de-
feating from their point of view. In others, there are different
con- trols which serve the purposes of the government concerned, most
commonly motion picture and television censorship, less commonly
direct or indirect control of the press. Yet the possibility of retalia-
tion exists. It is for that reason we would prefer to accomplish dis-
closure of diplomatic activities under diplomatic procedures.
Let me illustrate. A ranking West European diplomat called on
Mr. Murrow in 1961 and complained of what he called the demeaning
aspects of the Foreign Agents Registration Act. He pointed out that
no such restrictions were being applied to USIA in his country. Unlike
our own conception, lie and many other foreigners regard our Depart-
ment of Justice as concerned almost exclusively with criminal activi-
ties, the prosecution of felons, the pursuit of public offenders. In his
view, registration with the Department of Justice would change the
status of his office from that of an official diplomatic arm of his gov-
ernment to that of an "agent"-with all that the word implies-of a
foreign government, perhaps with evil designs.
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
He took the position that this would be tantamount to reducing an
official diplomatic undertaking by an allied government to the level
of a suspect public relations firm lobbying in behalf of a special
interest. This official, like others who have raised the question, would
not object to furnishing the Department of State the information that
would be required for the Department of Justice under the Foreign
Agents Registration Act.
His position is, in fact, consistent with our own. As a government,
we have maintained for years that official information activities-and
I stress the word "official"-are a legitimate diplomatic activity.
The principle has long been acknowledged by the diplomatic ac-
creditation of USIA personnel in other countries, and our own diplo-
matic accreditation of information, press and cultural counselors and
attaches.
The official information activities which are within the recognized
diplomatic scope should be defined, of course. We and the State
Department have agreed to these criteria :
First, we believe the following activities are properly part of the
diplomatic function :
1. Preparation and dissemination of descriptive information con-
cerning the people; the scientific, educational, social, economic, po-
litical, and legal institutions; and the geography of the country;
2. Dissemination of speeches of officials of a country;
3. Preparation and dissemination of the position of a country on
current and proposed U.S. foreign policy directly affecting that
country ;
4. Promotion of exhibitions concerning a country;
5. Reasonable representational activity.
Secondly, we believe the following activities are not proper activ-
ities of an official government information service and should be
prohibited :
1. Attacks upon other countries or governments represented in the
United States;
2. Attacks on the institutions of the United States;
3. Comments on U.S. domestic issues;
4. Material designed to promote religious or racial dissention in the
United States;
5. Material designed to influence the outcome of elections in the
United States ;
6. Financial or other contributions to political campaigns or efforts
to influence elections in the United States;
7. Control of newspapers, television or radio stations, or other media
of communications in the United States;
8. Disseminating an inordinate amount of material ;
9. Receiving income from the conduct of the office or dissemination
of material, or engaging in tourist promotion.
In addition to the application of these criteria, the U.S. Govern-
ment would continue to exercise sovereign powers to control abuses.
In flagrant cases, the traditional declaration of persona non grata
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is available, as well as the issuance or nonissuance of diplomatic
visas.
DIPLOMATIC FUNCTIONS CONTROLLED THROUGH STATE
In essence, Mr. Chairman, our case rests upon four points :
(1) Official information activities as distinguished from those of
nondiplomatic agents, are a recognized diplomatic function, long
sanctioned by our Government and most others.
(2) Such official activities should be controlled through diplomatic
channels.
(3) This control is desirable and can be achieved successfully under
the Department of State.
(4) This approach will avoid the possibility of retaliation against
the oversew information activities of the United States.
Mr. Chairman, I appreciate the opportunity to be heard on this
bill. We support this committee's objective and will contribute in
any way we can to reaching it.
Mr. CHAIRMAN. Thank you, Mr. Wilson.
DIPLOMATIC FUNCTIONS CONTROLLED THROUGH STATE
Do I understand that your complaint is also directed not only at
the proposed bill but at the existing law before we amend it? Is that
correct?
Mr. WILSON. Yes, sir. There have been complaints under the present
law, and I think we are concerned that the proposed amendment
might increase the volumes of complaints and lead to possible
retaliation.
The CHAIRMAN. I was not aware that there had been instances of
complaint under the present law. What was the nature of the
complaints?
Mr. WILSON. I would say this, that throughout the years we have
had a number of low-level complaints from a variety of governments.
I can think of four specific complaints on a high level by foreign
governments to us.
Essentially the complaints boil down to the feeling that they should
not be required to register with the Department of Justice. They
compared the Department of Justice to their own Ministries of Jus-
tice, and they tend to think of these ministries as arms of the govern-
ment concerned with criminal affairs.
The CHAIRMAN. Would this be cured by requiring these reports
to be filed with the Department of State rather than with the Depart-
ment of Justice?
Mr. WILSON. We think it would, sir. We think this is-what we
are talking about here are official diplomatic activities, and we think
if they are kept within official diplomatic channels, the State Depart-
ment, it would make a large difference.
The CHAIRMAN. Would it satisfy you if that were the required
procedure?
Mr. WILSON. Yes, sir; it would.
The CHAIRMAN. I can understand, since even in this country there
seems to have arisen some criticism of the Department of Justice, not
wholly warranted, however.
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CONSEQUENCES OF SIMILAR REQUIREMENT BY FOREIGN GOVERNMENTS
I believe you stated that the provision requiring a foreign agent to
identify himself and his principal when speaking to U.S. Govern-
ment officials would result in obvious and painful consequences in the
relationships of our officers abroad with foreign Ministries of Infor-
matioon, should foreign governments enact such a requirement. Do
you think it would be demeaning to you or to your people to have to
identify yourself when you speak to foreign officials? You do not
suffer from this same feeling?
Mr. WILSON. You mean, are you referring to our information offi-
cers and offices?
The CHAIRMAN. I refer to a similar requirement on the part of the
foreign gousvernment.
Mr. WoN. I don't think it would be; yes, sir.
Senator SPARKMAN. Mr. Chairman, may I ask a question?
The CHAIRMAN. Yes, go ahead.
Senator SPARKMAN. Why, Mr. Wilson, in making these claims that
they are diplomatic functions, and diplomatic duties, would they be
covered by this bill?
Mr. WILSON. Well, Senator Sparkman, I realize that this bill is
concerned with nondiplomatic, in its very title I believe, with non-
diplomatic functions.
Senator SPARKMAN. I am surprised at your request for the amend-
ment, when the bill does not cover the type of things that you
present, at least not so far as I am aware.
Mr. WusoN. As it is presently drawn, the bill would affect the
offices, officers, and staff members of official Government information
officers and offices in this country if .they did not have any diplomatic
passports.
Senator SPARKMAN. Would you tell me where that ap ears in the
bill? You have suggested an amendment, have you not v
Mr. WusoN. Yes, sir.
Senator SPARKMAN. May I have that reference?
Mr. WusoN. I wonder if I could ask Mr. Parson to answer that.
Mr. PARSON. I am David Parson, Deputy General Counsel to the
Agency.
Senator SPARKMAN. Your amendment is to existing law rather than
to this pending bill.
Mr. PARSON. Yes. S. 2136 does amend the existing statute, and the
Foreign Agents Registration Act requires the registration of every-
one, included under the act, with certain exemptions. The one exemp-
tion is now present in section 3 (a). This exempts two classes of
people, specifically diplomats and consuls. We would propose a
further exemption which would carry out some of the existing pattern
of exemption that Mr. Katzenbach referred to, for example, an exemp-
tion for a diplomatic information office under the roof of an embassy.
But we would make this officially so by writing it into the act as an
exemption.
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DIPLOMATIC IMMUNITY FOR INFORMATION OFFICERS
Senator SPARKMAN. I see. The act provides an exemption for diplo-
matic or consular officers.
Mr. PARSON. That is right.
Senator SPARKMAN. The things you have pointed out have been
diplomatic functions although they may have been performed by
someone who did not fall in either category, diplomatic or consular,
is that correct?
Mr. PARSON. Precisely, Senator.
Senator IIuMrinREY. In other words, he wishes to deny the lawyers
the opportunity for rigid interpretation, and he is right.
The CHAIRMAN. Under the present law the Department of State
now exempts information officers by granting them diplomatic im-
munity, does it not?
Mr. WILSON. Well, there are a limited number of information offi-
cers who are granted diplomatic immunity. It is rather limited,
usually the highest ranking ones, and they do have staffs and officers
under them who are nationals of the country represented who are
working legitimately for their country, but they do not have diplo-
matic immunity ; they have official passports.
The CHAIRMAN. I agree with your basic idea about people whom
..you have just described, that is, diplomatic officers, and so on, who
carry on legitimate activities.
EMPLOYMENT OF PUBLIC RELATIONS FIRM BY INFORMATION OFFICE
The problem that bothers us a bit is, in view of your objection to
what happens if an information office employs a public relations firm
to do certain things for them, that they do not have to report their
activities.
Senator SPARKMAN. Mr. Wilson did say that it would only apply
to non-Americans.
Mr. WILSON. Yes, sir; that is why we put that in there specifically.
Senator SPARKMAN. If they employed an American public rela-
tions firm, that firm would not be exempt under his wording.
Mr. WILSON. We have attempted with these four provisions, Mr.
'Chairman, that I mentioned on page 3 of my statement, to try to
close that kind of a loophole exactly.
The CHAIRMAN. Take the case Senator Sparkman mentioned. They
employed a public relations firm in New York and registered, but
ull they list is their activities, which is just the blanket registration-
"We are employed by the information office of country X," and that
is all. Would they have to report fully everything they do?
Mr. WILSON. They would; yes.
The CHAIRMAN. how could they report?
Mr. WILSON. If the information office put out the material they had
prepared, that material would have to be sent to the State Department.
It would also have to-it would, therefore, come under scrutiny.
The CHAIRMAN. If the information office provided trips for news-
men to their country, would that be reported to the State Department?
Mr. PARSON. If I may suggest, there would be absolutely no change
as regards these public relations offices. I would say no change in the
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11
ACT
sense that they would be required to register and to present a full
statement of activities. This would continue.
The only exemption would be for the offices, which are the official
Government information offices, either under the Embassy roof or
more likely in New York.
OBJECTION TO USIA REPORTING TO JUSTICE DEPARTMENT
The CHAIRMAN. Do I also understand that even the information
officer would report, for example, if he financed free trips to the State
Department? This you do not object to. It is just having to report it
to the Department of Justice which you object to. Is that correct?
Mr. WILSON. If the information office was making the reporting;
yes, sir; it would go to the State Department.
The CHAIRMAN. It would be a public document, would it not?
Mr. WILSON. Yes, sir.
The CHAIRMAN. But to the State Department.
Mr. WnsoN. Yes, sir; but through the State Department, through
the diplomatic channel, which was the Embassy.
The CHAIRMAN. The crux of it is you do not object to the reporting,
but simply the agency to which one reports, is that it?
Mr. WILSON. Yes, sir; that is the key concern we have.
The CHAIRMAN. You suggest, if I understand correctly, that you
do this administratively. to you have an objection to this being
part of the law just as you have stated it, that the report be made to
the State Department?
Mr. WILSON. No, we have no objection to that.
NO OBJECTION TO REPORTING TO STATE
The CHAIRMAN: I do not think that we are very far apart in our
thinking. I did not exactly understand your position. You would
have no objection to the report requiring the details of their activi-
ties in this field being made to the State Department ?
Mr. WILSON. No objection whatsoever.
The CHAIRMAN. You would not mind this being included as an
amendment. to the law?
Mr. WILSON. No, that would be quite all right with us.
The CHAIRMAN. Do you mean the same information as is now re-
quired of other agents who report to Justice?
Mr. WILSON. Yes.
The CHAIRMAN. This, of course, would be a public document. I do
not know that we are in disagreement. I personally at the moment
can see no objection to this. I thought there was perhaps more to it.
Mr. WILSON. I should add what we are concerned with is that the
offices themselves, the officers and the staff members of official infor-
mation activities, would come under this new procedure, and not be
required to go through Justice.
The CHAIRMAN. Yes, I understand it. It would be to the State
Department.
Mr. WILSON. Right.
Senator SPARKMAN. I think we certainly would all agree with the
objectives they have presented.
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The CHAIRMAN. Do you have any other suggestions about this bill?
Mr. WILSON. No, sir.
The CHAIRMAN. I think the criteria you outline in the latter part of
your statement seems to me to be quite adequate as to what should be
the diplomatic functions and what should be considered prohibited.
Do you have any questions Senator Humphrey.
DIPLOMATIC IMMUNITY SOUGHT FOR FOREIGN INFORMATION OFFICERS
Senator HuMriiREY. I just want to get this straight, because there
seems to be a bit of ambivalence and indefiniteness present. As I
understand the testimony, and I have hurriedly looked over the testi-
mony of Mr. Wilson, you point out that the present act, Foreign
Agents Registration Act, now exempts from registration, in section
3(a), a duly accredited diplomatic and consular officer of a foreign
government who is so recognized by the Department of State while
said officer is engaged exclusively in activities which are recognized
by the Department of State as being within the scope of the functions
of such officer. Now, the principle of exemption you now ask is to
be extended to official government information offices, officers, and staff
members in the United States who are non-Americans.
Mr. WILSON. Yes, sir.
Senator HUMPHREY. Is that correct?
Mr. WILSON. That is correct.
Senator HUMPHREY. Presently this is being done administratively.
Isn't the present situation that official information officers in the em-
bassy of country A, country B, and country C do not have to register
as a foreign agent?
Mr. WILSON. That only applies to those under the embassy roofs.
Those who work in information offices, for example in New York City,
do have to.
Senator HuMPHREY. I see. So, what you are really saying is there
is a new category of diplomacy today; namely, the information cate-
gory, and it has taken on increased importance for every country, and
you want to include in what has been the traditional concept or defini-
tion of a diplomatic officer, the information officer; is that correct?
Mr. WILSON. Yes, sir.
Senator HuMFHREY. I do not blame you for wanting to get that
clarified because I have a feeling like with the law itself, that the very
conservative definitions of diplomatic officers go back to Machiavelli
and did not get much beyond Napoleon and, therefore, you would like
to get it up to the 20th century as to what we mean by diplomatic
activity ; is that correct ?
Mr. WILSON. That is correct.
Senator HuMPIIREY. Particularly as it relates to information officers.
Mr. WILSON. That is correct.
Senator HuMPHREY. So you want an information officer who is a
duly accredited information officer to another government to have
the same privileges and immunities insofar as the Foreign Agents
Registration Act is concerned as a consular officer and as a normal
diplomat; is that correct?
Mr. WILSON. That is exactly right.
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EXAMPLE OF NEWLY INDEPENDENT STATE CONTRACTING A FIRM
Senator HuMPHREY. Our Government has initiated what we call the
contract theory of government. We contract out almost everything
nowadays. We are going to get to the point where, we just will not
really need any government at all. We will just have a contracting
officer. The Atomic Energy Commission contracts out atomic energy
work; the Foreign Relations Committee contracts out studies; the AID
administration is now going to contract out a lot of its work. We are
really just going to have a group, a limited group, of elite running
around here who are proficient in contracting if we do not watch out.
There is some good and some bad in this concept or at least some
doubtful features. But let us say we are talking now about country
A. It does not want to have a large number of information officers
in the United States,, but it has developed an expertise in contracting,
and it has an information officer who is not only a good information
officer but. he is an expert in contracting, so he comes to the United
States and says, "Why bring all these nationals, these foreign nationals
over to the United States and have them learn about this American
culture. It may destroy their sense of values or something. Why not
leave them home where they are happy. We will send one miserable
person over here as an information officer and then we will let him
contract."
I am using the most unbelievable set of circumstances that could
easily happen. But an information officer comes over here and con-
tracts with a large American public relations firm. He contracts with
an American public relations firm, to represent country A in the United
States. Does the firm that makes the contract with the official informa-
tion officer of country A take on the prerogatives, the cloak, the majesty
of the sovereign. foreign power?
Mr. WILSON. No, sir; absolutely not.
Senator HuipnREY. He still remains an American national and is
subject to all the prohibitions, limitations, and rules of our country.
Mr. Wir,soN. Subject to Foreign Agents Registration, that is correct.
correct.
Senator HUmPiiREY. He does not have diplomatic immunity.
Mr. WILSON. No, sir.
Senator HuMPHREY. Then all of his public relations materials that
are done in the name of country A, and the information officer of coun-
try A, that person would be subject to the Foreign Agents Registra-
tion Act?
Mr. WILSON. That is correct.
REGISTRATION WOULD DEPEND ON MATERIAL DISTRIBUTED
Senator HuMPIiREY. I want you to think about this very carefully
because that means that he would have to register with the Justice De-
partment, the contracting firm. He would have to register with the
Justice Department. Would the material that he produces and his ac-
tivities be registered with the State Department as well?
Mr. WILSON. It would depend on how the material was distributed.
If it were distributed by the public relations firm then it would be a
Justice Department matter.
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Senator HuMPHREY. In other words, if he developed the material
and the imprint of the information officer, as well as the government 01
country A, was on said material, then the material would flow to the
State Department.
Mr. WILSON. To the State Department which, in turn, would pass it
on to Justice where there would be one file.
Senator HuMPHREY.. I think this is very important to clarify be-
cause, frankly, I would imagine that a good deal of this information
work will be done this way particularly by what we call the newer
nations and the countries that do not have a highly developed diplo-
matic corps as yet. It would seem wise that they would want to, do
that, and it would seem to be very prudent and frugal.
So you might have one information officer, let us say, from an
African state-let us take a new country where they did not want
to have a large group of nationals in the United States because of
problems that might be encountered, it would be possible for said
information officer to contract out the information activities of country
A, and as long as those information activties were issued in the name
of, and with the official seals or officials insignia of, country A, those
printed materials would be registered with the State Department.
Mr. WILSON. That is correct.
REGISTRATION OF TRIPS AND PARTIES
Senator HUMPHREY. However, if trips were involved, for example,
or parties for lobbying activities, et cetera, how would those be
registered? Let us say this public relations firm decided that the
image of country A was poor on the west coast. All the influential
reporters on the west coast are invited to take a trip to country A.
and enjoy the pleasantries of life. How do you register that, with
whom, and who has the responsibility for officially checking into it?
Mr. WILSON. Well, if it were organized by the public relations firm
it would be registered with the Justice Department. If it were orga-
nized by the host government and under the auspices of the host
government, it would be reported to the State Department. If it was
done under the imprint of the host government.
REGISTRATION WITH BOTH STATE AND JUSTICE
Senator HuMPHREY. I am for your amendment. I think this is a
very constructive proposal, but I would think it might be well so that
you do not get in trouble on this, that while the information would
be registered with the State Department that there would be some
cross indexing here with Justice, because when you get an American
firm involved, unless you have a cadre of police officers, you are going
to have to enforce it. You cannot just enforce it through gathering
the material in the files of the State Department for busy people.
Mr. WILSON. Well, the material will flow to the Justice DDepart-
ment from the State Department. We would not set up a separate
machinery of examination in the State Department, although it is
quite possible the State Department might, upon a case that would be
be, we might consider, detrimental to our interest, and we could call
that to the attention of the Justice Department. The central reposi-
tory of all this information would be in the Justice Department.
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
INCREASED CONTRACTING BY FOREIGN GOVERNMENTS FORESEEN
Senator HumriiREY. I have a feeling we will have more contracts.
This is just looking into the future. You cannot train information
officers in a hurry, and you do have public relations firms that are
very adept at public relations activities. You are, therefore, going
to find more and more of this contract type of operation, and if the
contracting party, the one who receives the contract, is to be treated
as if he were a part of a government, part of the government of coun-
try A, that is one thing. But if he is to be treated, if he happens to be
an American national or an American public relations firm, you will
have some problems.
Mr. WILSON. I might say we have a further protection in here in
that we would require the information officer from country A to re-
port the contract of any goods and services so there would be another
check that way.
Senator HUMPUREY. What if a country, for example, would hire a
Belgian-I am thinking of Katanga. They had an agent working in
this country. How do you operate under that? Under your amend-
ment as long as he is a non-American he does not have to report to
Justice. Ile just reports to you busy people over in the State Depart-
ment where you do not have the investigator's mentality.
You know the departments all develop a sort of an atmosphere in
which they live. In one department they are probusiness, or prolabor,
or proagriculture. Over in Justice one is procletective, and at the
State Department you are proforeign relations. You are trying to
make everybody happy all around the world, you see.
USIA AMENDMENT PUT DIPLOMATIC CLOAK ON INFORMATION OFFICERS?
How does your amendment apply to an African country that con-
tracts its public relation activities in the United States to a Belgian
national like Mr. Streulens? Does Mr. Streulens just wander around
here, footloose and fancy free, saying, "I represent a foreign country,
you can't touch me, and I can abuse your Members of Congress or your
Government or anything else"?
Mr. WILSON. It is true under our amendment that a foreign national
could be hired by another country. But the case you just cite we
do not think would be really possible because he would be under the
control of the Ambassador and the Embassy.
Senator HuMPIIREY. He would.
Mr. WILSON. Well, he would if he were hired as a regular staff mem-
ber and, therefore, the Ambassador and the Embassy would be
accountable to us if his activities-would be accountable to the Depart-
ment of State.
Senator HUMPHREY. So if his activities were obnoxious or did not
meet the kind of conduct you outlined in your statement he could be
declared persona non grata.
Mr. WILSON. That is correct; he would be official.
Senator HUMPUREY. He would be official.
Mr. WU,soN. Even if he were a Belgian working for the Congo,
for instance, he would be an official working for them.
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Senator IIUMPIIREY. I think that is an improvement, because the
present situation is that he is operating as a private individual and
enjoying all of the privileges and immunities of a private individual
without the responsibilities of official representation.
Mr. WILSON. That is correct.
Senator HuMPIIREY. That is the present situation. But your
amendment would make it so he would come under the discipline of
the normal diplomatic rules of conduct as you have outlined in your
statement.
Mr. WILSON. Precisely.
CASE OF TIIE DOMINICAN REPUBLIC
Senator HUMPIIREY. What about a country such as the Dominican
Republic with which we have no official relations at the present time?
What about their information office?
Mr. WILSON. You mean as long as we have no official relations?
Senator HUMPHREY. Yes.
Mr. WILSON. I would think any activities on behalf of the Domini-
can Republic would come under the Foreign Agents Registration Act
and the amendment of Senator Fulbright. They would not be in-
volved in this because we do not have an official relationship with
them.
Senator HuMPIIREY. At the present time, am I correct, we have
withdrawn our Ambassador. Have we broken diplomatic relations?
Mr. WILSON. We have not actually. We have withdrawn our
Ambassador.
Senator HUMPIIREY. We have not broken diplomatic relations.
Mr. WILSON. I take it back. We actually have not broken
diplomatic relations.
Senator HUMPIIREY. So the information officer of the Dominican
Embassy staff would still., under your amendment, be subject to the
conditions that you have outlined?
Mr. WILSON. Yes, sir; I believe he would.
GENERAL SUPPORT OF AMENDMENT
Senator IIUMPHREY. I did not mean to take this much time with
that amendment. I think it is very worth while, and I think it is an
innovation. It is something I think that is long overdue, in order to,
give proper recognition to information services. I think we ought
to think about it a great deal. I frankly find your amendment very
constructive.
Mr. WILSON. Thank you, Senator.
The CHAIRMAN. Is that all?
Senator IIUMPHREY. Yes. I wanted to get that point clarified..
The CHARMAN. Thank you, very much, Mr. Wilson.
Mr. WILSON. Thank you, Mr. Chairman.
The CHAIRMAN. The committee is adjourned until tomorow morn-
ing at 10 o'clock.
(Whereupon, at 12 noon, the committee was recessed, to reconvene
at 10 a.m., on Wednesday, November 20, 1963.)
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
WEDNESDAY, NOVEMBER 20, 1963
UNITED STATES SENATE,
COMMITTEE ON FOREIGN RELATIONS,
TVashington, D.C.
The committee met, pursuant to recess, at 10 a.m., in room 4221, New
Senate Office Building, Senator J. W. Fulbright (chairman)
presiding.
Present: Senators Fulbright, Sparkman, Symington, and Aiken.
The CHAIRMAN. The committee will come to order.
This morning we continue the series of hearings before the Senate
Committee on Foreign Relations in its studyy of the activities of non-
diplomatic agents o foreign principals. We have before us S. 2136
introduced by Senator Hickenlooper and myself which amends the
Foreign Agents Registration Act of 1938, as amended.
We are very pleased indeed to begin this morning with Mr. Arthur
Dean, a distinguished attorney from New York City.
Mr. Dean, will you come forward, please sir. You are getting to
be a regular visitor to this committee, are you not'?,
Mr. DEAN. Yes, I am, Senator; thank you very xiiucli.
The CHAIRMAN. We need the helpful advice of witnesses from the
professions.
You may proceed, sir. You have a written statement, I believe?
Mr. DEAN. Yes.
:STATEMENT OF ARTHUR H. DEAN, SENIOR PARTNER, SULLIVAN &
CROMWELL
My name is Arthur H. Dean. I am a senior partner in the law firm
.of Sullivan & Cromwell in New York City. I very much appreciate
this opportunity to testify with regard to S. 2136, which would amend
the Foreign Agents Registration Act of 1938.
At the outset, Mr. 6hairman, let me acknowledge that I am not
familiar in detail with all the cases that the committee has been con-
sidering. I have read newspaper accounts from time to time of
summaries of some of the testimony which has been given, and, I am
generally familiar and sympathetic with the objective of clarifying
the application of the present statute so that neither the Congress nor
the public will be misled or deceived by activities which are not what
they seem on the surface to be.
CLARIFICATION OF TERM "FOREIGN PRINCIPAL"
This morning, I particularly want to call the attention of the com-
:mittee to the fact that these proposed amendments might, I think,
43
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unintentionally, extend the registration requirements and attendant
restrictions and penalties of the act to a large number of business firms
and financial institutions in this country, as well as their bona fide
legal, public relations, accounting and other independent advisers and
assistants, who form a necessary and useful part of the modern busi-
ness community.
I want to emphasize that the business firms and consultants that
I have in mind might be covered by the act, as proposed to be amended,
even though all are engaged in carrying on straightforward commer-
cial and financial operations, having no relationship to the kind of
activities which have been under review in your recent hearings.
I believe it is vitally important that any attempt to introduce
clarity in the present act, and to encourage aggressive enforcement
in appropriate cases, should not have the side effect of treating many
legitimate commercial and financial firms as "foreign principals" or
"foreign agents" within the concept of the act. Nor should such
a statute require their employees, lawyers, public relations, and other
advisers and representatives to be branded as foreign agents, having
to comply with the strict and properly onerous requirements imposed
on such true foreign agents. Indeed, the very process of branding
such a large group as "foreign agents" would tend to defeat the pur-
pose of the act by rendering registration largely meaningless without
a review of the specific circumstances requiring each registration.
LAW FIRM rrAS OVERSEA CLIENTS
My law firm, Sullivan & Cromwell, represents a number of Ameri-
can corporations doing business overseas. Frequently, they conduct
their foreign operations through subsidiaries or affiliates organized
abroad under the laws of a foreign country, which may be required
under the applicable foreign law. We also serve as counsel to coin-
mercial firms whose parent corporations are organized abroad, and
who engage in trade and commerce with and in the United States
usually through subsidiaries or affiliates organized in this country.
Under a strict interpretation of the terms of S. 2136, law firms such
as ours might frequently have to puzzle whether or not to register
as a "foreign agent."
And the same problem would be, faced by other consultants and
representatives, as well as many employees of these corporations even
though all are engaged in carrying out perfectly routine commercial,
financial, and related activities.
I doubt that this broad result was the intent of the drafters of the
proposed amendments. I feel certain that they did not intend to places
such a burden on normal international business firms or transactions.
