DIRECTOR OF THE CENTRAL INTELLIGENCE AGENCY WILLIAM J. CASEY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00901R000100300007-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 13
• Document Creation Date: December 19, 2016
• Document Release Date: December 9, 2005
• Sequence Number: 7
• Publication Date: April 7, 1982
• Content Type: REPORT

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UNITED STATES COURT OF APPEALS
FOR THE
DISTRICT OF COLUMBIA CIRCUIT
SPECIAL PROSECUTOR DIVISION
REPORT OF THE ATTORNEY GENERAL
PURSUANT TO 28 U.S.C. ? 592(b)
: No.
SUBJECT: DIRECTOR OF THE CENTRAL :
INTELLIGENCE AGENCY
WILLIAM J. CASEY ?
In accordance with Section 592 of Title 28, United
States Code, as added by the Ethics in Government Act of
1978, Public Law 95-521, I, William French Smith, Attorney
General of the United States, make the following report
concerning the receipt by the Department of Justice of
information regarding an alleged criminal violation by
William J. Casey, Director of the Central Intelligence
Agency.
1. The Allegation. On January 7, 1982, an article'/
appeared in The Washington Post alleging that William J.
Casey had lobbied public officials in the Treasury Depart-
ment and the Internal Revenue Service in the period June
through September, 1976, seeking changes in agency policy
on behalf of a foreign client, the Government of Indonesia,
1/ A copy of the article is attached as an Appendix.
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without having registered with the Attorney General as an
agent of a foreign principal.
2. Statutes Involved. The Foreign Agents Registration
Act ("FARA"), 22 U.S.C. ? 611-621, and its implementing
Regulations require that no person may represent the interests
of a foreign principal before any agency or official of the
United States by seeking changes in official policy without
first registering with the Attorney General. Section 618
of FARA provides that wilful failure to register as required
may be punished by a fine of not more than $10,000 or by
Imprisonment for not more than five years, or both.
3. Investigation. Because the information in the
article raised the possibility that 22 U.S.C. ?.618 may have
been violated by a person subject to the Special Prosecutor
provisions of the Ethics in Government Act, the Department
of Justice, pursuant to 28 U.S.C. ? 592(a), conducted a
preliminary investigation of the matter. In the course of
the investigation, the following information was developed:
a) In April of 1976, the Internal Revenue Service
issued a private letter ruling to Mobil Oil Company, which
concluded that certain payments to be made by Mobil to the
Government of Indonesia's oil development arm, Pertamina,
under proposed oil production sharing contracts would not
qualify as an Indonesian "income tax" and thus could not
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be credited against Mobil's United States income. It was
anticipated that a Revenue Ruling of general applicability
would be forthcoming. Both the affected oil companies and
Indonesia were concerned about the effect the anticipated
Ruling would have on their contracts and the profitability
of their joint ventures to develop Indonesia's oil resources.
b) On May 19, 1976, Indonesia retained the law firm
of Rogers & Wells to represent its interests before the
Internal Revenue Service with regard to the tax credit
issue. At preliminary meetings with Treasury Department
officials, Indonesia was advised that the best course
would be to amend its tax code and its contracts with the
oil companies to conform the oil company payments with
the IRS definition of a creditable foreign tax. Indonesia
decided to pursue this course.
c) On June 30, 1976, William Casey, then counsel
to the firm of Rogers & Wells, became involved in the firm's
representation of Indonesia. Over the course of the fol-
lowing three months, he obtained appointments with high
officials of the Treasury Department and the Internal
Revenue Service, attended several meetings as counsel for
Indonesia, and made a number of telephone calls in behalf
of the client.
d) As many participants in those meetings as
could be identified and located were interviewed in the
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course of this investigation, including Mr. Casey himself.
Relevant documentation was obtained from the Treasury and
State Departments, the Internal Revenue Service and the
law firm. The evidence developed in the course of the
investigation indicates that Mr. Casey's representation
of Indonesia was limited to efforts to obtain, as expedi-
tiously as possible, an agreement with the Internal
Revenue Service as to the changes that would be necessary
In Indonesian oil production sharing contracts and tax
code to ensure that payments made under the contracts
would be creditable under the United States tax law.
