CJHjrValid XHTML 1.0W3C: Valid CSS2

Alt+left-arrow to return from a link

 

Full-text: July 16 1971 hearing (pp.123-174)
Accounting for CORDS and funding
the CIA/DoD Phoenix Program

CIS: 72 H401-3 SuDoc: Y 4.G 74/7:V 67/4

U.S. Assistance Programs in Vietnam

 


HEARINGS


BEFORE A


SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS


HOUSE OF REPRESENTATIVES


NINETY-SECOND CONGRESS FIRST SESSION


______________________

July 15 {a.m., p.m.}, 16, 19, 21; and August 2, 1971

__________


Printed for the use of the Committee on Government Operations



GPO mark



U.S. GOVERNMENT PRINTING OFFICE
68-870 WASHINGTON :

 

COMMITTEE ON GOVERNMENT OPERATIONS

Chet Holifield, California, Chairman

Jack Brooks, TexasFlorence P. Dwyer, New Jersey
L. H. Fountain, North CarolinaOgden R. Reid. New York
Robert E. Jones, AlabamaFrank Horton, New York
Edward A. Garmatz, MarylandJohn N. Erlenborn, Illinois
John E. Moss, CaliforniaJohn W. Wydler, New York
Dante B. Fascell, FloridaClarence J. Brown, Ohio
Henry S. Reuss, WisconsinGuy Vander Jagt, Michigan
John S. Monagan, ConnecticutGilbert Gude, Maryland
Torbert H. MacDonald, MassachusettsPaul N. McCloskey, Jr., California
William S. Moorhead, PennsylvaniaJohn H. Buchanan, Jr., Alabama
Cornelius E. Gallagher, New JerseySam Steiger, Arizona
Wm. J. Randall, MissouriGarry Brown, Michigan
Benjamin S. Rosenthal, New YorkBarry M. Goldwater, Jr., California
Jim Wright, TexasJ. Kenneth Robinson, Virginia
Fernand J. St Germain, Rhode IslandWalter E. Powell, Ohio
John C. Culver, IowaCharles Thone, Nebraska
Floyd V. Hicks, Washington
George W. Collins, Illinois
Don Fuqua, Florida
John Conyers, Jr., Michigan
Bill Alexander, Arkansas
Bella S. Abzug, New York

Herbert Roback, Staff Director
Christine Ray Davis, Staff Administrator
James A. Lanigan, General Counsel
Miles Q. Romney, Associate General Counsel
J. P. Carlson, Minority Counsel
William H. Copenhaver, Minority Professional Staff

______________________

FOREIGN OPERATIONS AND GOVERNMENT INFORMATION SUBCOMMITTEE

William S. Moorhead, Pennsylvania, Chairman

John E. Moss, CaliforniaOgden R. Reid, New York
Torbert H. MacDonald, MassachusettsFrank Horton, New York
Jim Wright, TexasJohn N. Erlenborn, Illinois
John Conyers, Jr., MichiganPaul N. McCloskey, Jr., California
Bill Alexander, Arkansas
EX OFFICIO
Chet Holifield, CaliforniaFlorence P. Dwyer, New Jersey

William G. Phillips, Staff Director
Norman G. Cornish, Deputy Staff Director
Harold F. Whittington, Staff Consultant
Dale E. Moser, Supervisory Auditor, GAO
Martha M. Dott, Clerk
Mary E. Milek, Secretary

(II)

 


CONTENTS

Witnesses: Oye V. Stovall, Eugene Wohlhorn, James Duff, Ralph Stansbury (U.S. General Accounting Office, International Division)

{July 16 1971 hearing, pages 123-174


(III)

 

{p.123}

U.S. Assistance Programs in Vietnam

_______________

Friday, July 16, 1971

House of Representatives,
Foreign Operations and Government Information Subcommittee of the Committee of Government Operations,

Washington, D.C.


The subcommittee met, at 10 a.m., in room 2247, Rayburn House Office Building, Hon. William S. Moorhead (chairman of the subcommittee) presiding.

Present: Representatives William S. Moorhead, John E. Moss, John N. Erlenborn, and Paul N. McCloskey, Jr.

Staff members present: William G. Phillips, staff director; Norman G. Cornish, deputy staff director; Harold F. Whittington, staff consultant; Dale E. Moser, supervisory auditor, GAO; and William H. Copenhaver, minority professional staff, Committee on Government Operations.

Mr. Moorhead. The Subcommittee on Foreign Operations and Government Information will please come to order.

Today, we continue our investigation of the economy and efficiency of U.S. assistance programs in Southeast Asia. The witness today is Mr. Oye Stovall, Director of the International Division, General Accounting Office. Mr. Stovall will be testifying on aspects of the so-called pacification program in South Vietnam. It is based on a classified report issued earlier this month, that revealed some $1.7 billion of the $2.1 billion in funds authorized for the program was not properly accounted for.

He will also be describing the CORDS program, civil operations and rural development support, and its operations during the past 3 years.