But I doubt that any law firm with an international practice or any
corporation engaged in international commerce can fail to recognize
and be disturbed by this possible interpretation of a penal statute if
they focus on the precise details of the pending bill. I have in mind
particularly the proposed definitions of the terms "political activities"
and "political consultant" (set forth in sec. 1(5) of S. 2136, starting
at line 22 on p. 3 and line 7 on p. 4).
These sweeping definitions are particularly troublesome when read
in conjunction with the definition of the term "agent of a foreign
principal" (set forth in sec. 1(2) of S. 3236, starting at line 11 on.
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FOREIGN AGENTS REGISTRATIO A
p. 2) and the limitation of the so-called commercial exemption in
section 3(d) of the act to "private and nonpolitical" activities.
The situation can be corrected, I believe, without undue difficulty;
but it is highly important that, in order to accomplish the committee's
purposes, with which I am sympathetic, steps should be taken to avoid
placing needless burdens on people who should not be required to
register.
AMERICAN FIRM WITH FOREIGN SUBSIDIARY
Let me give you a few concrete illustrations of the kind of problem
posed by the pending bill :
1. Take the case of an American corporation with a wholly owned
subsidiary incorporated under the law of some foreign country. The
foreign subsidiary asks its parent to give certain information to the
U.S. Government, either the Congress or the executive branch. Per-
haps the information pertains to a proposed change in customs regu-
lations or to a proposed tax that would affect the commercial position
of the ov 4rsea subsidiary.
S. 2136 clearly makes the wholly owned subsidiary of the American
corporation a "foreign principal" (see clause (3) of the definition of
"foreign principal," starting at line 6 on p. 2). Under certain cir-
cumstances, the definition of "agent of a foreign principal" (starting
at line 11 on p. 2) would appear to make the U.S. parent an agent of
its foreign subsidiary. For example, it is quite possible that any
employee of the parent, or any law firm, public relations counsel, or
other person, who spoke to Government officials on behalf of the
foreign subsidiary of the American parent might have to register
and comply with the burdensome requirements imposed on foreign
agents. Indeed, under a strict interpretation of the bill (particularly
the definition of "political consultant," starting at line 7 on p. 4),
it is conceivable that those in this country who merely give factual
information and advice to the foreign subsidiary "pertaining to the
foreign or domestic policies of the United States" might have to
register as a foreign agent.
The CHAIRMAN. You mean they might even if they made no effort
to influence the policy of the Government and the Congress?
Mr. DEAN. Yes, Senator Fulbright. Under the definitions, if any
foreign subsidiary of an American parent were to ask for advice with
respect to American laws or how they can comply with American
laws and we furnish such advice, I believe we would have to register
under S. 2136. I come later to your definition in the bill which
concerns doing anything attempting to persuade anybody. I believe
if we were to act in the preparation of a registration statement for a.
foreign corporation, and all we did was to assure compliance with
the rules and regulations of the Securities and Exchange Commission,
that the circulation of the prospectus, which is trying to persuade
somebody to buy the securities, might mean we would have to register
as a foreign agent, although all we would be doing would be render-
ing purely legal advice.
There are scores, perhaps hundreds, of bona fide American indus-
trial, commercial, and financial enterprises with foreign subsidiaries.
They have added immeasurably to the economic health and security
of the United States, and contribute mightily to help solve the bal-
ance-of-payments question of the United States. To require that the
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446 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
U.S. parent corporations, in dealing with the interest of their foreign
subsidiaries (which in substance are the same as the interests of the
U.S. parent), should have to register and identify themselves as
foreign agents seems to me to be unnecessary and harmful to our
best commercial interests.
INTERNATIONAL FIRM WITH FOREIGN INCORPORATED PARENT
2. Another example of what I would consider to be an unfortunate
and unwise registration possibility under S. 2136 involves the case
of a private international commercial or financial organization, hav-
ing a parent company which happens to be incorporated abroad but
_ Mch has substantial commercial operations in this country. ,
It may have an American subsidiary, for example, which main-
tains manufacturing and research facilities, as well as sales or service
offices in this country. The subsidiary may be a substantial employer
in this country. In short, the U.S. subsidiary would have precisely
the, same interest in domestic policies, labor, taxes, production and
marketing, et cetera, as other American companies operating here.
Several foreign corporations of this type, with which I am familiar,
have their securities listed on U.S. stock exchanges in the United
States and are widely owned by Americans. Indeed, more of the
stock of the parent company may be owned by Americans than by
nationals of the country in which it is incorporated or of all other
countries put together. (Of course, it may be difficult at any one time
for a corporation to ascertain the precise beneficial ownership, as dis-
tinct from record ownership on its books.)
Under the proposed bill, the foreign parent company would be con-
sidered a "foreign principal" (see clause (3) starting on line 6, p. 2),
and the U.S. subsidiary and its employees (along with any legal,
public relations, or other consultants and advisers it may employ)
would, under certain circumstances, appear to be considered as "for-
eign agents" (see the definition, starting at line 11, p. 2).
It is true, of course, that the subsidiary (as well as its employees
and representatives) would be considered to be acting as "foreign
agents" only insofar as they are acting "for or in the interests of" the
parent (see clauses (i) through (iv) of the definition, starting at line
21,p.2).
But in a parent-subsidiary relationship the risk is that any activity
on behalf of the subsidiary, even though it is very much a going and
active American concern, can be considered to be "for or in the inter-
ests of" its foreign parent. This is becoming increasingly important
because of the requirement of the laws of a large number of foreign
countries that companies operating mines or public utilities in those
countries be incorporated under the laws of those countries.
POLITICAL ACTIVITIES DEFINED
Even though the parent's as well as the subsidary's interests in this
country are, in fact, purely commercial, and there is in no sense any
control by or representation of a foreign government or political party,
I believe that under the sweeping new definition of "political activi-
ties" added by S. 2136 (see line 22, p. 3) the U.S. subsidiary might be
unable to make representations to our Government or its officials
without registering as a foreign agent.
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FOREIGN AGENTS REGISTRA O
For example, the U.S. subsidiary's plant managers might, under
a strict interpretation, be regarded as having to register as foreign
agents before they could speak to their own Congressmen about issues
affecting their plant communities-labor relations, marketing legis-
lation, et cetera. This is because of the introduction of the words
"domestic policy" in S. 2136 in the definition of "political activity."
Since any activity intended to persuade or influence any other per-
son with reference to the domestic policies of the United States is a
"political activity" within the proposed definition in S. 2136 (starting
at line 22, p. 3), presumably the commercial exemption in section 3(d)
of the act (which is limited, among other things, to "nonpolitical"
activities) would not be available.
Thus a law firm might have to register as a foreign agent simply
to represent the U.S. subsidiary before any agency or official of the
U.S. Government, even though the matter involved is purely domestic;
for example, the application of the U.S. income tax laws to the sub-
sidiary's business activities in the United States, and even though the
question was purely a matter of rendering a legal opinion.
To me, it seems that ordinary commercial operations of this type by
purely commercial firms which have such substantial and bona. fide
American interests should not be covered by the provisions of the act.
I believe it is quite contrary to the basic spirit and intent of the foreign
agents registration procedure. I believe the committee would not want
to include persons of the type I have been describing in the "foreign
agents" registration requirement. I think, in the larger aspect; that
if you require many people to register under the act who are not really
engaged in the type of activities the committee wishes to regulate,
your proposed amendments might be self-defeating; because if you
have thousands of people registering who would always have to
describe themselves as foreign agents, it might become meaningless.
But without further clarification., I am afraid that they may inad-
vertently be encompassed in the registration provisions by S. 2136.
CLARIFICATION OF TERM "POLITICAL CONSULTANT"
3. Thus far, I have been discussing the difficulty which the pending
bill might impose on numerous corporations, and on lawyers, public
relations consultants, and others who serve these firms in their bona
fide, ordinary, commercial activities, and the burden which all such
registrations would place on the Department, of Justice. Now I should
like to turn briefly to a feature of the bill which, perhaps, most directly
affects lawyers and law firms, such as my own.
The proposed bill would include as a foreign agent any person who
serves as a political consultant, to a foreign principal. (See clause (ii)
starting on line 24, p. 2.) The term "political consultant" is defined as
any person, including a lawyer, who merely informs or advises any
person with respect to any matter pertaining, among other things, to
the domestic policies of the United States. (See subsection (p), start-
ing on line 7, p. 4.)
All Federal statutes and rules and regulations of administrative
agencies thereunder would seem to me to be manifestations of the
policies' of the United States-for these are certainly the principal
ways in which at least the internal policies of our Nation are given
expression by the Congress or by the regulatory agencies set up by the
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
Congress. Thus merely rendering legal advice to a foreign client con-
cerning almost any aspect of U.S. law might require a lawyer to
register as an agent of a foreign principal, unless his activity can be
said to come within the so-called commercial exemption spelled out in
section 3 (d) of the act, and this has been made somewhat cloudy by
the amendment to the act put through in 1961.
(The following was subsequently inserted by Mr. Dean as a rider to
his statement:)
The 1961 amendment changed the phrase "financial, mercantile, or other activi-
ties" appearing in section 3(d) to "financial or mercantile activities." The
legislative history of this amendment includes a letter of the Department of
Justice stating that the words "or other activities" are "without effective pur-
pose, and should be deleted," which suggests that no change in the scope of the
exemption was intended by dropping the words "or other." However, the ex-
press addition now of public relations activities to the language of the section
3(d) exemption would indicate that the earlier interpretation was not correct,
for if it were there would be no need for the express addition. Thus S. 2136 would
make the applicability of section 3(d) to the lawyer's activities (as well as the
legitimate activities of many others) even more uncertain by changing the phrase
to "financial, mercantile, or public relations activities." (See sec. 3 at line 16,
p. 7.) But even assuming that section 3(d) would cover legal activities not-
withstanding the reference only to "financial, mercantile, or public relations
activities," it might not cover the following situations.
If the foreign client is an individual, just a pure individual, not
engaged in trade or commerce and seeking advice on personal mat-
ters-for example, a construction of U.S. immigration and naturaliza-
tion laws on how lie could become a citizen-to my mind a serious
question exists as to the availability of the commercial exemption
under section 3(d) of the act. An American lawyer advising such an
individual not engaged in commerce might well be required to register
as an agent under the act before he could give any legal advice to his
foreign individual noncommercial client.
Also, law firms are frequently approached by foreign governments
seeking legal advice with regard to U.S. laws-a very common ques-
tion, for example, is the application of the U.S. securities laws and
stock exchange laws and the "blue sky" laws of the several Stages, with
regard to offerings in the United States of securities issues by a foreign
governmentor its agencies or instrumentali ties. Again, because of the
nature of the governmental client who is not engaged in commerce, a
serious question arises with respect to such inquiries by a foreign gov-
ernment, as to whether the commercial exemption is available in such
cases, and whether the law firm might be obligated to register under the
act before rendering the requested legal advice as to the proper inter-
pretation of a domestic law or a rule or regulation of a U.S. adminis-
trative body.
SHOULD RENDERING OF LEGAL ADVICE NEED REGISTRATION?
I doubt that the committee intends that the mere rendering of legal
advice to a client in situations such as these should be adequate cause
for requiring registration as a foreign agent and compliance with'ill
of the burdensome requirements such as a registration under S. 2136
entails.
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 Approved FoP J q 4,13 su Pfi B8V403RUGM007
I should like to acknowledge, Mr. Chairman, that some of the prob-
lems I have been discussing might arise if there were a strict and
literal interpretation of the present statute, as well as under the pro-
posed bill. It is my understanding, however, from oral conversa-
tions with the Department of Justice, that under the present act if
lawyers, for example, confine themselves entirely to rendering legal
advice they do not have to register. In my opinion, however, many
,of these problems would be aggravated by S. 2136, particularly the
new deffiiition of "political consultant" and the incorporation of
"domestic policies" in the definition of "political activities" (see p.
4, line 7; p. 3, line 22), and the fact that these problems have existed
for many years does not justify continuing the confusion into the
future.
I further believe? Mr. Chairman, that the specificity that has been
put into the definitions may make it very difficult for the Department
,of Justice to draw up regulations with respect to exemptions, because
the Supreme Court has held that the agency chosen by the Congress
to grant such exemptions cannot grant exemptions in areas covered
by the specific provisions of the statute itself.
One of the primary purposes of the bill, as you, Senator Fulbright.
pointed out in your remarks on the Senate floor on September 10 of
this.year, is to clarify and add certainty to the statute. You also
indicated at that time that another purpose of the proposed bill, as
well as the series of hearings which have been conducted, is to enable
and encourage the Justice Department to tighten its enforcement
.activities.
UNNECESSARY REGISTRATIONS MIGHT BE BURDENSOME
From the examples I have given, I think it is clear that literally
scores of major American corporations, and many of their employees
acid consultants, might be required to register as foreign agents under
S. 2136. Not only would this be burdensome to the companies and
the citizens involved, but an avalanche of registrations of this sort
would swamp the Justice Department and prevent it from properly
enforcing the law with regard to the kinds of persons whom the com-
mittee feels should be made to comply. Further, you might not get
the detail in these registration statements that would be necessary in
,order to fulfill what the committee wants to accomplish. Subject to
correction, I believe that a large number of the activities that were
carried out in connection with the proposed sugar legislation-which
naturally aroused the committee-were by people who had already
'registered under the Foreign Agents Registration Act, but perhaps
their registration statements were not enough.
In short, such a mass of registrations would not serve the basic
purposes of the statute.
I mentioned earlier that I felt the difficulties with the proposed
-legislation could be met through changes in S. 2136. I believe there
:are, a number of ways in which this could be accomplished. I would
like to file with the committee an appendix to my statement which I
shall submit for the record, and my firm and I myself will be happy
to work with your staff in developing or considering further ap-
proaches, should this be desired by the committee.
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CLARIFICATION OF GUIDELINES FOR ENFORCEMENT
But regardless of the specific language of any amendments to the
bill, I think the Congress should take steps to give the Justice Depart-
ment some guidelines as to the enforcement of the legislation. It is,
clear from your earlier hearings that the committee feels the Depart-
ment has not been sufficiently strict in enforcing the act in the past,
but it is equally clear that the Department could inflict even greater
harm by interpreting the legislation too literally and too harshly..
However, under the cases in the Supreme Court as to the proper
meaning of language in a statute, I doubt very much that statements
made on the floor of the Congress or here in the committee will neces-
sarily be very helpful to the Department of Justice if you do not put
amendments into the bill itself so that the legislation is also clear and
precise.
Accordingly, I believe your committee should utilize these hearings,.
as well as its report on the bill and the floor debate on the legislation,
in conjunction with amendments to the act itself, to spell out the kinds
of activities and business enterprises that it does not mean to cover
by the registration requirements as well as those that it does mean to,
cover.
If the bill is passed without such clarification by the Congress, I
believe it could result in widespread burdens to thousands of citizens,.
and will fail to accomplish the purposes which I believe are intended`
by the committee.
If many people the committee does not intend to cover are required
to register under the Foreign Agents Registration Act and state each
time they meet a Government official, "I am a foreign agent," I am.
afraid the bill will not serve its purpose.
I want to thank the committee once again for granting me this oppor--
tunity to appear today. I am convinced that by correcting the pend-
ing bill in the areas I have indicated, the committee will strengthen the,
effectiveness of the Foreign Agents Registration Act by restricting
its application to those to whom it should apply and avoiding need
less burdens on other citizens.
As I said before, I would like to submit this appendix to my state-
ment in which I suggest certain specific changes in the bill which, I
think, would meet most of the points that I have outlined. Thank
you very much.
(The appendix referred to in Mr. Dean's statement follows:)
APPENDIX TO STATEMENT OF ARTHUR 11. DEAN
SUGGESTED CHANGES IN S. 2136, TO AMEND THE FOREIGN AGENTS REGISTRATION ACT
OF Iris
I. Revise section 1(1) of S. 2136 (which sets forth the definition of the term
"foreign principal") by changing the period at the end thereof (line 9, p. 2)'
to a semicolon, and adding thereafter the following :
"Provided, however, That the term `foreign principal' does not include any bona
fide business corporation or other similar association or organization if (i)
such person-
"(a) is engaged in bona fide trade or commerce with or in the United
States and directly or indirectly owns or controls ; or
" (b) is directly or indirectly owned or controlled by
one or more corporations organized under or created by the laws of the United
States or of any State or other place subject to the jurisdiction of the United
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 Approved For ;sa2D 4 1 IRDPNBM469PWO'U P0007( 03-9
States, having its or their principal places of business within the United States,
and regularly engaged in substantial bona fide commercial, industrial or finan-
cial activities within the United States; and (ii) no substantial portion of
the activities either of such person or of such corporation or corporations are
directly or indirectly supervised, directed, controlled, financed, or subsidized in
whole or in major part by a. government of a foreign country or a foreign
political party."
II. Revise the definition of "political consultant" set forth in section 1(5)
of S. 2136 by adding at the end thereof the following :
"Provided, however, That the term `political consultant' shall not include any
person engaged in the practice of law solely by reason of rendering legal advice
to a client of such personn."
The CHAIRMAN. Well, thank you very much, Mr. Dean.
Of course, the purpose of these hearings is to solicit exactly the kind
of information you have volunteered, and I know the staff will welcome
assistance and any suggestions you. have.
We do not minimize the fact that this is a very difficult area. The
distinctions to be drawn are very difficult, and we do not intend to bur-
den the representation, certainly, of domestic interests. The difficulty,
in the case of these foreign subsidiaries of domestic corporations, is in
determining what interest is actually being represented, that is, of
the domestic or of the foreign principal, and that exists under present
law. Much of what you say, I think, could be used as a criticism of the
present law, isn't that correct?
Mr. DEAN. Yes; if it were strictly enforced. There were some words
in the exemption provision that were taken out in 1961. I think it read
"financial, mercantile, or other activities," and those words were
helpful. Well, we took up many of these matters with the Depart-
ment of Justice and, as I said earlier, the Department felt that if you
were strictly within a plain ordinary commercial transaction or
strictly within just giving legal advice as to what statutes meant and
you were not trying to lobby or promote anything or to persuade some-
body to do something.
The CHAIRMAN. Don't you think that would still be the interpreta-
tion of this language? There is quite a difference in your giving ad-
vice, for example, to your foreign. principal, and going to a Congress-
man or appearing before a committee and trying to persuade the en-
actment of legislation especially useful for your client. The Sugar
Act is a good illustration. Don't you think there is quite a difference?
DEFINITION OR TERM "POLITICAL CONSULTANT"
Mr. DEAN. Well., look at your definition in (p) on page 4.
The term "political consultant" means any person, including, without limita-
tion, any economic, legal or other consultant, who engages in informing or advis-
ing any person with respect to any matter pertaining to the political or public
interests, policies or relations of a foreign country or of a foreign political party
or pertaining to the foreign or domestic policies of the United States.
The words "legal" and "domestic" are new to the act.
If you will read that in connection with your definition of an agent,
which is on page 2, subsection (2) that "except as provided in subsec-
tion (d) hereof, the term `agent of a foreign principal' means,". and
then it goes down to subdivision (ii) "acts within the United States.
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 Ap ved FonRefeamR@g4ktlaQflAq}&R f, ,,9 ( 0100070003-9
as a public relations counsel, publicity agent, information service em-
ployee, or political consultant for or in the interests of such foreign
principal."
So that if you give any legal advice with respect to domestic policies
of the United States to a foreign principal you may have to register.
The CHAIRMAN. The point I was making is that in section (p) you
first read on page 4 that the definition is almost, but not exactly, identi-
cal to present law.
Mr. DEAN. Well, you put in the words "domestic policies of the
United States" which means if you give any advice with respect to
any domestic law, rule, or regulation that you fall within the term
"political consultant," if you are giving that advice to a foreign prin-
cipal.
The CHAIRMAN. Of course, you know the origin of "domestic poli-
cies" was the sugar legislation.
Mr. DEAN. Yes.
The CHAIRMAN. That is the reason it was put in there.
Mr. DEAN. Yes.
JUSTICE VIEW OF DEFINITION OF "POLITICAL ACTIVITY"
The CHAIRMAN. One thing does interest me which is of a general
nature. Yesterday the Deputy Attorney General stated as folglows in
his testimony :
Finally, as indicated in my letter, the narrowing of the term "political activi-
ties" as contained in the proposed bill may unduly narrow the application of the
statute and seriously hamper its enforcement.
Ile continues, saying :
I would suggest that any definition of "political activity" should be at least as
extensive as that which is now in rule 100(a) (11) promulgated by the Attorney
General.
This is a very interesting difference of view. He seemed to think
we made it too narrow, and you think it is too broad. But that does
not mean that we should not seek a reconciliation of these two views.
I think you know what we are trying to get at. It is not just the
strictly legal advice as between you and your foreign principal, if you
have one, but it is your attempt in his behalf to influence the actions
particularly of the Congress and of the Executive.
In many of these cases the Executive is the branch where the influ-
ence is brought to bear. I do not minimize the difficulty of making
this clear in the law. I think it is a combination of the law and the
regulations which the Department itself adopts in connection with it.
We were hopeful that this change, as suggested by the Attorney Gen-
eral's office, about injunctive relief where you are not threatened with
indictments, would lead to a clarification of these matters and conse-
quently to less friction and difficulty than we have had in the past.
Don't you agree with that? Mr. DEAN. I agree with that.
In a number of my talks that I have had with the Department of
Justice over the years, the thing they have always been concerned about
in the previous law was it was so broad and so vague that they did not
know how to interpret it, and they rather declined to enforce the law
vigorously because they felt the act itself was so broad that they did
not quite know how to interpret it.
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The CHAIRMAN. As the Deputy Attorney General testified yester-
day, the original purpose of this law was directed primarily at sub-
versive activities of the old Nazi Party and the Communist, Party.
Now business activities, such as many of our hearings were concerned
with, have entirely supplanted that as a major activity covered by
this law.
Mr. DEAN. I am in sympathy with what you are trying to do. I
remember back in the 1930's there was somebody, I believe, who was
acting as an advertising agent for a foreign railway, and in the guise
of carrying on travel advertising they were carrying out a urge
amount of propaganda for the Nazi Party, and since they were acting
as an agent of a railway they claimed that they were not acting on
behalf of a foreign government.
I am in complete sympathy with what you are trying to accomp-
lish. My basic points are really two. I am afraid if you include a
large number of people through ordinary activities, and require
them to register, then the fact that you will have several thousand
people who every time they talk to a Congressman will have to say,
"I am a foreign agent," I am afraid the Congressman will get bored
and it will fail.
The CHAIRMAN. I think you put it more baldly. There is nothing
wrong when visiting a Congressman or coming up here to testify with
your saying: "One of my clients is such and such a company or such
and such, and this is why I have an interest in it."
Everyone would accept this for what it is. There is nothing illegal
in these representations. The Congressmen are merely being informed.
Do you think there is anything wrong if you, as a lawyer, came
before the Finance Committee about a tax matter which, right now,
is under consideration and said, "Well, I represent the Government
of France or Italy, and we are very interested in this matter," and no
one, as long as it is stated that way, would see anything wrong with
it, do you?
Mr. DEAN. No. I would be delighted to say that.
The CHAIRMAN. That is all you have to say according to this leg-
islation.
Mr. DEAN. But the trouble here, Senator-and I think you will
agree-is that the people, you are trying to cover are those who, with-
out being honest about it, are attempting to deceive you as to what
they are really doing.
The CHAIRMAN. That is right.
Mr. DEAN. And I hate to see people like ourselves, who have always
tried to be strictly lawyers and not lobbyists, thrown in with a bunch
of people who, in the public eye, at least, are not regarded very highly.
The second thing is the major oil companies, as I am sure you
know, have had to meet with a great deal of nationalistic fervor, and
they have had to incorporate a lot of subsidiaries in foreign countries.
That is true in a large number of countries.
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 Appoved F RIRR~6fflp Pa 91 It is also true of some of the mining companies, American. mining
companies, which have had to incorporate under Canadian law.
Their main activity, apart from mining in Canada, is carried on in
the United States; but under this proposed definition the American
subsidiary would be the agent of a foreign principal, and no one, nei-
ther the president of the subsidiary nor anyone else, would be able to
discuss these matters down here or to testify or go to the Treasury or
the SEC or other places without saying constantly, "I am an agent
of a foreign principal." I doubt whether that is what you really have
in mind.
The CHAIRMAN. We certainly do not have in mind this application
when you are not trying to exercise any undue influence. Your nor-
mal operations are not what we are concerned about.
I wonder if you would outline a few of the political issues which
you feel might require representation of U.S. corporations oversea sub-
sidiaries by persons in this country. Do you have in mind taxes?
Mr. DEAN. No, not necessarily taxes in particular. There are hear-
ings on the extension of oil imports, there are constant hearings wheth-
er there should be customs duties imposed on lead or zinc. There are
questions about migratory labor in California. Taxes are also, of
course, a very important part. Many a time, as I am sure your com-
mittee is well aware, the heads of American corporations are called in
by the Department of Defense or the State Department in saying,
"How can you cooperate with us in trying to carry out this policy?"
and I think that it is a very important part of the duties and obliga-
tions of American business to cooperate with anyone in Government
who asks them, to do it honestly and do it willingly.
But under this bill, if, let us say, the vice president of an oil com-
pany was called upon, and it had a foreign subsidiary, and this foreign
subsidiary was involved, each and every time he would have to say,
"I am the agent of a foreign principal." He could not even ask any in-
formation from the Library of Conb ess, as I read the bill, without
saying, "If you give me an ordinary governmental publication, I am
getting it on behalf of a foreign principal."
He cannot ask for any information about any domestic policies in
the United States without indicating that he is an agent of a foreign
principal. I am just afraid that in its present form the bill is going
to be so inclusive that it might be self-defeating.
The CHAIRMAN. We certainly do not want to make it that.
Do you have any questions, Senator?
Senator AIKEN. No. I think Mr. Dean's testimony is generally
helpful.
I am inclined to agree with you, Mr. Chairman, that this proposal
of the second amendment would, perhaps, result in weakening-the-pro-
visions of the existing law as defined by the Attorney General.
I would like to say, Mr. Dean, if you think that, the proposed legis-
lation is rather tough and too inclusive., you ought to see what some
.of them are proposing for Members of Congress. No more privacy
or anything, I guess.
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The CHAIRMAN. Do you find any difficulty in complying with the
domestic lobbying act if you interpret this as literally as, you fear the
Foreign Agents Registration Act is interpreted? Wouldn't you have
the same trouble under the domestic lobbying act?
Mr. DEAN. No. The domestic lobbying act has provisions that if
you call upon a person and try to influence him with respect to legis-
lation, and that sort of thing, I have no quarrel with the provisions of
the lobbying act.
As I read this, however, before we could render the simplest legal
:advice with respect to any law or regulation of the United States, if
we did it for a foreign principal, ancT we did not fall within the com-
mercial exemption, I think we would have to register before we gave
that.
The CHAIRMAN. Why wouldn't you fall within that exemption? I
am a little puzzled about this point. If all you did was to give advice
to your foreign principal, if you did not come down and appear before
the Congress or seek to influence it, why do you think you would be
covered by the act?
Mr. DEAN. I think under a strict reading of the act we might. The
words "or other activities" which used to be in section 3 (d) of the act
were taken out in 1961. As I understand it, under S. 2136, your
section 3(d) exemption would read:
Any person engaging or agreeing to engage only in private and nonpolitical
financial, mercantile, or public relations activities * * *.
Now, you have put the word "legal" in your definition of political
consultant, and you have taken out the previous language of "or other
activities" in your exemption, and it was those words on which the
Department of Justice previously relied in advising us that if you
gave pure legal advice and nothing more that you did not have to
register.
The CHAIRMAN. I will call your attention to the words in. the present
act, that say :
Any person who within the United States collects information for or reports
information to a foreign principal-
You have lived with that all during these years.