At all times, the fact that Mr. Casey was representing
Indonesia was made clear to those officials with whom
he was dealing. The evidence does not support a conclu-
sion that at any time Mr. Casey sought to persuade or
influence officials to change any agency policy.
4. Analysis and Conclusions. Pursuant to the
Special Prosecutor provisions
Act, I must determine whether
Investigation or prosecution.
It does not.
FARA is a disclosure statute, with its focus on
protection of the integrity of the government's decision-
making processes, accomplished through a requirement that
agents seeking to influence United States government
of the Ethics in Government
this matter warrants
It is my conclusion
further
that
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action to the benefit of foreign clients register with
the Attorney General and make certain disclosures regard-
ing their receipts, expenditures and activities. The Act
and its implementing Regulations define who must register
and the information that must be disclosed publicly; exempt
certain types of agents from registration; and define the
administrative and judicial remedies and penalties appli-
cable to violations. Wilful failure to register as
required is subject to prosecution as a felony.
Because there is no dispute that Mr. Casey was an
agent representing a foreign principal before officials
of United States agencies, and that he was not registered
with the Attorney General, the focus of this inquiry cen-
tered on whether or not his representation fell within one
of the established exemptions to the registration
requirement. The exemption involved in this case is the
so-called "attorney exemption" codified at 22 U.S.C.
? 613(g). This section exempts from the registration
and disclosure provisions of FARA:
(g) Any person qualified to practice
law, insofar as he engages or agrees to
engage in the legal representation of a
disclosed foreign principal before any
court of law or any agency of the Govern-
ment of the United States: Provided,
That for the purpose of this subsection
legal representation does not include
attempts to influence or persuade agency
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personnel or officials other than in
the course of established agency pro-
ceedings, whether formal or informal.
By regulation, in 28 C.F.R. ? 5.306(a), "attempts to influ-
ence or persuade" is defined as efforts to alter official
policy or influence its formulation. Thus, so long as an
attorney's representation is limited to negotations with
agency officials within the context of established policies
and procedures, and the client's identity is disclosed to
the agency officials by the attorney, there is no registra-
tion requirement.
The evidence developed in this preliminary investigation
indicates that Mr. Casey's activities on behalf of Indonesia
clearly fell within this attorney exemption. His client was
disclosed to each of those agency officials with whom he
dealt, and his representation was limited to negotiations
to reach agreement on changes to be made in his client's
production sharing contracts and tax code, in order to con-
form to the IRS's policies and procedures. The evidence
fails to disclose any effort to persuade the Treasury
Department or the IRS to alter those policies.
Mr. Casey's representation of Indonesia was open and
above-board, and his disclosure of his client's identity
as required by the attorney exemption to FARA is evidence
of his good-faith efforts to comply with the requirements
of the Act.
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The specific allegations in the Post article to the
effect that Mr. Casey "was advocating specific changes in
tax policy" and "attempted to win a favorable policy change
for Indonesia" are not supported by the evidence developed
in the course of the preliminary investigation, and given
the scope of the inquiry, it is unlikely that evidence to
support the allegation would be developed through further
investigation.
In conclusion, I find that these matters have been
thoroughly investigated and there is insufficient evidence
to support a criminal prosecution. Therefore, I hereby
notify the Court that I find this matter to be so unsub-
stantiated that no further investigation or prosecution
is warranted and that no Special Prosecutor should be
appointed for this matter.
Respectfully submitted,
.4% / 1FAID
' ..
ILL Ai F CH SMI
Attorney General of the
United States
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APPENDIX
The Washington Post, Thursday, January 7, 1982, Page A-1
Casey Lobbied Without Registering
By Patrick F. Tyler
suArdreum furs Ron %Priv+
Wit/ IRM J. Carey, as a private Isw?
yr working for the Indonesian gov-
ernment, lobbied trip officials of the
Treasury Depertment it 1976 for
multimillion-dollar changes in the
U.S tax Iva without registering ots
fonitn went.
COAry, nnw Central Intellirnce
Acency director, has esontendeil in
pest Senate inquiries (het he per-
formed limited IrP1 flervim? and
attended 'informetionel meetings
with Internal Revenue Service ern-
riga But government dcrumente
obtained hy The Washingtne Toot
indicate t,hot Orel Wel Ad MCI ting
litpeS4 rk (+Angry ID tu policy outside
eetehlratied channels with top pout.
lea! appnintem of the Ford admin.
