CHAPTER XIV

Hiding the Laos Mess

By the summer of 1959, Representative Porter Hardy was fed up with

arbitrary executive secrecy. The lanky Virginia Democrat was getting

a double dose of “executive privilege” and had nearly reached the end

of his patience. He was a member of the Armed Services subcommittee

headed by Chairman Edward Hebert, and therefore had firsthand

knowledge of how the Defense Department was hampering investigations

of military waste.

Representative Hardy was also chairman of his own Foreign Operations

and Monetary Affairs Subcommittee. This subcommittee (of the House

Government Operations Committee) was responsible for investigating

the handling of more than 60 billion dollars in foreign aid by the

State Department and the International Cooperation Administration

(ICA).

The Hardy subcommittee had a small staff of a half dozen headed by

John T. Reddan, the chief counsel. Under the best circumstances,

Hardy knew that they would be able to look into only a few reports

of mismanagement or fraud. But a little scrutiny should soon tell

whether the internal investigations of ICA were being conducted in

such a manner that the Congress could rely on ICA to police itself.

To find out how well ICA was performing, it was necessary to examine

the files of complaints of fraud or mismanagement and to determine

how these complaints were being followed up by ICA investigators.

But the ICA barred Hardy’s committee staff members from examining the

investigation files as well as the evaluation reports ICA was making

on its own operations. Such files, Chairman Hardy was told, would

contain “advice, recommendations and conclusions,” and, according to

President Eisenhower’s May 17, 1954, letter, therefore, could not be

released.

The investigation proceeded nonetheless. It was slow work, but with

patience and persistence Chief Counsel Reddan, Counsel Richard

Bray, Jr., Counsel Miles Q. Romney, and Investigator Walton Woods

pieced together the information ICA had denied them. They got it by

interviewing former government employees, examining the files of

business firms with government contracts, and taking trips to other

lands to personally examine foreign-aid spending.

The little country of Laos in southeast Asia was one of the first

on which they concentrated. The picture was not pretty. The

administration of U.S. aid was creating at least as many problems as

it was trying to solve.

The aid program in Laos started in January 1955, when that nation

was granted its full independence. Laos had been a part of French

Indochina with Cambodia and Vietnam. Independence for Laos had meant

that the United States took over the support of its entire military

budget—41 million dollars in 1955, 47 million dollars in 1956, 43

million dollars in 1957, and 30 million dollars in 1958. Most of it

went to support a 25,000-man army. The subcommittee later concluded

that this military aid plus about 1.5 million dollars annually in

economic assistance added up to the fact that the United States was

“virtually supporting the entire economy.”

As early as June 1957, the subcommittee received reports indicating

the foreign-aid program in Laos was being damaged by waste,

inefficiency, and poor judgment. After preliminary inquiries, the

formal investigation was started on April 10, 1958.

The requests for ICA files on Laos foreign-aid spending were rejected

by ICA Director James W. Riddleberger. The ICA also barred Chairman

Hardy from files on India, Bolivia, Brazil, and Guatemala.

A few months later, the ICA refused to let the GAO auditors see the

files on Laos.

Chairman Hardy was irked with the frustration, but downright furious

at what he considered to be a disregard of the law. Certainly the

ICA reports on Laos should be made available to the GAO, for the

Budgeting and Accounting Act of 1921 provided explicitly that all

records of all departments must be made available to the GAO auditors.

Furthermore, when the foreign-aid program had been established in

1948, the debates had included discussion of the accounting on

foreign aid and the necessity for availability of information to

Congress.

At that time Senator Arthur Vandenberg, the Michigan Republican,

commented:

“There are several points in the bill where it is provided that

Congress is to be advised. In addition, we are creating ... the

‘watchdog’ committee [Joint Committee on Economic Cooperation] ...

which will be entitled to all information of every character at all

times.”

Despite the law and the intention of the lawmakers, the ICA had

clamped the secrecy lid on, and kept it on. ICA also rejected GAO

requests for information on foreign-aid spending in Formosa, India,

Vietnam, Pakistan, France, Turkey, and others.

In its investigation of but one of the foreign-aid programs—the

one in Laos—the Hardy subcommittee unearthed enough evidence of

incompetence, laxity, mismanagement, and fraud to fill scores of

pages of an official report.

The military program for a 25,000-man Laotian army, for example,

arose from a political decision made by the State Department and

contrary to the recommendations of the Joint Chiefs of Staff and the

Defense Department. “Significant military opinion has suggested a

force of 12,000 to 15,000,” the Hardy subcommittee reported.