The former director of the program in Vietnam, Ambassador William E. Colby, will be our witness on Monday morning.

Mr. Stovall, will you and your associates who will testify please rise and I will administer the oath?

(Oye Stovall, Director, International Division, General Accounting Office, Eugene Wohlhorn, James Duff, and Ralph Stansbury were sworn by the chairman.)

Statement of
Oye Stovall, Director,
International Division,
General Accounting Office;

Accompanied by

Eugene Wohlhorn, Assistant Director;

James Duff, Associate Director; and

Ralph Stansbury, Audit Manager

Mr. Moorhead. Mr. Stovall, before you proceed, will you introduce your associates to the subcommittee? {p.124}

Mr. Stovall. On my left is Mr. Eugene Wohlhorn, Assistant Director of the International Division, and on my right, Mr. James Duff, Associate Director of the International Division, who is responsible for all our work in this area, and on his right, Mr. Ralph Stansbury, Audit Manager of the International Division.

Mr. Moorhead. You may proceed, Mr. Stovall.

Mr. Stovall. Thank you, sir.

I have a prepared statement, Mr. Chairman, if I may read it.

Mr. Moorhead. You may, Mr. Stovall.

Mr. Stovall. We are appearing here today in response to your request concerning the pacification and development programs in Vietnam.

First, to refer to the origin of CORDS.

The operating arrangement now known as the civil operations and rural development support (CORDS), grew out of an effort in 1967 to improve the U.S. capability for management of its pacification efforts by establishing a single line of management responsibility for U.S. teams and. advisers out in the regions, and districts throughout Vietnam.

Previously there had been no effective mechanism for coordination of the U.S. pacification activities in the field among the various military and civil chains of responsibility. It was stated at the time it was initiated in May 1967, to be an arrangement:

To provide for the integration of civil operations and rural development support activities within MACV — to provide for single manager direction of all U.S. civil/military revolutionary development activities in the Republic of Vietnam.

It was placed under the managerial responsibility of a deputy with the rank of ambassador, responsible directly to the commander, U.S. Assistance Command, Vietnam, Comusmacv, for the following stated reasons:

There were two basic reasons for giving the responsibility for the performance of the U.S. mission field programs in support of rural development to General Westmoreland. ¶

In the first place, it is the U.S. Military Assistance Command, Vietnam, which performs the supporting advisory role to the Republic of Vietnam Armed Forces, who are primarily responsible for providing continuous local security, the indispensable first stage of pacification. ¶

In the second place, the greater part of the U.S. advisory and logistic assets involved in support of rural development are controlled by and provided through MACV. ¶

Therefore, if unified management of U.S. mission assets in support of the Vietnamese programs is desirable Comusmacv is the logical choice to direct it.

Looking back after 4 years to the conditions that prevailed in 1967 and the sometimes conflicting advice and the uncoordinated actions, and the lack of any unified management mechanism, the CORDS arrangement that was established has in my view, even with all its imperfections, provided a vastly improved management mechanism over what they had before.

On July 2, 1971, we transmitted to your subcommittee a GAO staff document, classified “Secret,” developed from a survey by our staff in Vietnam concerning U.S. involvement in Vietnam’s pacification and development programs during the period from July 1967 through September 1970.

I might add, Mr. Chairman, that shortly afterward, we also transmitted copies of this document to other committees of the Congress, {p.125} that we thought had direct interest in this subject matter. They were the two Appropriations Committees — Senate Foreign Relations, House Foreign Affairs — the Senate Government Operations Committee, and also the Refugees Subcommittee of the Senate Judiciary, which had been interested from time to time in the refugee activities.

Our efforts were directed toward the development of a working document which would contain facts obtainable for a rather complete description of, and perspective on, the various pacification and development programs, the extent of CORDS participation in the program, the amounts and sources of financing for such activities, and whatever information was available to our staff in Vietnam concerning progress toward achieving program objectives.

The document is being used to provide background information needed by our staff for developing plans for more detailed reviews of specific CORDS activities in the future. ¶

It should not be construed as an audit report of the General Accounting Office, but as a useful information document. It has not and will not be subjected to the strict review processes normally applied to our reports, but it has not been submitted to the responsible agencies for official comment. ¶

The security classification applied to the document is based primarily on the classification shown in source documents from which the information was obtained in Vietnam.

Normally a document of this type is not released for use outside our office. However, because of the current significance of these activities, it occurred to us that it might contain information of present value to personnel in the Departments associated with CORDS activities, and to those committees of the Congress having need for such background information and perspective on the CORDS activities.

When we transmitted copies of the classified document to the Secretaries of State and Defense and the Administrator of AID, on July 1, 1971, we requested that we be advised of any inaccuracies which the staffs of those agencies might observe in it.

Our statements here today are drawn primarily from that document which is still classified and accordingly is subject to restrictions on release of classified information.

I should add, Mr. Chairman, that we requested declassification of the draft of this statement from which I am talking now, and the Department of Defense did very quickly act to declassify most of the information that was in that draft. I am working here from those parts of it which were declassified.

