SEMIANNUAL REPORT TO THE DIRECTOR, CENTRAL INTELLIGENCE AGENCY

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005498584
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 47
• Document Creation Date: June 24, 2015
• Document Release Date: April 14, 2011
• Case Number: F-2007-00194
• Publication Date: December 1, 2006

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Central Intelligence Agency
Inspector General
SEMIANNUAL REPORT
TO THE DIRECTOR, CENTRAL INTELLIGENCE AGENCY
JULY - DECEMBER 2006
John L. Helgerson
Inspector General
APPROVED FOR RELEASE ^
DATE: 25-Feb-2010
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(U) A Message From the
Inspector General
(U/k____] In the area of investigations, the work
of the Office of Inspector General (OIG) during this
reporting period has been devoted, in large measure, to fraud
and corruption matters. Inquiries are underway involving
cases of embezzlement, theft, contract fraud, conflicts of
interest, acceptance of gratuities, conspiracy, and
obstructing justice. One of these investigations involves a
former high-ranking official. The significance of the matters
under investigation is evidenced by the fact that the OIG is
working with Federal prosecutors from four different United
States Attorneys' offices and two sections within the Department of Justice's Criminal
Division.
The DIG also continues to devote investigative resources to reviewing the
Agency's detention and interrogation activities associated with the conflicts in Iraq and
Afghanistan and the international war on terrorism. This work, undertaken with the
cooperation of the Departments of Justice and Defense, as appropriate, is examining the
circumstances surrounding the movement, confinement, and, in some cases, alleged abuse
of detainees.
Three matters involving deaths of detainees remain significant.
In another matter, the OIG completed an investigation
examining [lie events surrounding the death of a former Iraqi Major General while in
custody of the US military in Iraq. The investigation found that CIA personnel were not
involved in the specific actions that directly caused the General's death,
In a third matter involving a fornner Agency contractor, the trial in
the Eastern District of North Carolina on four counts of assault of a detainee, who died,
resulted inn a guilty verdict. Sentencing is pending.
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(U0) The Investigations Staff is conducting a number of investigations
involving child pornography. Two cases of former Agency employees, one a senior officer,
involved in child pornography were resolved with guilty pleas and substantial prison
Sentences for each.
(U~~ The Investigations Staff has grown and evolved significantly since
this Office became statutory over 16 years ago. Our Special Agents are well-trained
professionals who are capable of conducting virtually any type of investigation. As set
forth elsewhere in this Report, I am asking for some expanded authorities that will enable
our Special Agents to better serve the Agency.
During this reporting period, the Office published a comprehensive
inspection report on the Agency's pet forinance0 Similar to the inspection0
,eported in the January-June 2006 Semiannual Report, this effort documented
and assessed the success of the Agency's aggregate performance
of the past three years.
over the period
The Office also published an inspection report on CIA's CounterTerrorism
Center (CTC). 7 /ic report described an organization of highly motivated officers
committed to ensuring there is not another devastating attack on US territory.
(U~~ During this reporting period, the Inspection Staff also completed
reviews of two major Agency components and a comprehensive analysis of the Agency's
reliance on contractors. Finally, at the end of the year, the Staff produced a Historical
Review of Lessons Learned from the past five years' of OIG inspections. This report was
sent to the managers of all major Agency components, hopefully helping them to avoid the
mistakes of others and learn from best practices.
(U The OIG continued its outreach to counterpart organizations
throughout the Intelligence Community. In August, three inspectors fironl the newly
created Inspections Staff in the National Geospatial-Intelligence Agency participated in the
OIG's New Inspector Training Course.
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(U~ The Audit Staff completed its annual independent audit of the CIA's
financial statements (for fiscal year 2006). Although the auditors disclaimed an opinion
on the financial statements, the audit report found that the CIA continues efforts to
improve reporting financial information in accordance with Federal requirements, and
steps are being taken to strengthen key internal controls.