The subcommittee also found favoritism, conflict of interest,

and bribery in connection with ICA contracts in Laos. “Edward T.

McNamara, [ICA] public works and industry officer, accepted bribes

totaling at least $13,000 from Willis H. Bird and Gerald A. Peabody

of the Universal Construction Co., in return for helping them

secure lucrative contracts and overlooking deficiencies in their

performance.”

The subcommittee reported dozens of incidents of minor officials’

showing favoritism toward firms that later employed them. One sharp

charge was aimed at the man who headed the United States Operations

Mission (USOM) during part of this period.

“Carter dePaul, former USOM director, sold his 1947 Cadillac upon

his departure from Laos to Gerald A. Peabody, head of Universal, at

an inflated price [about $3000]. Uncontroverted evidence indicates

the vehicle was at that time inoperable, and that shortly thereafter

it was cut up and the pieces dropped down an abandoned well. In the

interim, it had stood rusting in front of Universal’s main office,

where it was the subject of scornful amusement by Laotians and

Americans alike.”

More shocking than the frauds was the evidence dug up by the

subcommittee showing that U. S. Embassy officials in Laos and high

ICA officials in Washington took no effective remedial action after

receiving reports of corruption and mismanagement. Greater energy was

obviously being expended in hiding the mess from Chairman Hardy and

his investigators.

The subcommittee’s evidence indicated that an investigator for the

ICA Auditor Haynes Miller, “was ‘railroaded’ out of Laos because

he was close to discovering the truth about Universal, its bribes,

its virtual monopoly of U.S. aid construction projects ... and its

woefully inadequate performance.”

This action to remove Auditor Miller seemed more reprehensible to

me than any ordinary theft or misuse of money or government power.

This was evidence that there was a brutal conspiracy within the U.

S. Embassy in Laos to eliminate those officials who were complaining

of fraud and mismanagement and to shield persons who were engaged

in wrongdoing. It demonstrated what could happen when government

officials feel they have an “executive privilege” to hide the records

on their activities.

Miller’s reports and his persistent efforts to get something done

about deficiencies in the program only resulted in his removal. He

was “unable to adjust” to Laos, some of his superiors and associates

said. U. S. Ambassador J. Graham Parsons sent a telegram to

Washington stating he had invited the investigator to resign “because

of obvious signs of nervous disorder.”

“Ambassador Parsons’ opinion of Miller’s ‘nervous disorder’ was

rendered without benefit of medical advice,” the Hardy subcommittee

reported. “This is contrary to Department of State regulations.

Competent medical advice was available to the Ambassador and could

have been solicited.”

“One month later, on October 30, 1957,” the report added, “Miller was

subjected to a full medical examination in Washington and certified

as ‘qualified for general duty.’”

Officials of the ICA excused the deficiencies and maladministration

in the Laos program with the claim that the aid program, no matter

how poorly administered, had saved Laos from Communism.

“This assertion is purely speculative, and can be neither proved nor

disproved,” the Hardy subcommittee stated in 1959. That was two years

before it was generally realized that a corrupt aid program had

probably helped the Communists in Laos.

Even in 1959 the Hardy subcommittee concluded “that a lesser sum

of money more efficiently administered would have been far more

effective in achieving economic and political stability in Laos, and

in increasing its capacity to reject Communist military aggression or

political subversion.”

At a press conference on July 2, 1959, two weeks after the Laos

report was issued, William McGaffin, of the Chicago _Daily News_, put

the problem of secrecy in ICA to President Eisenhower.

“Mr. President,” McGaffin started, “do you see any solution to the

quarrel between Congress and the executive branch of the Government

over the question of freedom of information?”

“Well, I don’t know exactly what you are adverting to when you say

freedom of information,” President Eisenhower said and then jumped

for the safety of George Washington’s shadow:

“This question, from the time of Washington, has been a live one.

When the Executive determines that something is to the—will damage

the security of the United States or its vital interest, then it

withholds information that possibly could be put out. But I don’t

know of any specific thing which you are talking about at this

moment.”

McGaffin bounced back:

“Mr. President, if I could just spell it out briefly: Congress seems

perturbed over various instances where they feel that the executive

branch has misused the claim of ‘executive privileges’ and denied

them information which they should have.

“For instance,” McGaffin continued: “There are evaluation reports

made by the ICA on certain countries which have received mutual

security—Formosa, Laos, Brazil, Guatemala—a whole string of them, and

Congress has raised the point where they are going to try to pass a

law which would compel ICA to turn that information over to them.”