Mr. Moss. Mr. Chairman?

Mr. Moorhead. Mr. Moss.

Mr. Moss. Your statement raises a very interesting question. ¶

Classification takes place under Executive Order 10501.

Under what authority does an Executive order bind the General Accounting Office?

Mr. Stovall. May I ask Mr. Duff to respond to that?

Mr. Moss. Yes, indeed.

Mr. Duff. I can’t reply directly to Executive order, Mr. Congressman. However, we do not classify our reports. The classification placed on our reports is the classification of the basic document.

Mr. Moss. I understand that. I used the term “bind” advisedly. {p.126}

I want to know the effect of an Executive order on the General Accounting Office.

You went to the Department of Defense for clearance of statements you are giving us today.

Mr. Duff. That is correct.

Mr. Moss. By inference, if they failed to clear it, you would not then have come to the Congress, of which you are an arm, and given us this statement. ¶

At least you would not have done so in an open session.

Mr. Duff. That is correct.

Mr. Moss. This gives, then, to the Executive, a rather effective means of controlling the activities of the Congress and of an arm of the Congress.

I would like to know what the legal position of the General Accounting Office is?

Mr. Duff. If I may, Mr. Chairman, I am sorry I cannot reply—

Mr. Moss. You should know. ¶

Therefore, if you can’t give us the—

Mr. Duff. But I can in general terms tell you how we are bound by that, if you permit me, sir.

Under the Security Act, before we were given the right to review classified—

Mr. Moss. What Security Act?

Mr. Moorhead. What act is that you mean?

Mr. Duff. The Security Act.

Mr. Moorhead. You said under the act. ¶

There is no Security Act. ¶

There are certain sections of title 18 that are frequently referred to as a National Security Act, but there is no Security Act.

Mr. Duff. Well, I will attempt to stay away from the legal terms, then.

Mr. Moss. I think the record should be very accurate, and I am not nitpicking at all.

Mr. Stovall. I think, Mr. Moss, to respond directly to your question, since we cannot answer it in the context of a legal position, we would be very glad to submit this for the record.

Mr. Moss. You know what you are doing, you are taking the advisory classification of the Executive and applying it to all of the work relating to anything in which that type of information is contained.

That is why I wanted to know what the binding position is, not the accommodations you have worked out, but whether you recognize that it is binding upon the General Accounting Office?

Mr. Stovall. May we get an official position with our legal people and submit it for the record?

Mr. Moss. I think you should.

It might be worthwhile to have the Counsel for the Comptroller General advise the committee.

Mr. Stovall. We would certainly have to have his advice in such a statement.

Mr. Moss. I think it is sharply in focus, and this committee has challenged it before.

We have always taken the position that classification is advisory to the Congress and the arms of the Congress. ¶

It is not binding upon them.

Thank you, Mr. Chairman. {p.127}

Mr. Moorhead. You may proceed, Mr. Stovall.

(The information follows:)

______________________

Executive Order No. 10501, November 5, 1953, 18 Federal Register 7049, provides in section 7 that classified information shall not be disseminated outside of the executive branch except under conditions authorized by the head of the disseminating agency.

The safeguarding of classified information affecting the national security is, of course, a legitimate function of the executive branch. ¶

We do not view our broad right of access to executive branch information as being unreasonably impaired by the requirements imposed under Executive Order No. 10501. ¶

While it might be argued from a technical legal standpoint that the General Accounting Office, as a part of the legislative branch, is not bound by the terms of the order, we believe that it is reasonable for the executive branch to impose conditions relating to the national security in connection with our access to information of the executive branch.

Essentially, we view the question of classified materials and the national security implications involved as part of the total environment in which we must carry out our functions; and we do not consider that we could reasonably assert a right of free access to classified information irrespective of security requirements.

Moreover, as a practical matter, it makes little difference whether we conclude that the order does not bind the General Accounting Office since the order as implemented by Department of Defense regulations precludes Defense personnel from furnishing classified data to those who refuse to follow the requirements promulgated.

Therefore, as a condition to being allowed access to classified documents in the Department of Defense the General Accounting Office agreed to establish a system for insuring the proper safeguarding of classified matter at least equal to that prescribed in the Executive order. ¶

That system is embodied in Comptroller General’s Order No. 1.11 and in section 12(a) provides in part that ¶

“classified defense information originating in another agency shall not be disseminated outside the General Accounting Office without the consent of the originating agency.”

In addition, the Executive order provides in section 5(i) that when classified material affecting the national defense is furnished authorized persons other than those in the executive branch, a notation shall be included on the material which states in effect that it contains information affecting the national defense of the United States within the meaning of the espionage laws and the transmission or revelation of the material in any manner to an unauthorized person is prohibited by law.

