CHAPTER XIVHiding 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 beingfollowed 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 preliminaryinquiries, 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, forexample, 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’ outof 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 realizedthat 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 ChicagoDaily 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 thepoint 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 offthe 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?
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 signingit, 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 TampaTribune, wrote to President Eisenhower:
“Mr. Mollenhoff’s question at the press conference about your administration’s ‘secrecy policies’ had to do with theHouse 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 RichmondTimes-Dispatchin 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 Journaleditorialized 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 theJournalin 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,” saidThe 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 HartfordCourant, edited by Herbert Brucker, carriedan 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 decidedtotry 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 thehuge 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 AdmiralLewis 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” torefuse 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 problemsand 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.