Mr. DEAN. Yes. But it is the use of the words "domestic policies"
in here that causes the trouble.
The CHAIRMAN. This says "information for or reports information
to a foreign principal." Any kind of information, apparently, whether
it is a weather report, or the state of Congress, or the prospect of who
is going to be elected, and so forth, if reported falls under that existing
law.
Mr. DEAN. But in the act, as it existed in 1961, until that time in
section 3(d) you had this exemption "or other activities," and that
has been now taken out. As I say, you put the word "legal" in your
definition of a political consultant, but you took out the words "or
,other activities"-in section 3 (d). You now also propose to specifically
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
cover public relations, and this, in conjunction with taking those other
words out, gives us considerable concern.
In your Iobbyiilg act you have to attempt to influence the passage
or the defeat of legislation. If you give an opinion with respect to
the tax law you are not attempting to influence the passage or defeat
of legislation.
The CHAIRMAN. I think you have raised a very difficult. problem,
and one of the problems of enforcement in existing law has been the
difficulty of interpreting some of these provisions. This is largely a
matter for the lawyers to work out, I guess, as to exactly where the
line is drawn.
PURPOSE OF PENDING LEGISLATION
Your suggestions certainly will be given most serious consideration.
I may say for your information that we are not trying to rush this
legislation through. I introduced it now in order to give you and other
interested people an apportunity to study it. I do not anticipate it
will be passed this year. We hoe by next spring, at least, to have it
underway both here and in the douse. The committee may be able
to report it and enable further study.
I do not think it is a matter of great urgency that it be passed im-
mediately, as some of our legislation is, but it has never been looked
into by any committee since the original act came into being and the
subsequent investigation of it.
I think it is clear what we are trying to get at. The difficulty is
where to draw the line between legitimate, normal representation, as
you have described it, and what we really think of as undue influence
upon the normal processes of the Government.
Mr. DEAN. Well, I am in sympathy with what the committee is try-
ing to do.
The CHAIRMAN. As a lawyer, and with your experience, you can
be very helpful in helping draw that line.
Mr. DEAN. I will be glad to be of any help I can.
Senator AIKEN. Mr. Chairman, if all the laws ever enacted by the,
Congress were clear and understandable certainly we would increase
the number of unemployed lawyers, would we not?
Mr. DEAN. I think that would be devoutly to be wished for, Senator.
Senator AIKEN. So you owe your living to the fact that the laws we
pass are not understandable.
Mr. DEAN. No. I would far rather earn my living in a more con-
structive way.
The CHAIRMAN. It would not be in the position of trying to enact
the laws, I am sure.
Do you have anything further to say?
Mr. DEAN. No, I have not.
The CHAIRMAN. We will be glad to receive any further suggestions.
that occur to you.
Mr. DEAN. Thank you very much.
The C EIAIRMAN. Thank you very much, Mr. Dean.
Mr. Chayes, the legal adviser to the Department of State.
Mr. Chayes, we are very glad to have you this morning.
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Before you proceed, I would like to insert in the record a letter re-
ceived by the committee on November 18, 1963, from the Department
of State in. support of S. 2136.
Further, at this time I would like to offer the appreciation of the
committee to Secretary Rusk and his Department and his assistants,
particularly Mr. Chayes and Assistant Secretary Frederick G. Dutton
for their assistance in the investigation of legislative matters arising
out of the investigation.
(The letter referred to, as well as that from the Agency for Inter-
national Development, follows:)
DEPARTMENT OF STATE,
Washington, November 18, 1963.
Hon. J. W. FULBRIGHT,
Chairman, Committee on Foreign Relations,
U.S. Senate.
DEAR MR. CHAIRMAN : This is in response to your request for the comments of
the Department of State on S. 2136. This bill would amend the Foreign Agents
Registration Act of 1938, as amended, in a number of significant respects.
First, it would substantially revise the definitions employed in the act (sec. 1).
Second, it would provide several additional registration requirements (sec. 2).
Third, it would broaden the labeling requirements and make the Department of
Justice rather than the Library of Congress the recipient of copies of propa-
ganda filed under the act (sec. 4). Fourth, it would require the Department of
Justice to send to the Department of State every registration statement, supple-
ment, amendment, and piece of political propaganda submitted by an agent of a
foreign principal (sec. 6). Fifth, the penalties for violations of the act would be
reduced in certain cases (sec. 8(f) ). Sixth, it would empower the Attorney
General to seek, and a court to grant, an injunction or restraining order in
certain cases (sec. 8). Seventh, it would make unlawful contingent fee con-
tracts between a foreign principal and his agent which are dependent upon the
success of political activities (sec. 8(g) ). Eighth, it would make unlawful po-
litical contributions by agents of certain foreign principals in behalf of such
principals (18 U.S.C'. 613). Finally, it would make unlawful the representation
of a foreign principal by an employee of the U.S. Government unless the head
of the employing agency certifies that such employment is required in the na-
tional interest (18 U.S.C. 219). Sections 3 and 5 of the Foreign Agents Registra-
tion Act would also be amended in minor respects.
The Department supports this bill in its entirety.
The Bureau of the Budget advises that from the standpoint of the administra-
tion's program, there is no objection to the submission of this report.
Sincerely,
FREDERICK G. DUTTON, Assistant Secretary.
DEPARTMENT Or STATE,
AGENCY FOR INTERNATIONAL DEVELOPMENT,
Washington, D.C., November 26, 1963.
Hon. J. W. FULBRIGIIT,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMAN : Thank you for giving the Agency for International De-
velopment the opportunity to comment on S. 2136, amending the Foreign Agents
Registration Act of 1938.
,We have studied the proposed amendments and your remarks introducing the
bill. This Agency is entirely in accord with the purposes of the amendments, as
you have explained them, and we have no objections at this time to the specific
language of the bill.
AID will continue to follow the committee's work in this area. Of course, we
will be happy to present testimony, if you desire us: to do so, or to answer any
questions you may wish to put to us.
The Bureau of the Budget has advised that it has no objection to the sub-
mission of this response.
Sincerely,
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The CHAIRMAN. Mr. Chayes, will you proceed, please, sir.
Mr. CHAYES. Thank you very much, Mr. Chairman.
I have a prepared statement. I can read it if you choose or I could.
submit it for the record if that is your preference, sir.
The CHAIRMAN. If you will submit it for the record and then
summarize the principal points you wish to make, it would probably
be more useful to us.
Mr. CI [AYES. Thank you, Mr. Chairman.
STATEMENT OF ABRAM CHAYES, LEGAL ADVISER, DEPARTMENT'
OF STATE
First, as you have already said, we have submitted a letter on behalf"
of the Department in support of the bill. We do support the bill in,
its entirety.
STATE DEPARTMENT HAS IMPROVED ON ITS RESPONSIBILITIES
Second, I thought you, Mr. Chairman, and the committee would be
interested in a number of steps we have taken within the Department
since Mr. Ball testified here earlier this year, to intensify, step up,..
our work in relation to the existing law.
As you know, the Department of Justice is the enforcement agency-
but., as the committee pointed out earlier, the State Department has
a responsibility to assist and draw information to the attention of the
Justice Department so that it can better carry out its responsibilities.
Among the steps we have taken are the following :
First, the Department of Justice now keeps us supplied with the
supplemental and amended statements as well as the original registra-
tion statement. An example of the significance of that step is that
this year so far Justice has sent us more than 200 separate items,
whereas last year we received only 44 separate statements when they
were sending only the original registration statements. Of even more
significance, so far this year we have commented on about 125 of
i-hose statements, that is, submitted some form of comment back to
the Justice Department; whereas in 1962 the whole of that year, we
submitted only 7 comments back to the Justice Department.
Now, the second step that we have taken is to improve the dissemi--
nation of the statements and the supplementary statements through-
out the Department. It used to be that only the desk officer of a par-
ticular country got the statement for information and comment. But,
of course, a foreign agent might approach the Department at various
levels and not only through the desk officer of a particular country
rhat he was representing or in which his client, was located. So we-
now distribute these not only to the bureau covering that geographical
area but also to the so-called functional bureaus, that is, the bureaus
whose responsibilities run throughout the Department, the Bureau of
Economic Affairs, and the Bureau of International Organization Af-
fairs.
The third step that we have taken is to instruct officers in the
Department to take the initiative in bringing to the attention of the
Justice Department any activities of foreign agents that appear to us
to be out of the ordinary. I think it is interesting that, as a result
of these instructions, we have had since Mr. Ball's testimony in Feb--
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ruary approximately 25 reports to the Justice Department emanating
from our Department concerning possible violations of the act, and
these reports have stimulated a number of inquiries by the Justice
Department into possible violations, and in some cases, corrections of
existing activity.
The final step that Mr. Ball proposed in February was that the
Department would provide a period of instruction for new Foreign
Service officers, concerning the act and the responsibility of the De-
partment with respect to it. That has been done.
We now conduct seminars in the Foreign Service Institute, and on
this matter representatives of my office, of the Justice Department
and of the Bureau of Intelligence and Research participate.
I should say more generally that responsibility for the Depart-
ment's activities with respect to the act have been centralized in the
Bureau of Intelligence and Research, and we do have now a place
which keeps our people on their toes, about the enforcement of the act.
We have one single place that is charged with that responsibility, and
it can keep the other officers active about it.
So much for a description of what we have been doing.
STATE SUPPORTS USIA AMENDMENT
There is one amendment to the act that we are supporting that, per-
haps, deserves special mention. You will recall that yesterday the
U.S. Information Agency proposed an amendment which, under cer-
tain restrictions and safeguards, would exempt official Government
information agencies from the requirements of the act, provided they
make certain information available to us, and provided we regard
them as carrying on functions that are essentially characteristic of
official information agencies, and thus entitled to be called in these
modern times diplomatic.
we support that amendment. It has been introduced at the request
of the Information Agency, and we are prepared to support it as it
now is before you.
I might say, in conclusion, I was very grateful for your remarks
about the cooperation of the Department. I must say we, especially
my own office, have enjoyed very much working with your staff on
this bill. I think it has been a constructive and helpful kind of
experience in the development of legislation. Thank you, Mr. Chair-
man.
(The prepared statement of Mr. Chayes follows:)
STATEMENT or AERAM CIIAYES, LEGAL ADVISER., DEPARTMENT OF STATE, ON FOREIGN
AGENTS REGISTRATION ACT, S. 2136
I
Mr. Chairman and members of the committee, the Department has already
written to the committee concerning its views on S. 2136. In brief, we support
the bill in its entirety.
We believe that the proposals contained in this legislation will promote the
original aim of the Foreign Agents Registration Act-public disclosure of the
activities of agents of foreign principals. It will also provide new safeguards
which have become desirable since the last major revision of the act more than
20 years ago.
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I would like to discuss briefly what the Department of State has done to better
its own practices concerning the net since Mr. Ball testified before the com-
mittee last February. At that time, Mr. Ball outlined four steps which were
being taken to tighten our procedures. First, we have asked the Department of
Justice to keep us currently supplied with copies of the supplemental and amend-
atory registration statements of each agent of a foreign principal, in addition to
the initial statements of such agents.
The Justice Department has so far this year sent us more than 200 original,
supplementary, and amendatory statements for review and comment. In the
whole of last year, when only copies of original registration statements were
reviewed, we received only 44 statements.
Of much more significance, in 1962 the Department commented on only 7
statements ; this year the Department has commented on about 125 statements.
This improved record is due in part to the fact that last June responsibility
for coordination of all Department activities concerning foreign agents and the
act was centralized in the Bureau of Intelligence and Research. That Bureau
now insures that there is adequate review of all information received by the
Department concerning agents of foreign principals and that the Department of
Justice is provided with reports concerning this information.
Furthermore, we have distributed throughout the Department and to our
embassies and consulates, a foreign affairs manual circular concerning the
Department's role with respect to the act. This circular was prepared after
consultation with representatives of the Justice Department and staff members
of the committee. I would like at this point to submit a copy of the circular for
the record. The Department has also distributed copies of the Foreign Agents
Registration Act throughout the Department and to all oversea posts.
The second step which Mr. Ball said the Department would take to tighten
its practices was to improve the method of disseminating agents' statements
throughout the Department. Previously the registration statement of an agent of
a particular country was generally seen only by the desk officer of that county.
Now, however, we circulate statements first to the geographic and then to the
functional bureaus with an appropriate explanatory memorandum. Statements
are widely distributed within each interested bureau. All are sent both
to the Economics Bureau and the Bureau for International Organizations and
to the geographic bureau which has responsibility for the country involved. For
example, to date this year the Bureau for European Affairs has reviewed over
100 statements and the Bureau for Latin-American Affairs has reviewed over 40.
In many cases the commenting officers merely report that the data in the
statements appears to be accurate and complete insofar as they know. Com-
ments of Department officers indicate that, for the most part, agents of foreign
principals generally approach officers of the Department for routine exchanges
of information, public documents, and technical guidance. We believe, however,
that the Department of Justice will find all of our officers' comments useful as
background information concerning the agents and their principals.
The Department's intensified review of agents' statements indicates that the
primary efforts of foreign agents to influence foreign policy are not through
direct contacts with Department officers, thus confirming Mr. Ball's testimony
that "we have not found that the activities of foreign agents present any serious
problems for the process of policy formulation within the Department. By and
large, the Department and its personnel do not constitute the major target for
these activities."
The third step outlined by Mr. Ball was to instruct our officers to take the
initiative in bringing to the attention of the Department of Justice any activities
of foreign agents that appear to be out of the ordinary.
We have organized a major effort to record the contacts of our officers with
agents of foreign principals and to provide the Department of Justice with this
information. We are now screening telegrams, memorandums of conversations,
and other communications for references to contact with or information about
foreign agents. In several cases communications have been exchanged with
oversea posts to obtain data for the Department of Justice.
Since Mr. Ball's testimony the Department has sent approximately 25 reports
to the Justice Department concerning possible violations of the Foreign Agents
Registration Act. As a result of these reports, we understand that the Depart-
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS 61
ment of Justice has initiated a number of inquiries into the activities of. indi-
viduals who did not register, apparently submitted incomplete or inaccurate
information on their registration, statements, or did not properly label their
political propaganda.
For example, we informed the Department of Justice that an individual was
purporting to represent a government of an African country although he had
not disclosed this fact to the Department of Justice in his original registration
statement. The Department of Justice immediately directed him to submit new
registration forms that were complete and accurate. The Department, through
our embassy in the African country, brought the agent's activities to the atten-
tion of that country's government. We were later informed that the individual
was notified by the government that he had no authority to act in its behalf.
The final step outlined in Mr. Ball's testimony was that the Department would
provide a period of instruction for new Foreign Service officers concerning the
act and the responsibilities of Department officers with respect to it. Presently
the Foreign Service Institute includes a seminar period on this matter as a
regular part of the course for each class of newly commissioned Foreign Service
officers. Representatives from the Departments of State and Justice conduct
these seminars.
COMMENTS ON USIA AMENDMENT
I would also like to comment briefly on the amendment to the Foreign Agents
Registration Act proposed by the U.S. Information Agency. This amendment
would exempt from registration official Government information offices and
their officers and staff members if they meet four requirements. First, the officers
and staff members must not be U.S. citizens. Second, all material disseminated
by them must be identified as to its source. Third, all such material must be sent
to the Department of State. Finally, their activities must be within the normal
scope of official information activities.
The Department of State supports this amendment. The U.S. Information
Agency plays a vital role in implementing this country's foreign policy. USIA
has informed us that its efforts may be seriously curtailed by foreign governments
abroad if its amendment is not enacted. If the Agency's activities were jeopar-
dized, it would be a major blow to the implementation of our policy abroad. Fur-
thermore, the Department has long thought that information services should be
recognized as part of the legitimate activities of foreign governments in this
country. For these reasons, the Department of State believes that the USIA
amendment should be adopted,
To insure adequate disclosure by the official information services of foreign
governments, the amendment would require that copies of all material dissemi-
nated by such offices, and their officials and staff members, be sent to the Depart-
ment. The Department would review this material to be sure that the name of
the foreign government involved was disclosed.
The Department would also check to see whether the material was within what
we consider the legitimate scope of an information services' activities. If, for
example, we found that the information service of a.foreign country was dis-
tributing literature. that. contained attacks on the institutions of the United
States or was designed to influence the outcome of elections in the United States,
we would take steps to have the information service either cease distributing
such material or would withdraw its exemption from registration with the
Department of Justice. In serious cases, the Department could declare individ-
uals to be persona non grata.
The Department would also obtain from the information services of foreign
governments lists of their officials and staff members, reports concerning dis-
tribution of their material,. and the names of public relations persons and firms
and other contractors employed by them. The Department would make this
information available to the Department of Justice.
In this way we could, I believe, Obtain adequate disclosure of the activities of
the information services of foreign governments and at the. same time, provide
adequate recognition of the fact that these services are within the normal role
of foreign governments.
Iv
In conclusion, I would like to state the Department's view that the,-hearings
concerning the Foreign Agents Registration Act, and the proposals which have
resulted from them, are an example of legislative leadership in a significant area.
25-690---63-5
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62 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
The purpose of the act-public disclosure of the activities of foreign agents--is
an important one. We believe that the legislation proposed by the chairman and
Senator Hickenlooper will promote that purpose and that it will provide a num-
ber of new and desirable safeguards as well.
The CHAIRMAN. Thank you very much, Mr. Chayes.
I believe you came in just after Mr. Dean started his testimony. You
have had considerable experience in this area. I wonder if you would
care to comment upon his suggestions or, perhaps, one would say, his
fears, that this proposed legislation is too broad with regard to the
ordinary commercial or professional relationship between law firms
and foreign clients.
Mr. CHAYES. Well, of course, I have not had the chance to study
it from that point of view.
As a matter of fact, I was just exchanging a comment with my
assistant, Mr. Ehrlich, as Mr. Dean was testifying, remarking on the
wide difference in point of view from which we inside the Government,
exercising legal responsibilities, approach the bill, and the way Mr.
Dean approached it.
I think my own reaction was that this is the kind of fear or appre-
hension a careful lawyer might have in looking at the bill. I do not
think it is a full answer to say that, well, in the past it has not been that
way. Obviously, one of the purposes of this set of hearings and of the
new legislation, is to give some new impetus to enforcement activity.
As everyone has pointed out, the fact that there is an injunctive
remedy rather than a criminal remedy in the new bill is likely to make
court activity a little more frequent; and so it seems to me the real
issue is : Can you take care of this problem without doing damage
to other parts of the bill?
I have just glanced at the suggested amendments, and without want-
ing to take any position from the point of view of the Department, it
does not seem to me, for example, that an amendment saying that
"political consultant" shall not include any person engaged in the prat
tice of law solely by reason of rendering legal advice to a client of
such person, may not affect your problem too much.
It seems to me this is, as I say, the kind of thing that a cautious
and careful lawyer would try to look at in advance; if he could take
care of it in advance that would be fine; if he could not he would be
around the next day arguing with the Justice Department that the
bill did not cover him.
The CHAIRMAN. I do not expect you to give a final answer, but I
do hope in the next few weeks you might be able to give some thought
as to how you think it might be improved, if it can be.
One thing did strike me that the present law is not very different
in this respect from the proposed law, and they have lived with it.
Perhaps if it is enforced more vigorously it might cause some incon-
venience.
On the other hand, I think if it becomes a habit for people to iden-
tify their interests when they do represent a client either before the
Congress or executive branch that the curse of representing a foreign
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS 63
interest would be taken off. No one suggests it is not a legitimate
employment or a legitimate activity. All we ask is that it be out in
the open, which has not been the case in those instances which we
have actually had before this committee.
Senator Aiken, do you have any questions?
Senator AIKEN. No questions.
The CHAIRMAN. We appreciate your cooperation in this very much.
I am glad to know that the USIA and the State Department have
come together on this. We at first thought there was some difference
in the way this would be applied.
I have a few questions that, perhaps, we will try to elicit some
comments on.
FOREIGN AFFAIRS MANUAL CIRCULAR
Mr. CHAYES. Mr. Chairman, if I may, before the questions begin,
it might be of interest to the committee if I would submit for the
record, a copy of the Foreign Affairs Manual Circular amending our
regulations which we have prepared and is now in effect on the sub-
ject of administration of the Foreign Agents Registration Act.
I think it is fair to say that the development of this circular grows
out of the interest that the committee has expressed and has awakened
in us as a result of the hearings. So if I may submit that now for the
record I would appreciate it.
The CHAIRMAN. Fine. We will be glad to receive it.
(The document referred to follows:)
[Foreign Affairs Manual Circular No. 126, June 21, 1963]
ADMINISTRATION OF THE FOREIGN AGENTS REGISTRATION ACT
1. Purpose
This circular describes functions and provides procedures with respect to
the administration in the Department of the Foreign Agents Registration Act.
2. Baokground
Officers of the Department and oversea posts should be familiar with the
provisions of the Foreign Agents Registration Act and their responsibilities
under it. The Department of Justice enforces the act, but the Department of
State is charged with specific supporting responsibilities. In general terms,
officers of the Department are expected to help identify agents who have failed
to register in accordance with the act, to scrutinize agents' statements to
ascertain whether they are incomplete or inaccurate, and to help identify po-
litical propaganda which is not labeled or disseminated by agents in accord-
ance with the act.
3. Responsibilities
Responsibility for liaison with the Department of Justice, AID, USIA, and
other agencies on all matters concerning the Foreign Agents Registration Act
is located in the Bureau of Intelligence and Research (INR). All inquiries and
communications requiring liaison, coordination, signature, or clearance should
be directed to Mr. Gene F. Caprlo, Office of the Deputy Director for Coordina-
tion (INR/DDC), room 8749, extension 2097. Communications from over-
sea posts should carry the subject heading, "Foreign Agents Registration Act."
Normally, there should be no liaison or correspondence with the Department
of Justice, AID, USIA, or other interested agencies with respect to the act,
except through INR/DDC.
4. Foreign Agents Registration Aot
4.1 The purpose of the act is to require public disclosure of the activities and
expenditures of agents on behalf of foreign principals. Disclosure reveals to
the public and the Government the sponsorship of activities and expenditures
of agents of foreign principals which are meant to influence, directly or indirectly,
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64 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
domestic or foreign policies of the United States by the use of techniques out-
side normal diplomatic channels. Registration does not place any limitation on
the activities of an agent in behalf of a foreign principal and it places no stigma
on any person who registers. Rather, it is accepted that nondiplomatic rep-
resentation in behalf of certain foreign principals is sometimes necessary because
of the complexities of current international problems.
4.2 The act provides that no person shall act as an agent of a foreign principal
unless he has filed with the Attorney General an initial registration statement
and semiannual supplements to that statement; however, certain persons
are exempt from registration. Registration statements and supplements must
contain detailed information concerning the activities of foreign agents on behalf
of their principals and the financial relations between them. The act also re-
quires detailed reports on the dissemination of materials defined as political
propaganda under the act. Registrants must give notice to the Attorney General
concerning certain changes in their initial statements or supplements within 10
days after such changes occur.
4.3 "Agent of a foreign principal" includes, with certain exceptions, any per-
son, who within the United States, acts or agrees to act, as a representative
of any person or organization (including governments and political parties)
outside the United States. This definition includes, for example, public relations
counselors, lawyers, and economic consultants who represent foreign principals.
There are six general classes of agents of foreign principals who do not have to
register. The most important exemption relates to persons engaged solely in
commercial activities in behalf of foreign- principals. The definitions of "foreign
principal" and "agent of a foreign principal" in section 1. and the exemption in
section 3 of the act should be examined with particular care.
5. Coordination procedures
5.1 The Department of Justice now sends copies of initial statements, supple-
ments and amendatory statements to the Department of State for review and
comment. INR/DDC will distribute -these to. the staff assistants in the appro-
priate geographic and functional bureaus for comment. They should be circu-
lated to all officers, including the Assistant Secretary, in the bureaus who may
have any contact with or knowledge about the agents or their activities. Com-
ments should be comprehensive and Include any information about the agents
or their activities known to the commenting officers. Comments should be re-
turned to INR/DDC on a priority, basis.,
5.2 Officers approached during the course of business by any'person-who ap-
pears to be an agent of a foreign principal must inquire or otherwise determine
whether that person is registered as a foreign agent. INR/DDC should be
consulted should any question arise. All contacts (whether or not during the
course of business and whether in person or by mail or telephone) with persons
who appear to be acting as agents of foreign principals should be recorded.
Copies of significant correspondence and memorandums of conversations should
be sent immediately to INR/DDC. Officers who observe any activities of, or
sponsored by, agents of foreign principals should call them to the attention of
INR/DDC. That office will ascertain whether the activity in question has been
properly reported in accordance with the act. Copies of printed and other ma-
terials distributed by agents of foreign principals and received by officers should
be sent to INR/DDC.
5.3 "Political propaganda" is defined in the act in extremely broad terms in
-section i(j) of the act and this definition should be carefully examined. Sec-
tion 4 requires that material considered political propaganda within the meaning
of the act shall be marked or stamped conspicuously at the beginnig of such item
with a statement in the language or languages used therein, setting forth the
following:
(a) The name and address of the agent ;
(b) Information Indicating that the agent has submitted a registration state-
ment to the Department of Justice which is available for public inspection ;
(c) Identity of the foreign principal for whom distribution is being made;
(d) Statement that copies of the material have been filed with the Department
of Justice ;
(e) Statement that the filing of a registration statement does not indicate ap-
proval of the material being transmitted by the U.S. Government.
5.4 Political propaganda produced for television, radio, or movie screens is
also required to be clearly identified and labeled by the agents as material pre-
pared in the interest of foreign principals.
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5.5 The act requires that copies of political propaganda distributed by agents
of foreign principals be filed with the Department of Justice and the Library of
Congress. INR/DDC will procure copies from the Department of Justice for
officers who wish to examine them.
5.6 The FBI conducts inquiries for the Department of Justice in cases of sus-
pected violations of the Foreign Agents Registration Act. Officers of the, De-
partment are occasionally interviewed in these inquiries and should be prepared
to assist the FBI in all cases. Arrangements for Department cooperation in
these inquiries will be made by INR/DDC.
5.7 ' Officers in the Department as well as in oversea posts should be familiar
with 22 CFR 41.124, note 9, volume 9, Visas, Foreign Affairs Manual. It de-
scribes the proper handling of visa applications of certain persons who might,
while in the United States, engage in activities covered by the Foreign Agents
Registration Act.
5.8 Copies of the Foreign Agents Registration Act and the Annual Report of
the Department of Justice (which lists foreign agents by countries) will be dis-
tributed to all bureaus and embassies.
The CHAIRMAN. Mr. Chayes, what policy does the Department of
State have with regard to the hiring, as consultants, of individuals
who already are registered under the Foreign Agents Registration
Act?
Mr. CIIAYns. Well, Mr. Chairman, we have upon occasion in the
past hired persons or retained persons as consultants who, at the
same time, were registered foreign agents. I think the Department
submitted to you a list of those, and then supplemented it by a list
of others who had been hired by AID while having the status of
foreign agents.
Our policy is, of course, to consider such retention with great care,
but there are obviously some situations in which it would be possible
to hire a consultant who was registered as a foreign agent when there
would be no possibility of conflict of interest and when the services
of the person would be of great value to the Department..
The CHAIRMAN. Are there many cases of this nature?
Mr. CiIAYPS. No; there are very few. I think in the statement that
we submitted, which covered a period from January 1959 to August of
1963, there were nine. Two more were added in a supplementary
statement, and two of the originals have since resigned.
I might bring that information up to date. Mr. Sidney Cone, who
was listed in the first statement that we submitted, terminated his con-
sultant relation, I think, last week.