(UL____) In 2005, the OIG undertook an initiative to provide more oversight of
the effectiveness of project management throughout the Agency. During the current
reportirt,Q period, a third audit in this series was completed. This was an audit of the
nlricli found that, overall, the program was well managed. CIA
managers accepted the recommendations made in the report and are taking steps to
i mmplement theist.
The Office continues to meet the standing request of the Congress that the
O/G audit covert action program no less frequently than every three years. The
Audit Staff completed an audit of a covert action program
(U/L
) The Audit Staff completed an audit of information security at field
stations and of the CIA's Corporate Information Retrieval and Storage System. It also
completed the mutual Independent Evaluation of the CIA's Information Security Program
and Practices Required by the Federal Information Security Management Act for FY 2006.
In response to a tasking from the President's Council on Integrity and Efficiency, the Staff
completed an evaluation of CIA's compliance with an Office of Management and Budget
Merruoranduin oil protecting sensitive Agency Information, as well as compliance with
four recorrnnended action items from the Deputy Director of the Office of Management and
Budget.
(U~~ The Office continues to experience turnover of personnel in its Audit
Staff, especially to outer components of the CIA, but I am pleased to report that during the
current reporting period, a longstanding, vigorous hiring program brought the Staff up to
its full, authorized strength.
(LC::::) In October 2006, the Inspector General participated in the
proceedings of the International Intelligence Review Agencies conference in Cape Town,
South Africa. The conference was attended by inspectors general, members of
parliamentary oversight committees, and various executive branch officials involved in the
oversight of intelligence services front 14 countries. This biennial conference, which was
hosted by the US in 2004, allows attendees to hear of alternative ways of dealing with
conuuon challenges and to share best practices. In recent years, the group has played an
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indirect role in helping to strengthen the oversight of intelligence services in emerging
democracies of the former Eastern Europe and Africa.
John L. Helgerson
11 January 2007
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(U) STATUTORY REQUIREMENTS
(U) This report is submitted pursuant to section 17 of the CIA Act of 1949,
as amended, which requires the Inspector General to provide to the Director,
CIA, not later than 31 January and 31 July of each year, a semiannual report
summarizing the activities of the OIG for the immediately preceding six-month
periods, ending 31 December and 30 June, respectively.
(U) All audit activities of the OIG are carried out in accordance with
generally accepted government auditing standards. All OIG inspection and
investigation activities conform to standards promulgated by the President's
Council on Integrity and Efficiency.
(U) The OIG has had full and direct access to all Agency information
relevant to the performance of its duties.
(U) Subpoena Authority
(U/~ During this reporting period, the IG did not issue any
subpoenas.
(U) Legislative Proposals
(U) Proposed Amendment to Section 17 of the Central Intelligence
Agency Act of 1949, as amended (50 U.S.C. ?403q):
(U) The OIG has requested inclusion in the CIA Fiscal Year 2008
Intelligence Authorization Act legislative submission to the Office of
Management and Budget limited authority for searches by specified OIG officers.
Specifically, the CIA Inspector General, the Assistant Inspector General for
Investigations, and any Special Agent supervised by the Assistant Inspector
General for Investigations would be granted authority to seek and execute
warrants, issued under the authority of the United States and authorized by the
Attorney General, for the search of specified premises and seizure of evidence,
upon probable cause to believe that a violation has been committed. Execution
of the authority would be limited to defined premises that are owned or under
the control of the CIA.
(U) Congress enacted Section 17 of the Central Intelligence Agency Act
(50 U.S.C. ?403q) in 1989 to create an effective and independent Office of
Inspector General for the CIA similar to the statutory Offices of Inspector
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General created by the Inspector General Act of 1978, 5 U.S.C. App. 3. The
proposed legislation would provide the CIA OIG with a limited version of the
authority that has been granted to the OIGs of 25 departments, agencies, and
organizations by 5 U.S.C. App. 3 ?6(e) relating to seeking and executing
warrants. The Inspector General for the Department of Agriculture is granted
similar authority by agency-specific statute, 7 U.S.C.A. ?2270.