.ration, including Treasury Secre-
tary William E. Simon.
The iesue of whether Cami,
should have registered as a foreign
agent is under Justice Department
review (nitrating lot frill's Senate
Intell,gence Committee inquiry,
ahich concluded Casey was not unfit
to serve as director of the CIA. Stan-
ley Sporkin, CR general counsel,
hao maintained that Cocery wax pot
-required to reef* as 1 idesigta
Cetiy?i, ieviaentation 11
sla, ea doctrmentad by te?Okipela
fmra the IRS and
Aar to the cast a trirl-eft
Clifford and Paul Warnke; 167,1
mer high grvermnent o.frktak Thai
Were required to register ae ,kyrign
agents for Algeria In 1975 AN idle
tics on-vials letreet1 that the 1114i.
Id met In 1971 with U.S. gleidere-
anent officials In In ttlecapI. to it.
;edit* Export-Ircip:et karat to Atga.
In many *Atwell, the Justice
Department requires reeistration
after the fact. it 1980, Preaident
Ca'ter's brother, Billy, aim was
forced to register for his Libyan rep.
cementation, which caused emhar.
remount to the edministnition.
A Weyer representing a eFent,
including a foreign government, In
'eatablialled pmeeeding" such sa
en IRS tax ruling caw is no re.
quired to register as a foreign agent,
but suppoaed to register if engeiged
In 'political ectivity." The law de.
fine? that as any acticin intended to
?persuade or in any other way influ-
ent* any agency or andel of the
United Stales svith reference to
kanulating, adopting or chenrini
the dornestk or foreign policies of
thi. !lolled States....
Diirtitno,tta and interview" with
former official, ahno thnt Gnikev met
firo with the treasury secretary and
the eminent secretary For tax Hwy,
State Department official end !Ater
with lEtS otrelials, utiv IRS to
put aside AA objertiona th a)e, !Mo.
mien production conU.acts. with
major American oil companies and
the claims for tax credits for over-
sees taxation. In 1b78 the IRS came
around to the position favored by
Indonesia. '
? t.
On July 8, /916, Cotey met with
Simnn and his amittant secretary for
tax policy, ehafie. M. Walker, to
enlist their aid. Walker flowed the
meeting by writing a July 9, 1976,
memorandum to then IRS Commis-
sioner Donald C...Alexinder urging
him to erpedits nis tax rulings.
? In an intervorer tht week, Ale:-
ander said that Simon and Walker
berArne involved in the foreign tax
credit question. 1 just thought the
IRS out(ht to have celled them the
way we saw them without regard to
polithal cortaideratione."
Both Siroot andlValker said ro-
an* that they do not recoil the
300007-0
unkerni
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Attorney General William berth
Smith. in the Wet escent policy
statrinent on foreign want migra-
tion, said in a ',port last fl thst his
department would require seomplett
public disclosure by persons &chi*
for OtIJI the interests of foreign
eipals where such activities are iv
litical in DAWN Or bonier on the po-,
btical."
Casev's arriment that Issot mos
required to nester as ii foreign
agent centers on the 'Exemption few
attorneys performing legal service.,
in what the law calla an 'earahiodied
igen ey proceed ing ."
IRS repilationa alecifically state
that only U.S. taxpayers. may apply
for TRS rulings in an eotablished
agency pr ding, which requires a
formal applicstinn and specific gib-
rnivolins Casey merle no such api.
cation and iretead attempted to win
a favorable prilicy change for Inein.
nesis by ening throogh top Trrionirv
officials.
Justice spokesmen Joh1?1 Roman
Mid yeaterday that private levvere
have an obligation In register IP
',cents df foreign clients 'when they
attempt to influence or persuade
rverneint nfficiale exoept in fatale
fishwr! agency proceedinp.'
sir other words," &well said, bar
formes inure be made in a proceed
ing nrther than informally up on the
Hill or over the breakfast table or in
private rneetinri in the executive
branch. It hu to be some sort of fo-
rum, such ea a court or a hearing."