Mr. Lloyd Cutler was listed on our first submission. Perhaps there
is an inaccuracy there. It said he served a consultant WAE (when
actually employed) to the Under Secretary on international economic
relations problems which are.of major concern to the Government. I
think that should. be supplemented by saying that for a period from
February to June of 1963 for Mr. Cutler was a member of the In-
ternational Business Advisory, Committee chaired by Mr. Clarence
Randall which advises the Secretary on business problems.
The committee met once during that period, and Mr. Cutler at-;
tended'that meeting. What developed in that case., however, was that
there just were too many issues on which Mr. Cutler felt it necessary
to excuse himself, so he finally resigned from thecommittee entirely;
and I think now has no further connection as a consultant or as a
member of the committee with the Department.
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The CHAIRMAN. Of course, the bill does not, as you already know,
prohibit employment of this nature. It is merely a case again
of making it very clear why he is employed. I believe it says that you
must certify that such employment is required in the national inter-
est. The whole purpose of the bill is to make known who repre-
sents whom and for what purpose.
Mr. CHAYES. We have no objection to the requirement of certifica-
tion by the agency head and, indeed, we are instituting procedures now
as a regular part of our employment process, especially of consultants,
to make sure that any foreign agent relationship is disclosed as a part
of that process.
The CHAIRMAN. What is your policy with regard to individuals
who are employed as consultants and then assume employment that
requires them to register under the act?
Mr. CHAYES. I do not think it would be any different except that
they would have to disclose that to us, and I suppose under the bill a
certification by the agency head would then become necessary.
The CHAIRMAN. Do you know whether or not the same policy is fol-
lowed by the AID organization?
Mr. Cams. I do not know. We have submitted for the record a
list of consultants employed by AID who were also registered under
the act. It is a somewhat longer list than the Department's list. But
I would assume, without being specifically authorized to say so, that
AID would not find it onerous to comply with the terms of your
bill.
The CHAIRMAN. When Mr. Ball testified last February he indicated
the Department had no set policy with regard to advising foreign
governments on the hiring of Americans to act as their agents in the
United States. Is the Department still receiving requests for such
advice?
Mr. CHAYES. Well, in fact, I think perhaps more was made of that
than was justified by the fact. The Department has never received
many requests for such advice, and I think since Mr. Ball's testimony
there have been no requests and no such advice has been given, to our
knowledge.
We have, since Mr. Bell testified here, instructed our field officers to
refer such requests home and not to act on them in the field.
Now, I think Mr. Ball indicated, and it is certainly our view of this
matter? that the Department has to be very circumspect, and in ordi-
nary circumstances should not advise on these matters. Obviously
very many problems would arise if advice of this kind were sought and
given.
On the other hand, isolated occasions may arise when in order to
prevent a foreign country from being imposed on in one way or an-
other, it may be desirable to give advice even if it is only of a negative
sort.
The CHAIRMAN. You advise not to hire agents, in many cases, I
would think, where some nations think it is necessary, where it is not
necessar
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Mr. CHAYES. Yes. I was thinking of references to particular agents
or consultants.
The CHAIRMAN. That would be a very difficult function for a public
office to assume.
Mr. CHAYES. Yes, indeed.
The CHAIRMAN. I have had a little difficulty even with regard to my
own constituents on domestic matters.
STATE DEPARTMENT INFORMING FOREIGN PRINCIPAL OF AGENTS FAILURE
TO COMPLETE REGISTRATION
After the February session it was also suggested that in cases where
an agent in the United States failed to fully complete his registration
statement, the Department of State be contacted with an eye toward
their bringing the matter to the attention of the foreign principal.
Has anything like this been done?
Mr. CHAYES. I do not think we have set up a formal procedure of
that kind. However, the comments that we develop for example, in
the course of this new arrangement that I have described, occasionally
lead to something of that kind, and one example is mentioned in my
prepared statement where an individual was purporting to represent
an African government, although he had not disclosed the fact on his
original registration statement; and by our referring that back to the
Department of Justice, the Department, first of all, got him to expand
the registration statement, and then we contacted the foreign govern-
ment and found that the fellow was not authorized to represent the
African government at all.
So with both of the Departments moving on their own lines of re-
sponsibility and establishing effective communication between each
other, I think we can handle that kind of thing pretty well.
AGENTS MISREPRESENT THEIR EFFECTIVENESS
The CHAIRMAN. It seems to me this could be a very effective method
of keeping the agents in line, so to speak. I believe it is quite evident
from many of the cases we had that the representative here, the for-
eign agent, was misleading his own client as to what he was able to do
and what he actually did. If the client could be given a little objec-
tive information it would be a great help to this whole activity; don't
you think so?
Mr. CHAYES. Well, we as I say, are trying to maintain that kind of
relation with Justice, and in this particular case, and perhaps, some
others, that is exactly the process that occurred.
The CHAIRMAN. You would accept that as one of the functions that
you could perform most profitably.
Mr. CIIAYES. We have accepted it since this committee has expressed
its interest in this sort of problem.
The 'CHAIRMAN. I would think it would be very effective particu-
larly with the new countries not being familiar with the way this
Government operates.
Mr. CHAYES. That is one of the principal problems in this area.
The CHAIRMAN. During the hearings before this committee, in more
than one instance, it was clearly shown that an agent was deceiving
his foreign principal as to both his activities in the United States and
as to the attitude .of the U.S. Government. I think in at least one in-
stance the result was harmful to U.S. foreign policy.
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I think this is, as we have just said, it very important aspect of the
problem.
OVERSEA PERSONNEL CONTACTS WITH FOREIGN AGEtiTS IN UNITED STATES
During one of our hearings it was brought out that a U.S. Ambassa-
dor was working with the Xmerican agent of the foreign government
to which he was accredited in an effort to secure a U.S. Government-
financed housing project for that foreign government. Does the De-
partment have any regulations requiring personnel overseas to report
their contacts with foreign agents operating within the United States?
Mr. CHAFES. I think our new procedures do require that. One of
the problems that we discovered in our preparation for Mr. Ball's
testimony was that our personnel, both here and abroad, were not
sufficiently alert in, first, requiring such agents to identify themselves
and the source of their representation and, second, in reporting this
to a central point in the Department.
My understanding is that our new regulations require that both
from oversea and domestic posts.
Let me consult for one moment. I am informed that my answer is
correct.
The CHAIRMAN. In one of the cases I had in mind there was no
question, I think, from the testimony that the Ambassador knew of
this regulation. But of course, he was in favor of the project. But
I would think that the Department ought to take a position that our
Ambassador ought not to engage in this kind of activity.
Mr. CHAFES. Well, under the new regulations he is instructed to
report his contacts with foreign agents to the Department. Obvi-
ously,, as you say, a good deal of this activity is legitimate. I deal
with lawyers and others who are foreign agents constantly. Often
their interests are not different from those of the United States, and
if it is known who they are and who they represent, and if the appro-
priate authorities have the opportunity to make an independent judg-
ment as to what the interests of the United States require, there often
can be a fruitful collaboration between the foreigner or the foreign
principal, and also his agency, and the U.S. Government.
So that it is not desirable, I would think, and I do not think the
bill moves in that direction-it is not desirable to prohibit this kind
of collaborative activity when it is surrounded by appropriate safe-
guards.
Now, I do not know the details of the particular case you are com-
menting on, so I cannot say, whether it is within that class or not.
The CHAIRMAN. I think it was unclear as to whether the Depart-
ment knew about it.
Mr. CHAYES. That we have taken steps to correct it.
The CHAIRMAN. The act as it now stands requires these govern-
ment information offices to register.
Mr. CHAFES. Yes, Mr. Chairman.
CRITERIA FOR GRANTING DIPLOMATIC STATUS TO INFORMATION OFFICERS
The CHAIRMAN. It was suggested, as you know, yesterday that dip-
lomatic officers individually can be and have been exempted under
section 3 (a) of the act as diplomatic or consular officers.
Mr. CHAFES. Yes. For example, the press officer of an embassy
who carries on the day-to-day news briefing functions might be ex-
empted as a diplomatic officer.
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The CHAIRMAN. Can you give for the record what are the criteria
for granting diplomatic status to these officers?
Mr. CHAYES. Well, in general, it is that lie performs diplomatic-
you mean to press officers or generally?
The CHAIRMAN. Yes, information officers.
Mr. CIIAYES. Information officers. He is attached directly to the
embassy, works directly under the control and supervision of the
ambassador, and he is a part of the embassy establishment in the nar-
row sense of the word. He is a press attache like the military attache
is a military attache.
The CHAIRMAN. Does that apply to all governments?
Mr. CHAYI:S. I think we would grant credentials on those criteria to
all governments ; yes.
The CHAIRMAN. Is it possible to extend this exemption to the in-
formation office as such as opposed to the individual officer?
Mr. CIIAYES. Well, we do not do that now because the act requires
that the information service register the information service of a
foreign government. But the effect of the amendment proposed by
the USIA would be just that, to extend the immunity that now applies
to a press attache or a cultural attache to the government information
office which may carry out very similar functions.
CHARACTERISTICS OF OFFICIAL INFORMATION 'OFFICE
The CHAIRMAN. Can you. describe for us what is meant by an official
government information office?
Mr. CHAYES. Well, what is meant by it is an agency like our own
U.S. Information Agency or like the French Information Office, or
the British Information Service.. In other words, it is an agency
which is a recognized arm of the governmental establishment. It is
inside the government establishment..It is financed by ordinary
budgetary procedures coming out of public funds? and so on.
I would say, the best way to define it is that it is an agency of the
government rather as an outsider doing work for the government.
The CHAIRMAN. It was our understanding that. one of the newer
nations, I believe it was an African nation, hired a New York public
relations company which was then designated as the government in-
formation office in the United States, with a national of the foreign
government listed as the information officer.
Do you think that information office would be exempt?
EXEMPTION UNDER USIA AMENDMENT
Mr. CIIAYES. Well, it would not under this amendment because only
noncitizens can be exempted under this amendment, so that if the in-
formation or public relations office was staffed by U.S. citizens they
could not get the advantage of this exemption.
The CHAIRMAN. Then it would not be exempt ?
Mr. CHAYES. It would not be exempt under the proposed USIA
amendment. It would not be eligible for exemption under the pro-
posal of the USIA amendment.
I should stress, Mr. Chairman, the difference between eligibility
for exemption and exemption. All that the proposed USIA amend-
ment does is set up qualifications for eligibility for exemption. But,
as you will see from the terms of the amendment, there is considerable
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within the eligibility for exemption provided by the USIA
amendment.
The CHAIRMAN. I am not clear about the case of the public relations
company which is an American company if it is hired and then
designated as the government information office. I do not see how that
would be eligible as an information office, would it?
Mr. CHAYES. You are saying the office itself that would be
designated?
The CHAIRMAN. Yes.
ELIGIBILITY FOR EXEMPTION
Mr. CHAYES. Well, I am not altogether sure, in the first place, how
meaningful it would be because any member of that office who was a
U.S. citizen would still have to register. Under those circumstances
it seems to me that the Department might simply not grant the exemp-
tion in the particular case, because it would not serve the purpose of
the exemption.
The CHAIRMAN. It is the activities of that office as such that we
would be interested in, of course.
Mr. CHAYES. Yes. But what I am saying is, first of all, all the
individuals within the office, if they were U.S. citizens, would have to
register, would not even be eligible for exemption. So that the only
thing that might be eligible for exemption would be the office as an
entity.
Under those circumstances I would think it would be very unlikely
that the Department would certify that office for exemption under
this amendment. The purpose of the amendment is not to deal with
agencies of that type.
The CHAIRMAN. Would an information office made up of a group of
countries such as the one discussed by some African states, as dis-
tinguished from a single country, be exempted under this amendment?
Mr. CHAYES. The amendment in terms does not read on that., so it
would be an interpretive problem. I really have not considered that
specifically, Mr. Chairman.
You can see how you might interpret the exemption to cover it or
not. If it were carrying out the kind of activities that we regard as
basically within the diplomatic function, I would offhand see no reason
for not applying the exemption to it.
If, on the other hand, it were a tourist office and were not carrying on
the kind of information activities which we think of as part of the
modern practice of diplomacy, of course, it would not be eligible.
BROKEN DIPLOMATIC RELATIONS
The CHAIRMAN. What would be the situation of the government
information office of a country with whom we have broken diplomatic
relations?
Mr. CHAYES. If we are not in diplomatic relations with it, then
since this is part of the diplomatic establishment, as we see it., it
would either withdraw or lose its exemption.
The CHAIRMAN. It would lose its exemption.
Mr. CHAYES. I think so. The whole theory, the whole philosophy
of this amendment, is that a certain amount of press, information,
cultural aetivity has becoine t F1411 e i
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just as in the beginning commercial and economic activity may not
have been thought of as so intimately related to diplomatic activity
proper. But then gradually the pattern of diplomatic activity has
come to embrace a broader range of affairs, and now the Department
and this Government, I think, through its own policy, with respect
to the USIA, has recognized that there is a range of legitimate foreign
policy activity involving information, cultural relations, and so on.
? The CHAIRMAN. Let me see if we can sort of bring this together.
It seems to me there might be two courses that we might follow. We
would like your opinion on them. The first would call for an exemp-
tion by law for government information offices and foreign nationals
employed by them, provided their activities are recognized by the
Department of State as being within the normal scope of official
information activities
This proposal would further require the Department of State to
seek administratively from the foreign information office informa-
tion as to the details of their activities, including the names of all
those individuals employed by the foreign information office for serv-
ices and goods. In addition, the foreign information office, would
provide the State Department with copies of all the material it
disseminates.
What do you consider to be informational activities that are within
the normal scope of official information activities?
Mr.. CIIAYES. Well, I think Mr. Wilson yesterday in his statement
listed those that we, together with USIA, have agreed would fall
within that definition : Descriptive information about the people or
the scientific, educational, social, economic, political, legal institu-
tions of the country; or the. geography of the country; the distribu-
tion of speeches of the officials of the country; analysis or dissemina-
tion of the position or views of the country on current or proposed
U.S. foreign policy directly affecting that country; promotion of
exhibitions of or cultural presentations; and. a certain amount of rep-
resentational activity within reasonable limits associated with those
other matters.
The -CHAIRMAN. I think you are aware of the various methods for
disseminating information that have been disclosed during the com-
mittee's investigation. Do you consider free trips for journalists
and others to be a normal information function?
Mr. CFIAYES. Well, as I say, we believe that a certain amount of
representation activity within reasonable limits can be considered
normal.
I would think that there could be situations in which a journalist
could or might properly be given a free trip to a foreign country or
some share of the expenses be borne by the foreign country.
Senator SYMINGTON. Mr. Chairman, would the Senator yield?
The.CIIAIRMAN. Certainly.
TRIPS SPONSORED BY OTHER U.S. GOVERNMENT DEPARTMENTS
Senator SYMINGTON. In support of Mr. Chayes' position, the De-
fense Department spends a good many dollars every year giving trips
not only to journalists but other people.
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!! FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
As to whether it is done in other departments I do not know.
I only make that comment because I am sure that whatever is spent
by the State Department and other departments that have considered
it important to promote our position abroad is relatively small. I
thank the Chair.
Mr. CIIAYES. Thank you, Senator Symington. I would add only
that we do bring journalists over here in connection with our own
exchange programs.
I would distinguish sharply perhaps a mass junket of some kind
with no specific purpose in mind, and with a lot of nonjournalistic
activity, shall we say, connected with it.
But it seems to me this is the kind of thing that just has to be subject
to a rule of reason. One of our objectives is the dispersion of knowl-
edge about each other throughout the world.
The CHAIRMAN. Mr. Chayes, the point I was seeking to make was
not that these activities be prohibited but that they be made public
and be public knowledge, so that the reports of the journalists are con-
sidered in view of this activity. That is the whole theory of this law.
We are not proposing to prohibit journalists from pursuing these
activities, but if they do it, it should be reported and should be public
knowledge. Isn't that what we really are concerned about?
Mr. CHAYES. Well, I think myself that a better approach to the
problem is in connection with the reasonableness of the scale of the
activity. I do not know that simply recording in some Government
department the fact that such and such a journalist had made a free
trip to X country is going to do very much by way of public appraisal
of his further writings.
The CHAIRMAN. They went to a great deal of trouble not to disclose
it. That is quite clear. So there must be some significance to it.
Senator SYMINGTON. Would the Chair yield?
The CHAIRMAN. Yes.
Senator SYMINGTON. I must say all trips I was referring to, of the
Department of Defense, are a matter of public record, to the best of
my knowledge. - -
The CHAIRMAN. The cases we had in mind are where these trips are
given with the expectation of favorable reviews, favorable stories. As
I say, there is no intention of saying, "You shall not do that but that
if you do it that this should be on the public record." Now, it was
not on the public record in most of the cases that came to our
attention.
-
Mr. CITAYES. I certainly agree with the chairman and with the com-
mittee that it is wrong to hide the source of the financing or to take any
steps to hide it.
I was talking more specifically, I thought, to the problem of how
you would handle trips financed by a foreign government information
office under the terms of this amendment.
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS 73
The CHAIRMAN. That difficulty is what I was trying to get at. If
a trip is taken and the foreign government pays for it, should it not
be reported as part of their activities.
Mr. CIAYES. Well, of course, we have agreed that the foreign gov-
ernment would report everybody that it hires to do work for it, and so
on. I suppose it is not a very serious extension of that concept to say
that it should also report free trips.
The CHAIRMAN. Also it does not strike me that this is what you
consider a normal function of an information office, to finance trips
abroad and not report them.
Mr. CIIAYES. Well, if you add "and not report them," I would agree.
So that I do not see any objection to our requiring such reports as a
part of the general notion we have already talked about that exists
in the amendment.
The CHAIRMAN. These cases, as you know, to which I have made
reference, are where the public relations firm hired by the foreign prin-
cipal promoted and paid for the trips by the journalists with the
expectation, I am sure, of their writing very favorable reports.
Mr. CHAYEs. That, of course, if it were done by the public relations
firm, would still be required to be reported to the Justice Department.
The CHAIRMAN. Shouldn't it be if it is done by the Government
information office? It seems to me that it ought to be. The fact that
it is not a normal diplomatic function is the distinction I was seeking
to make.
Mr. CIIAYES. Well, if it is hidden I would suppose it is not and,
therefore, I would see no objection to including the names of journal-
ists who got free trips-they might be exchange visits or something
of that kind-in the list of people with whom that information office
deals or makes arrangements.
The CHAIRMAN. All activities by the Federal Government you re-
ferred to before of bringing over visitors, as being all out in the open,
are well advertised and publicized. In fact they like to publicize them,
Mr. CHAYES. But I am not sure though that the foreign reader,
when he reads a particular piece by a particular journalist in his local
? newspaper, knows that that journalist has just been on a visit to the
United States at the expense of the U.S. Government.
The CHAIRMAN. In many cases I have seen where the article is
carried more or less with the idea that the writer has had a special
opportunity to observe. No effort is made to conceal that fact that
I know of. Normally it is the opposite.
Mr. CHAYES. I think the main point of the disclosure is to enable
us to see that the activity is kept within reasonable bounds rather than
being used as a sort of flooding technique.
IS DISTRIBUTION OF FILMS A NORMAL INFORMATION FUNCTION?
The CHAIRMAN. Do you consider the giving away of films to be a
normal information function?
Mr. CIIAYES. Assuming that the content of the films falls within
these classes that I have already listed, and assuming further that the
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74 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
source of the film is labeled, it does not seem to me that there is any
necessary inconsistency between film distribution and normal informa-
tion function.
The CHAIRMAN. Particularly if its source is labeled. That is the im-
portant thing.
Mr. CRATES. Yes. As you see, the amendment proposed requires
that the matter disseminated shall be identified as being disseminated
by such foreign government.
The CHAIRMAN. That is right.
Mr. CRATES. So we would require, in order to maintain the ex-
emption, that the material disseminated be labeled as a government
originated product.
The CHAIRMAN. Would these films have to be filed with the De
partment ?
Mr. CRATES. Yes. The amendment proposed requires also that
they shall be filed with the Department of State. We would have to
review the films as well as written or printed material to see that they
fall within these categories that we regard as normal diplomatic in-
formation activities.
The CHAIRMAN. Do you consider the payment to syndicates for the
placement of editorials to be a normal information function?
Mr. CRATES. I would have serious doubts about that; and, again, of
course, if the editorial is produced or is a product of that office, it
would have to be identified as such, and maybe that would destroy the
value of the payment anyway.
The CHAIRMAN. You know how it was done here. They just pur-
chased editorial materials which were then distributed to many small
papers, about 1,200 to 1,500.
Mr. CRATES. The fact that the whole purpose of such an arrange-
ment would be to dissemble the source of material, it seems to me,
makes it inconsistent with this amendment which requires that the
source be identified.
The CHAIRMAN. I agree with you. I just wanted your views about
it.
Mr. CRATES. Therefore, it would not fall within this exemption.
The CHAIRMAN. That kind of activity would not be a normal in-
formation function.
Do you consider the subsidization of publications, whether directly
or through purchase of a substantial share of the subscriptions, to be a
normal information function?
Mr. CRATES. Well, it all depends on what kind of publications.
For example, we, as you know, distribute Amerika one of the best
picture magazines in the United States, but we distribute it in Russia.
The CHAIRMAN. That is clearly labeled as your production.
Mr. CRATES. That is right.
The CHAIRMAN. But that is not the case I had in mind at all. A
case I had in mind was a publication which is not produced, but pur-
chased by the Government. We had one case where 50 percent of the
subscription list was purchased by the foreign principal and distrib-
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uted, in effect, free to various people of their choice. It was obviously
not labeled because it was not produced by the Government.
Mr. CHAYES. Well, there again there are problems of degree. For
example, I can conceive of a foreign government seeing an article
in a magazine that it believes is extremely favorable to it or gets
across a point that it wants to get across. I can see that it might
buy up a lot of copies of that particular issue and distribute it. I
do not know that we do this, but one of the things that you might
want to do as an information officer was to show that some independent
source of opinion.
The CHAIRMAN. Suppose, the case I had in mind was a magazine
that is struggling along and is not too profiable. They just agree as a
regular matter to take 50 percent of their subscription regularly.
That is a form of subsidization, is it not?
Mr. CIIAYES. If what is involved is an effort without disclosure to
promote the government's line through a particular publication by
means of a subsidy to it, then I believe that is not a normal function
and, again, because of the provisions of the proposed exemption re-
quiring disclosure would be disqualified for the exemption.
FURTHER QUESTIONS ASKED OF WITNESS
The CHAIRMAN. I have a few more matters here which we will sub-
mit to you in writing. The Senator from Missouri has to leave, and
we will have to go to the floor, so I will desist at this moment. The
staff will submit these to you for the record so that you can supply
the answers for the record.
Mr. CHAYES. I will be very glad to respond, Mr. Chairman.
The CHAIRMAN. What we are trying to do is to clarify this amend-
ment so there will be as little misunderstanding as possible in the
future as to what we mean by it and what is required by it. There
has been some suggestion that the law has not been clear, and' it was
not known exactly what was allowed and what was not allowed, and
whether registation of certain activities was required.
We will excuse you now unless you have something further you
would like to say.
Mr. CHAYES. No. I myself and my staff will be at the disposal of
the committee for these purposes.
The CHAIRMAN. The staff will be in contact with you and if we
can improve and clarify this law, we will.
Mr. CHAYES. Thank you very much, Mr. Chairman.
(A further communication from the Department of State appears
in the appendix.)
The CHAIRMAN. The next witness is Mr. Klein, Mr. Julius Klein, of
Chicago.
Mr. Klein has requested to be heard on this bill. You may proceed,
Mr. Klein.
Senator SYMINGTON. Mr. Chairman, inasmuch as I will not be able
to stay through the statement, some 14 pages, would the Chair allow
me to refer to a letter that Senator Morse has written me, because he
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
had to be out of town today, and then make a very few comments on
my own?
The CHAIRMAN. Certainly.
Senator S YMINGTON. Thank you, Mr. Chairman.
The distinguished senior Senator from Oregon has written me a
letter which takes issue with some of the recommendations made by
General Klein with respect to the bill under consideration. However,
the Senator emphasizes that he has known General Klein for many
years, 19 years to be exact, and that he has a high regard for his in-
tegrity and his efforts to follow any legislation under which he oper-
ates.
One statement, one sentence, in his letter :
I wish to repeat that, on the basis of the friendship that has existed between
us for 19 years, it causes me to believe that he is a highly honorable man.
As mentioned there, Mr. Chairman, he goes into some detail with
respect to his disagreements with the proposed amendments to the
legislation recommended by General Klein.
Speaking for myself, and because this matter is basically one of
interest to General Klein, first I want to express my opinion about
these hearings. They have been constructive, and we have found
people who, in my opinion, should not have been operating the way
that they were operating and therefore any comments that I make
are in no sense a criticism of the hearings. I congratulate the Chair
on much of what has been accomplished to date.
So far as General Klein himself is concerned, as I understand it,
he has had some unfortunate publicity in foreign countries, which
has unfairly represented the result of his appearance before the com-
mittee, and also the committee's conclusions with respect to his ac-
tivities.
BACKGROUND OF GENERAL KLEIN
I also have known General Klein for some 18 years. We worked
together in the Department of Defense under the late great Secretary
of War, Robert Patterson.
General Klein was a colonel first, then a general on the Secretary's
staff. At that time I was Assistant Secretary of War for Air and
he was a liaison between the Office of the Secretary and the then Army
Air Corps.
I also knew him through his close friendship with the late Senator
Robert Taft who was a true student of airpower, as we all know.
General Klein also operated as liaison between Senator Taft and the
Army Air Corps before it became the U.S. Air Force.
I concur in what Senator Morse has said. I believe General Klein
an able and honorable American, who has served his State of Illi-
nois in significant positions well in the past, and he has also served the
Nation in positions of trust.
I would hope that anything he believes this committee has done to
hurt his position with some of his clients abroad, that he realizes,
based on what he showed me and Senator Morse yesterday, that this
was not a fair interpretation of the committee's hearings.
Mr. Chairman, I am grateful to you for letting me make this state-
ment at this time. I would like to remain to listen to the presentation
of General Klein, but must be on the floor at 12 o'clock.
The CHAIRMAN. The committee has no authority to meet beyond
12. We will have to adjourn at 12, so the Senator may do as he likes.
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FOREIGN AGENTS REGISTRATI A
Senator SYMINGTON. I ask unanimous consent, Mr. Chairman, that
Senator Morse's letter be made a part of the record.
(The letter of Senator Morse referred to follows:)
U.S. SENATE,
COMMITTEE ON FOREIGN RELATIONS,
Noeeiriber19, 1968.
I-Ion. STUART SYMINGTON,
U.S. Senate, Washington, D.C.
DEAR SENATOR SYMINGTON : It will be impossible for me to attend the Foreign
Relations Committee meeting tomorrow morning, November 20, at which Maj.
Gen. Julius Klein is scheduled to testify on S. 2136.
In view of our conversation today, I would appreciate it very much if you
would ask permission in my behalf to insert this letter in the record of the hear-
ing tomorrow morning.
First, I wish to make some comments about Klein himself, and then I want to
make a statement in regard to the arguments he has advanced in his prepared
statement in opposition to S. 2136
I have known Julius Klein for the 19 years that I have been in the Senate. I
knew him all the time I was a Republican, as well as during the period I have
been a Democrat. He has been a public relations man during that period of time,
representing various clients on many matters. I have always found him to be
completely nonpartisan in any of the representations he has ever made to me in
regard to any subject matter in which he was interested in his capacity as a pub-
lie relations man.
I also have always found him to be honorable, and I have never known him to
misrepresent facts about any issue or attempt to deceive me. On some matters
involving his public representations, I have disagreed with his position and op-
posed his recommendations in carrying out my duties as a Senator. On other
occasions, I have concluded that the facts have supported his position, and in
those instances, I have favored his side of some given legislative issue.