That part of the criminal code that applies most directly to the employees of the General Accounting Office is 18 U.S.C. 793(d). That section provides in effect that any person lawfully having possession of information relating to the national defense who has reason to believe that such information could be used to the injury of the United States or the advantage of any foreign nation shall not communicate such information to any person not entitled to receive it under penalty of a fine of not more than $10,000 or imprisonment for not more than 10 years, or both. ¶

Section 793 does not define “any person not entitled to receive it” nor does it list any exceptions. ¶

In this regard, it differs from section 798 of title 18 of the United States Code, which governs the disclosure of classified information concerning the cryptographic system and the communications intelligence activities of the United States. ¶

Subsection (c) of section 798 provides that nothing is the section shall prohibit the furnishing upon lawful demand of information to any regularly constituted committee of the Senate or House of Representatives of the United States of America or joint committee thereof. ¶

In view of the stringent criminal penalties that could apply to unlawful disclosure of information by General Accounting Office employees under 18 U.S.C. 793, and in view of the fact that section 793 does not contain a specific legislative exception in effect allowing dissemination of classified information to committees of the Congress independent of the requirements of the Executive order, we believe that we must advise our employees of the requirements of the criminal code and promulgate instructions which will protect them from possible violations. ¶

Whether the release of classified information is a violation of 18 U.S.C. 793 is a matter not within our jurisdiction, being one which only the courts can decide. {p.128}

______________________

Mr. Stovall. Thank you, sir.

As to the pacification programs, top of page 4, basically the pacification programs are programs of the Republic of Vietnam. ¶

As previously stated, much of the monetary support for the programs comes from the United States but the programs are Vietnamese programs.

The 1969 pacification and development plan was the first attempt by the Government of Vietnam to pull all elements of pacification together. The plan was a continuation of the prior pacification campaigns and placed special emphasis on the role of all the people as participants in the military, political, economic, and social efforts.

These efforts were aimed at defeating the enemy, restoring public security, and ultimately in establishing stability in the Republic of Vietnam. ¶

Under the 1969 plan, the Government of Vietnam deployed the regional forces, the popular forces, and the rural development cadre in as many contested or Vietcong-controlled villages as possible.

The 1970 plan was directed toward involving people in the villages and hamlets in the national struggle. The plan has eight objectives:

1. Territorial security;

2. Protection of the people against terrorism;

3. Peoples self-defense;

4. Local administration of government;

5. Greater national unity;

6. Brighter life for war victims;

7. Peoples information; and

8. Prosperity for all.

These objectives are aimed at achieving a smooth continuation of the 1969 plan, but with renewed effort to:

Eliminate the remaining Communist political and military strength;

Provide effective security for 100 percent of the people;

Increase the quality in performance of the main tasks;

Build and develop the rural areas, cities and areas bordering them and

Vigorously develop a local community development spirit.

The 1970 plan was divided into three phases: Phase I ran from January 1, 1970, to June 30, 1970; phase II ran from July 1, 1970, to October 31, 1970; and the supplementary phase covered the last 2 months of the year and was extended into the first 2 months of 1971.

On May 30, 1970, the Government of Vietnam issued a special 1970 pacification and development plan. That special plan set forth two objectives:

(1)  Complete in 4 months all the works included in the 1970 plan and

(2)  Develop morale and material factors to assist the village on its way to future economic and financial self-sufficiency.

The Government of Vietnam stated that the special plan was issued “to restore the momentum that characterized the implementation of the programs in 1968 and 1969.”

The 1971 plan, titled “Community Defense and Local Development Plan,” is a follow-on to the 1970 plans, and will cover the period of March 1, 1971, to February 28, 1972. It has been revised somewhat by consolidating the eight objectives in the 1970 plan into three broad objectives: Those of self-defense, self-government, and self-development. {p.129}

AS TO THE CORDS ORGANIZATION AND PERSONNEL

The Commander, U.S. Military Assistance Command, has overall responsibility for U.S. pacification and development assistance and he administers the program through his deputy for CORDS, Chief of Staff, and the Assistant Chief of Staff for CORDS.

At the Saigon level, CORDS has 11 directorates which advise the Government of Vietnam’s ministries and perform the staff and administrative functions. These directorates are under the control of the Assistant Chief of Staff for CORDS and are manned by both military personnel and civilians. CORDS field personnel are under the direct control of the deputy for CORDS. The organization in the field is similar to the CORDS Saigon in that each of the four military regions has staff advisers organized along the same functional lines as the Saigon directorates.

CORDS had about 13,300 personnel in July 1, 1970. The staffs were composed of U.S. military and civilian personnel; local national employees of Vietnam; and third country nationals from such countries as the Philippines and Korea. Over 80 percent of the assigned personnel as of July 1, 1970, were assigned to field activities outside of Saigon.

CORDS FINANCIAL PROGRAMS

When CORDS was established it was decided that it for the most part would receive services, supplies, and needed material directly from its supporting organizations. Accordingly, it did not establish any central accounting or budget or funds control mechanisms of its own. It drew directly as needed upon its supporting organizations, principally the U.S. military services, and used their employees including military personnel to carry out its activities.