Another knowledgeable Justice
Department official who asked not
to be named said that the circum
-
starves deecribod in this story would
normally require registration as' a
Fore ign agent.
elle Ind.:exist/in tax meter born
in May, 191'6, when major oil corn-
pen operating in Indonesia, in-
cluding Texaco, Atlantic- Richfield
and Mobil, were put on notice that
the IRS would no lOnger.treet their
"production Owing' arrangements
with the Indonegan government se a
foreirn tax that could be deducted
from US. taxes. ? ?
On June 1, WM one et Casey's
partaers at Rcgere & Wells, Peter R.
Tahoe wrote a letter to Treasury
International Tat Coursed Robert J.
Patrick Jr. to set up a meth*
bRogers & Walls woe Peaked by the
government of [Monads ... to ad-
eke on ways to overcome the In.
term! Revenue 'SeMct's objections
to the profs:furs for collecting Indo-
On Ji7 Owl nut WI
Simon and Walker arid delivered to
them a leven.page mernorendiV.
The Memo gated that Cory and
Reefs & Wella 'have been inertial,-
pod by the Indonesian government*
use OUT best efforts to develof
procedure For the prompt elide:
publication of a statement to, ,the
effect that Indonesian ifICOOlt
.. will be eligible for the for
ax eign
I tcredit, either in the form al a
public SIRS] revenue ruling or Oh-
. ferrite."
The next day, WiJkir **soli 1,11.
memorandum to then IRS commis-
sinner Alexander telling him that the
Indonesian case could have beige.
;cant influence on the foreirn op-
erations of the American oil
Uy. He 'sprayed his opinion that
the Indonesian government befth
the advice of New York legal enure
ler had adequately mini:Vied ha all
contrects to get in line with IRS Iv
quirementa arid would be seeking eo-
oonaiderstion in the neer future. tL
assume that,11.3ilIkter
&xis& In view of the trent:464i'
irnportance of this mattet, thiejorik
awning ruling roved will be kw..
dited by you: affect"'
On July 14, 1916,C
other Rogere & Wells attache!,
er, met with Aseittant IRS Cone* t
sioner John L Wither' and
other IRS oriclale For 40-ns ..kiaNra
conference on the Indonesian .tagoi
. according to I conference ttort.
? the IRS tam.. Withers '
'Cy that the IRS %add not
press any opinion is to whether _SC
not itu credit would be given tidll
? taipwr rrluestrri*
kg from the service. , :?11
'Since neither Pertiunbsi ittik
docreelan state oil company WI
&neat& met the lite ogi1
some other entity such akellS,
sial-npahy would have An
ere service before we could give a det
finitive &newer on the tax credit ;11
The conference fepork'srtitteo*NA.'.-
'IRS technical branch attorney &se-.It
%in.; Elkhrtes. t bi!tet,
Nen* which costly Fddie~
earlier to Assistant Secretary Nabs
Airm crotrautad to /FtS partaten110
On July 29. Carley it Within
seven page of additional informs-
tion about propelled changes in the
Indonesian tax structure.
Former IRS nMcials said this
1 week that none of these actions were
1, part of an 'established seamy pro-
ceeding" since Ca.ey's foreign client
had no standing to request an IRS
revenue
"That's not an established army
proceeding when he's going to the
I iTreaeuryi secretary," said former
1IRS commissioner Sheldon S.
Cohen.
One IRS branch chief, John L
! Crawford, said in an Aug. 17. 1976,
Interns! note. 'The memorandum
I submitted by Rogers & Wells on he.I half
Perlarnina ... does not at
Toed any basis for a conference sottli
Pertsmina's representetivec" He
added, 'I think further conferences
would be counter productive.*
In a suheequent meeting re-
quested by Casey on Aug. 30, anoth-
er conference report shows that
Withers' repeated his point several
times. "Mr. Withers began the too-
fertnce by observing that a request
for a ruling (by a U.S. taxpayers
... has not been received."
? But the discussion continued, ac-
cording to the conference report.
'Mr. Casey indicated that in consid-
ering the oil companies' position It
was impneent to Int-lone/de to de-
termine what the service will require
In the way of a creditable tax.
'Mr. %there responded that the
service must tell the taxpayers di-
rectly concerned whether the tax is
creditable rather than going indirect-
ly through Indonesia.'
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The report adds, `Mr. Casey aug?