(U) The current process for executing criminal searches of CIA-controlled
spaces requires the CIA OIG to enlist the assistance of a Federal law enforcement
agent (traditionally from the FBI) with the appropriate security clearances who
will request and execute a search warrant based on information provided by the
OIG and using OIG investigators and resources.
(U) This process requires considerable coordination and cooperation that
delay - at times significantly - the OIG's efforts to acquire criminal evidence
located on CIA-controlled property. Additionally, the current search warrant
process raises concerns regarding disclosure of national security information to
individuals who would not otherwise possess the requisite security clearance
and need-to-know, which increases the potential of compromising covert
facilities, persons, or operations. This amendment enables the CIA OIG to be
both more effective in accomplishing its mandate to investigate criminal
violations and more efficient in freeing the resources currently used to
coordinate search warrant requests and executions with the FBI or another
Federal law enforcement partner.
(U) The Senate Report accompanying the legislation adding search
warrant authority to the Inspector General Act of 1978 identified, among other
issues, the FBI's recent measures to refocus its efforts on counterterrorism. The
Report explained that the OIGs are now called on to play an increasing role in
handling certain law enforcement matters in place of the FBI. Similarly, by
allowing the CIA OIG to independently request and execute search warrants on
CIA-controlled property, this amendment reduces the demands this office now
puts on the FBI's resources.
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(U) AUDITS
(U) AUDIT STAFF OVERVIEW
(U/ The Audit Staff conducts performance and financial
statement audits of CIA programs and activities, and participates with other
agencies in joint reviews of Intelligence Community programs and activities.
During this period, the Audit Staff completed 10 audits that addressed project
management, covert action, financial management, information technology, and
field station administration.
The Audit Staff continues to pursue its program, as requested by
Congress, to audit each covert action program (or an aspect of each program) at
least every third year. This reporting period, the Staff completed an audit of a
covert action program
(U/ In the information technology area, the Staff completed the
annual review of the security of the CIA's information systems as required by the
Federal Information Security Management Act, and audits of information
security practices in the field and the Corporate Information Retrieval and
Storage System.
(U/
The Audit Staff completed an audit of
(U) The Staff completed work on the statutory audit of the CIA's financial
statements for fiscal year (FY) 2006 and issued the report in November 2006. The
report contains 18 reportable conditions of which 12 are considered material
weaknesses, and encompasses the status of management's progress on
recommendations from the FY 2004 and FY 2005 audits.
(U) During this period, the Audit Staff responded to a tasking from the
President's Council on Integrity and Efficiency to assess Federal agencies'
compliance with Office of Management and Budget (OMB) Memorandum M-06-
16, Protection of Sensitive Agency Information. The Staff completed its assessment
and sent a classified response to the OMB in September 2006.
(U) During the reporting period, the Staff's recruiting effort brought the
Audit Staff to the fully-staffed level. At times during the past year, the Staff has
been under strength by as many as 13 auditors. The recruiting effort has been
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(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS OUTSTANDING FROM
PREVIOUS SEMIANNUAL REPORTS
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(Li) SUMMARIES OF SELECTED CURRENT AUDITS
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(U) INSPECTIONS
(U) INSPECTION STAFF OVERVIEW
(U~ The Inspection (INS) Staff is responsible for conducting
inspections of CIA programs and operations to evaluate their efficiency and
effectiveness and their compliance with law, Executive orders, and regulations.
(U~ During the current reporting period, the Staff completed
inspections of the CounterTerrorism Center (CTC) in the National Clandestine
Service (NCS), the Office of Iraq Analysis (OIA) in the Directorate of Intelligence
(Dl), the Directorate of Science and
Technology (DS&T), Agency-Wide Performance0 and the Agency's
Reliance on Contractors. INS also completed a Historical Review of Lessons
Learned from Five Years of Inspections (2002-2006). INS is completing its reports
on the inspections of th and of the
Counterintelligence Center (CIC) in the NCS. In addition, the Staff commenced
inspections of the office of the Associate Director for Military Affairs, various
com}
NCS,
artmented programs
(U,1 The Inspection Staff continues to conduct a two-week course
for new inspectors and a seminar for team leaders before the start of each
inspection cycle. The Staff also provides instructional seminars for OIG
inspectors and research assistants during the course of each cycle. During this
period, the Staff initiated new seminars on focus groups and on presentation of
survey results.