In late 1970, the Saigon headquarters of the Agency for International Development and the Joint U.S. Public Affairs Office still operated independently of CORDS for programs not related to pacification, but their field staffs, that is, outside of Saigon, fall under CORDS for all assistance programs. ¶

Since the bulk of the resources for pacification support were and continue to be provided by the military, the Commander, U.S. Military Assistance Command, Vietnam, was charged with the leadership of the program under the overall authority of the Ambassador.

The combined financing of the CORDS program for the 3 years 1968 through 1970 totaled about, $4 billion. The United States budgeted approximately $2.1 billion, the Government of Vietnam budgeted the equivalent of about $1.6 billion, and the equivalent of about $300 million was made available from U.S. owned or controlled local currency (piasters) accounts. This local currency was generated under other U.S. dollar financed assistance programs.

Approximately $3.2 billion or 80 percent of these funds were budgeted for territorial security or related military programs. ¶

Other uses for which the funds were budgeted were establishment of local government, $328 million or 8 percent; brighter life for war victims or refugee programs, $141 million or 4 percent; general support, $202 million or 5 percent (general support involves such things as CORDS technical support, personnel support, and Air America). Funds in {p.130} lesser amounts amounting in each case to 1 percent or less of the total were budgeted for people’s self-defense force; prosperity for all or civic action; greater national unity or Chieu Hoi; protection from terrorism or Phoenix; and people’s information program.

Under the present CORDS organization the 11 individual directorates, to the extent that they desire it, must obtain their financial information from the agencies (that is, the military services, AID, and CIA) which support their programs.

This is a time-consuming task for them and in some cases is avoided. ¶

During our survey, we received incorrect and conflicting figures from the CORDS directorates. ¶

We also found that some of the responsible officials in the directorates were unaware of the amounts obligated under their programs, and in some cases did not know the amounts in their budgets. ¶

In discussing these matters in Saigon our staff suggested to officials there that procedures for central management and control of budgets and obligation data were needed, as well as procedures for obtaining obligation data input on a regular basis from the contributing agencies. At the conclusion of our survey, CORDS informed us that steps were in process to receive and record financial data on a regular basis.

I don’t know, Mr. Chairman, how far this has progressed. This was based on work last fall. We are going to follow it through. I don’t know what specifically is developing. But this was a local effort. This was not a department effort.

Mr. Moorhead. When are you going to do that?

Mr. Stovall. We are going right on to concentrate now on further work in this financial area. It is a continuation. This was the first step of a continuing plan.

We believe that it is now time for a fuller reassessment of the military and AID financing arrangements, not only in Saigon but also at the unified command and department levels. We believe this is needed to clarify fiscal responsibility, and to overcome the lack of adequate central financial records in CORDS. What may have been most expedient under the earlier circumstances should, in our view, be fully reconsidered now in the light of the changing conditions and the prospective shift toward economic and rehabilitation efforts.

In this regard we would like to express caution about the degree of reliability of any presently available overall documents or reports which may purport to contain completely reliable figures on program costs associated with the operations. ¶

We have seen several differing sets of figures as indicated on page 142 of our classified document. ¶

This further supports a conclusion that the system of financial accountability and financial reports on CORDS operations needs to be reassessed and tightened.

SOURCES OF U.S. CONTRIBUTIONS

U.S. resources are contributed through the appropriations of the Department of Defense, the Agency for International Development, and the Central Intelligence Agency. ¶

CORDS receives resources in the form of funds, personnel and material directly from these organizations or from the individual budgets of subordinate U.S. organizations in South Vietnam and the United States. {p.131}

The U.S. funds used to support the CORDS organization are not appropriated for CORDS as such but instead are appropriated for the function being performed. ¶

For example, Department of Defense appropriations which account for some 86 percent of U.S. CORDS funding are from appropriations for operations and maintenance, military personnel and major equipment items.

PROGRAM OBJECTIVES AND RESULTS

The 1970 pacification and development program objectives, and the results, according to CORDS — and I would emphasize, Mr. Chairman that this is a presentation as given us by CORDS, this is not a GAO conclusion — according to CORDS can be summarized as follows:

1. The first objective is to provide effective territorial security for 100 percent of the population. By June 30, 1970, some degree of security had been provided for 91.1 percent of the Vietnamese population. The Government’s regional and popular forces assisted by free world forces and Vietnamese regular forces, the national police, and other civilian forces have principal responsibility for territorial security. The regional and popular forces were expanded by over 115,000 during the 18 months ended June 30, 1970, and have been provided modern weapons and equipment. The national police are also being prepared to assume a greater role in territorial security, and CORDS has attempted with limited success to increase both the quality and number of police.

2. As a supplement to the territorial security program the Government is attempting to improve the organization, training, and equipment of the peoples self defense force. The peoples self defense force is a civilian militia whose mission is to defend the hamlets. The goal of organizing 2.7 million members by June 30, 1970, was exceeded by 800,000.

