Civil Air Transport

English

Embry-Riddle Aeronautical University

'I'HE CIA AND I 1rs PROPRIEI'AHY NE'l'WORXS An understanding of the role of the CIA and of its numerous proprietary companies can not be obtained from/' a simple I study of those proprietaries alone. i:t'he CJ A' s proprte-taries are deeply involved with the Department of Defense. They are involved with other departments of the Government and they are involved with many other governments. In some cases the relationship is very complex. The CIA may have a military unit which is a cover unit and that unit may deal with a proprietary which in tyrn will deal with some legitimate company. The legitimate compa.riy will think ~hat it is dealing with a private firm or with the DOD directly where a military contract is involved •• In another case a CIA proprietary may gain a contract from the DOD and will utilize that contract to service the mili-tary and at the same trime to service other companies. In so doing the private companies will not :k . now that they are ' deaf lj_ng with the CIA and not the DOD. In another case a ··CIA proprietary may use its CIA conJ1.ec ti on to get something from the DOD which other companies could not get, thereby gaining a competitive advantage over the othebs. In so doing this device may be used-intentionally or unintentionally-to destroy the competition. And then in certain re.re co.ses, but i n some most importaI1t cases, an. outsicie company may le::>nn that it has been outbid by a proprietary. :Lt may learn thtS through its own de-• vices a..-rid contacts or i -c r;;ay acq:.: ~.i'."e such knowledge from a lawyer who has had special knowlecige of such activity. In that case it may inform the DOD that if it does not get an equal or better contract it will blow the whistle. This t;ype of "National Security" blackmail is most effective. The outside company will get a contract aI1d then may co~:-tinue to use that kind of blackmail year after year. ') ( _ CIJi 1 S pro1Jriet cqry 'ousJ·_n ~c .s is \•er·y l~J~~ e ~ f "t. - - -0 - ~ ~ 0 • uOille 0 luS pr e-prietaries' activities a re concealed deeply within major companies, which cover for the CIA and in return get favors and inside assistance. This could well be the subject of a co~plete study. Even beyond the search into proprietaries the study could look at what the CIA does with the rather large sums of money { which it earns from these pr oprietaries. The CIA uses a 11 street!! ' ! '. name and buys and sells as other big investors do to manage these vast funds. The street name most commonly associated with the CIA is 11 Suydam11 • Funds of this nature are of cou.rse not Federal Firnds and are not subject to the usual controls. Huge sums arise from the sale of proprietaries. We do not know where they go, nor do we know if the sale means a bona fide separa:tion from the CIA or just another cover arrangement. The CIA depends upon some of these fi.mds for 11 1Au.._Tldered 11 money. Few people have ever had a real opportunity to understand how the CIA utilizes money. 'I'he CIA .gets "what money will buy 11 many times without the actual expenditure of fi.mds. It makes liberal use of the provisions of the National Economy Ac.t of 1932 as amended in order to acquire goods and services from other ag encies at no . cost or at nominal cost. The "horizontal" move-ment of money where the CIA is involved is a little J.01own specialty. In order to provide some b2ckgr·ound for all of this it may be well worth while to provide _ some background about the DOD/CIA relationship and its role within the government, industry and foreign affairs. Before 1955 the U.S.Air Force had a policy for providing su~port of the clandestine activities of the CIA; but it was re-latively informal. It was based upon a letter: coded DAF 53. In August of 1955 I was directed by the Director of Plans, .Hq USAF to assemble all pertinent files and records and to draft a formal set of policy papers for the special support of the clan-destine activity of the CIA. I had participated in clandestine ... ~ - -;, certain activ iti es in Saudi Arabia , Russia , Turkey and had been at the Cairo and Teheran Conferences . During the Korean Wa.r period I was the Com.ma,."'1der of an Air Transport unit which was responsible for certain operation~ throughout South Asia among them providing support for the CIA in India, Thailand, Vietnam, the Philippines and Okinawa. .• . I had background for th~s special work before 1955. I was able to assemble a rather uoluminous file dating from 1946 and 1947 through 1955. Some of these papers were in the handwriting of General Vandenberg who had b een Chief of Staff of the Air Force and who had been the Director of the Central In-telligence Group before the creation of the CIA. Other papers were the original NSCID's d a ting back to the forties and by far the most important papers were the Report to President Truman on the CIA, dated Jan 1,1949, made by Allen W. Dulles, William H. Jackson and Viathias Correa. I ... ater directives were s ome ~1e handwriting of President :C:isen....