CONFIDENTIAL FUNDS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-04718A000900170017-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 12, 2016
• Document Release Date: January 14, 2002
• Sequence Number: 17
• Content Type: MISC

,;ONFID N*pAoP@191 r Release 2002/02/11 : CIA-RDP78-04718A000900170017-8
Monies made available to the Agency by appropriation thru the Congress
have come to be known as confidential funds. Technically, it is a misnomer
and has grown out of the fact that atails of expenditures that are made with
the funds are to be treated confidentially, that is, held within the confines
of the Agency and not forwarded to the uenera A.ccountin Office for normal
Government audit.
The public law which extends i;o this Agency the authority to expend funds
for "objectives of a confidential, extraordinary, or emergency nature", i units
such expenditures to be accounted fo:cr solely on the certificate of the Director.
A literal interpretation of this law gives the Director absolute power to control
the expenditure of confidential funds allocated to the Agency. It is obviously
impossible for the Director to haurseif supervise and approve or disapprove each
expenditure of confidential funas. Ile has, however, thru the medium of regula-
tions, set out rules for the handling of such monies and, for most purposes, has
delegated his authority for authorizing and approving disbursements.
exercising the authority that goes with the use of confidential funds,
there are limitations imposed on the use of such funds by
a. legislative intent,
]. historic usage of funs of this type in other agencies,
C. a reasonable attempt to limit the use of this type of tuna to
those expenditures which of necessity must be handled in this manner.
The history of our e islation will show that Congress clearly intended
that the Agency be enabled to ac, as a -=Lure intelligence service. Or4 this
basis the justificatioi for confiuent tai expenditures of an operationa- nature
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cover administrative type expenditures r -um cunfidential funds. In this area
qe have the power to make payment, however, we may not have the authority to
make payment. In many instances where a situation has resulted in apparent
inequities to an individual, from administrative procedures, attempts have
been made to undo the inequity Uxu the use of confidential funds. In attempt-
ing to present justification for relief' if the individual, there is a tendency
to resort to an "operational need" type of explanation. Situations of this
kind, which may in some instances be a sort of subterfuge, inevitably tend
to break down accepted standards and policies for expending confidential funs
in compliance with general laws and regulations. compliance with general laws
and regulations is the aim of the Agency except where it is impossible to do
Go because of the peculiar nature of oua? operations.
We are attempting to develop accountiig practices and procedures which
fix responsibility for the reporting aria accounting for expenditures to the
degree compatable with security and operational circumstances, and maintain such
accounts and records as are required to provide a comprehensive basis for re ieving
the employee of his accountability when a proper accounting has been rendere4,and
furnish reports which can be used as tools of management to assist in the mere
effective d.ireeti of the Agency.
In this Agency the security and operational circumstances of the expenuiture
of funds for intelligence operations demand a flexible basis of rendering
accounts in the light of the circumstances surrounding the particular-operation.
The general concepts,of the requirements fur the basis of accounting is to i;et
properly itemized vouchers or receipts wherever and to the extent that security
and operating conditions permit. However, these requirements are relaxed as
appear to be justified to carry out the particular mission or activity. We reel
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0 is more
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criteria rather than inflexible regulations. vie like also to t1i1 that we
are being helped in this re and by the desire of those officers actually expeiia-
in?g monies on operationhfor self protec-cion. `fbe thought uppermost in the
mind of a person expending Government iwxus ought to be "how can I best, under
the conditions surrounding this disbursement, satisfy other interested parties
tat I did, in fact, expend these funds in the best interests of the Government?"
if this question is honestly answered ansx steps taken to implement the answer,
there should be no difficulty in developing an acceptable accounting.
Inasmuch as criteria have been estab..ished for accountings, there obviously
must be an audit program to check on the compliance with the regulations. (7bser-
vations of finance case histories of covert operations indicate that abusive or
unethical practices will not be foll.owec. by the majority of our employees, even
where there is no restraining influence in the form of an audit and inspection
program. It does appear, however, that instances of abuse do increase when
there is a lack of financial audit. Another aspect of the situation which we
must keep in mind is the fact that we are using public funds and it is a fun=i.a-
mental concept in the Unit?d States t at those who expend "people' money"
Cj t3 O
must account to the people.es wi-chout saying that any obvious repeated
instance of abuse or laxity in connection with the expenditure of confidential
funds, if brought to the attention of Congress or the public, would undoubtedly
result in a curtailment of the funds made available for confidential purposes
and would seriously impair the mission or the Agency.
It is therefore of the utmost importance that each officer and employee
of the Agency maintain the highest standard of individual integrity. We have
attempted to spell out, in Agency k(egu.i-ation the policies and 25X1 A
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 L1
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individual responsibilities requlrea in ;:jitrieetion with the handling of funds
and you should all have h t the vppor to become acquainted with it. Ti',
however, you have not real it up to taib point, you should take the few minutes
necessary, to accomplish this reading wiwiu- . delay.
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