3. The Government of Vietnam is also decentralizing government administration and permitting village and provincial governments more authority in local matters. As of May 31, 1970, 1,953 of about 2,000 villages had elected officials. CORDS is assisting in developing the capabilities of local officials by providing extensive training programs and deploying rural development cadres to organize and assist village governments.

4. Closely related to the development of local government is the program to involve the people and local governments in economic development projects. During the first 7 months of 1970, 8,500 village self-development projects were started and during the first 9 months of 1970, 511 province-level projects were started.

5. Under the Chieu Hoi program the Government attempted to induce 40,000 of the enemy to rally to the Government’s cause during 1970. Only 65 percent of the goal for the first half of 1970 was achieved.

6. The Government’s Phung Hoang program is directed toward neutralizing members of the Vietcong infrastructure, the leadership of the Communist insurgency. As of August 31, 1970, 13,708 members had been neutralized during the year. Attempts to improve neutralization results have included formal training programs, targeting specific individuals in the infrastructure, preparation of dossiers on known members of the infrastructure, and emphasis on the timely processing and trial of detainees. {p.132}

7. The Government has also attempted to establish an effective people’s information system to explain the Government’s programs and elicit public participation. This goal was being pursued through face-to-face communications, indoctrination courses, television and radio programs, films and distribution of pamphlets and magazines.

8. Finally the Government is attempting to improve the life of war victims by assisting them to resettle in new areas or return to their original villages. The June 30, 1970, goal was to pay full resettlement allowances to 101,825 refugees and to pay full return-to-village allowances to another 273,514 refugees. As of June 20, 1970, only 44,591 war victims had received their full resettlement allowances and only 105,448 had received their full return-to-village allowances. The primary reason for the shortfall was that large numbers of new refugees were diverted from the normal programs to provide emergency relief.

As a result of CORDS assistance, the Government of Vietnam has achieved a degree of success in its pacification and development efforts. However, we observed a number of problems common to many of the Government’s programs, which have hindered the full achievement of objectives. We noted that:

There is a shortage of qualified leaders in the regional and popular forces and the national police.

Military priorities have also adversely affected the retention and recruiting of qualified personnel by civil agencies.

The regional forces and the rural development cadre were not deployed in accordance with the instructions contained in the Pacification and Development Plans. The Special Pacification and Development Plan emphasized the deployment of regional forces in mobile offense missions. We observed, however, that little success has been realized in redeploying the units.

Pay and allowances of the Government’s military and civilian personnel are considered by CORDS to be low and believe this has contributed to desertions in the military corruption by civilian officials and the inability of civil agencies to recruit and retain qualified personnel.

The Government of Vietnam, in some instances, has not provided adequate support.

There has been poor cooperation between Government of Vietnam officials in implementing Government policies. This has been particularly true in the Phoenix program in which the lack of interagency cooperation has been one of the more significant factors hindering program effectiveness.

These problems have been recognized by CORDS and in some instances remedial measures have been developed.

Recent articles appearing in the press since July 10, 1971, conveyed an implication that our survey of the pacification program has disclosed that $1.7 billion of the funds available for that program were lost. This was a misinterpretation of statements contained in our survey document. On page 137 of that document we said:

We were unable to obtain obligations for $1.7 billion of the $2.1 billion budget shown above. The largest part of this, about $1.3 billion, was budgeted to provide military hardware and other commodities to the regional and popular forces under the military assistance service funded program. Because this program also provides commodities to other Vietnamese military organizations and records segregating deliveries to the regional and popular forces are not maintained, we were unable to obtain obligations. {p.133}

 

The point we were developing in our survey was the fact that the overall operational costs for the various programs administered by CORDS are not available at CORDS nor to the best of our knowledge anywhere else. ¶

In other words, we are concerned that the absence of adequate fiscal control over the operating programs of CORDS is a serious weakness which could permit the misappropriation of equipment, materials, and supplies without alerting management in a timely manner.

We did not intend for our statement to infer in any way that we believed $1.7 billion of funds were lost. It is our belief, however, that in the absence of adequate financial controls at CORDS it would be very difficult if not impossible to accurately reconstruct the value of and disposition of equipment, supplies, and services that have been furnished by the United States for the operating programs of CORDS.

To summarize, we believe that the main elements and related questions pointed up by our survey are:

1. CORDS, as the organization responsible for administering the U.S. pacification in Vietnam, has not been given responsibility for financial stewardship and accountability for the costs of the programs it administers.

We believe that CORDS or any other U.S. organization responsible for managing a foreign assistance program, should not be exempted from the integral and very important part of that responsibility that relates to financial stewardship and accountability.

2. The military financial budgeting and accounting system does not provide information as to the portion of the material supplied from the U.S. military pipelines into the CORDS program.

We believe the system should be modified to provide such information.

3. The present system results in a blurred distinction of accountability between the respective U.S. military services, the free world military forces, the Vietnamese armed forces, and CORDS.

We believe that consideration should be given to the more fundamental question of whether an operation such as CORDS or any foreign assistance program or CORDS should have adequate financial control relatable to that foreign assistance program.