President Eisenhower confused the problem with national security in

answering:

“Well, there are certain things, particularly in the security field,

that, if you reveal, are very obviously damaging to the United States

and I think anyone of good sense will see that. And you simply must

take measures to see that those things are not revealed.

“And, now, this has been—there is nothing new about this. The

Executive, and there seems to be a sort of congenital built-in mutual

opposition that I don’t know why it occurs, I don’t particularly feel

it personally, but I know it’s there and at times it comes to my

attention in one form or another.

“But,” said the President, retreating to the safety of his reputation

as an honest man, “I am using my own conscience on the matter and

when such things as these come to me for decision, I shall continue

to do so.”

It was a most unsatisfactory answer on a most important question

involving the policing of spending by the Defense Department and the

ICA. I decided to follow up where the Hardy subcommittee and Bill

McGaffin left off. At the next press conference, on July 15, 1959, I

caught President Eisenhower’s eye.

“Mr. President,” I started. “Several committees of Congress have

charged that departments of your administration have used the

secrecy of the so-called ‘executive privilege’ to hide imprudence,

mismanagement, fraud, and in some cases material which has later

resulted in indictments. I wonder if you have taken any steps to

correct this?”

President Eisenhower’s eyes blazed with anger. Despite his emotion he

remained controlled enough to avoid the kind of comments on facts or

law that had put him in so much trouble in the past. He said:

“I think you had better put that question in written form and let me

take a look at it because you start off, right off the bat, with the

premise or implication that someone is guilty of fraud and I don’t

believe it.”

When I attempted to reply that the charges of fraud and mismanagement

were included in official reports of Congress, he cut me off sharply.

“I will see your letter if you would like to submit it.”

In the letter to President Eisenhower, I tried to be careful and to

be respectful of his position:

My dear Mr. President: In response to your request, I am submitting

the basic question which I asked at the July 15, 1959, press

conference. I regret that the statement of the question at the

press conference raised any implication of fraud, or knowledge

of fraud, at the White House level. Such an implication was not

intended. The question was based on the findings of various

committees of the Congress. In general the reports dealt with

subordinate officials who, it is contended, used the so-called

executive privilege in an effort to conceal their activities from

investigators of Congress and the General Accounting Office.

Several committees of Congress have made reports charging that

officials in some departments of Government have used the

secrecy of executive privilege to hide what the committees

called carelessness, mismanagement, fraud, and other alleged

improprieties. Comptroller General Joseph Campbell has told the

Congress that some executive departments have violated the law—the

Budgeting and Accounting Act—in withholding reports from him

in connection with waste, mismanagement and improprieties. Mr.

Campbell has testified before the House Appropriations Committee

that this secrecy is a violation of the law, and he also stated

that it “could be almost fatal” to vital auditing functions his

office performs.

Comptroller General Campbell and the Moss subcommittee, among

others, have raised the question as to whether this withholding of

information is inconsistent with the Constitutional requirements

that the Chief Executive “take care that the laws be faithfully

executed.”

There is no problem of national security involved. The Air Force

and Navy have informed Congress and the GAO that no national

security is involved, since the GAO auditors have the same

clearance to examine classified material as do the officials in the

departments.

Against this background, I would rephrase my question as follows:

In the light of the provisions of the Budgeting and Accounting Act,

do you feel you have an executive responsibility to carry out the

law in line with the Comptroller General’s views?

The answer, from Gerald D. Morgan, Deputy Assistant to the President,

reached me a few days later on July 21. Morgan merely quoted from the

President’s letter to Representative Hoffman of some months before,

and from other earlier statements of his on “executive privilege.”

Morgan wrote, “The President’s position has not changed.” I was not

convinced that President Eisenhower knew what his position was. The

letter left all basic questions unanswered.

The foreign-aid bill, amending the Mutual Security Act of 1954,

was now before the Congress, and Representative Hardy had tacked

on an amendment specifically stating that “all documents, papers,

communications, audits, reviews, findings, recommendation reports and

other material which relate to the operation or activities of the

International Cooperation Administration shall be furnished to the

General Accounting Office” and authorized committees of Congress.