°flower. One of the most pertinent of these papers was a long letter directive signed by the then Secretary of Defense Louis Jo'hnson, in 1949 which established D@D policy for the operational and logistics · s ·•.J pJ) o:ct of uhe clct!1destine ac ti vi ty of the CIP.. (l~OTE: This use of words is to differentiate the cla.11destine s operations of the CIA from its Intelligence mision which was ,. not given this special status.) The principle point of the Johnson directive was t he DOD would d o everything po ss i ble to support the CIA but only after it has b een asc~rtained without doubt that approval for each project had been 9 ranted by the NSC a..~d then only after ' the CIA had agreed to reimburse the DOD for all o'...lt-of-pocket costs incident to such support. It also auth-ori zed elaborate personnel support of the CIA on an assigned and attached basis. l~ational policy required that no clandestine operati cn would ever be undertaken which could l/ot be plausibly disclaimed by the U.S.government in the .event of faiflure or compromise. As a result all clandestine operations were de s igne d to be small, 4 very clo s ely h e ld and when ev e r pa s sibl e ,one -time. Needless to s ay, alth ough my visible role was to p r ovide y'lili tary support for the cla..'1destine operations of the CIA, my :ceal role was to keep the military inf or1n ed of what was being done in this rarified atmosphere, its cost and to emphasize this requirement for the ability to plausibly disclaim any operation which involved military support----at all times. With all of this material and with the assistance of selected officials I was able to prepare a draft for support activities which was ready for Air Staff coordiBntion. The report was about 50-60 pages in length and was coded:TAB-6. It was coordinated throughout the Air Force in the States and over-seas and in addition to each Commanding General one other officer was designate to handle 11 TAB-6 11 matters. General Thomas D. 'vlhite ""2~S Chieftof Staff of the USAF at that time and my boss was Gen Richard Lindsay. When the Air Force policy had been made official, it was ' arranged for me to meet with Allen Dulles and his Deputy> General C.P.Cabell. They arranged for me to have a very thorough and continuing briefing on all CIA matters involved. The CIA was ple ased with this policy a.nd Vir Dulles suggested that there be a single 11 Focal Point 11 office on the Air Staff. This was my . office and I was its chief from 1955 through 1960. In 19 .56 Allen Dulles arranged for me to travel around the world to visit a consid e r abl,e number of his overseas offices in the company of one of his officials. Tbis was my first official visit to a number of these places and I went back to many of them during the next eight years. In 1960, at the request of the Secretary of Defense, Thomas Gates I was t~ansf erred from the Air Force to the Office of Spec-ial Operations. This senior office was responsible for all contact between the CIA and DOD, among other things. At that level I performed much the same duties and functions there as I had done in the Air Force only then it was for all services. I After the Kennedy inauguration I continued to work in the office of the Secretary of Defense, Bob McNamara for about a ye ar !Antil General Earle Wheeler, who was then the Director of the Joint Staff suggested tha t the military support of the CIA might best be placed on the Joint Staff level. This request was granted and in 1962 I was transferred to the Joint Staff and provided with a Navy and Army counterpart along with secretarial assistance. My first duty there was to draw up a Joint Staff policy paper very much like the one which I had created for the Air jForce. This was done and it was approved by the Chiefs of Staff .! II c21d officially 11 Red Striped'". An office similar to mine in the Jci~t Staff waps established in most major commands overseas and in t;he Army, Navy and Air Force. In the nine years which this period spanned many of the th:ings which have now become quite well known as "CIA activi ties'j meaI1ing clandestine operatio,ns rather than intelligence chores, took place. For example, the very first meeting which I attended with CIA officials in 1955 involved the origins of the vast P2V-7 program which became a world wide ELINT, radar and surveillance ' project. The Indonesian project, Tibetan programs, the Bay of Figs program and many other-s all - got their first .military support from my office. Gradually a system developed which resulted in the DOD being--in effect--a proprietary partner of the CIA. l"Jy office processed and supported the assignment or attach-ment of thm1saT1ds of mili tary personn.el to the agency and in support of the agency. It established and supported more than one thousand military cover units which were created for the sole purpose of providing cover for the ClA. This became a :particularly impoitant ac.