(U/L___j In addition, the Inspection Staff continues to utilize an
independent contractor to track, monitor, and pursue compliance with
recommendations. The Staff closed four inspections -the Chief Information
Officer's (CIO's) Information Services Infrastructure (ISI); the DI's Office of Asian
Pacific, Latin American, and African Analysis; the Office of Securi ; and0
- that were open as of 1 July 2006. OIG is closing the
inspection because the one nonsignificant recommendation has
remained unsatisfied for five semiannual reporting periods.
(U) COMPLETED INSPECTIONS
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very successful in hiring entry- and developmental-level employees with
excellent academic credentials and full performance auditors with relevant work
experience. The new employees coming aboard during this reporting period
include representation from the five following governmental auditing
organizations: the Government Accountability Office, the Offices of Inspectors
General of the District of Columbia, the Departments of Defense and State, and
the Defense Contract Audit Agency. The employees bring a wealth of experience
in the areas of accounting, business, finance, and information technology.
(U) COMPUTED AUDITS
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(LL) OTHER COMPLETED WORK
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(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS OUTSTANDING FROM
PREVIOUS SEMIANNLIAL REPORTS
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(U) SUMMARIES OF CURRENT INSPECTIONS
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(U) INVESTIGATIONS
(U) INVESTIGATIONS STAFF OVERVIEW
(Uc::::) The Investigations Staff investigates possible violations of
statutes, regulations, policies, and procedures, as well as allegations of waste,
fraud, mismanagement, abuse of authority, and substantial dangers to public
health and safety related to Agency programs and operations. The Staff oversees
the Agency's grievance system and conducts proactive initiatives aimed at
detecting and preventing fraud, waste, and abuse.
(U~ The Staff conducted a range of other investigations,
including allegations of fraud by employees and contractors, possession of child
pornography, theft of US Government property, misappropriation of funds, and
false statements and claims. Judicial proceedings in two child pornography
investigations involving two former Agency employees each resulted in the
former employees receiving significant prison terms.
The Staff continued its resource-intensive investigations
concerning detention and interrogation activities in Iraq and Afghanistan.
events surrounding the death of a former Iraqi Major General while in custody of
the US military in Iraq.
Finally, in a
matter involving a former Agency contractor, the trial in the Eastern District of
North Carolina on four counts of assault of a detainee, who died, resulted in a
guilty verdict. Sentencing is pending. Congressional oversight committees are
regularly informed of progress in these investigations.
(U/[::::j As the Staff's workload continues to expand, four new
investigators have joined the Staff, drawn from within the Agency and the
Federal law enforcement community. Several other external recruits remain in
process. The Staff's remaining four vacancies will be filled from a large number
of internal applicants. Staff recruitment and training remain priorities.
(U~ Advancing the information technology arena remains a
critical priority for the Staff, as it seeks to identify and deploy software to
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manage its workflow and organize and search the voluminous records received
in investigations. A number of equipment upgrades of software and hardware
took place during the past six months. Two Special Agents have extensive
experience in computer forensic investigations and another three are
approaching that level. A position for a Forensic Laboratory Manager has been
created and will be filled in the near term.
(U/~ The Staff continues to oversee the Agency-wide grievance
system, which seeks to resolve grievances at the lowest possible level in the
organization. In addition to sponsoring a yearly grievance counselor workshop
for component and directorate grievance officers, the Staff hosts quarterly
meetings of grievance officers to share issues of common interest, and it conducts
mandatory training for all new grievance officers. This training, together with
the emphasis on resolution at the lowest possible level, continues to contribute to
effective and timely grievance resolution.
