ENTERTAINMENT FUNDS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81-00755R000100080033-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 9, 2016
• Document Release Date: July 12, 2000
• Sequence Number: 33
• Publication Date: October 28, 1949
• Content Type: MEMO

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UTTICC 1viemoranaur ? UNITED STATES GO ERNMENT
TO : Director of Central Intelligence DATE: 28 October 1949
Thru: Executive, and Chief, I & S Staff
FROM : Chief, Audit Division
SUBJECT: Entertainment Funds
1. An audit of the confidential funds expended in the
United States for official entertainment which were recorded
during the period 1 January through 8 September 1949 has been
performed, as directed in your memorandum of 8 September 1949.
2. The audit reveals a total of $9,156.76 spent for
entertainment, of which $627.95 was borne personally by em-
ployees. Of the total amount, $6,847.35 was spent on 1,012
occasions for 2,405 persons and the remainder of $2,309.41
was spent on three special projects. A summarization of the
amounts involved, by Staff Offices and for special projects,
is attached as Table 1.
3. The term "entertainment" has been considered to cover
those occasions on which at least one CIA staff member'was
present when a meal or other type of entertainment was pur-
chased for one or more operational contacts or agents. This
interpretation has excluded payments covering actual living
expenses allowed agents and informants, such payments being
considered a part of the agent+s compensation or purchase of
information rather than an entertainment item.
4. The vouchers on which entertainment expense was
claimed have been audited in accordance with applicable regu-
lations. Paragraphs 7.2 and 7.2a of the Confidential Funds
Regulations effective 1 February 1949 were controlling for
the major part of the period and are quoted. below:
"Expenses for entertainment involved in the pro-
curement of information or special services or in the
contacting of persons for operational reasons will be
allowed where such entertainment has been approved by
the Assistant Director or-chief of the field installa-
tion concerned. The voucher claiming','reimbursement
specifically will include the date and nature of the
entertainment, the number of persons, the names of the
persons entertained, or in lieu of their names, a des-
cription of their occupations or the capacities in
which the persons entertained were acting, or other
data acceptable to the Certifying Officer.
"No reimbursement will normally be allowed for
the expenses of entertaining officers or employees of
the United States Government exclusively. However,
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where such persons necessarily are.present or inciden-
tal to the contacting of other individuals or the
procurement of confidential information or special ser-
vices, such expenses may be allowed."
The approving authority of both the ADSO and the ADPC has
been redelegated in writing through the designation of approv-
ing officers.
5. The audit did not include any investi ation into the
necessity for or benefit from any of the entertainment since
such a determination was considered an operational activity
outside the scope of this assignment. Therefore, reliance
has been placed upon the approving officer for assurance that
the entertainment was essential to the effective operation of
the agency.
6. The audit findings indicate that there has been lit-
tle or no apparent abuse of confidential funds for entertain-
ment purposes. Amounts spent generally appear reasonable,
there has been no excessive concentration of this activity
in any one individual, and proper approvals for all expendi-
tures have been obtained. However, numerous instances, dis-
cussed below, were noted in which the vouchers did not
comply with all technical requirements of the Confidential
Funds regulations governing entertainment.
a.. The requirement that individuals entertained be
named or identified as to occupation or capacity
in which entertained was' the one most often dis-
regarded. In many cases,?those entertained were
not identified in any way or were described as
"contacts,' "agents," or by initials. It is be-
lieved that more informative descriptions can be
given on the voucher without jeopardizing secu-
rity and should be included in the future., In
the present audit, since no indication of thisuse
of funds through omission of this information
was found, a more complete description of those
persons entertained has not been requested.
b. The requirement that the number of persons present
and the number entertained be given was not met in
numerous instances. The number of staff indi-
viduals present is therefore not apparent and an
appraisal of the entertainment cost as divided be-
tween staff and non-staff individuals has not been
possible.
co In a few cases, the date of entertainment was
omitted or vaguely stated. As an illustration of
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this point, James Angleton was paid in June 1949
for entertainment expenses incurred as early as
July of the previous year, the 1948 expenses be-
ing identified only by month or within a 2-month
period. Four entertainment items claimed by
Mr. Angleton showed no date by either month or
year,
d. The Contact Division vouchers contained affirma-
tive statements that no Government employees were
entertained. In regard to vouchers from other
offices which did not contain this statement,
reliance has been placed on the operational approv-
ing officer to exclude entertainment of Government
employees only.