We expect to look further into the system for financing and controlling the CORDS operation and plan to make reports to the Congress on the results of our work.

This concludes our statement, Mr. Chairman.

We will be glad to answer any additional questions.

Mr. Moorhead. Thank you, Mr. Stovall, for a very fine statement. I think the problem you raise about the financial control of a program of this size is very pertinent. And I think this is something the subcommittee should definitely direct its attention to.

I personally didn’t think you were saying that the funds were missing, but that they couldn’t be accounted for, which is a different thing.

Mr. Stovall. Yes, sir.

Mr. Moorhead. But the Pentagon issued a statement which, if the newspapers reported it accurately, is quite critical, I would think, of this interpretation of the General Accounting Office. {p.134}

They said — and I am quoting from the Washington Post of July 14:

“The auditors trying to find it” — that is, the money — ”were simply looking in the wrong place.”

Yet your statement says that the overall operational costs for the various programs administered by CORDS are not available from CORDS records nor, to the best of your knowledge, anywhere else.

Do you deny the charge that your auditors were looking in the wrong place? ¶

If they had just gone to the right place, they could have found the funds. ¶

Is that correct, sir?

Mr. Stovall. Mr. Chairman, we should put this, I think, in context.

We do want to emphasize that the information contained in our document and in our statement was material available in Vietnam.

We have not yet checked this for information that might have been available outside of Vietnam at the time the document was prepared.

We are going to follow on through. But this was the first step, to get what we could in Saigon.

Now, in that context, we found that we could get general information from Defense. And we have had some later discussions with them within the past 2 days.

I would like to have Mr. Duff speak to that, if I might, because our statement, we think, is a perfectly good statement.

Mr. Moorhead. Mr. Duff, if you would, please direct your attention specifically to the fact that the statement you present to us today says: ¶

“As of today this knowledge is not available anywhere else”; ¶

whereas the Pentagon says you just looked in the wrong place.

Mr. Duff. Mr. Chairman, the newspaper article does say that. I have reviewed the statement that the Defense Department released, and that statement—

Mr. Moorhead. Do you have that release, Mr. Duff?

Mr. Doff. Yes, sir.

Mr. Moorhead. I think it might be appropriate to have that release printed as part of the record at this point.

Without objection, it will be made part of the record.

(The information follows:)

______________________

A recent newspaper article based on a secret GAO survey stated that $1.7 billion of U.S. support to the Government of Vietnam (GVN) pacification program was not accounted for and that GAO could not determine how most of the $2.1 billion authorized for the program was used. The article contains misleading information.

In forwarding the classified survey, GAO informed Secretary Laird that the document should not be construed as a report of the GAO. It was not subjected to the strict review processes normally applied to GAO reports and it was not submitted to the responsible agencies for official comment, as is customary. The primary purpose of the document, GAO said, was to use it for planning and preparation of work programs for conducting more detailed reviews of CORDS programs and activities at some later date. Although a document of this type is not released normally for use outside of GAO, its distribution to certain congressional committees was based on what was considered by GAO to be of current significance.

In making its limited release of the classified survey, GAO qualified the cover-ape and substance as follows:

1. Much of the statistical data, other information, and evaluations were for the most part not developed by GAO.

2. This background document is directed toward presenting what were described as GAO’s very limited observations on the progress of the pacification and development programs in Vietnam toward achieving overall program objectives. {p.135}

3. It did not include in-depth examinations into CORDS activities and expenditures as reported by the Governments of the United States and the Republic of Vietnam.

4. The document is not a report but is intended for use as general background information on the organization, financing and operation of CORDS.

The GAO survey concludes that they were unable to obtain obligation data in Vietnam for $1.7 billion of the $2.1 billion budget. The GAO survey either overlooked or failed to indicate that obligation records are not nor are they intended to be maintained in Vietnam. Records supporting the amounts questioned by the survey are available at activities outside of Vietnam where the financial accounting is actually performed. These records all are subject to periodic audit by the Army Audit Agency.

The largest part of the $1.7 billion, for example, about $1.3 billion, was budgeted to provide military hardware and other commodities to the regional and popular forces (RF/PF) under the military assistance service funded program (MASF). This fact is recognized in the GAO survey. Commodities are brought into Vietnam through the U.S. Army logistics system and are turned over to the Republic of Vietnam Armed Forces (RVNAF) for distribution. CORDS participates to a limited degree in computing requirements but does not participate in ordering or delivering commodities. Assistance to the RF/PF is part of the regular MASF program. As such, material furnished to RF/PF is requisitioned by the Vietnamese Army, Navy or Air Force under the MASF program. Obligations are recorded by the U.S. military department through which the materiel is requisitioned at the time the requisition is processed. When the materiel is received in Vietnam, it is controlled and accounted for in the Vietnamese logistics system until it is issued to RF/PF units.