I am very sorry that his work as an adviser to the West German Government
which has been under investigation by our committee apparently is receiving
bad headlines in Germany as the German newspaper stories which you and I
talked about today indicate. I am satisfied that in connection with any service.
Mr. Klein rendered the West German Government as a public relations agent
in the United States, he performed that service with full disclosure to the Ger-
man Government as to the representations he was making in behalf of that
Government in the United States and did not knowingly or intentionally engage
in any illegal action.
As he points out in his statement, the term "foreign agent" has a negative
connotation in the minds of many newspaper readers and undoubtedly the
newspaper stories concerning our committee's investigation of the activities
of foreign agents may have caused many people to assume incorrectly that serv-
ices rendered the United States by American representatives of foreign govern-
ments who function in the capacity of public relations representatives' neces-
sarily carries with such work negative connotations. However, in my opinion,
that is neither the fault of the Foreign Relations Committee nor of the law. It
is one of those risks relative to public reaction that anyone working in this field
must necessarily run.
I do not think that our Foreign Relations Committee is subject to any
criticism because of the fact that representatives of foreign governments- act-
ing under the Foreign Agents Registration Act of 1938 may have suffered
some criticism or injury to their professional standing as a result of the com-
mittee of the Senate carrying out its clear duty to try to find out what has been
going on under the administration of the Foreign Agents' Registration Act of
1938. In one respect, it is somewhat similar to the risk that anyone runs as a
result of a grand jury indictment.
There is no doubt about the fact that no matter how innocent one's conduct has
been in regard to any matter, if it develops that the grand jury issues an indict-
ment which later is either quashed or a petit jury acquits, there is no doubt about
the fact that the person indicted has been injured. iSometimes, I refer to such
situations as part of the price of being freemen. Freedom comes high, but it
is worth the cost.
I feel that so long as representatives of foreign governments conduct them-
selves honorably and properly within the law, the facts concerning their record
will stand up against any investigation or inquiry into their course of conduct.
25-690-63-6
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
On the basis of any information I have received to date, I am sure that
Mr. Klein's record in carrying out his public relations work will support the
representations he has made in his appearances before the committee.
I wish to repeat that on the basis of the friendship that has existed between
us for 19 years, it causes me to believe that he is a highly honorable man.
Now a word about Mr. Klein's prepared statement in opposition to S. 2136.
I find myself in disagreement with a good many of his criticisms of the bill.
It may be that before we finish the markup of the bill, some of his criticisms
and those of other witnesses should cause us to modify the bill. However, I do
not think that his major criticisms are sound.
I refer particularly to the specific comments he makes an pages 5, 6, 7, and
8 of his prepared statement. As an introduction to the specifics he lists on
those pages, he says, "Would legislation really control the bad ones?" In this
reference, he is referring, of course, to agents representing foreign governments.
I think most of his comments on this point constitute non sequitur arguments.
Murder laws, of course, do not stop murders, but all of us are a lot safer with
the murder laws, and we have fewer murders than we would otherwise have.
I know of no law that will control the bad ones, to use Mr. Klein's phrase, if any
individual is determined to flaunt the law.
However, I do know that our hearings show that the Foreign Agents Regis-
tration Act of 1938 is very much in need of amendment, and I think S. 2136 is a
move in the right direction. I am perfectly willing to consider any proposal
that will improve S. 2136, but I feel that Mr. Klein's prepared statement repre-
sents too much of an ignoring of the serious defects which have developed under-
the operation of the Foreign Agents Registration Act of 1938. ?
Incidentally, I think some of those defects would never have developed if the
Department of Justice had lived up to its clear responsibilities of effective
administering of the law. Nevertheless, effective administering of the Foreign
Agents Registration Act of 1938 will not resolve many of the defects which
have been shown by the hearings of the Foreign Relations Committee to exist.
Therefore, I shall continue to support amendments of the Foreign Agents
Registration Act of 1938 along the lines of S. 2136.
I think that the prepared statement which Mr. Klein will give at the hearing on
November 20 deserves very careful analysis by the committee in the markup
of the bill in order to doublecheck and make certain that the final bill will not
be productive of some of the shortcomings that Mr. Klein fears. But I do think
that we must see to it that the agents representing foreign governments are
required to operate under full public disclosure for all their activities, because
in a democracy there is no substitute for full public disclosure of any activity
that affects the public interest.
I am sorry that I cannot be at the hearing, but I shall appreciate very much
your making this letter a part of the record.
With warm personal regards,
Cordially,
WAYNE MORSE.
The CHAIRMAN. Mr. Klein, do you wish to submit your statement
for the record and to comment on it?
STATEMENT OF GEN. IULIITS KLEIN, CHICAGO, ILL.
General KLEIN. Yes, Mr. Chairman.
I appreciate the statement given by Senator Morse and Senator
Symington, and I am deeply grateful.
I have prepared a statement, but I realize the chairman's time is
limited, so I most respectfully request that my statement, which has
been given to the committee, be made a part of the record.
The CHAIRMAN. That shall be done.
General KLEIN. Thank you, sir.
I would like to read a brief statement on a matter of personal
privilege. I would like to associate myself, Mr. Chairman, with the
statement made by Ambassador Dean.
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General KUnN. I would like to associate myself with the statement
presented this morning by Ambassador Dean, who is the head of the
Law firm of Sullivan & Cromwell, and has been associated for many
years with the late John Foster Dulles. I think Ambassador Dean
has better expressed his views than I ever could, and I think he covered
also the field of public relations in his statement, and I fully agree with
him.
Mr. Chairman, I have tried to give you my views regarding your
bill which I have submitted right now, and my reasons for believing its
enactment in its present form will not be in the best interests of the
United States. I have pointed out where I can envisage that foreign
private businesses will not employ persons to represent them in the
United States because of the provisions which would require their
representatives to register and reveal details of the business of their
principals and that this could result in American isolation economi-
cally, politically, and militarily.
As a matter of personal privilege, I would like to state that I have
been personally hurt, businesswise, by the publicity which has resulted
from the committee hearings during the past few months and by the
announcement of November 4 regarding the present public hearings.
You will recall, I am sure, that the release of November 4 announced
that with publication of the hearings of the committee, which covered
my testimony, the investigative hearings of the committee on the
activities of nondiplomatic agents of foreign principals was concluded.
The same release announced, also, the hearings on S. 2136 which are
presently being conducted. In addition, the same release contained
an expression which has been interpreted by many segments of the
press, foreign as well as domestic, as personal criticism against me
by the entire Senate Foreign Relations Committee.
I am confident that the implication in that portion of the release
was not intended as personally harmful to me by the chairman, who
made the statement, but was intended to show why the committee
chairman feels it necessary to amend the present registration
legislation.
IIowever with your kind permission I would like to show you a few
samples of iow misinterpretation was given to that statement.
The United Press International which first released the story was not
factual. The Associated Press story was. The UPI took immediate
corrective measures, as did the New York Times, Chicago newspapers,
and other U.S. papers in the United States, for which I am grateful,
but the German press still features these attacks on me which are not
in line with what actually took place at the executive hearing or sub-
sequent to that hearing.
I have before me some of the newspaper stories from the German
press, such as the Hamburg Echo of November 5, 1963, which stated
in headlines that the Foreign Relations Committee of the U.S. Senate
criticized me and severely labeled me as a lobbyist under attack of the
Senate committee.
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I have another clipping from the Frankfurter Neuepresse with
headlines of the same date, which read, "Serious Charges Against Gen-
eral Klein by the Foreign Relations Committee of the Senate in Re-
gard to Klein's Lobbying Activities."
I could go on and quote you many more articles which were dis-
patched from Washington news services and rewritten and distorted
and then attributed to the Senate Foreign Relations Committee, per
se, criticizing and condemning me.
I am glad that the New York Times and other U.S. newspapers cor-
rected that, including the UPI wire service, corrected the original dis-
patch, but you know a correction never gets the same coverage or
space as the original dispatch. I am also grateful for the letter from
the assistant managing editor of the New York Times informing our
offices of the correction. I would like to cite an excerpt from a letter
which I have just received from a, distinguished Democratic member
of the Foreign Relations Committee who was present when I testified.
It was not Senator Morse, Senator Humphrey, or Senator Symington.
He wrote :
I am sorry indeed for the embarrassment you suffered from unjustified pub-
licity. As you say, the correction seems never to overtake the erroneous first
impression or charge. From your long years In public or semipublic service I
know this is not an entirely new experience for you, no more than it is for me.
Even so, this offers but little consolation. Your friend.
Of course, I agree with the observation of your colleague who is a
member of your committee.
APTITUDE OF EUROPEAN PRESS TO WITNESS
As a matter of information, certain segments of the press, particu-
larly in Europe, have for months printed articles derogatory to me as
the result of the committee hearings. The radio and press behind
the Iron Curtain has especially attacked _ my role, a role of which I
am very proud. In fact, long before the hearings were started, a dis-
torted and out-of-context article, which was published over a year ago
in one of our leading news magazines, was the opening of a pandora's
box for hostile elements of the West German press. When I say,
"hostile press," I .am referring to publications in West Germany which
were unfriendly to the Adenauer administration and to our own U.S.
foreign. policy. There is no mystery to the fact that I have maintained
a close, personal relationship, over a number of years, with Chancellor
Adenauer and, also, with a number of his official staff and his close
associates.
I have also enjoyed a close personal relationship with a great num-
ber of people in Germany-industrialists, financiers, lawyers, teach-
ers, doctors of medicine, ordinary citizens and, of course, with persons
who have belonged to parties not alined with the Adenauer party.
However, I can say without fear of contradiction that I have never
by voice or other actions indicated what my feelings might be in re-
lation to partisan politics within that country. And, of course, neither
have I discussed partisan politics of my own country when I am abroad.
While abroad I have supported at all times the interest of the United
States, irrespective of whether we have a Democratic or a Republican
administration.
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As an example of the ridiculous limits such distortions can go, I
call your attention to a November 7 policy statement by the German
Socialist Party.
Basing its action on the reports of this committee's hearings, the
Social Democratic Party is requesting that I be investigated in Ger-
many for anti-Kennedyism and un-Americanism.
Does this mean I am to be investigated by a foreign parliament for
-Kennedyism? And as the result of these hearings?
anti
This is the height of absurdity. When I present myself to foreign-
ers I present myself, not as a Republican, not as a Democrat, but as
an American, supporting my President and my country's policy. This
is well known, and has never been questioned-until now. And the
only reason it is being questioned is because of the distortions that
have resulted from this committee's hearings. The same statement
says that the anti-American campaign in Germany, which apparently
was instigated by me, should also be investigated. I think this is the
place to do the investigating, and this committee has been more than
fair to me; so was the chairman, which I appreciate.
MISINTERPRETATIONS IN GERMAN PRESS ALLEGED
Many German press distortions occur because of faulty translations
or because certain words and expressions, as used in the United States,
mean something quite different when put into German language.
For example, the word, "hearing," as we in this country understand
it, means an investigative process for obtaining information. In Ger-
many, that word and the word "investigation," stand for something
far more ominous and are synonymous with a court trial.
Certainly, the implication is clear to Germans that a hearing or an
investigation is tantamount to a trial for a criminal offense. Nat-
urally, this false interpretation has given additional ammunition to
those who would be glad to add a bit of distortion to an item even
though its meaning might be perfectly clear.
I fully realize, Mr. Chairman, that you or your committee cannot,
be lie] d responsible for purposeful distortions, misinterpretations, and
misuse of out-of-context excerpts, but I am sure you must admit that
I have a right to be disturbed when a published release by the commit-
tee chairman contains, a statement which can readily be interpreted not
only as a reflection on me, but also upon his fellow Members of
Congress.
I refer in this instance to the release of November 4, which says :
The hearing again discloses how a foreign agent, by exaggeration, or misuse
of his relationship with Members of Congress, can for his own purposes create
for foreign governments, officials, or business interests a mistaken and sometimes
unflattering picture of how our governmental institutions function.
The implication in this statement is that I have been able to dupe
Members of Congress, as well as my foreign clients, and because they
have been duped, they must be dupes, a rather unflattering statement
in itself and, certainly most unfair to all concerned.
I am proud to have the friendship and respect of many Members
of Congress and I am sure, Mr. Chairman, that not a single Member
will state that I have ever taken advantage of such friendship. I
certainly believe that this hearing should be the medium for inform-
ing the Members of Congress, and the public as a whole, that ethics do
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9FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
exist within the Halls of Congress and that Members of Congress are
responsible adults who are fully capable of resisting being duped.
Perhaps this revelation might even be broadened to include those
who also have ethics and are the accepted friends of Members of
Congress. I have never had the privilege of personal association with
you, Mr. Chairman, and, therefore, am unable to determine what
might be the basis for your personal opinion on this subject of
duping.
However, I can heartily disagree with your published statement
even though I must respect your right to express your views as you
hold them. Your voice is a powerful and respected one, both here
and abroad.
Another matter to which I object as unwarranted and even unethical
is the inclusion in the printed hearing of the portions of my testimony
pertaining to contracts and dealings with my commercial clients. The
publication of this portion of my testimony, which I asked to be de-
leted, has been particularly injurious to me and to my clients and
there are no political implications in those portions. However, there
is little doubt that this information will prove highly beneficial to
my clients' competitors, as well as those of myself, and I am sure
they will take advantage of this windfall.
I understand that certain high officials in the present administration
were actively registered in the past as foreign agents. However,
there have been no reports that they were cited as "horrible" exam-
ples of foreign agentry. Having been singled out, I cannot help but
wonder why cases have been overlooked, particularly by the press.
I do not know to what extent you or your commitee will go to, bring
clarification to points of question, such as I have tried to illustrate,
but I can assure you that it would be most helpful to me if certain
clarification could result. I know that corrective action by the com-
mittee would have healing effects on some of the wounds that have
been caused in Germany and could be beneficial in advancing the mu-
tual interests of the United States and that country.
And if I may add a rather personal note, it might even help me sal-
vage some of my German accounts and continue to bring good Amer-
ican dollars into the United States. I am proud to represent German
industrialists, to promote trade to and from the United States and
I know that the work I have been doing has been to the best interests
of America.
I hope the committee, in its wisdom, will see the desirability of facil-
itating trade between the United States and Germany and will not
adopt measures which can only hamper. I would like to see an expan-
sion of trade between Germany and United States and I believe this
is what you, too, have been promoting.
Also, I would like to see the ties between our Nation and our NATO
allies strengthened.
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And, now as a closing thought, it was my privilege to be in Frank-
furt, Germany, 2 weeks ago on the occasion of the dedication of the
monument to the late Gen. George C. Marshall. I was an invited
guest as were the chairman and other members of the Senate Foreign
Relations Committee. It was enlightening to witness the high regard
in which the Federal Republic holds the members of this committee
and its distinguished chairman. The newly elected Chancellor
Erhard and the German people were most pleased with the presence of
these Members of Congress as well as that of Mrs. Marshall and
Secretary of State Rusk.
General Marshall was my colonel 30 years ago and my dear friend
for many years. He served in Chicago as our colonel instructor. I
have deep sentimental ties to the late General Marshall. His former
aide, Gen. Kenneth Buchanan, who is sitting right next to me, is the
vice president and general manager of my company, has been asso-
ciated with me since his retirement from the service.
I am proud to say that at the time of the announcement of the dedica-
tion of the General Marshall monument, my Frankfurt office enthusi-
astically supported this project from the beginning.
I thank you, Mr. Chairman, for your consideration, and do hope
whether we agree or not that you will accept my statement with the
belief that I helped this committee and you, Mr. Chairman, in order
to bring about clarification and protect the interests of the United
States. Thank you, Mr. Chairman.
(The prepared statement of. General Klein follows:)
STATEMENT OF THE VIEWS OF MAJ. GEN. JULIUS KLEIN (U.S. ARMY RETIRED),
REGARDING S. 2136
Mr. Chairman, I am Julius Klein of Chicago. I am the head of the firm bear-
ing my name, Julius Klein Public Relations, Inc., an international public relations
organization with offices in Chicago, Washington, New York, Los Angeles, and
Frankfurt-am-Main, Germany, and with active associates in Vienna, Paris, and
Manila.
I request that this statement, which expresses my views regarding S. 2136 a
bill to amend the Foreign Agents Registration Act of 1938, as amended, be incor-
porated as part of the official record of the hearings to be conducted by the
Senate Foreign Relations Committee during the period of November 19 to 21,
1963. I feel that I am qualified to make this personal statement because of
my experiences in foreign fields and because I have been registered to. represent
foreign principals under the provisions of present legislation.
I request that my views be given committee study and will appreciate your
consideration of this request.
The hearings which were conducted by the Senate Foreign Relations Com?
mittee during the past few months on the two subjects: "Nondiplomatic Activi-
ties of Representatives of Foreign Governments," commonly known as foreign
agents, and "Lobbying," have brought forth many important as well as con-
troversial points. Unfortunately, many sectors of the public have gained the
impression that the hearings were based on the inquisition of individuals, and
not on acquisition of sound information which could be useful in determining
whether or not changes are warranted in existing legislation pertaining to the
two subjects. Unfortunate, also, is the fact that it was the opinion in many
quarters that the committee failed to make clear the fact that two distinct sub-
jects were being studied and let the, impression stand that foreign agents and
lobbyists are one and the same thing.
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
The present hearings, which relate to S. 2136, should at least clarify the above
point and bring out that the two subjects have no relationship to each other,
except when a person might be registered to perform duties under both cate-
gories. The latter is not common, but even if it were it would still be advisable
that official interpretation of the two designations be issued and further con-
fusion eliminated in the public thinking that the two are synonymous. I think
the matter is comparable in importance to that of determining whether or not
existing legislation needs changing.
In approaching study of S. 2136, 1 cannot suppress or reason out the ques-
tion, "Is there anything wrong with present legislation on the subject which
cannot be cured by providing the Department of Justice with sufficient personnel
to properly administer it?"
In spite of this pertinent question, I have attempted to evaluate S. 2136 from
the viewpoint as to whether or not its enactment will be to the best interests of
the United States. There is a definite element of doubt in the matter for the
simple reason that it involves foreign relations to a major degree and can estab-
lish precedents whereby other nations can duplicate its terms through retaliation
or simply because we have shown the way. Are we prepared to bring forth
either duplication or retaliation as being to our best interests? The answer
would seem to be an obvious "no."
I can agree that in the case of some nations retaliation would have little mean-
ing, particularly whenthose nations are communistic by ideology, or are too weak
to take a definite stand either for or against communism. Certainly, in the case
of all such nations it is not only desirable but a necessity that we have effective
controls over the activities of their agents in the United States.
However, we are closely associated in many fields of activities with nations
that are "on our team." politically, economically, and militarily, but the terms
of S. 2136 make no provisions for distinguishing friend from foe and all are
treated as suspect insofar as the activities of their nondiplomatic representatives
are concerned. I think it most unfortunate that such suspicion must 'apply to
our friendly allies, which it does by making its representatives fully suspect.
Is there to be no trust amongst friendly nations ; are we to trust our friends on
the battlefields, but not in nondiplomatic exchanges of political and economic
views ; are we approaching the period when not only paid nondiplomatic repre-
sentatives of foreign principals, but also opinion formers, through speeches or
written words, will be forbidden to mention any political activities of our allies ;
and we are prying loose the lid of a Pandora's box which will bring foreign
retaliations and prohibitions against American citizens presenting American
views, even in friendly foreign lands?
I think it unnecessary to detail the countermeasures which other nations can
easily adopt in keeping with the retaliatory aspects of the proposed legislation,
but by no means do I offer fear of retailiation as a reason why the presently
proposed legislation should be made more realistic. Nor do I question that
reasonable control should be provided over those who were paid to represent
foreign political principals, but I do question the wisdom of trying to kill
a flea with a nuclear bomb, or even a 12-gage shotgun.
It may be true that there have been representatives of foreign principals
who have worked against the best interests of our country in trying to justify
their fees, but I am absolutely confident that the vast majority of representa-
tives have gone the other way and unquestionably have placed the interests
of the United States completely above those of the foreign principals. Cer-
tainly, this is true of those who represent our allies, allies with whom we work
on equal terms in mutual efforts to strengthen the common cause. Is every for-
eign nation, regardless of any alliances which may exist with us, to be treated
in full suspicion and immediately judged guilty of some heinous crime because
It might try to present its political views through other than diplomatic
means?
Or is the "flea" we are trying to eradicate the representative of a more
specific type of nation and are the activities of that representative so covert
that we must completely kill the activities of all foreign representatives in
order to get at him? Does he, for example, get his fee from some country
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because he is able to extract sums of money from the United States in the form
of foreign aid? If such might be the case would it be impossible to provide
practical legislation which would prohibit foreign aid money, or the moneys of
such countries, from being paid for this type of representation? Is the little
beast the agent of a country not friendly to the United States and holding the
objective of overthrowing our form of government?
WOULD LEGISLATION CONTROL TIIE BAD ONES?
If this should be the case it is doubtful that such a person would ever register
under any foreign agent laws and legislation to control him would never find
him enrolled. Would legislation really control the bad ones? Most unlikely.
May I refer directly to S. 2136 and quote as follows :
Line 6, page 1: "(b) The term `foreign principal' includes"-
Line 6, page 2: "(3) a partnership, association, corporation, organization,
or other combination of persons organized under the laws of or having its
principal place of business in a foreign country."
Line 13, page 2: "(1) any person who acts as an agent, representative, em-
ployee, servant or in any other capacity at the order, request or under the
direction or control of a foreign principal or of a person any substantial
portion of whose activities are directly or indirectly supervised, directed, con-
trolled, financed or subsidized in whole or in part by a foreign principal, and
who directly or through any other person"-
Line 24, page 2: "(ii) acts within the United States as a public relations
counsel, publicity agent, information-service employee or political consultant
for or in the interests of such foreign principal ;"
Line 7, page 3: "(iv) within the United States represents the interests of
such foreign principal before any agency or official of the Government of the
United States; and * * *."
Line 20, page 8: "(e) It shall be unlawful for any person within the United
States who is an agent of a foreign principal required to register under the
provisions of this Act to transmit, convey or otherwise furnish to any agency or
official of the Government (including a Member or committee of either House of
Congress) for or in the interests of such foreign principal any political propa-
ganda or to request from any such agency or official for or in the interests of
such foreign principal any information or advice with respect to any matter
pertaining to the political or public interests, policies or relations of a foreign
country or of a political party or pertaining to the foreign or domestic policies
of the United States unless the propaganda or the request is' prefaced or accom-
panied by a true and accurate statement to the effect that such person is regis-
tered as an agent of such foreign principal under this kct."
REPRESENTATIVES IN UNITED STATES OF PRIVATELY OWNED FOREIGN FIRMS
Before going into explanation as to my reason for quoting these passages, from
S. 2136, permit me to discuss briefly the matter of representatives within the
United States of privately owned foreign businesses, including manufacturing,
transportation, financing, extracting natural resources, etc. Many such busi-
nesses employ American representatives to keep them informed on political
and economic trends within the United States and on such matters in other
parts of the world as reflected in the United States. Such representatives have
frequent need to consult with Government agencies to obtain information or
material that is available to the public in general. Also, they may, on occasion,
be requested to consult a Government agency to present matters of informa-
tion which may pertain to their clients. Normally, all such activities would be
related to economic matters and hold no political implications, but it has often
been said that the fine line which divides international politics and economics is
often most difficult to discern.
Regardless, however, whether the problem might be purely economical or
related in some manner to politics, the cold fact remains that every American
representative of a foreign business, under the provisions of S. 21.36, will have
to register as a foreign agent if he is to have contact with any agency of Govern-
ment. The quotes from S. 2136 clearly state this, but I truly wonder if the
significance of the requirement has been thoughtfully considered by those who
drafted the proposed changes to the act.
What does this really mean? I can answer that question through personal
knowledge. It means that foreign businesses will reject. the idea of having
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business expenditures open to public knowledge, including that of their com-
petitors, as will be revealed when their representatives register as foreign
agents, and will discontinue employing American representatives. Perhaps the
sting could be removed to a measurable degree if the details of registration
were maintained as classified information and not be open to public scrutiny.
Certainly, I believe this point deserves careful consideration.
Is this something over which we should show serious concern? I think it is.
Initially, such representatives will lose their clients and with their fees
eliminated certain amounts of money that have been coming into the United
States will be cut off. However, these are most minor points and carry insig-
nificant weight in evaluating what the best interests of the United States may
be.
What is of major significance is the resentful attitude toward the United
States which will inevitably develop among foreign businesses and the con-
clusion in official government circles of the foreign countries that none of a
country's private enterprises should do business within the United States. The
loss of imports, which might result, could, of course, work to some advantage to
the United States by reducing American amounts of money which go out of our
country for payments for those goods. However, will there be any guarantee
that American exports will not be reduced in proportion, or are we naive enough
to think that trade can be a one-way street alone? As I see it, the only con-
clusion which can be reached is that through this proposed legislation the
United States can reach a status of economic isolation.
But there can be little separation of economics and politics and there is ample
evidence to prove that foreign political policies are based as much on economic
considerations as they are on those that are purely political in nature. Also,
military policies have their foundation in matters which relate both to economics
and politics and it is not difficult to envisage that an economic isolation would
rapidly lead to similar isolations, politically and militarily. Naturally-and
the explanation seems most superfluous-when I refer to politics I speak only
of politics as practiced between governments and, certainly, have no reference
to partisan politics within our own family. But even at that, strong partisan
opinions, pro and con, could easily result with the envisaged isolation of our
country as the base on which such partisan politics could develop. Nor is it
hard to believe that the exchange of such opinions could have serious effects in
our relations with our allies.
PRESIDENT'S LETTER OF SEPTEMBER 1946 WITHDRAWN
The basic Foreign Agents Registration Act of 1938 provided an exemption
from registration for a person whose foreign principal is a government of a
foreign country the defense of which the President deems vital to the defense
of the United States, although this exemption was removed by the President
by letter dated September 30, 1946. The act further provided exemption from
registration for a person engaged only in private, nonpolitical, financial, mercan-
tile, or other activities in furtherance of the bona fide trade or commerce of
such foreign principal. This latter provision would be changed by the provi-
sions of the amendments presently under consideration in the event any of the
activities conducted in the interests of the principal might require contacts with
any agency of our Government. I think it of major importance and to the best
interests of the United States that the President's letter of September 30, 1946,
be withdrawn and the exemption privileges to which it referred be reinstated,
and that exemption continue to be provided for the American representatives
of foreign private businesses located within the countries that would be covered
by the President's action. There are a number of minor points for criticism
in existing legislation which are continued in the subject bill. For example,
the requirement for labeling all material issued by a registrant when such
material may be only a reprint from the Congressional Record. Present labeling
requirements tend to establish the registrant as the one who prepared the
material. Many points could be given study to establish clarification, etc.
Now why, one might ask, would a foreign nation-or industries within that
nation-wish to be represented In the United States when it already has an
embassy and various consulates established here? The answer lies in the
word "protocol." There are very definite and prescribed limits as to. what
constitutes the proper duties and functions of a diplomat.
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Diplomatic protocol is an uncodified system of regulations and customs for
political interchange. It dictates not only by whom and to whom things are
said but how and what is said. It prescribes channels and procedures. The
system evolved over a great number of years largely in eras of slower com-
munication and lesser events. Its insufficiency is demonstrated by the recent
suggestion that a direct line be placed between the White House and the
Kremlin.
Nonetheless, it is and remains the system whereby nations communicate
through official representatives. But these persons, enjoying as they do official
capacity, can rarely speak or communicate unofficially. Their voice is unmis-
takably that of the government they represent. Their occasional errors in
judgment become the errors of their government and are usually irreparable.
Nandiplomatic representatives are unfettered by protocol. They can repre-
sent their client or interest in all segments and levels of society in which they
operate. They are not limited to presenting their client's position to their
counterpart.