$ivity. For example private com:r::anies which did business with these "military" units thougbt the.}' 1-.:ere dealing with the military when in reality they were dealing with the CIA. In some cases this led to major con-tracts and in certain cases these contracts were let without the custorr.ary and required bidding or amending procedures normal to the DOD system. Of course, in keeping with the old directive pro-mulgated by Sec Johnson and up-dated thereafter, the military ' 1 t: 6 sought reimbursement for all funds expended. But in some cases due t o security precautions they did not know what had taken place and in others they could not take action with out expos-ing the CIA. Some competitive, non-proprietary companies learned about this system and took advantage of it. They used this quiet undercover relationship for leverage. As small com-panies learned this, larger ones did and this got to be quite widespread and led to a most unique method of procurement. In another twist of this process the CIA would put its own agents into "military" units and in some cases would have them recalled to active duty so that they could serve in uniform with rank. Then the CIA would ask the Defense Dept to reassign these people to other jobs with other federa l departments and agenc-i:e s or even out into industry. Obviously the gaining org-anization did not know that the DOD was serving as a proprietary of the CIA. 1rhis led to many complicated situations especially ,. when a CIA agent, wearing the uniform of the armed forces was giyen a responsible job in the FP~~ o~ other such policy making organization. This got even more deep-rooted after the original "deep co\ter'1 assignee was replaced and another took -his place. - By that time no one would know that the original 11 slot' had been created for the CIA and the new incumbent would be completely unidenti-fiable to anyone as a CIA agent. This required elaborate money arrangerr:._ents which my office was responsible for arranging. The salary such persons drew from tbe military would be bl anked and the man would turn in his military check. Re would be paid by the CIA and the military would be reimbursed--on paper to keep the record clear. Then it became more complicated when the individual would travel on ~ifitary orders and incur expenses against the DOD all over the world. In maay cases we would keep three files: the individual's, his CIA file and his military file. We would do our best to keep ~~~~~~~·'·-~0hem all up to date and to plug the holes. With all this activity it was inevitable that my office would become increasingly involved in the CIA proprietary pro-gram. We handled hundreds of cont,J"acts with companies of all kinds, with aircraft companies, with air lines, with maintenance organizations, with brokers and universities, with sub-contractors II and with innumerable small deals of every kind. Out of all this j came the "Air America" enterprises. (Air America will be used here generically. Actually there is a whole hierarchy of companies under the Pacific Corp and other arrangements.) Air America is not unknown; yet there are perhaps no more than two or three people who really ]r,_r10w how extensive what we shall call "Air America"is and how far reaching its activity. At one time we had records in my office, and I am sure they were not comprehensive, of more than 100 organizations which were in some way or other related to Air America. It may be said that Air America, in total war one of the largest airlines a.Dd air support , organizations in the world. At one time Air America had 7~0 base fac~lities in the Far East which had more than 4,000 men on each one. ·~an any other airline say that? There are Air America affiliates all over the world. Air America works in Europe, the Far East and the Middle East. Air America crews and aircraft played a significant role in the Bay of Pigs program and in such things as the Indonesian a..'1d Tibetan proj.ects. Air Arr.erica had the capability to rr: aintain aircraft of all kinds and more than that ' it could make aircraft parts for most of its own aircraft. It had the design drawings required to make all parts of such aircraft as DC-6's. It could build complete aircraft in order that it could create a totally sani-ti zed airplane with no serial numbers, an;y--where in its entire structure---not just the tail number, for operational purposes. L Air America was an elaborate corporation. The best in its busines in the world. It would surprise this committee to have a listing ., 8 of how Air America acquired all of its aircraft and then for this committee to be able to go over that "sanitized" list to find out how Air America actually obtained its aircraft and its other capital as sc~ s. It is significant to point out that these advantages which accrued to Air America gave it an enviable com-petitive adge in the airline, air maintenance and even in the manufacturing and sub-component business among its peers. There came