7. Some practices, not directly in conflict with regu-
lations but whose administrative desirability is questioned,
were observed during the audit.
a. The regulations do not specifically require that
the names of staff persons present on entertain-
ment occasions be given. However, an administra-
tive determination has been made by the Finance
Division, SSS that this should be done, a deter-
mination with which the Audit Division is in com-
plete agreement. Although the vouchers in the
.early part of the period audited often did not
show this information, much improvement has been
made since the decision by FD to require it, and
it is considered essential that in the future all
vouchers show this information to permit proper
evaluation of the claim by the approving and cer-
tifying officers.
b. The employees of the Contact Division, Office of
Operations, when claiming reimbursement for opera-
tional meals, make a deduction from the gross cost
in the amount of the normal cost of the employee's
meal, thus effecting a recovery of a portion of the
cost of the employee's meal or meals by the agency.
This is done whether the employee is in travel
status drawing per diem or at his headquarters. In
all except the Contact Division, travelers are in-
cluding in their claims the cost of their own meals,
when present at operational entertainment meals,
even though they are also drawing per diem. Inasmuch
as this represents dual reimburserr nt by the Govern-
ment, it is suggested that in the future a recovery
be made from the traveler through a reduction of
entertainment expense either (1) in the amount he
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would normally spend for such meal or meals while
in travel status, or (2) by fixed amounts to be
established for each meal, for example, 75% for
breakfast, $1.00 for lunch and 02.00 for dinner.
In this connection, an analysis of the claims
shows that in OPC and OSO, where no recovery of
any portion of the cost of entertainment meals
was made from staff employees, $1,365.84 or 38%
of the total cost of entertainment was incurred
by individuals in travel status. Another phase
of this problem is that of staff employees sharing
in entertainment luncheons at their headquarters.
It is felt that the normal cost of lunch should
be borne by all staff members present, and only
the excess above such normal cost should be reim-
bursed by the agency as an operational expense.
c. The practice of allowing a period of several months
to elapse after an expense is incurred before sub-
mitting claim for reimbursement is also questioned,
particularly in the case of entertainment where
receipts are normally not obtained and documentary
evidence of date, cost, and persons present is not
available for reference when the claim is prepared.
Delays up to eleven months in claiming expenses by
Washington staff members were observed.
8. Other facts and general observations revealed by the
audit and appearing of interest are presented briefly below:
a. The distribution of per person costs for entertain-
ment by the Staff offices is shown in the following
tabulation:
25X1A
00/Contact
Per person cost
____ -
i -
OSO
-_
OPC
---
~~
M~~
Total
U
nder ti
7
---
14
-
12
_
3
- -
36
1.00 - 1.99
49
40
211
15
315
2.00 - 2.99
26
62
270
24
382
3.00 - 4.99
58
52
87
6
203
5.00 - 6.99
24
16
11
-
51
7.00 - 9.99
9
1
3
-
13
10.00 - 12.99
2
1
1
-
4
Insufficient information was given in the claims for special
project entertainment to permit a similar tabulation of those
expenses.
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b. Those instances in which the entertainment costs
exceeded $100.00 on a single occasion were a din-
ner for 24 persons at Blair House in February 1949
given by OPC, costing $292.27, and a series of
entertainments for two foreign agents given between
6 December and 16 December 1948. This latter series
included a dinner for 23 persons at the Shoreham
Hotel costing $591.15; three other dinners in Wash-
ington for 7 to 12 persons costing from $115.00 to
$143.00; two dinners in Chicago, one including
entertainment at two night clubs, costing $118.00
(for 6 people) and $141.00; and two dinners in New
York one including night club entertainment, cost-
ing 4119.00 and $147.00. The number of persons
present on the last three occasions was not given
in the claim.
25X1A
d. An employee who was authorized to travel to New
York City for the purpose of "technical ins ection
of certain equipment involved in 25XlA2dl
expended y$,38.50 in one day (for two people) and
$170.50 in eight days for meals and drinks, mainly
with one agent.
e. Five cases of wines and liquors were purchased for
a dinner for 24 people. The quantity suggests that
an unused portion may have remained, for which an
accounting was not made.
f. Night club expenses were claimed by an employee
authorized to travel to New York City to de-brief
an agent.
9. In conclusion, although, as previously stated, the
audit revealed in general no evidence of misuse of entertain-
ment funds, it is believed that improved control and adminis-
tration of entertainment funds is possible. To that end, the
following recommendations are offered:
a. That the regulations be amended or clarified to
require the furnishing of names of all CIA
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personnel and members of their families present
at each entertainment occasion.
b. That closer adherence to present regulations be
required as to furnishing dates of entertainment,
number of persons present and entertained, and an
informative description of the persons entertained.
c. That consideration be given to the advisability of
recovery of a portion of the cost of entertainment
meals from employees drawing per diem, and from
employees in headquarters when present at opera-
tional luncheons.
25X1A9a
Chief, Audit Division
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