1 cannot authoritatively describe the activities of firms similar to mine, but
I can endeavor to give you an outline of the services which Julius Klein Public
Relations, Inc. offers to its oversee clients. Mainly, these clients are in West
Actually, I think of my company as a foreign agent in reverse. By that I
mean we believe we are doing as much for the United States as for our foreign
clients. Our services not only bring dollars into the, United States but provide
our oversea clients with reliable up-to-the-minute information on American
economic and political trends and attitudes.
I would say that most of our activities have been directed at advising our
German friends on how best to present their problems to the United States and,
in turn, to make them understand similar problems within the United States
in regard to matters of commerce, trade, and tourism. Of course, the overall
picture of the Soviet Government action in Berlin, as well as overall economic
issues, their effect on political issues and the Reed for alinement with U.S.
and NATO policies are matters which are also stressed. For this reason, we
maintain our office in Frankfurt, staffed with skilled people. It is one of the
biggest expenses we have in connection with our activities.
In addition, we try to arrange a. proper reception if and. when important
German political, civic, or business leaders visit the United States, and vice
versa. These visits, as history will reveal, are of the utmost importance in
the relationship between countries. That these visits be timely and well pre-
pared and received requires an acute awareness of the political and economic
atmosphere in both countries.
May I point out, also, that my company does not lobby for any legislation in
Congress. We exert no influence on policymakers but adhere to established
policies in foreign affairs, policies which we try to explain, to our oversee clients.
Reviewing our experiences over the past few years. I believe we can gay that
we faithfully served our Nation, the United States, In its dealings with Germany
by advocating, for example, investment in the United States and Canada by
German industry and similar policies of international friendship. Corollary
activities are the promotion of the foreign aid program and the attempt to
achieve better understanding in Germany of our balance-of-payments problem.
I would like to explain what I said in a speech in Wiesbaden on April 25 to
the group that engaged me to handle their public relations. I made it clear that
the internal political affairs of Germany are of no concern to me, but that I am
vitally interested in seeing Germany and the United States work harmoniously
in established policies-that the interests of my own country, the United States,
come first at all times. My German clients understand and respect this. I am
sure you will also agree with this position.
I received many letters after my speech, including one from a most distin-
guished banker who said (translation) :
"* * *. You not only impressed me deeply but also all those present with your
significant statement that, as far as you are concerned, once you are away from
your own country-the United States-your position, irrespective of party affilia-
tion or beliefs, is that of an American for America. This is an expression that
we Germans should with all energy take notice of and adhere to."
S. 2136 is of interest to American business and to the several organizations and
associations which exist to further the interest of American businesses. For
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
that reason, I hope that concerned organizations, such as the National Associa-
tion of Manufacturers, the U.S. Chamber of Commerce, the American Bar Asso-
ciation, the Public Relations Society of America, etc., will make their views
known so that the committee can weigh S. 2136 In the knowledge that it has been
presented to concerned groups for reactions as to whether or not its enactment
will be in the best interests of the United States.
SUGGESTED CHANGES IN PROPOSED AMENDMENTS
In summary, let me present my own reactions and suggestions as to how I
think this legislation could be beneficially changed :
Frankly, I do not think S. 2136, as presently written, is to the best interests of
the United States. Therefore, I suggest that consideration be given to the
following changes :
1. That the President's letter of September 30, 1946, be withdrawn and a list
of friendly nations be prepared which would meet the qualifications for exemp-
tions as listed prior to that letter ;
2. That with the publication of such a list the requirements be withdrawn for
registration by American representatives of those nations and their native pri-
vately owned businesses ;
3. That registration of American representatives of foreign nations and their
private businesses be required only in the case of nations that maintain com-
munistic ideologies, neutral nations, nations that engage in aggressive military
or political activities, nations that might lend encouragement to the overthrow
of the American form of government or advocate the overthrow of a nation
friendly to the United States, nations that are receiving aid from the United
States except those deemed by the President as vital to our own economic and
military well-being, and those that intentionally avoid discharging their obliga-
tions and commitments to the United States, or engage in unlawful seizure, con-
fiscation or expropriation, without proper compensation, of the properties of the
American Government or of its citizens ;
4. That a more expressive and less offensive term be adopted to replace
"foreign agent" (and that the committee by proper action advise the public that
there is no relationship between those who register under the provisions of the
Foreign Agents Registration Act and those who register with the Houses of
Congress as lobbyists).
5. That registration requirements of whatever legislation is enacted establish
a classification on all information pertaining to fees, activities; etc., for repre-
sentatives of privately owned foreign businesses and not make this information
open to public scrutiny.
6. That labeling requirements, whether in existing legislation or that to be
enacted, exempt from labeling the reprints of public material, excerpts from
newspapers, magazines or other publications, releases of speeches ; etc., except
where the material has been prepared and issued by the registrant himself.
(This would eliminate labeling such material as reprints from the Congressional
Record,`and the daily press.)
Mr. Chairman, I have tried to give you my views as to why changes to the
Foreign Agents Registration Act should abolish suspicion and restore dignity
and standing to reputable foreign nations, to the private businesses within
those nations and to the persons who might be employed to further the views
within the United States of those nations and their private enterprises.
I certainly do not think the present bill, S. 2136, will accomplish these. purposes.
My views are based completely on the conviction that my suggestions, if accepted,
will be to the best interests of the United States. I suggest that the committees
in both Houses of Congress responsible for legislation concerning foreign relations
and commerce activities, as well as the executive branches of our Government,
consider what effect the bill will have on the American economy and on American
foreign relations if such precise legislation were to be enacted by the Parliaments
of England, France, Germany, Switzerland, the Scandinavian. and other friendly
countries.
It is my considered opinion that this should be weighed very carefully. As
stated previously these countries will have a right to consider their interests,
also, and such legislation affects their Industrial, economic, private and political
relations with the United States.
I sincerely appreciate the opportunity to make my views known to your com-
mittee and I hope I have been able to make a contribution to its study.
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The CHAIRMAN. The Senate is in session, Mr. Klein. I think the
published record speaks for itself, and my statement was based on
the record.
It was my understanding that this morning your request was to
testify on the bill, but in any case, I will accept your second statement
for the record. Thank you very much.
General KLEIN. Thank you very much, Mr. Chairman.
The CHAIRMAN. The committee is adjourned to 10 o'clock tomorrow
morning.
(Whereupon, at 12 noon, the committee was recessed, to reconvene
at 10 a.m., on Thursday, November 21, 1963.)
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
THURSDAY, NOVEMBER 21, 1963
UNITED STATES SENATE,
COMMITTEE ON FOREIGN RELATIONS,
Washington, D.C.
The committee met, pursuant to recess, at 10:10 a.m., in room 4221,
New Senate Office Building, Senator John Sparkman presiding.
Present : Senators Sparkman and Aiken.
Mr. SPARKMAN. Let the committee come to order, please.
We are expecting other Senators later, but I think we should start
before they arrive.
Today we are continuing the final series of hearings before the Sen-
ate Committee on Foreign Relations in its study of activities of non-
diplomatic agents of foreign principals. We conclude today our three
days of hearings on S. 2136 introduced by Senator Fulbright and
Senator Hickenlooper, which amends the Foreign Agents Registration
Act, and corrects some of the apparent abuses disclosed during the
course of the committee's investigation.
Our first witness this morning is Mr. Ward B. Stevenson, president
of the Public Relations Society of America.
Mr. Stevenson, we welcome you here this morning. I understand
you have a prepared statement. Actually I have a copy of your state-
ment which will be printed in the hearings in its entirety. You may
read it, summarize it, or discuss it in any way you see fit.
For the benefit of the record, it would be appreciated if you would
identify the gentleman who accompanies you.
STATEMENT OF WARD B. STEVENSON, PRESIDENT, PUBLIC RELA-
TIONS SOCIETY OF AMERICA, INC., ACCOMPANIED BY FRANCIS
K. DECKER, COUNSEL
Mr. STEVENSON. Thank you, Mr. Sparkman.
I am Ward Stevenson of New York City, president of the Public
Relations Society of America, and vice president of the public rela-
tions firm of Dudley-Anderson-Yutzy of New York City.
I am accompanied by Mr. Francis K. Decker, who is the legal coun-
sel of the Public Relations Society of America.
I do have a prepared statement which is actually relatively brief,
and I will o through it quickly, with your permission, Mr. Chairman.
Senator SPARKMAN. Very good.
DESCRIPTION OF PUBLIC RELATIONS SOCIETY
Mr. STEVENSON. The Public Relations Society of America was
formed in 1948 and now has 4,475 individual members in the United
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
States and 125 members in 33 foreign countries. Within the United
States, we have 52 chapters located in the major metropolitan areas
of the country. This society is a professional association whose znemn-
bers are accepted only on individual merits and qualifications. We
have no firm, corporate or institutional memberships.
In order to qualify Yor membershipp in the society a public relations
practitioner must have a reputation for ethical conduct and integrity,
shall be free of affiliation with any subversive organization, and must
have devoted a major portion of his time for a period of not less than
5 years to the practice of public relations at an executive level. He
must be a recognized public relations executive at the time of his
admission to the society and have administrative responsibility for
public relations activities in his own organization. Teachers of pub-
lie relations are eligible, as are public relations people who have only
1 year's administrative or executive experience. The latter are ac-
cepted on an associate level until they meet the 5-year requirements.
Approximately 60 percent of our members are executives in charge
of public relations for business and industrial firms. About 1,200 of
our members are public relations counsel representing clients on a
fee basis. The remainder are public relations officers for institutions,
health and welfare agencies, government agencies, hospitals, colleges,
and universities.
SUPPORT OF BILL WITH MISGIVINGS
With respect to Senate bill 2136 which will amend the Foreign
Agent Registration Act of 1938 as amended, in general, we would
favor and support the proposed changes largely because they serve
to clarify and strengthen the present law.
We do share some of the misgivings concerning the possible effect
of these amendments that were expressed to the committee yesterday
by Mr. Dean of Sullivan & Cromwell, particularly those which, it
seems to us, might involve the requirement to register as a foreign
agent even though one was simply representing a U.S. corporation
with foreign subsidiaries.
We share Mr. Dean's view that this could require almost everybody
to register, and thereby dilute the whole effect of the Foreign Agents
Registration Act.
Now, we note particularly that section 3 (d) of the present law would
be amended so as to specifically exclude a public relations practitioner
engaged in the furtherance of bona fide trade or commerce. We think
this is wise. We think this might avoid some of the difficulty Mr.
Dean was talking about yesterday, I am sure. We also note with a
great deal of approval that S. 2136 would add to section 7 of the pres-
ent law a paragraph (a) which coincides with paragraph 12 of our
code of standards of professional practice.
But, in summary, our members, with the qualifications that I ex-
pressed with regard to what Mr. Dean said yesterday, our members
would find noting unjust or unworkable in the amendments you
propose.
EFFORTS MADE TO POLICE ETHICAL STANDARDS
While the Foreign Agents Registration Act is important to the
Nation's interests they do not believe that it is possible to legislate
the responsible and proficient practice of public relations performed
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on behalf of either foreign or domestic principals. We who make our
living in the public relations business believe we have an obligation,
therefore to do an effective job of regulation-not just in the public
interest, tut in our own. We are the ones who suffer first when pub-
lic relations work is done in an inept or irresponsible way. I will
describe briefly how we are endeavoring to develop, strengthen, and
police the standards by which public relations work is done.
Each member must subscribe and adhere to our society's specific
17-point code of professional standards and there are judicial proce-
dures for enforcement of the code. The original code was adopted in
1954 and revised in 1959. The code is available in printed form to
anyone who requests a copy. I have copies with me if the committee
staff would like to have them.
NINE-MAN GRIEVANCE BOARD
We have a grievance board of nine men who are charged with the
responsibility of investigating any situation where a member of the
society may have been guilty of violating any one of the code's 17
points. As a matter of fact, this grievance board is reviewing the
testimony heard by your committee to determine whether there is any
evidence of code violations.
This board has also reviewed the recent SEC report with the same
purpose in mind. If the grievance board believes violations may have
occurred, it presents its findings to a judicial panel of the society.
The judicial panel holds hearings on the complaint after which it
renders an opinion to the society's board of directors. The board of
directors makes the final decision on what action should be taken. It
may dismiss the complaint if violation is not proved. If violation is
proved, the board may censure, suspend, or expel the member depend-
ing on the type and degree of violation.
Because we are so concerned about increasing the competence and
standards of public relations performance we are, this year, launch-
ing an accreditation program whereby a public relations man will have
to meet stringent requirements of experience and professional con-
duct and, in addition, pass both written and oral examinations before
receiving accredited status from the society.
DOES PUBLIC RELATIONS WORK HAVE SINISTER IMPLICATION?
Despite our determination to enhance our standards of responsibil-
ity and proficiency, we who work in public relations are disturbed
over imp lications heard in many quarters from time to time that there
is something sinister. about public relations work. We who work in
public relations are the last ones to believe that the opinions of free
men can be manipulated. Free exchange of opinions, open discussions
of ideas and expressions of diverse points of view all constitute the
very fabric of a democratic society.
Those who believe that public relations work involved the manipu-
lation of men's minds for sinister or unwholesome purposes simply
don't know any thing about public relations, and also apparently lack
respect for the dignity of the individual in a free society.
Public relations activity, and the use of public relations techniques,
is one of the characteristics of a free, democratic society. Put more
succinctly, in any society where there is free speech and where public
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opinion is the motive power for progress, there will be public relations
work to do.
Our concern and purpose in the Public Relations Society of America
is to be sure it is done properly and effectively. Thank you, Mr.
Chairman.
ONLY ORGANIZATION OF ITS TYPE IN THE UNITED STATES
Senator SPARKMAN. Thank you very much, Mr. Stevenson.
Is there any other organization in the country parallel to yours,
similar to yours, or are you the only such organization?
Mr. STEVENSON. We are the only national public relations organiza-
tion. There are some others that are specialized. The railroad public
relations people and some of the financial public relations people.
There was another national organization up until about 2 years afro.
and we merged with them, so we are the only ones left now.
DISCIPLINARY PROCEEDINGS AGAINST VIOLATORS
Senator SPARKMAN. In the bylaws of your association, article 13
provides for disciplinary proceedings which may be brought by your
organization against members for the violation of your code of pro-
fessional standards. You discuss that some in your paper. I wonder
if any proceedings under this article have resulted from disclosures
made during the course of the committee's hearings. Or did you
intend by the statement contained in your paper that the grievance
board is reviewing the hearings at the present time and has not yet
taken any action?
Mr. STEVENSON. It has proceeded beyond that stage, Mr. Sparkman.
The grievance board is now reviewing the testimony, has been review-
ing the testimony, ever since you began to gather the testimony.
Now, beyond that in one case the grievance board decided that there
had been a violation, based on the testimony before this committee, and
presented it to a judicial panel, I should say we have several panels
which, that are regional instead of one national, therefore, a member
is heard in front of a panel of persons in his own region. So the
grievance board, having decided that there had been a violation in
at least one case, instituted disciplinary action against the member,
and that was heard before a panel and we are awaiting the decision of
the panel in that case.
Senator SPARKMAN. I think you mentioned in your paper some of
the disciplinary actions that may be taken. Would you mind restating
them, the sanctions for violation of the code of professional ethics?
Mr. STEVENSON. May I have the question again? What action have
we taken in the past?
Senator SPARKMAN. I say what are the actions that may be taken
under your standards?
Mr. STEVENSON. I see.
We have three alternatives, Mr. Sparkman. We may censure, we
may suspend, or we may expel.
Senator SPARKMAN. You mentioned all three of those in your paper.
Mr. STEVENSON. That is right.
Senator SPARKMAN. Does that constitute the punishment now? In
other words, you either would find the person not guilty or, if guilty,
then you could take any one of those three actions?
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Mr. STEVENSON. That is correct, and we will soon now be able to
do a fourth.
Senator SPARKMAN. What is that?
Mr. STEVENSON. Which would be with our accreditation program.
If an accredited member of the society is found guilty of violating
the code, we may remove his accreditation. That will give us a fourth
remedy.
SOCIETY MEMBERSHIP PREREQUISITE TO PRACTICE
Senator SPARKMAN. Is membership in your organizaiton a legal
prerequisite to the practice of the public relations profession in any
State?
Mr. STEVENSON. No, Sir.
Senator SPARKMAN. I know in some associations, as the legal asso-
ciation, or the medical association, many States require membership
in order to carry on in the profession. You do not ?
Mr. STEVENSON. No, sir.
Senator SPARKMAN. Rule 4 of your code provides, and I quote:
A member shall not represent conflicting or competing interests without the
express consent of those concerned, given after a full disclosure of the facts.
I wonder how you interpret this provision for members of your
organization who specialize in representing political interests of for-
eign countries? For example, would a member who undertook to
represent South Africa and Nigeria be in conflict with this rule if he
failed to disclose to one of the parties his representation of the other?
Mr. STEVENSON. With the qualification that the president of the
society does not really interpret the code, the judicial panels do that,
with the understanding that I am now speaking really quite unofi-
cially about the code. I would say, Mr. Sparkman, in the example
you give, yes, there would be a conflict of interest there between
Nigeria and South Africa.
Senator SPARKMAN. I used those two instances because they seem
to beat opposite poles. But suppose there were two friendly countries.
If there had been no disclosure to either one of the countries that he
represented the other, would that change it?
Mr. STEVENSON. Well, it would, of course, depend on the circum-
stances. But certainly where a member of the society represents for-
eign principals there is the possibility of a conflict of interest, and the
responsibility is on the member to make very sure that where a con-
flict of interest arises he notify both of his principals to get their
approval to proceed, and if they do not approve, then he has got to
withdraw from one or the other of the assignments.
Senator SPARKMAN. Yes.
Section 12 of your code provides, and I again quote :
A member shall not propose to a prospective client or employer that his fee
or other compensation he contingent on the achievement of certain results ; nor
shall he enter into any fee arrangement to the same effect.
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As you know, we are contemplating a similar provision in the pro-
posed bill that we have under consideration with respect to persons
engaging in political activities on behalf of foreign clients. I wonder
what you deem to be the reasons for having such a provision.
Mr. STEVENSON. The use of contingent fees in our business, Mr.
Sparkman, leads to abuses, such abuses, for example, as a strong temp-
tation to attempt to corrupt the channels of communication, such
abuses as misrepresenting results to the client.
Senator SPARKMAN. I wonder if I may interrupt to ask just what
you mean by channels of information, corrupt channels of informa-
tion.
Mr. STEVENSON. Channels of public communication.
Usually when you have a contingent fee a public relations man has
one way or another promised the client that "you do not have to pay
me unless I can produce a certain amount of time or space on some-
thing involving the channels of public communication," and having
done that, having made that kind of a contingent arrangement, then
there is too strong a temptation, we think, on the part of the practi-
tioner to do a lot of things-you cannot do it too well in this country,
but in other countries you can do things to corrupt the channels of
communication.
There is a temptation, if you will, in one way or other to try to
bribe the people who are really managing public communication.
Another reason for this provision in our code is that as a practical
matter a public relations man cannot undertake to guarantee results.
All he can really do, if he is honest in this business, is to promise to try
to produce results. He cannot ??uarantee them.
Senator SPARKMAN. Did you keep up with the hearings with refer-
ence to the sugar legislation?
Mr. STEVENSON. No, sir, I did not. I am aware of them.
Senator SPARKMAN. Where there were a good many instances of con-
tingencies.
I wonder if, under your definition of corrupting channels of public
communication, what your attitude would be toward using channels of
newspapers through stories that had been written in a slanted way, but
published as news without any labeling. Would that be a corruption
of public communication or a tendency to do so?
Another instance would be where newspaper editors were taken on
a luxurious outing or trip to some foreign country and given slanted
stories, with the thought that when they return they would write the
stories pleasing to the country represented and visited.
Would that fall within your description of corrupting channels of
public communication?
Mr. STEVENSON. I think I should say, first, in response to that, that
this whole business of corruption depends very much on the editor
and I know many editors who could not be corrupted under any cir-
cumstances no matter what kind of trip they were taken on.
Senator SPARKMAN. Of course, I realize the term "corrupt" is a
pretty strong term, and yet under the definition that you gave for
corrupting public communication, I thought that it had a rather broad
interpretation.
Mr. STEVENSON. Yes.
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Let me try to be more responsive to what I think you are getting
at here.
We, of course, have another provision in the code that says that a
member shall not engage in any practice which tends to corrupt the
integrity of the chanels of public communication. Therefore, we will
decide such cases as you are talking about entirely on the evidence
that we gather at our hearings.
It is possible, yes, sir, that taking newspapermen overseas, on some
junket for no -purpose other than to persuade them to write some story
could be a violation.
On the other hand, taking newspapermen overseas and allowing
them to come back and write whatever they please and write it as they
see it, might not be. It depends entirely on the circumstances of the
case, and we have to deal with each of these individually.
I will say that it is something that concerns us. Now, as to whether
identifying a principal whom you represent, when you present mate-
rial to a newspaperman or to anyone else engaged in public com-
munication, as far as that goes, we think we have an obligation to
do that. We must be prepared, to identify our principal when we are
dealing with anybody, in dealing with public information. In fact,
we have so amended our code now as to say so.
However, once we have identified our principal and presented this
material to the editor nor whoever it may be, then he takes the respon-
sibility for it from that time on. He decides whether or not to use it.
Ile decides in what form to use it, and he decides where and when to
use it.
Senator SPARKMAN. On this question of contingent fees which we
have been discussing, has your association, to your knowledge, ever
enforced that provision?
Mr. STEVENSON. Which provision is this, Senator?
Senator SPARKMAN. A member shall not propose to a prospective
client or employer that his fee or other compensation be contingent
on the achievement of certain results, nor shall he enter into any fee
arrangement to the same effect.
Mr. STEVENSON. Yes, sir.
Senator SPARKMAN. Has there ever been any action to enforce
that?
Mr. STE, VENSON. Yes, sir; there is a case now pending that involves
that particular rule.
Senator SPARKMAN. Do you think it will be well for us to include
in the bill a provision to the same effect that you have in your code
of ethics?
Mr. STEVENSON. We would have no objection to it, and we think it
would be well for you to do it. You have such a provision, I believe,
in the bill.
Senator SPARKMAN. In the bill, yes. I stated we had a provision in
the bill, but we wanted to know what you thought about our retaining
it in the bill.
Mr. STE, VENSON. We would go along with it.
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OREIGN AGENTS REGISTRATION ACT AMENDMENTS
Senator SPARKMAN. Section 8 of your code of standards provides,
and I quote :
A member shall not make use of any organization purporting to serve some
announced cause but actually serving an undisclosed special or private interest
of a member or his client or his employer.
A situation which might be covered by this section was brought
out in one of the hearings of this committee. A group purporting
to be composed of Americans of foreign descent, interested in this
Government's attitude toward their ancestors' country was, to all
appearances set up by a public relations firm employed by the foreign
country.
I wonder whether this would be a situation covered by section 8
of your code, assuming these to be the facts of the matter?
Mr. STEV ENSON. Our grievance board now has under active con-
sideration the conduct of a public relations firm or a member of the
society, based on the testimony that was elicited before this committee.
We are going to find out, in other words, Mr. Sparkman.
Senator SPARKMAN. In other words, you are going into it?
Mr. STEVENSON. Yes.
PRIVATE NONPOLITICAL PUBLIC RELATIONS ACTIVITY
Senator SPARKMAN. Would you give us an idea of what you con-
sider to be a public relations activity that was private, nonpolitical,
and in the furtherance of bona fide trade and commerce? I believe
that is the statement you have used.
Mr. STEVENSON. Yes, sir. I would say public relations activities
carried on for a foreign principal, the purpose of which is to help
him develop his market for his products in the United States per-
haps a market for his securities in the United States.
Certainly when the foreign principal is a private business firm, not
a government, not a firm supported by a foreign government, cer-
tainly it would be true in that case.
I think even under certain circumstances a promotion of tourism
would come under that provision.
You see, we are getting, Mr. Sparkman, to the day when there will
be multinational companies, and there are going to be business firms
that will not, really have any nationality. They tivill be owned by per-
sons of many nationalities. They will be managed by persons of many
nationalities and, indeed, they will serve many markets. We are begin-
ning to see it already.
When the activities of such a firm are nonpolitical and are entirely
commercial, dealing with trade and commerce and the sale of its goods
and services, then it seems to us that the public relations activities on
behalf of such a firm carried on within a number of countries ought
to be recognized as part of bona fide trade and commerce.
Senator SPARKMAN. Suppose they were dealing with tariff mat-
ters. Would that fall within the same category?
Mr. STEVENSON. I would believe that once you get into tariff then
you are affecting legislation, and I would say that you would then be
required to register. But I am not a lawyer. I would ask for legal
adviceatthatpoint.
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
Senator SPARKMAN. All right. Thank you, Mr. Stevenson, both of
you. We appreciate your testimony.
Did you have anything to add, Counsel?
Mr. DECKER. Mr. Sparkman, I think Mr. Stevenson has covered the
points. I think we are glad that you pointed out certain provisions
of our code as having our attention in connection with enforcement
procedures.
Senator SPARKMAN. We certainly appreciate your testimony. I
think it is very helpful. Thank you very much.
Mr. STEVENSON. Thank you very much.
Senator SPARKMAN. Our next witness will be Mr. Rodolphe J. A. de
Seife. Will you come around, please.
You have a prepared statement?
Mr. DE SEIFE. Yes ; I do.
Senator SPARKMAN. I have a copy of it. You handle it as you see
fit, either read it or summarize it or discuss it. It will be printed in the
record in any event.
Mr. DE SEZrE. I think I would rather discuss it, Mr. Sparkman, with
your permission.
Senator SPARKMAN. Very well.
STATEMENT OF RODOLPHE J. A. DE SEIFE, ATTORNEY AT LAW
Mr. DE SEZrE. I would like to thank the committee, first of all, for
the opportunity to address it.
My name is Rodolphe de Seife. I am a partner in the law firm of
Hart, Moss & Tavenner here in Washington, D.C., and I have an office
in Paris, France.
As I stated in my statement, Mr. Sparkman, we have never repre-
sented foreign clients who, in any way, were connected with govern-
ment. I have represented-I am representing-foreign clients in the
United States primarily in court cases, but also in some Government
board proceedings, quasi-judicial proceedings. We are representing
several American firms abroad. Some of these firms are the so-called
multinational firms that Mr. Stevenson was just mentioning. They
are owned, in general, 60 percent by American principals, 40 percent by
foreign principals.
What I am worried about with this proposed bill S. 2136, which, in-
cidentally, I would like to state for the record I do endorse-I mean I
endorse the objectives of the bill-certainly is the fact that the lan-
guage now is going to be so broad if it is not carefully analyzed and
maybe somewhat redrafted, it will be so broad that it will include the
bona fide practice of law, representing foreign private principals as
opposed to principals who may be government owned or sponsored.
I tried yesterday to elicit some information from the Department
of Justice on their stand and, typically, I got no satisfaction. This
is why I am here this morning, Mr. Sparkman, to ascertain that this
legislation did not intend to cover what I call the bona fide practice
of law before courts and administrative boards and agencies, because
if this were the case, in many of these cases that we handle, the finan-
cial remuneration is, frankly, not sufficient to warrant the bother
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OREIGN AGENTS REGISTRATION ACT AMENDMENTS
of having to register, besides which my partners in my firm and I do
not relish the connotation of being known-and this has nothing to
do with the substantive part of it-but we just do not like the idea
of being called foreign agents.
As a matter of fact, I have refused the opportunity of representing
foreign government-connected- principals on that basis, Mr. Sparkman,
and I intend to continue to do so.