a time when the Pacific Corporation, Air America's gilt-edged parent, was being formed that the CIA wanted to regularize and formalize many of its activities. One of the things they were gre~tly interested in was the process of bidding for military contracts both airlift and maintenance. The presi-dent of Air America and I worked together for quite a period of time on the draft of an important letter which was to be signed by Allen Dulles and addressed to the Secretary of the Air Force with .. the suggestion that P!ir America be informed of every request for bid for either airlift or air maintenance c ontracts and that Air America be carefully considered when such bids were being awarded. We were careful, on both sides, to see that the letter was not a firm commitment and the Air Force was careful to see that no explicit commitment was inferred. preparation the letter was signed by Allen Dulles and delivered to the Secretary via the office of the Dep-uty J: ssi st2nt Sec::::· e tary for Civil Aviation. (It should be r~oted that the office of that official was Pente.gon Room number 4E871 and that the office of the Secretary of the Air Force is also listed as 4E871. No other such official had the same room number as the Secretary. Actually that room is the office of the Secretary's receptionist as was physically across the hall from the Se c retary. It also happened that the incumbent of that office \\·as an official of the CIA.) Because I had worked on the develop~ent of this letter I wa s directed to prepare a reply for the Secretary's signature. In general the Sec*etary agreed with the suggestion ~rom Allen ~ I I l f t ! ! t 1 r I I t r t ' t ,. t ! ,. f I i f f l t f i l ' Cl!l s 1_1 c h contracts. Air Jrne;r·ica ;_rnd other proprietaries re:cieve:d 1ncn;v i :iporta.nt 2irlift c:_nd aircraft maintenance contracts even a t a ~ime when this meant omitting other small carriers from contracts which they might otherwise have expected to win. WiLh the fulfillment of thes e contracts the CIA ~as able to make "l~se of such flights for its ov:n operational purposes and more importantly to give the appearance that Air America was a healthy and normal hard working airline among its competition. In the Far East t!1is close ::.~elationship blossome~to the period of the Vietnam War V.'hen Air _l,merica and its number-less affiliates received tremendous contracts i!lvoltlng them in all aspects of the war . But it was not always that \·.'ay 2nd on one conspicuo"lJS occasion our letter of agreement with Allen Dulles caused the hir Force sooe grief . During that particRlar period airlift contracts had reached a low ebb 81d there were very few up for bid in the Far Eas~. In spi te of thi s hi r A~erica won i :s bid. This caused some bitter complaints f:r:·om the others. One in particuleir came to the Pentagon and requested a discussion with the Secretary. Failing success with that ploy the next step ~as to visit the law offices of a prominent firm acros s ~i-..;er . I\ot long af ter that they both retD.rned and some sort of ?.STE:S'.:::er1t 1·<as reached . The " :rw::-win.ner" obt2ined a contrc.ct for so=e 2i~~ift . - . ' G.l c_ E UCCSSS did :riot go per·iod. It is quite futiJe to atte~pt such probing aro~nd in 10 the quag1nL1·c of tr:e t pe:riod>r:-spe:ci2lly s11;ce it ... ,~::is a r~, n~or part of the p:r·of e ssi on to o bf1.1 sea te everything c;nd ev c:1·y.·:J-i e;re a s a matter of expert ise. Men ~ho might truthfully s~ear that they took part in such end such a mission would be wrong be-cau s e they would have no v:ay of knm·:ing that the part of the mission they worked with was only the umbrella portion and t}:at t!1e men they trained and l aunched n e v e r were intended t o go c.n;y-•. 1here anyhow. Even some who ser\red with military ·uni ts never knew t!:at . tht:-l.\"' · ... mi ts \·,iere really false ani they v:ere s: v.pl;y rr.aintaining helicopters or keeping records for the CIA. But there is a ...  :ay to get to a full un8erstanCiing of al.l of _,_ , L·_c;ese ?he this country spells out in fine detail t~e duties and responsibilities of the CIA. All that is necessary is to ask the CIA ~hat it has done in accorda~ce with the law--a law ~hich i fu ~lti~ately unco~plicated i~ e:aC. s it with skill .::nd ca:re. _;.nd next it is sir:rnle to ar.:'ange v:itn the CIA that it wi ll be funded explicitfy each . ' -.i ecr- GO c.o ce~t2in things of importance 4 c~this government and its ~elf~re 2nd tha t t~ere will be Boney for those thi ngs and nothing else. 'l'!::e.t is the i·:ay these th ini; s can be operated. · .. . 'E did thet in the :':!OD ior t b ose nine ;years a...'Tld we }r,._new \.;hat we.s goi::1g on. ',: e c;te a little c:r-o· .. -.' f:r·oo ti::De t.o ti=ie; but e. t lea St v:e k.""Jew L 

The CIA and It\u27s Proprietary Networks

https://commons.erau.edu/cgi/viewcontent.cgi?article=1095&amp;context=aviation-pioneers-association

The CIA and It\u27s Proprietary Networks

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