On July 24, 1959, President Eisenhower signed the bill with Hardy’s

amendment, including three provisions for disclosure of information

to the Congress or the GAO. In signing it, however, the President

served notice he would not abide by the disclosure sections:

“I have signed this bill on the express premise that the three

amendments relating to disclosure are not intended to alter and

cannot alter the recognized constitutional duty and power of the

executive with respect to the disclosure of information, documents,

and other materials. Indeed, any other construction of these

amendments would raise grave constitutional question under the

historic separation of powers doctrine.”

Five days later at the July 29, 1959, press conference I asked the

President if he considered the provisions in the bill to cut off

funds to balky agencies to be “a criticism of the administration’s

secrecy policies.”

President Eisenhower turned red in the face at the reference

to “secrecy” in his administration. “You start your question

with an implied fact that is not a fact,” he said. “You say

the administration’s secrecy policies. There has been no

administration....”

I tried to amplify my question, but was cut off.

“Please sit down,” the President said sharply. I sat on orders from

the Commander in Chief, and he continued:

“There has been no administration since my memory, and I have been

in this city since 1926, who has gone to such lengths to make

information available as long as the national security and the

national interest of this country is not involved.”

It was fruitless for me to try to stand up and tell him what was

happening in his administration. So I sat still and took it. The

support that came later from editors over the country was most

gratifying.

V. M. (Red) Newton, Jr., managing editor of the Tampa _Tribune_,

wrote to President Eisenhower:

“Mr. Mollenhoff’s question at the press conference about your

administration’s ‘secrecy policies’ had to do with the House of

Representatives provisions in the foreign aid bill that would force

the bureaucracy to give information of this foreign aid to the

Congress.

“Both the Congress, which votes the expenditure, and the American

people, who pay the tax funds, are entitled to full information.”

The Richmond _Times-Dispatch_ in an editorial entitled “Does

Eisenhower Understand?” commented: “Somebody is going to have to

explain to President Eisenhower that the ‘executive privilege’ dogma,

which originated in his first term five years ago, is being perverted

into a device for ‘covering up’ and denying the public the facts

concerning the government.”

The editorial commented on the “corruption, profiteering and

mismanagement in Laos” in the ICA, and the fact that the Teapot Dome

scandals would never have been uncovered if such a principle as

“executive privilege” had been invoked.

“So it would be advisable for Mr. Eisenhower to look into this

‘executive privilege’ thing much more carefully than he has done so

far. He will find that it carries within itself the seeds of scandal,

and offers needless temptation to department heads. It should be

abolished.”

_The Wall Street Journal_ editorialized on the “Misplaced Anger” of

President Eisenhower. It gave President Eisenhower full credit as

a “man who believes that public office is a public trust.” But the

_Journal_ in its usual fair but solid way called attention to the

entire problem of the GAO’s obtaining access to government records so

it could fulfill its responsibility.

“If he [the President] were to inquire into the extent of secrecy,”

said _The Wall Street Journal_, “we have an idea the President would

be far more angered at some of his own bureaucrats than at the

reporter who brought the secrecy to his attention.”

The Hartford _Courant_, edited by Herbert Brucker, carried an

equally fine editorial. Brucker was chairman of the Freedom of

Information Committee of the American Society of Newspaper Editors,

and was one of a handful of the editors who knew the subject

thoroughly.

By this time editors of a couple dozen newspapers had done

considerable study on the problem of “executive privilege.” Although

cognizant of the many problems weighing on President Eisenhower, they

felt the time had come for him to make himself aware of the insidious

secrecy that was creeping into the federal government under his

prestige.

It was a week after this press conference that James W. Riddleberger,

Director of the ICA, refused to make evaluation reports available to

Congress on the foreign-aid program in Laos and Vietnam.

Now Chairman Hardy saw that a disclosure amendment to the

Mutual Security law would not be enough to force the Eisenhower

administration to produce records for the GAO and the Congress.

The 3.1-billion-dollar foreign-aid appropriations bill was still

pending in Congress, and Hardy decided to try to use an amendment to

this purse-string measure to force the Eisenhower administration to

produce records.

The House was unanimous in adopting the Hardy amendment to the

appropriations bill. This amendment provided that the Comptroller

General could shut off aid funds to any program if records were

refused to Congress and GAO investigators.

The Eisenhower administration was gravely concerned over this

amendment. Riddleberger voiced the opposition, and the Senate

weakened in the face of administration pressure. The Senate version

of the appropriations bill carried the provision that the President

could authorize withholding by a simple certification “that he has

forbidden its being furnished ... and his reason for so doing.” In

a late night session the Senate-House conference committee accepted

the huge loophole in the Senate version of the appropriations bill.