(U) COMPLETED INVESTIGATIONS
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(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS OUTSTANDING FROM
PREVIOUS SEMIANNUAL REPORTS
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(U) STATISTICAL OVERVIEW
(U) Audit Staff
(U/~ During the period 1 July to 31 December 2006, the Audit
Staff issued 10 reports and made 34 recommendations to improve accounting
and financial management, facilities management, and general management.
(U/~ The Audit Staff had 22 audits and reviews ongoing at the
end of the reporting period.
(U) Inspection Staff
(U/~ During the last six months of 2006, the Inspection Staff
completed 5 inspections and 1 review. At the end of the reporting period, the
Staff also had 7 ongoing inspections. In addition, the Staff closed 4 inspections.
(U) Investigations Staff
(U/~ The Investigations Staff completed work on 135 matters of
various types during this reporting period. Of this number, 19 cases were of
sufficient significance to be the subject of a final report-4 Reports of
Investigation and 15 Disposition Memoranda.
(U/During this period, the IG formally referred 3 matters to DoJ
based upon a reasonable belief that violations of Federal criminal law may have
been committed.
(U~ As of 31 December 2006, 134 matters were in various stages
of review by the Investigations Staff.
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(U) COMPLETED AUDITS
1 July - 31 December 2006
(U) Financial Management
(U) Independent Auditor's Report on the Central Intelligence Agency
Fiscal Year 2006 Financial Statements
(U) Information Technology
(U) 2006 Independent Evaluation of the Central Intelligence Agency
Information Security Program and Practices Required by the Federal
Information Security Management Act (FISMA)
(U/The Corporate Information Retrieval and Storage (CIRAS)
System
(U) Assessment of the Agency's Compliance with Properly Safeguarding
Sensitive Information
(U) Operations
(U) Procurement
(U) Field Activities
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(U) CURRENT AUDITS
31 December 2006
(U) Financial Management
(U) Independent Auditor's Report on the Central Intelligence Agency
Fiscal Year 2007 Financial Statements
(U) Unused Airline Tickets
(U) Imprest Fund Credit Cards
(U) Information Technology
(U) Operations
(U) Procurement
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(U) Field Activities
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(U) COMPLETED INSPECTIONS
1 July - 31 December 2006
(U,
Agency-Wide Performancq
Agency's Reliance on Contractors
(U) CURRENT INSPECTIONS
31 December 2006
Counterintelligence Center
Office of the Associate Director for Military Affairs
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(U) COMPLETED INVESTIGATIONS
1 July - 31 December 2006
U/
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(U/
Allegation of Nepotism
Alleged Contract Fraud
7)
Alleged Contracting Irregularities
Alleged Improprieties in the PISCES Program
Alleged Time and Attendance Abuse
b CIA Retirement and Disability System Appeal
* (U) These investigations resulted in a Disposition Memorandum rather than a Report of
tnvcstigation.
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Ethics Complaint
(U/I Time and Attendance Fraud
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(U) CURRENT INVESTIGATIONS
As of 31 December 2006
(U) Category
Number of cases
(U
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Grievances
Assignment
2
Compensation
1
Management and Supervision - Grievance
3
Other - Grievance
1
(U/
p General Investigations
Criminal and Prohibited Acts
Conflicts of Interest
9
Embezzlement
2
False Claims - Other
8
False Claims/Statements/Vouchers
2
False Claims - Time & Attendance
12
False Claims
1
False Claims - TBD
1
Firearms
3
Management and Supervision - Administrative
2
Megaprojects
4
Misconduct - Employee
5
Misconduct - Management
4
Procurement Fraud
14
Regulatory Violations
3
Retaliation
3
Theft/ Misuse of Government Property
7
Waste
3
Other - Administrative/ Criminal
32
Unauthorized Operation
1
Unsubstantiated Allegations
11
(U/
Total Ongoing Cases
134
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