STIGMA OF "FOREIGN AGENT" LABEL
Senator SPARKMAN. May I interrupt right there; I am a little
curious why you would not like to be referred to as a foreign agent
or certainly as one representing a foreign government. Some of the
outstanding lawyers in this country have represented foreign govern-
ments and, apparently, never resented the fact being known that they
did represent them.
Mr. Thomas Dewey, who ran for President twice, so far as I know
has never objected to it.
Former Secretary of State Dean Acheson, and the present Under
Secretary of State George Ball, are among innumerable very fine
lawyers of law firms throughout the country who have not felt any
stigma attached to it. I just wonder why your reaction is as it is.
Mr. DE SI,IFE. Well, Mr. Sparkman, I know, as a matter of fact,
personally several such very prominent citizens, and a couple of them
I can call friends.
What I really said is that in our particular practice, and with the
type of clients that we represent, some of them might 0b' -et to our
being known as foreign agents. I personally have no objection to
being called a foreign agent if what I am doing is right insofar as
my conscience is concerned.
Does that answer the question ?
Senator SPARKMAN. Yes; it does. I was just a little curious.
Mr. DE SEIFE. I would like to add this, however : If I were to be
engaged in anything that is not what I considered to be the practice
of law then, I think, it is perfectly proper to register. I am just
trying to confine my comments to the practice of law as I see it.
Senator SPARKMAN. At this point I wonder if I might ask you to
elaborate somewhat on the phrase "bona fide practice of law." May
I say that we have had the same suggestion from Mr. Arthur Dean, as
you know, and I just wonder if you would elaborate some on your
interpretation of the term "the bona fide practice of law."
Mr. DE SEIFE. I am sorry that I missed Mr. Dean's testimony. I
respect him very greatly and probably, if I had known about it, I
would have associated myself with his comments.
Senator SPARKMAN. Mr. Dean's firm, Sullivan & Cromwell, of
which the late Mr. John Foster Dulles was a partner, has had extensive
foreign practice, including, I believe, the representation of govern-
ments.
Mr. DE SEIFE. I want to make sure, Mr. Sparkman, that there is no
question, I am not casting aspersions on them. I say we are repre-
senting some types of American clients who might object to the term.
Senator SPARKMAN. Yes; I understand.
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Mr. DE SEIFE. And since they are good clients-if we get better
clients, I suppose we might change some of our views-but, of course,
we have not gotten any better clients than the ones we have right now.
So far as the practice of law is concerned there is, to me, a distinc-
tion between trying to influence legislation or trying to promote legis-
lation and simply representing the interests of a foreign principal,
primarily a private individual or corporation, before a court or in a
quasi-judicial proceeding before a board or a Government agency, let
us say a foreign contractor before the Armed Services Board of Con-
tract Appeals, for instance, something like that.
It, is a quasi-judicial proceeding.
We present facts, we talk about interpretation of the law, and we
win the case or we lose it, it makes no difference. I mean we do not
take anybody out for tea or we do not take him out for free plane rides
or anything else. I mean, this is just the normal practice of law.
I believe, Mr. Sparkman, that you are a lawyer yourself, and I
think as lawyers we know what the practice of law is concerned with.
We also know what is meant by political consulting in this country
or what is meant by public relations. I mean those things are not
quite the same. Unfortunately, a lot of lawyers call themselves law-
yers and they are not lawyers. They are primarily propagandists.
REPRESENTATION OF PRIVATE FOREIGN CLIENTS EXEMPTED
With respect, to the bill, I would like to suggest that some language
be added to section 3 of S. 2136, which is an amendment to the present
22 United States Code 613 (d) to include the word "legal" after "public
relations."
Senator SPARKMAN. That is on page 7 of the bill.
Mr. DE SEIrE. Yes, sir; and then to add a new paragraph (q). I
repeat again these are just suggestions. I am not a draftsman of any
note, but I would like to see some language in the bill which would
state that the bona fide practice of law by American lawyers before
courts or agencies or departments representing private foreign prin-
cipals is not covered, is exempt under this bill.
Now, I have two more suggestions.
Senator SPARKMAN. You say representing foreign clients?
Mr. DE SEIrE. Representing private foreign clients. My secretary
missed the word "private."
Senator SPARKMAN. I understand. You mean representing private
clients before any court, agency, or department of Government of the
United States.
Mr. DE SEIrE. That is right.
Senator SPARKMAN. You would limit your exception to that?
Mr. DE SEIFE. Yes.
I might add that insofar as private foreign clients are concerned,
I personally feel that the so-called mixed corporation-for instance,
in the French law a mixed corporation is a corporation in which the
Government has a predominant share of the stock; sometimes it does
not have a predominant share of the stock; those corporations under
French law are strictly private corporations; they are run on a busi-
nesslike basis and have no attributes of sovereignty.
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When they go abroad they are liable to be sued and to pay damages,
and what-have-you, just like any other corporations and, as a general
rule, they are not engaged in political activity. I say as a general
rule because there are some countries that use these corporations,
particularly if they have a state monopoly, for propaganda purposes
obviously. But I am thinking of, let us say, the Western countries
that have these corporations. They are not involved in any kind of
political activities. Those I would include.
However, there is room for argument there if we start making
exceptions whether this corporation belongs to an Iron Curtain coun-
try or not an Iron Curtain country, I think it is too complicated, so
I think you might as well throw it in under the definition of foreign
principals, I suppo
hat would se, as defined in the bill.
W I like to see, however, in that connect ion is a. system
of negative clearance with the Department of Justice. I do not know
whether this has been suggested before or not, but I do believe that
when you are in situations where you are not certain whether you
should register or not-let us take the example of a mixed corpora-
tion ; you represent a corporation, let us say, that is owned 30 percent
by the Government. There is absolutely no political connotation
whatsoever, no question about it. It seems to me you ought to be able
to present this to the Department of Justice, and they ought to be
able to come up with some kind of an answer within a certain number
of days. This is a much cheaper procedure than to wait until you have
a case in controversy where you are facing a jail sentence and a fine
and costs.
POWER OF INJUNCTION NECESSARY
Also in that connection I might say that I personally feel that the
Department probably ought to have, the Department of Justice ought
to have, the power of injunction that it is asking for. If they have
this power of injunction I would like to see an administrative pro-
ceeding under the Administrative Procedure Act, not something spe-
cial but under the Administrative Procedure Act, which would look
into the merits of the Department of Justice contention that you
should register, and also I would like to see waived criminal penalties
altogether where there are unintentional violations or where violations
are made for the reason of testing a certain situation.
Senator SPARKMAN. By the way, I believe our committee has been
assured in the course of these hearings that there is a method within
the Department of Justice whereby a person may have the kind of
prior consultation and decision that you mention, and so far as the
injunctive process is concerned, that has been suggested by the De-
partment of Justice representative.
You say there ought to be some way by which the full matter could
be gone into. If an application for an injunction is filed before the
court and it is carried to a hearing on the question of a permanent
injunction, would that not be an opportunity to go into the matter
fully?
Mr. DE SRIFE. Well, it might be, Mr. Sparkman.
Senator SPARKMAN. Is it not a matter of right to have a hearing for
a permanent injunction?
Mr. DE SEIFE. I am not sure I understand the question, Mr. Spark-
man.
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Senator SPARKMAN. You say it might be. It seems to me that it
would be a matter of right, for instance, if the Department of Justice
filed a petition for an injunction against you. The court might grant
the preliminary injunction, and would set it down for a hearing on
the question of making the injunction permanent.
Now, if I understand the law correctly, you. have, as a matter of
right, then to present your case to show why a permanent injunction
should not be granted.
ADVANTAGES OF AN ADMINISTRATIVE BOARD
Mr. DE SEIFE. Yes, you do. However, personally-maybe it is
because I am primarily an administrative lawyer-I like the idea of
an administrative board where you could be assured of some expedi-
tious handling of the matter.
Senator SPARKMAN. I thought-as a matter of fact the suggestions
came up while the Department of Justice witness was on the stand
testifying as to whether or not it should be part of the administrative
procedure-that the individual's rights were better protected under
an injunctive process in court rather than under an administrative
procedure that might be set up.
Mr. DE SEIrE. Well, Mr. Sparkman, there is some division of opinion
on that. It depends on which side of the fence you are. If you
represent the Government or if you represent a private individual,
it depends on which side you are. My experience, unfortunately, has
been that when you ask for an injunction against a Government
official, the chance of getting it is nil, no matter how right you are,
on a preliminary basis, at least; and when the situation is reversed,
the Government does get the injunction and then when you have to
get to argue, by the time you get to argue, the permanent injunction,
several months may have gone by, and if you had a client, you do not
have a client any more, let us face it. This is the problem.
So I do think that an administrative-type hearing might help mat-
ters. On the contrary, I believe in court reviews, very much so. But
I do think that if you have someone in authority who can handle the
matter-one of the problems, Mr. Sparkman, in all these Government
agencies is that you never seem to be getting any responsible individual
who can make decisions, and I speak from experience.
I have handled a security case where we tried to go up all the way
to one of the Secretary's offices, and all the way up to the Secretary's
office nobody could give you any kind of positive answer.
PLACEMENT OF ADMINISTRATIVE POWER
Senator SPARKMAN. Where would you recommend this administra-
tive power be lodged?
Mr. DE SEIFE. Well, of course, Mr. Sparkman, this is really a much
bigger question than I anticipated because I have my own philosophy
under the Administrative Procedure Act.
Senator SPARKMAN. It would almost have to be under the Depart-
ment of Justice.
Mr. DE SEIFE. Yes, it would almost have to be under the present
system ; yes, it would have to be.
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I would suggest a one-man, you know, one-examiner type board,
something like that, where the person is not a mere employee taking
orders from the boss at the top. This is what I am worried about, be-
cause too often policies change with the man, depending on the man
who occupies the office, if something you do is legal or illegal, and
it should not be that way.
Senator SPARKMAN. If you think well of it, I am sure the commit-
tee would be glad to receive a statement from you elaborating on that
point with reference to administrative procedure.
Mr. DE SEIFE. Mr. Sparkman, I will be very happy to submit one.
I would ask that Mr. Edward de Grazia prepare it for this commit-
tee, because I am leaving for Europe next week on a private case.
Senator SPARKMAN. That would be very good. We would be very
glad to receive it in order to get your suggestions. They might be
helpful to us when we come to this question of considering injunctive
relief or a cease and desist.
(The statement referred to was discussed and had not been sub-
mitted at the time of printing.)
Mr. DE SEIFE. Thank you very much, Mr. Sparkman.
Are there any other questions of me?
Senator SPARKMAN. Senator Aiken, do you have any questions of
Mr. de Seife?
Senator AIKEN. No.
Senator SPARKMAN. Thank you very much. We appreciate your
statement.
Mr. DE SEIFE. Thank you.
(The prepared statement of Mr. de Seife follows:)
STATEMENT BY RODOLPHE J. A. DE SEIFE, OF WASHINGTON, D.C.
My name is Rodolphe J. A. de Seife, and I reside in Washington, D.C. I am
a member of the bar of the District of Columbia since 1955, and the Supreme
Court of the United States of America. Since May of 1957, I have been engaged
in the private practice of law, having spent 2 years prior to that with the De-
partment of Justice as a recruit under the Attorney General's honor law grad-
uates program.
I have an office at 301 Bowen Building, 815 15th Street NW., Washington,
D.C., and also maintain offices at 261 Rue Saint-Honore, Paris 1, France, as an
American lawyer. My knowledge of foreign legal systems and foreign languages
has been the source of some foreign legal business in the United States, as well
as American legal business abroad.
I should add parenthetically that I am vice chairman of the Committee on
Foreign Affairs, Section of Administrative Law of the American Bar Associa-
tion, but since this committee has not had an opportunity to analyze or discuss
S. 2136, I am here representing myself only.
May I start by stating that I have read with great interest the extremely well
drafted proposed amendments to the Foreign Agents Registration Act of 1938,
as amended, contained in S. 2136. I find myself in full agreement with the
objective of this bill ; namely, that the representation of foreign governments
or government-connected foreign principals in the fields of public relations, po-
litical counseling, etc., be subjected to closer regulation and scrutiny. I therefore
favor wholeheartedly the aims of the bill.
SUGGESTED CLARIFICATION OF PROPOSED AMENDMENTS
However, I am disturbed at the possibility that the broad language of the
amendments could be, somehow, interpreted to include the bona fide practice
of law.
I, for one, have some private clients who happen to be foreign citizens residing
abroad. As a matter of fact, to date, I have represented only private clients.
In all my years of private practice, I have only practiced law and I have never
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
engaged in any lobbying activities for anyone. It seems to me that the proposed
bill which is designed to tighten the present law requiring the registration of
foreign propagandists should not, even by the most far reaching and remote
interpretation, cover the situation where on American lawyer represents in an
American court of justice, the interests of a foreign partner in an American-
based partnership ; nor should this bill be designed to include a lawyer, prac-
ticing as such, before an administrative agency in a quasi-judicial proceeding
representing foreign clients located abroad.
I would also suggest that the act not apply insofar as foreign principals are
concerned who are Government owned or controlled corporations, but however,
strictly commercial in character. These corporations do not have any attributes
of sovereignty and a lawyer representing them in a purely professional capacity
should not have to register as a foreign agent. But, there is some leeway for
discussion in that particular area.
What I definitely do believe, is absolutely essential is that S. 2136? specifically
exclude bona fide practice of law before courts. or administrative agencies in
this country. There is no justification for an all-encompassing language. While
I am certain that the legislature does not intend to cover the bona fide practice of
law, it would be a mistake to wait for a court to determine what the legislative
intent was. It is much easier, I suggest, to take care of this possible problem
here and now by some appropriate drafting change.
I therefore respectfully suggest that the proposed section 3 of S. 2136 (page
7 of the bill), include the word "legal" which should be added to "financial,
mercantile, or public relations" (22 U.S.C. 613(d) ). Consideration might also
be given to adding to the proposed paragraphs "o" and "p" to section 1, sub-
section d, a new paragraph (q) with the following language, or some similar
wording :
"Nothing in this paragraph or in this Act shall be meant to include within the
purview of this Act, the bona fide practice of law by American lawyers repre-
seating private foreign clients before any Court, Agency or Department of the
Government of the United States."
It is a known fact that there are many lawyers who do not practice law but
primarily engage in lobbying activities for their clients or act as "political con-
sultants," but it seems to me that the bona fide practice of law is quite easily
set apart form the type of activities described herein.
This suggested clarification of the proposed amendments in S. 2136 would
foreclose the possibility that American lawyers solely engaged in the private
practice of law might have to register as foreign agents every time they are asked
to represent some foreign widow or orphan, or foreign corporation before a court
or in quasi-judicial proceedings before an agency or department of the Govern-
ment. Such an interpretation would make the law practically unenforcible
since I dare say that there is not one lawyer out of two who, at least once in
his lifetime, does not have a foreign client in this age of ever-increasing facilities
of communications and narrowing of the gaps between nations. Furthermore it
would leave absolute discretion in the Attorney General or, worse, his subordi-
nates to use or misuse this law which, surely, is not an intended result.
Finally, I would suggest that if the Department of Justice is given the power to
enjoin the activities of any person it holds to be a foreign agent, provision be
made for an administrative hearing to determine the correctness of the De-
partment's action and that there be no criminal penalty attached to an unintended
violation, or where there is a genuine issue of fact, whether the person should
register or not.
Senator SPARAMAN. Mr. Roger Fisher, professor of law at Harvard.
Mr. Fisher, we are glad to have you with us.
STATEMENT OF ROGER FISHER, PROFESSOR OF LAW, HARVARD
UNIVERSITY
Mr. FISIiER. Thank you. I appreciate being here.
Senator SPARKMAN. Do you have a prepared paper?
Mr. FISHER. I am afraid I do not.
Senator SPARKMAN. That is all right.
Mr. FISHER. The bill which is up before you proposes changing the
Foreign Agents Registration Act. As a lawyer who is currently advis-
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106 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
ing the Government of Saudi Arabia on a legal problem and who, in the
past has advised the Governments of Pakistan and Iran on problems, I
would like to call some points to your attention.
Senator SPARKMAN. By the way, you are registered under the
Registration Act?
Mr. FISHER. I am registered as a foreign agent. I do not mind being
called a foreign agent. I do object, however, to the statutorry defini-
tions which makes me a "public relations counsel" engaged in' political
activity."
Senator SPARKMAN. Your connection is as a lawyer, is it not?
WITNESS' FOREIGN CLIENTS
1V Ir. FISHER. I am currently advising on a problem which has noth-
ing to do with the United States itself. We are working, hopefully,
for an amicable settlement between Kuwait and Saudi Arabia of a
boundary in the Persian Gulf. They have agreed to arbitrate; before
they do they want advice as to how the law would apply, and they
referred to me, as an international lawyer to give them an opinion as
to how the line dividing the Continental Shelf would run out.
I have no task of influencing any American in any capacity in this
country at all. I may say that in the past, working with Pakistan,
again it was a dispute between Pakistan and India. At the time I
was with Covington & Burling here in Washington.
Again a foreign international law question was involved in respect
to the question of advising the Government of Iran in a dispute with
Afghanistan. In none of these cases has there been any attempt to
influence any action, private or public, in the United States at all. It
is as a lawyer on an international law question.
Naw, it seems to me to be in the interests of the United States that
foreign governments which are so inclined settle their disputes legally,
under law; and if they feel like getting advice, that the obtaining of
advice from an American international lawyer be encouraged. That
is, we are trying not only to promote international law but to get full
understanding of our perceptions of it, our ways of treating problems.
SCOPE OF PRESENT REGULATIONS
Now, the present statute and regulations are so broadly drafted that
there are substantial hurdles placed in front of giving advice on small
matters of this kind. Not only need I file a full registration statement,
but when I. ask a student, a graduate student, to do a weekend's re-
search on a precedent of a Norwegian-Swedish arbitration, I discover
that apparently he himself must register as a foreign agent. It seems
that I am a foreign principal under the statute, and if he is going to
do 8 hours' work for me on legal research he must do 12 hours' work
filing a complete registration statement as a foreign agent himself.
Senator SPARKMAN. Why don't you have him do it as a class assign-
ment? That would get around it.
Mr. FISHER. Well, on weekends we ought to be able to pay them a
couple of dollars an hour for what they are doing.
The term "political propaganda" in the statute is so defined that if
I give a memorandum of advice to an officer of my client in this
country, I apparently must file that memorandum with the Library
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS 107
of Congress and the Department of Justice. That is, if the term
`political propaganda" includes "any * * * written * * * communi-
cation * * which is reasonably adapted to, or which * * * he in-
tends to * * * induce, or, in any other way influence a recipient * * *
within the United States on a matter of public interest.
Now, I have not interpreted the statute that broadly, I may say.
It is impossible to give confidential advice to a client as to how they
may come out in arbitration and, at the same time, file copies of the
statement with the Justice Department and with the Library of
Congress.
I do not mind disclosing the relationship. I do not have a draft
of a suggested change for you, but I do believe a simple disclosure
provision for persons who are not in any way influencing American
conduct, governmental or private, would be inadequate. If you simply
disclose your interest, the nature of the work you are doing, that should
cover you unless the Government came back and wished more in-
formation.
You could be prosecuted for a false statement if you misled as to
just what you were doing, but if you disclosed what you were doing
it seems to me that should be enough. To go through supplemental
statements which must be filed within 10 days of every time I ask a
student to work for me is too much. Apparently, he must file a state-
ment, copies must be carefully worked out. This is quite a discourage-
ment to taking on a small matter of advice for a small country on a
small question. They would most likely flip a coin or go elsewhere
rather than consult American lawyers on legal questions. It seems
to me to be to our interest to encourage them to come here.
CLARIFICATION OF TERM "POLITICAL CONSULTANT"
Senator SPARKMAN. Let me ask you, would the work that you are
doing-as an arbitrator-consultant-fall under the definition of the
practice of law?
Mr. FISinER. I regard the work as the practice of law, very clearly.
Senator SPARKMAN. Did you, by any chance, hear or read Mr. Dean's
testimony?
Mr. FISIiER. I heard of it; I did not hear the testimony.
Senator SPARKMAN. Mr. Dean made this suggestion, and I would
like to ask you what you think of this. He proposes that we revise
subpara-
the definition of "political consultant" set forth in section 1, s(5) of S. 2136. You are familiar with the bill, are you not?
graph
Mr. FISHER. I have seen it.
Senator SPARKMAN. He proposes by adding at the end thereof the
following :
Provided, however, That the term "political consultant" shall not include
any person engaged in the practice of law solely by reason of rendering legal
advice to a client or such person.
DEFINITION OF TERM "SOLELY"
Mr. FIsnER. The "solely" becomes difficult. For example, this
afternoon I will go over to the State Department to look for maps
of Persian Gulf boundaries which were worked out in the Geographer's
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108 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
Office over there. I will be dealing with the State Department, dis-
closing to them that I have accepted the assignment, at the informal
suggestion of people there. I will be disclosing who I am and what
I am there for, but I am not solely advising my client. I am gathering
information, not trying to persuade them of anything. The "solely
advising" is pretty narrow.
Senator SPARKMAN. Don't you think you are giving that a little
too strict a definition?
Mr. FISHER. It is a criminal statute.
Senator SPARKMAN. In other words, the work that you do in your
library, the Library of Congress, the Library of the Supreme Court,
the Library of Harvard University, or if you are at the State Depart-
ment looking at charts or maps, isn't that all incidental to your prac-
tice of law?
Mr. FISHER. I would certainly appreciate the bill having the phrase
"or activities incidental thereto."
Senator SPARKMAN. That is my interpretation of it, and it seems
to me you are giving it entirely too strict an interpretation when you
say that a thing such as you have described would not be permitted
or might be hit by the use of that word "solely." It seems to me that
the "solely" part refers to the service that you are rendering to your
client in Saudi Arabia.
Any research or any work that you have to do here in order to
prepare yourself to render that advice is incidental.
Mr. FISHER. I am very pleased to have that statement in the record,
Senator Sparkman, so that if the bill gets passed, I will be glad to
have your interpretation of it.
Senator SPARKMAN. That is my interpretation.
Mr. FISHER. There is one further point which is not in the statute
which you are amending with this bill, and that is the Logan Act, to
which I would like to call your attention in the same regard. I be-
lieve it to be in the interest of the United States that those foreign
countries which have disputes with us settle them lawfully, settle
them in our courts, settle them in international courts, in similar
fashion.
As you know, the Swiss Government sued in the Court of Claims at
one time; the Government of Norway also agreed to litigate in the
Court of Claims.
The Logan Act, which is section 953 'of title 18, makes it a crime
unless you have the "authority of the United States" (which is not
elsewhere specified and not quite clear), for any citizen to carry on
"any correspondence * * * with any foreign government or any officer
* * * thereof, with intent to influence * * the conduct of government
* * * in relation to any disputes or controversies with the United
States."
Now, it seems to me if you were seeking to encourage, as we are,
countries to use law, seeking to encourage them to use international
law, as we understand it, and to use a group of trained lawyers than
whom, Ithink, there is no better group In the world than the inter-
national lawyers in the United States-Arthur Dean and the New
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
York Bar and the Washington Bar have excellent counsel who have
represented governments before-it seems to me if you are fixing up
the law in this regard, I would like to see it fixed up so that it does not
preclude the practice of law for a foreign government with a dispute
with the United States. It seems to me to be in our interest to have
the foreign ggovernments using American lawyers. We will be more
likely to work disputes out amicably if they do have them.. The Logan
Act ought to be amended to see that it is broadened.
Senator SPARKMAN. Let me ask you again, do you really believe
the Logan Act would prevent your representing Saudi Arabia, if the
United States should happen to be the other party to the controversy,
if you are employed as a lawyer by Saudi. Arabia?
Mr. FisHER. I have construed the statute in the past on several oc-
casions as not applying. As, perhaps you know, there never has been
a prosecution under the Logan Act.
LOGAN ACT APPLIES TO INDIVIDUALS ACTING ON OWN
Senator SPARKMAN. I have always felt that the Logan Act applied
to private individuals who were just operating on their own, and did
not have an established relationship.
We provide in our statute under the Foreign Agents Registration
Act for people to be hired by foreign governments to represent them.
Now, it seems to me that when someone is so employed and registers
under the law, he can represent that country as a lawyer even if the
United States should be a party.
Mr. FISHER. I believe no one would be prosecuted under current law
for that conduct. I think when you are clearing up the law and legis-
lating in this fashion where American citizens are dealing with for-
eign governments and have relationships with them of one kind or
another, I would like to see it spelled out.
Senator SPARKMAN. If you feel it is important I would suggest you
do as Mr. Arthur Dean did, in giving us suggestions. I think it would
be well, as I suggested to the last witness, for you to file a statement
with us dealing with that point, and giving us suggested language.
Mr. FisHER. Fine. I would appreciate the opportunity.
(The statement referred to was not filed at time of printing.)
Senator SPARKMAN. I do not know what attitude this committee will
take when all of these gaps are filled, but I think it would be well to
have the point before us.
Mr. FISHER. Thank you very much.
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SPECIAL COURSE ON INTERNATIONAL LAW AT HARVARD
Senator SPARKMAN. Senator Aiken.
Senator AIKEN. Most of our international lawyers are trained, are
they not, at Harvard?
Mr. FISHER. We train a lot of them.
Senator AIKEN. Many from foreign countries say they went to
Harvard Law School.
Senator SPARKMAN. Harvard trains a. great many but there are lots
of other fine institutions which train in international law, too.
Mr. FISHER. I would not dispute that.
Senator AIgEN. Do you train them to be representatives of foreign
countries? Do you have a special course?
Mr. FISHER. We have 'a course of graduate training, a graduate
training program for foreign students. We have a large group say 50,
foreign students from foreign countries in law, and then we have a
number of American students taking international law, getting a regu-
lar lawyer's degree, but having special courses in the field.
Senator AIgEN. I guess there is a field for your operations, isn't
there?
Mr. Fisi-In,,r.. I think there is. There is plenty of business around
in terms of the problems that need lawyers' attention.
Senator AIgEN. It is a good business for some.
Senator SPARKMAN. Thank you very much, Mr. Fisher.
Mr. FISHER. Thank you very much.
Senator SPARKMAN. Now we will have Mr. Norman E. Isaacs, execu-
tive editor of the Courier-Journal and Louisville Times, Louisville,
Ky. Mr. Isaacs, we are glad to have you, sir. We have a copy of your
prepared statement. As I have said to the others, you may read it,
summarize it, discuss it, present your case as you see fit. Your state-
ment will in any event be printed in full in the record.
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS 111.
STATEMENT OF NORMAN E. ISAACS, EXECUTIVE EDITOR, THE
COURIER-JOURNAL AND THE LOUISVILLE TIMES
Mr. ISAACS. Mr. Chairman, with your permission, I would like to
read it.
Senator SPARKMAN. Very well.
Mr. ISAACS. There is a minor change in phrasing, and I would like to
enter into it.
Senator AIKEN. It usually takes less time, Mr. Isaacs, to read a
statement than it does to summarize it.
Mr. ISAACS. Mr. Chairman and Senator Aiken, no editor in the
United States can presume to speak for any other editor. Therefore
I speak only for myself and on behalf of the Courier-Journal and the
Louisville Times. However, I am sure you know that editors main-
tain the same lines of communications between themselves that exist
in law, in medicine, and in other callings. Therefore I believe it can
be said fairly that the policies which we in Louisville believe in and
practice are those also of a number of other newspapers.
We were dismayed by what was developed during your hearings
earlier this year when you questioned lawyers and press agents rep-
resenting foreign governments and groups.
Part of our concern stemmed from the fact that our newspapers re-
ceived, or did receive at that time, some of their news from some of
the news agencies which were mentioned in those earlier hearings. I
personally wrote the principal executives of these news agencies, pro-
testing in the strongest terms.