Representative Hardy recognized it immediately as a loophole that

could destroy the effectiveness of his amendment. A simple note from

the President would override any request by Congress or the GAO.

Would President Eisenhower read the documents necessary to determine

for himself whether a certification for withholding was justified? It

seemed more likely to his critics that he would sign certifications

continuing to bar the GAO and Congress from a thorough examination

of the internal workings of the foreign-aid program. Chairman

Hardy’s fears were justified. It wasn’t long before his requests

for information were being met with “certification” from President

Eisenhower giving only the most general reasons.

The Congress could have done more than it did. It unquestionably had

the necessary power, reaffirmed by the Supreme Court as recently as

1957 in the Watkins case. The Court said:

“The power of Congress to conduct investigations is inherent in the

legislative process. That power is broad. It encompasses inquiries

concerning the administration of existing laws as well as proposed

or possibly needed statutes. It includes surveys of defects in our

social, economic, or political system for the purpose of enabling the

Congress to remedy them. It comprehends probes into departments of

the Federal Government to expose corruption, inefficiency and waste.”

I was unsuccessful in my efforts to get Speaker Sam Rayburn or

Majority Leader Lyndon B. Johnson interested in taking any effective

measures to reaffirm the right of Congress to compel production of

records for GAO.

Congress did deliver the Eisenhower administration one blow in 1959

in connection with the “executive privilege” issue. That was when

President Eisenhower nominated Admiral Lewis Strauss to be Secretary

of Commerce. The hearings before the Interstate and Foreign Commerce

Committee started on March 17, and pulled out past the middle of May.

Although a good many personality clashes were involved, the role that

Strauss had played in the Dixon-Yates contract and his advocacy of

extreme “executive privilege” also figured.

The report favoring the Strauss confirmation stated: “Our committee

spent much time in detail examination of specific instances in which

it is charged that the nominee withheld or was grudging in giving

information to congressional committees. The few instances charged

represent a minute percentage of the nominee’s dealings with the

Congress.

“In fact, the nominee showed great diligence in keeping the Congress

informed,” concluded the six Republicans and two Democrats who signed

the majority report.

When questioned about the Dixon-Yates contract, Strauss had said: “I

thought it was a good contract and I still do ... it would have cost

the people a great deal less than the plant ... is now going to cost.”

Strauss denied that he had used “executive privilege” to hold out

information from Congress in the Dixon-Yates controversy.

“No information was withheld by me,” he said. “No question failed of

answer except one which was several times repeated and to which I

respectfully declined response on ground that to demand conversations

had with the President or members of his personal staff would be in

violation of the constitutional doctrine of separation of powers ...

I testified that the contract with Mississippi Valley Generating

Company had been entered into at the direction of the President and

had been terminated at the direction of the President, and that, I

submit, should have been sufficient.”

Strauss claimed a total right under “executive privilege” to refuse

records to Congress, and the seven-member Democratic minority

concluded:

“The record ... indicates such withholding is without basis in law,

and that the nominee had no concern for the law in this respect.

From the record it is clear that the nominee time after time has

resisted furnishing the appropriate committees of the Congress with

information needed in order for Congress to properly perform its

legislative functions.

“It appears to us from careful attention to the testimony, that Mr.

Strauss had withheld or manipulated information to serve policy or

personal ends. On the basis of the record, we have grave doubts as to

whether or not information furnished by Mr. Strauss, as Secretary of

Commerce, would be accurate or complete.”

The minority position was to prevail on the Senate floor where the

Strauss nomination was defeated.

Senator Mike Monroney, the Oklahoma Democrat, explained his

opposition to the Strauss nomination thus:

“Both the people and the press are entitled to expect from the

legislative branch of Government the vigilant protection of the

people’s right to know. For the Senate to seek to give protection in

the exercise of its power of confirmation is not only proper, it is

obligatory.

“I conceive it to be basic to democratic government that the people

and their elected representatives in the Congress, are entitled

to receive from the officials of the executive branch, not merely

literal truth, but full information, freely given without design to

soothe, to confuse or divert.”

When the Strauss nomination was defeated in mid-June, I had hopes

that the Congress was on the way to recognizing the problem of

“executive privilege” for all that it was. But by the end of the year

it was apparent that most of the members of Congress had gone back to

their little personal problems and had left Moss, Hennings, Hardy,

and a few others to wrestle with the big problem of how to obtain an

adequate GAO audit of spending that involved more than half the total

national budget.

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