Rested Indone.is ilhnuld be afforded
some status to negntiatt with the
'service, citing the example of tax
treaties whirh are negotiated by the
foreign government although the
provisinn. ariect U.S taxpayers.'
But the IRS official mitereted to
.Casey that a revenue ruling involv-
ing a U.S taxpayer was not &miles
.to a treaty between two govern:
vients. Car-ey relented by saying that
his las firm would "work with the oil
companies to expedite aubcnission oi
a ruling request."
By the end of August, the IRS
bed noted in its filo that it had
fused Rnger. & Well.' request and
continued to wait for a U.S. taxpayer
to make a ironsl application to
tiste an estshlishmi agency proceed-
kg.
Inse In was carried fig Into
the Carter administration where
there were high-level discuesions on
whether top Treasury officials
should pet involved with the IRS de-
cision.rnaking process.
After considering whether totals
action. Assistant Treasury Secretary
C. Fred Bergsten told Semetary W.
Michael Blumenthal in a Sept 23.
1977, memo that, 'There are strong
argument!' against intervening in
the IRS deliberatiom.
sit would put the U.S.. goverd-
went in the questionable poititkni of
politically Intervening in the tax rul-
ing process for the benefit of a for-
eign government," according to the
memorandum.
Camy's work for Worsts fol.
lowed by six months his departure
from the top post at the Stoops..
Import Bank, which durtm his ten-
ure had supported a multimillion.
&ray lending program for technical
development in Indonesia
In 1977, a year after the Arm
began work for Indonesia &eters &
Wells registered at a foreign agent
because `the firm foresaw a possible
need to move to an advccacy fasi?
tion with respect to the IRS: or-
eimiing to a letter 'supplied to The
Senate corrunittee. The firm's ttg-
firtration statement said the tidy
partner working an the aim "me
Peter Fisher.
Fisher described hit activftioull.
%ogle representation before rietn-
inenta1 departments or arm-iota(
-the United States in connection with
.obtaining United Stat* foreign 112
-credit for Indonesian income Wel
paid by United Stat?il eckettio-
sloe
On his registration forin.-c:ert".
inn asked what politica/ activitlitfbe
might undertake as an agent
donesia. Fisher replied, 1
called upon to pre?ent facts
gurnenta before appropriate
mint agencies henries 6r officials wits JO-
; sped to chancre in Indonesian *
laws and practices and ecceralke
thereof by ouch agencies or
In 1978, the IRS reinetated Or-
! eign tax credits in Indonesia. :;.?
; Staff writer Charier R. &MU
emtributti to this snide,
I **
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UNITED STATES COURT OF APPEALS
FOR THE
DISTRICT OF COLUMBIA CIRCUIT
SPECIAL PROSECUTOR DIVISION
IN RE REPORT OF THE
ATTORNEY GENERAL PURSUANT No.
TO 28 U.S.C. ? 592(b), No.
MOTION OF THE ATTORNEY GENERAL
PURSUANT TO 28 U.S.C. ? 592(d)(2)
FOR LEAVE TO DISCLOSE REPORT
Pursuant to 28 U.S.C. ? 592(d)(2), I hereby seek
leave of the Division to disclose the contents of the
"Report of the Attorney General Pursuant to 28 U.S.C.
592(b), No.
," filed with this Court on
. This report concerns the preliminary
investigation into allegations that William J. Casey
attempted to influence policy decisions by the Internal
Revenue Service and the Treasury Department on behalf
of a foreign client, without registering as an agent
of a foreign principal. The substance of the allega-
tion underlying this report was reported widely by the
news media. In these circumstances, I believe that it
is in the public interest for the Court to grant leave
pursuant to 28 U.S.C. ? 592(d)(2) to permit me to
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disclose publicly the report submitted to this Court
regarding these allegations.
,Respectfully sUbmitted,
Dated
Attorney General o the
United States
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2 bre T981
Mr. Casey has made the following statement after reviewing the
Senate Select Comittee's report:
I am pleased that the Senate Intelligence Committee, after an
exhaustive investigation, has repoiled nothing which reflects on
the integrity, the business practices and the ethical standards
in which I have always taken pride. I look forward to continuing
to work together with the Committee to improve the nation's
intelligence capabilities.
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