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.