It was-and it is-our feeling that there has been subterfuge when
editors are not aware that the writers of material being transmitted
to them may be employees of firms acting as _ agents for foreign
governments. The matter being sent may be of no importance in
the sense of leading readers astray, but the essential fact is that a
newspaper editor has the right to feel that the news agencies are
represented by their own professional employees, individuals who
are not in any way subservient to, or beholden to, any news source.
This, Mr. Chairman, also touches on the matter of travel and other
subsidies. I hope, Mr. Chairman, that you will extend to Senator
Fulbright my compliments for his remarks in the Senate on November
7 when he raised the question of whether the American press is con-
scious of its ethical responsibilities.
Senator SrARKMAN. Mr. Isaacs, I shall be glad to do it. I have
been rather hopeful that Senator Fulbright will be able to complete
his testimony before another committee and be here before the hear-
ings are terminated. But in any event I shall be glad to tell him that.
I know he will be pleased.
Mr. ISAACS. The episode which brought forth his question was the
one in which the producer of a motion picture flew some 250 reporters
to Hollywood in chartered planes, there providing free lodging, free
food, free liquor, free nightclub fare, free sightseeing tours, and free
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112 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
cable, free telegraphic, and free telephone tolls. Some 53 cities in
the United States were reported as being represented, and while I do
not know the exact number of newspapers represented, it was stated
that only 5 newspapers insisted on paying the expenses of their rep-
resentatives.
These five, Mr. Chairman, ought to be named as deserving of praise
for high ethical conduct. But for the others, may I say that the
Courier-Journal and the Louisville Times have no hesitation in an-
swering Senator Fulbright's question. We consider the commercial
toadying of the others a disgrace to journalism.
There is some arrant nonsense current in my newspaper circles, Mr.
Chairman. I regret to say it is reflected in the statements of some
of the best known newspaper executives. This nonsense is that it is a
gross error to make public criticism of anything wrong within journal-
ism.
As I understand it, we should say only those things which present
the good side. And there are many good things about the press.
But there are also some sad things. And if there is to be no public
criticism of the bad, how can any reform ever take place?
This Hollywood episode is not the first, nor will it be the last, to
illustrate the lax practices of a large segment of the American press-
practices which do dishonor to the thousands of responsible journal-
ists and newspapers seeking to perform their duties without subsidy
or favor. The fact is that there has been a great improvement in
the past 15 years.
All this, of course, is not within the scope of your committee's
current work. But it has a bearing on it. It would not surprise me
to learn that a number of the newspapers that cheerfully accepted the
Hollywood producer's subsidizing were quick to express indignation
on their editorial pages about the trip to Paris of Mr. Ernest Petinaud,
the House of Representatives headwaiter.
EDITORS SHOULD HAVE SOURCE OF INFORMATION
As we in Louisville studied the transcripts of your hearings, three
things struck us as important.
One had to do with the ease with which some press agents for for-
eign governments had smuggled their material into the American press
through the various news agencies.
I realize that the first amendment will be raised at the first mention
of any suggestion that there be a legal provision to require the dis-
closure to editors of the facts of sponsorship or origination when
stories or photographs emanate from a foreign government, its agen-
cies, or from its paid representatives.
The members of this committee may not know it, but the majority
of American publishers have rushed to the security of the first amend-
ment only in those instances where their commercial interests have
been at stake-as in calling the Child Labor Act an attack on the first
amendment, or railing against the Wage-Hour Act, or in matters
affecting postal subsidies ; indeed, anything having to do with dollars
and cents.
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There is no suggestion here that American newspapers be required
to publish the facts of sponsorship or origination. What we do believe
would be proper would be a requirement that editors be informed of
the source of the information which is provided to them, when this
source is a foreign government, or an agency of that government, or
a firm employed by that foreign government.
This would, by no stretch of the imagination, abridge the freedom
of speech or of the press. As I stated, there could be no suggestion
that editors publish this information. This would be improper.
There is now in the law a labeling provision which requires lobbyists
for foreign governments to identify themselves. But there is nothing
calling on a news agency to inform its members or clients about this
facet.
I suggest that American newspaper editors would welcome knowl-
edge of the source of information when this material has been spon-
sored by a foreign government. It would put them in a position to
handle such copy far more judiciously. Whether to use it, or not to
use it, would be their prerogative. What I am arguing for, Mr. Chair-
man, is more freedom of information-in this case, freedom of infor-
mation for newspaper editors.
A second thing which disturbed us was the casual manner in which
so many well-known writers have gone abroad, accepting travel, lodg-
ing, and entertainment and, in some cases, writing subsidies from for-
eign governments or their agencies.
We would strongly support a provision in the law which would call
for full reporting to the. Department of Justice of all subsidy for travel
abroad, when such subsidies have come either directly or indirectly
from a foreign government. We would urge a corollary provision
calling for monthly, public reporting by the Department of all such
subsidies.
There are well-known journalists who have informally defended
the practice of such subsidies. These gentlemen may be quite correct
that it in no way has impaired their objectivity and that the practice
is entirely defensible. If it is defensible, Mr. Chairman, then cer-
tainly there should be no objection whatever to such a provision as I
suggest.
illy third and final comment has to do with the practices within the
Department of Justice's registration section. As we read the trans-
cript, it seemed to us that your committee brought forth the informa-
tion that the registration secion had been most casual about the manner
in which it checked and reported on the activities of foreign agents.
There would seem to be no point whatever in passing legislation
merely to have passing observance of so important a. matter. The
Government, through that section, at least, seemed equally guilty of
ignoring its ethical responsibilities.
Thank you, Mr. Chairman.
Senator SPARKMAN. Thank you, Mr. Isaacs. I think it is a very
fine statement, and we are delighted to have it.
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I have some prepared questions that I was going to ask, that I
will submit to you. They are, in large part, answered in your state-
ment. I wanted to refer to a matter to which you made reference,
that is, that our hearings have brought to light the activity of certain
public relations firms relating to the disclosure or lack of disclosure
of activities within the journalism profession.
You say your own paper received articles and used them from some
of the press services. Did your newspaper receive the International
News Service?
Mr. ISAACS. No, sir; we never did. We did receive, however, the
North American Newspaper Alliance Service. We received United
Press International.
Senator SPARKMAN. Is not the United Press International really a
carryover of the INS?
Mr. ISAACS. The INS was taken over by United Press International.
United Press International is an organization of long standing, the
commercial news service.
We are also members of the Associated Press, as you probably know,
which is also of long standing. We also receive, just simply for your
information, the wire services of the New York Times, the wire serv-
ices of the Chicago Daily News, and the wire services of the Los An-
geles Times-Washington Post. So we are adequately covered, I would
say.
Senator SPARKMAN. That is a pretty good plug.
Mr. ISAACS. Yes. We did carry, in answer, I think, to your ques-
tion, one of the North American Newspaper Alliance stories which
came up in the testimony of Mr. Hamilton Wright.
Senator SPARKMAN. Yes.
Mr. ISAACS. And it is true we carried one of those stories.
Senator SPARKMAN. At the time you had no idea of it's being
slanted?
Mr. ISAAOS. None whatsoever. I would not-we would not-have
carried the story of such a nature datelined as it was out of Taiwan, if
we had known that the author of it was an employee of a press agentry
firm paid by the Chiang government. This has no reflection on the
government. It has a reflection, however, on the lack of disclosure.
We also carried material at an earlier date out of Mexico which
had been transmitted by United Press International, by a reporter,
or he was higher than a reporter, I think he was one of 'their news
editors who had been on a trip to that country for which his organ-
ization had not paid. I believe the trip was paid for by the Mexican
Government., indirectly or directly.
If we had known that, sir, we would not have published this story.
Senator SPARKMAN. What protection do you, as an editor, have to
be certain that the material you receive is not the product of public
relations men rather than legitimate newsmen?
Mr. ISAACS. At this moment material coming over the. wire services,
we have no protection.
Senator SPARKMAN. In other words, you have to rely on the services
I hemselves.
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Mr. ISAACS. We have to rely on the good faith and honor of the
agencies which service us with the material, and this is the whole point
of our disturbance.
Your hearings have disclosed what you properly, I think, referred
to earlier, in earlier testimony this morning, as a corruption.
Senator SPARKMAN. The witness referred to it and I tried to bring
out from him whether or not this constituted a corruption of public
communication.
Mr. ISAACS. Correct; and a newspaper editor has no defense what-
soever. He gets this material. It is put on his desk, coming off the
wire. I think the tendency is to regard this as a product of that
agency's professional employees and, therefore, he is inclined to trust it.
Now, there are, as you well know, divergencies between reporters.
But this is a matter which most of the metropolitan newspapers are
able to handle by using one basic story and parenthetically inserting
the material which sheds another light or another side to that issue.
Senator SPARKMAN. It leaves the reader really confused.
Mr. ISAACS. I agree. We hesitate to rewrite all of them, but in
some cases we are almost forced to, in order to get all these various
points of view across intelligently.
Senator SPARKMAN. Of course, there is a natural divergence in the
way the reporters see things, is there not?
Mr. ISAACS. Well, it has gotten to be more so as we have gone into
more interpretation. When you get into interpretation, Mr. Chair-
man, you then get into these strong varying viewpoints.
Senator SPARKMAN. We even had a little difference of interpreta-
tion a while ago with the Harvard professor.
Mr. ISAACS. I am not a lawyer, sir, and I do not presume to enter
that field. I think I have enough difficulties as it is.
Senator SPARKMAN. You have commented on these paid junkets.
You have made it clear that you do not believe in them or certainly
not unless there is the fair disclosure as to what is taking place. Even
beyond that is the case we referred to of the 53 newspapers, where
representatives were carried on a free junket and everything was fur-
nished free of charge. You do not happen to know the names of those
53 papers?
Mr. ISAACS. I do not, sir.
Senator SPARKMAN. Nor of the five who paid their own way?
Mr. ISAACS. Nor of the five. I would say fairly safely, I think that
the New York Times was one of the five. The other four I do not
know. I would like to know because I think they deserve some praise.
Now, our feeling, our attitude, is that we will take no trip any-
where at any time under any consideration which we do. not pay for.
This applies to everything. There are no exceptions to this.
If we do not choose to cover a story we will not let anyone else cover
it for us under this guise of having the expenses paid. We think we
ought to pay the bill for whatever we cover.
The Washington Post; I believe, also has a very strong rule on the
subject. It extends, it is deep enough, that we do not accept tickets
for anything, no free tickets, nothing free. If we want to go we pay.
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Senator SPARKMAN. You want to be left free to write about it as
you see fit.
Mr. Isaacs. Yes, left free to make our own mistakes.
Senator SPARKMAN. Has the American Society of Newspaper Edi-
tors, the American Society of Newspaper Publishers, or the journalism
professional fraternity, Sigma Delta Chi, has any one of these organ-
izations ever established a code of ethics to cover such practices?
Mr. ISAACS. No, sir. There has been a great deal spoken and written
about the subject. I myself have written for the American Society of
Newspaper Editors a number of times about this general subject of
what we call freeloading, and I have, it so happens, quite by surprise in
a stack of stuff here, a copy of the bulletin of the Society of American
Newspaper Editors, which is more than 10 years old at this point,
which is called "It's Bribery" on the front page of the American
Society of Newspaper Editors Bulletin, an article which I personally
wrote at that time attacking this kind of thing.
Senator SPARKMAN. Has there been discussion in the meetings to-
ward the adoption of a code of ethics covering this principle?
Mr. Isaacs. Occasionally, sir. Well, the American Society of News-
paper Editors does have a code of ethics.
Senator SPARKMAN. I mean including in that code of ethics such
provision.
Mr. ISAACS. No, sir, it does not. It is broadly implied there ought
to be in this type of conduct, but there is no stipulation, and the
Sigma Delta Chi has no such stipulation, although it has published a
number of articles by me on the subject. It has nothing in its code,
the society does not. None of the journalism groups have such a
provision.
Senator SPARKMAN. We had another situation which developed
during the course of the hearings. That was one in which a writer
or a columnist actually received a fee from a public relations firm for
a foreign principal, and then wrote about that principal without dis-
closing that he was being paid for such a writing. We had some
cases that arose particularly in connection with or in support of the
Trujillo government. There was a good bit in the papers about it at
the time.
Mr. ISAACS. Yes.
Senator SPARKMAN. Is there any provision in the code of ethics for
journalists in the area of outside employment?
Mr. ISAACS. None that I know of, Mr. Chairman. But as the result
of that passage in your hearings, I checked into our services and col-
umnists to discover whether any of this hanky-panky was going on,
and in one case I discovered that this was so. We no longer have that
column because we are going to insist that the same rules apply to
columnists that we buy that we apply to our own staff members.
There are no provisions in any of the codes that require this of a
newspaperman, although it should be, I will concede, definitely. I
think that journalism has grown up to the point of financial respon-
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FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
sibility now that it can well afford to take this kind of position, and I
regret that it has not come about.
Senator SPARKMAN. The thing that seems so bad to me about this
is that the reader has no knowledge. If he knew of these things, if
there were some kind of a label saying that "this is bought and paid
for," then he could read it like he reads an ad.
Mr. ISAACS. I agree with you thoroughly. I think the reader is
entitled to all the direction he can possibly be given, and this is why
I periodically would love to see the American Society of Newspaper
Editors take a strong position. But I do not think it likely. I think
the membership would just erupt into a wearying argument. This
has frequently happened in the society.
NEWSPAPER PUBLISHERS PRACTICE OF ACCEPTING GRATUITIES
Senator SPARKMAN. What is the argument against it?
Mr. ISAACS. Well, the argument, I suppose, is the old one that a
Martini does not corrupt anybody. You remember Senator Douglas'
old comment that all corruption starts with the cigar to the policeman
on the corner, and this is, I think, something which has grown up in
journalism where publishers are very lax and publishers permit, or
not only permit, they encourage, their people to accept this kind of
gratuity. And it has resulted, unfortunately, in some moonlighting
in some cities, I am sorry to say, where newspaper reporters also serve
other masters.
I do not see how the reader gets any protection out of this at all.
I think the reader is led down the garden path, and I do not think
this is honest or responsible journalism.
Now, in our small way, in our small country papers, we are trying
to practice honest and responsible journalism. I think, sir, that a
great many newspaper editors share my strong views on the subject.
I think they would welcome disclosure if only for their own inforina-
tion of where material comes from. If a foreign government in any
way has been responsible we are entitled to know it so that we can use
our own best judgment.
The story might be perfectly fine, a perfectly fine story; it might
be a good travel story, for instance, but if it comes saying that this is
under a contract withi. a public relations firm, that a government has
with a public relations firm, we know how to treat it.
One of the best agencies, I think, is the British Information Agency,
which, I suppose, is a foreign agent, and so registered. The British
Information Service provides newspapers with all kinds of materials,
including photographs, which we publish and label as coming from
the British Information Service.
Senator SPARKMAN. And everybody knows.
Mr. ISAACS. Everybody knows it. The reader is entitled to this
information.
Senator SPARKMAN. Let me say, Mr. Isaacs, that I certainly appre-
ciate your testimony, and I ain sure the chairman will, as will other
members of this committee. It has been a rather refreshing discus-
sion, at least it might make us feel that we have accomplished some-
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118 FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
thing in these hearings, by calling attention to this condition that does
exist or has existed in the journalistic field.
Mr. ISAACS. It has been helpful to us, sir.
Senator SPAMMAN. Thank you very much. We appreciate your
appearance.
Mr. ISAACS. Thank you.
Senator SPARKMAN. Thank you. The committee will stand in
adjournment.
(Whereupon, at 11: 40 a.m., the committee was adjourned, subject
to call of the Chair.)
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APPENDIX
Hon. J. W. FULBRIGHT,
Chairman, Committee on Foreign Relations,
U.S. Senate.
DEPARTMENT OF STATE,
Washington, December 12, 1963.
DEAR MR. CHAIRMAN : Following Mr. Chayes' testimony before the Senate
Foreign Relations Committee concerning the Foreign Agents Registration Act
of 1938, as amended, the staff of the committee sent to the Department a number
of questions concerning the U.S. Information Agency's proposed amendment
to the act. These questions have been carefully considered. Since they overlap
in a number of respects, we believe it would be most helpful if they were answered
collectively rather than separately.
If the USIA amendment is enacted, the Department of State could, as an ad-
ministrative matter, require foreign government information offices to provide
information about their activities, the disposition and receipt of funds, and the
names of all those Americans employed for services and goods. The Department
is not equipped, however, to insure that the information it would receive would
be complete and accurate in all cases. It would have to rely on the Department
of Justice to conduct inquiries in doubtful situations.
If the Department concluded, after consultation with the Justice Department,
that the information it was receiving was incomplete or inaccurate, a number
of steps would be open to it. First it could immediately notify the information
service or individual concerned to correct the deficiency. Second, if such notifi-
cation failed, it could withdraw the exemption from registration with the De-
partment of Justice. The Department of Justice could then immediately move
to require the service or individual involved to register. Finally, in serious
cases, it could declare the individuals involved persona non grata.
If foreign government information Offices were required to file with the De-
partment of State, for transmission to the Department of Justice, the same mate-
rial and facts as to their activities and expenditures as they are now required
to file with the Department of Justice, the Department of State would become,
for this purpose, simply a post office. Such a proposal might somewhat alleviate
the threats of reprisal faced by USIA. It would, however, make the Department
of State in effect an arm of the Justice Department with respect to the informa-
tion offices of foreign governments. The misleading impression might be given
that the Department had an independent enforcement responsibility, and we do
not believe that this is a proper role for the Department of State.
In summary, the Department could not endorse a. proposal under which it
would be merely a depository of information for transmittal to the Justice De-
partment. We wish to emphasize, however, that we do support the USIA
amendment and believe its enactment would promote our foreign policy
objectives.
Sincerely,
FREDERICK G. DUTTON.
119
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1fU FOREIGN AGENTS REGISTRATION ACT AMENDMENTS
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS.
New York, N.Y., November 20,1963.
Hon. J. WILLIAM FULBRIGHT,
Chairman, Foreign Relations Committee,
U.S. Senate, Washington, D.C.
DEAR SENATOR FULBRIGHT : Your committee began public hearings yesterday
on S. 2136-relating to the Foreign Agents Registration Act of 1938. The Amer-
ican Institute of Certified Public Accountants, the sole national organization of
professional certified public accountants in this country, representing over 47,000
members, is interested in the proposed legislation in connection with its possible
impact on CPA's representing foreign principals before Federal agencies ; for
example, the Treasury Department.
There is an ambiguity in the present law under the proposed bill as to the
meaning of the exemption contained in section 3(d) of the Foreign Agents Regis-
tration Act. It is desirable that this section be clarified and the ambiguity
removed.
Under the present law and under S. 2136 an agent (a CPA) representing, for
example, a Canadian corporation in a tax controversy with the Treasury De-
partment would appear to be an agent of a foreign principal. If the tax con-
troversy arises out of the ordinary private commercial activities of the foreign
principal, and the representation of such taxpayer in connection with the con-
troversy involves no political activities, there appears to be no reason to require
registration.
Section 3(d) of the present act exempts from registration agents of foreign
principals who engage "only in private and nonpolitical financial or mercantile
activities in furtherance of the bona fide trade or commerce of such foreign
principal * * *." Section 3 of the proposed bill would amend this section to
extend the exemption to public relations activities of a private and nonpolitical
nature.
It is not clear from the present language of this section of the act whether
the exemption applies to an agent's representation of a foreign principal in a tax
controversy with the Federal Government even though the agent engages in
no political activity on behalf of the foreign principal. The availability of the
exemption appears to depend on whether the word "private" excludes such an
agent from the exemption merely because the controversy is with the U.S.
Government.
In order to remove the ambiguity presently contained in section 3(d) of the
Foreign Agents Registration Act, it is requested that section 3(d) of the act be
amended by adding at the end thereof the following :
"Provided that, Representing a foreign principal only in connection with a
claim of such foreign principal against the United States, or a claim by the
United States against such foreign principal, which arises out of the private conm-
mercial activities of such foreign principal, shall be considered as falling within
the meaning of this exemption, if such representation involves no political
activity:"
We respectfully request that this letter be included in the record of the public
hearing on S. 2136.
Sincerely yours,
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SUMMARY INDEX
(List of witnesses appears alphabetically in contents.)
Page
Accounting procedures provision, adoption of specific------------------ 24
Act of 1938 does not supersede other statutes------------------------- 15
Administration of the Foreign Agents Registration Act (Foreign Affairs
Manual Circular No. 126)---------------------------------------- 63
Administrative board, advantages of an------------------------------ 103
Administrative flexibility of proposed legislation----------------------- 9
Agency relationship defined in act----------------------------------- 16
Agents misrepresent their effectiveness------------------------------- 67
AID views on S.2136---------------------------------------------- 57
Aiken, Senator George D.: Examination of witness: Fisher, Roger- - - - - - - 110
American Institute of Certified Public Accountants, views on S. 2136---- 119
Attorney-client privilege, application of------------------------------- 13
Bona fide practice of law------------------------------------------- 100
British Information Agency----------------------------------------- 117
Bureau of the Budget views on S. 2136------------------------------- 8
Clarification of inadequate registration----------------------------- 25
Commercial relationship between law firms and foreign clients ----------- 62
Complaints concerning registering with Justice------------------------ 33
Complete registration with State Department------------------------- 30
Corrupting channels of information---------------------------------- 96
Criteria for granting diplomatic status to information officers------------ 69
Curtailment of Government's oversea program ------------------------ 31
Defense-sponsored trips are public knowledge------------------------- 72
Definitions:
Agency relationship-------------------------------------------- 16
Foreign principal---------------------------------------------- 43
Improper activities of information service---------------------- -- 32
Official diplomatic functions------------------------------------- 32
Official information activities----------------------------------- 71
Political activities--------------------------------------------- 10
Political consultant------------------------------------- 47, 51, 62, 107
Solely--------------------------------------------------- ---- 107
Department of Justice views on S. 2136------------------------------ 6
Determination of interest being represented--------------------------- 51
Difficulties of proving private opinion or paid propaganda-------------- 12
Diplomatic agents, USIA amendment concerns----------------------- 30
Diplomatic functions controlled through State------------------------- 33
Diplomatic immunity for information officers------------------------- 35,37
Disclosure of nature of representation-------------------------------- 66
Domestic Lobbying Act-------------------------------------------- 55
Editorial pages carry propaganda------------------------------------ 109
Employment of public relations firm by information officers------------- 35
Enforcement of act, failure of--------------------------------------- 13
Ethical responsibilities of press-------------------------------------- 111
European press, attitude of, to witness in investigation----------------- 80
Exchange or visitor trips------------------------------------------- 73
Exemption for official Government offices, etc------------------------- 30
Federal Communications Commission views on S. 2136----------------- 7
Films, distribution of, a normal inforamtion function --------------------- 74
Film distributors,, efforts by Justice regarding------------------------- 19
"Foreign Agent" label, stigma of------------------------------------ 100
Foreign interest should be clarified----------------------------------- 53
"Foreign principal," clarification of term----------------------------- 43
Foreign principal's ownership control, significance of------------------- 16
Free trips abroad to newsmen and others----------------------------- 21
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Fullbright, Senator J. W.:
Examination of witnesses: Page
Chayes, Abram-------------------------------------- 62-63,65-75
Dean, Arthurll ---------------------------------------- 45, 51-56
Katzenbach, Nicholas deB---------------------------- 10-24,25-27
Lenvin, Nathan B----------------------------------------- 26
Wilson, Donald M----------------------------------- 33-34, 35-37
George C. Marshall ceremonies in Frankfurt-------------------------- 83
German press, alledged misinterpretations in, about investigation-----_-- 81
Grants by a foreign principal------------------------- ---------------------------------------- 20
Guidelines for enforcement, clarification of---------------------------- 50
Humphrey, Senator Hubert H.: Examination of witness: Wilson,
Donald---------------------------------------------------------- 37-41
Improper activities of information service, definition of----------------- 32
Increased contracting by foreign governments foreseen----------------- 40
International law, special course at Harvard for----------------------- 110
Israeli Digest's agency relationship---------------------------------- 21
Itemization of detailed statement by registrant------------------------ 17
Journalists, outside employment for__________________________________ 116
Justice's Registration Section--------------------------------------- 113
Labeling provision of S. 2136-------------------------------------
Lack of clarity where actual principal is concerned--- - - - - - - - - - - -- - - - - - - 15
Line between advice giving and legislation influencing- - - - - - - - - - - - - - - - - - 55
Logan Act, implications of---------------------------------- ------------------------------------------ 108
Majority of foreign representatives are above reproach_________________ 84
Motive for supporting a publication__________________________________ 17
Newspaper code of ethics ------------------------------------------- 116
Newspaper junkets------------------------------------------------ 115
Newspaper publishers' practice of accepting gratuities--- - - - - - - - - - - - - - - - 17
News services, newspaper's subscription to---------------------------- 114
No injunctive powers in existing law--------------------------------- 24
Objection to USIA reporting to Justice------------------------------- 36
Official diplomatic functions, definition of------------- --------------- 32
Official information office, characteristics of- -------------------------- 69,71
Outline of Julius Klein services-------------------------------------- 87
Penalties imposed under 1938 act------------------------------------ 11,26
Pending legislation could damage our foreign policy-------------------- 84
Political activities, definition of-------------- -------------------------------------- 10
Political activity, Justice thinks definition of, too narrow--------------- 52
"Political consultant," clarification of term-------------------- 47, 51, 62, 1.07
Political issues which might require representation--------------------- 54
Potential registrant's applicability under law__________________________ 23
Power of injunction necessary--------------------------------------- 102
Private nonpolitical public relations activity-------------------------- 98
Problems posed under pending legislation----------------------------- 45
Protection of editors against slanted news agency items - - - - - - - - - - - - - - - - 114
Public criticism of journalism --------------------------------------- 112
Public relations society, description of-------------------------------- 91
Public relations work, Does it have sinister implication?- - - - - - - - - - - - - - - - 93
Purpose of 5.2136------------------------------------------------- 56
Registration of trips and parties------------------------------------- 39
Registration with both State and Justice ----------------------------- 39
Religious and political activities, distinction between------------------ 20
Rendering of legal advice should not need registration------------------ 48
Reporting of subsidy for foreign travel- ------------- --------------- 113
Representation of private foreign clients------------------------------ 101
Representatives in United States of privately owned foreign firms--- ------- 85
"Solely," definition of term----------------------------------------- 107
Source of news agencies news items-------------------------------- 111, 112
Sparkman, Senator John:
Examination of witnesses:
de Seife, Rodolphe J. A----------------------------------- 100-104
Fisher, Roger------------------------------------------- 105-109
Isaacs, Norman E--------------------------------------- 114-118
Katzenbach, Nicholas deB---------------------------------- 24-25
Parson, David----------------------------------------- -- 34-35
Stevenson, Ward B---------------------------------------- 94-99
Wilson, Donald-------------------------------------------- 34-35
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Spot-check system on agents----------------------------------------
Page
19
State Department advice to foreign governments on hiring Americans--__
66
State Department policy of hiring registered consultants________________
65
State Department supports USIA amendment ------------------------
59
State Department views on S. 2136__________________________________
57
Study of nondiplomatic agents, review of-----------------------------
1
Subsidization of publications________________________________________
S
74
uggested changes in proposed amendments ----------------------- Symington, Senator Stuart: Examination of witness: Chayes, Abram____
72
Text of S.2136----------------------------------------------------
2
Trade between United States and Germany__ ________________________
82
USIA activities are diplomatic______________________________________
31
USIA amendment, Does it put diplomatic cloak on information officers?__
40
USIA amendment to bill, implications of_____________________________
21
USIA amendment to existing law____________________________________
34
USIA views on S. 2136---------------------------------------------
27
United States-owned foreign corporations_____________________________
22
Unnecessary registrations would be burdensome_______________________
- 49
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