The RF/PF is another customer of the ARVN, VNN, or VNAF — the same as an Army division, Navy vessel or Air Force squadron. The RF/PF part of the program is not subjected to individual control. To do so would be the same as establishing individual programs for each unit within the ARVN, VNN, and VNAF.

Funds used to support the RF/PF are accounted for and controlled in the same manner as funds provided to support other RVNAF activities.

Over the past several years, the Deputy Comptroller for Internal Audit (DCIA) within the Office of the Secretary of Defense has devoted its efforts in Vietnam to auditing the MASF logistics program. A number of these audits were performed in conjunction with the Army Audit Agency, Navy Audit Service and the Air Force Auditor General. Since the RF/PF are customers of the ARVN, VNN and VNAF, the logistics audits have included coverage of the RF/PF.

The balance of the $1.7 billion, $400 million, is for services and personnel costs and is also funded separately.

Documentation concerning the delivery of materiel that supports the obligations questioned by GAO has been and will continue to be reviewed by DOD agencies as part of the continuing audits of the MASF program for Vietnam.

In summary, obligational records are maintained outside of Vietnam and are periodically audited. Within Vietnam the materiel records are audited continuously for validity of requirements and distribution to users. Validity of inventory records at the Vietnamese Armed Forces Depot level is verified during these audits.

______________________

Mr. Duff. The Defense Department statement does not say this. And I think, if I might attempt to set the record straight on it, to the best of my ability, I will.

The Pentagon took the position that obligations are available. We said that obligations or cost figures relatable to CORDS in the CORDS program are not available. And I believe both statements are true.

The Pentagon can account for obligations of the overall assistance programs going to Vietnam. We tried to go into that to find out where the funds went in the various programs in Vietnam.

Mr. Moorhead. You mean the Pentagon says “x billion dollars” went to Vietnam, but they can’t say to which program within Vietnam it was allocated? Is that correct? {p.136}

Mr. Duff. That is correct.

And so, in my opinion, looking at the statement released by the Defense Department, and in looking at our statement, I think they are both accurate statements in that regard.

And I don’t know how the—

Mr. Stovall. If I may inject, though it was technically accurate, it was misleading, because the inference in the Pentagon statement was that you can account for the CORDS cost. ¶

We are convinced that you cannot do that.

Mr. Moorhead. It is your testimony that they can account for this money that left the United States and went to Vietnam, and you could find that out by checking the figures here; but that nobody can find out by normal auditing procedures what happened to the money after it got to Vietnam? ¶

Is that correct?

Mr. Stovall. And we still have some verification work to do. We are speaking here of the system as we understand that it operates. And I don’t believe — perhaps Mr. Duff can correct me on this, too — I don’t believe that all this information would be available in Washington.

I think, for example, some of it would have to be located at CINCPAC in Honolulu. And some of it would have to be located at some of the single management-control points in the Department of Defense at places in the United States. Some of it, no doubt, is available in Washington.

But it is a tremendous job, the attempt at reconstruction, to get at this. That is part of the further work that we are going to try to do.

The distinction between the actual system and the concept, though, what is really happening, we don’t yet know.

Mr. Erlenborn. Mr. Chairman, would you yield at this point?

Mr. Moorhead. Certainly, Mr. Erlenborn.

Mr. Erlenborn. I think we have a problem with terminology here. For instance, when you stated a minute ago that this money went to Vietnam and that we don’t know how it was used there, really it is not money that was sent there, is it?

Mr. Stovall. You are quite right. I should have attempted to clarify that point.

A great deal of it is materiel-in-kind, supplies.

Mr. Erlenborn. And it may have been procured from Defense Department appropriations and then diverted to the CORDS program rather than being utilized—

Mr. Stovall. Perhaps “diverted” wouldn’t be the best word.

It flows through the Department of Defense supply channels and then moves on out from those channels in Vietnam to the respective users.

Mr. Erlenborn. And some of this would be personnel costs as well, would it not?

Mr. Stovall. Some of it would; yes.

Mr. Erlenborn. So it is not money that was sent to Vietnam and then somehow or other lost?

Mr. Stovall. No.

Generally, the furnishing was of supplies and materiel and equipment-in-kind, rather than in money.

Mr. Erlenborn. Thank you. {p.137}

Mr. Moorhead. Resources.

Mr. Stovall. Resources; yes.

Mr. Moss. Mr. Stovall, it could be true in part, however, that money flowed to Vietnam, because you have $400 million for services and personnel, and some of this is indigenous personnel, Vietnamese personnel, and it is paid in the contract, isn’t it?

Mr. Stovall. For this type of thing there is a flow of funds; yes, sir.

Mr. Moss. So in both the services and personnel categories, this could represent actual funds flowing into Vietnam; being disbursed in Vietnam?

Mr. Stovall. Yes.

And to really know the elements of this, we would have to do more digging. We don’t know the relative elements other than the figures that we show in here.

Mr. Moss. This is very similar to the situation we encountered in 1965 and 1966 in the buildup when there were no audits being carried on in the field — in the military construction programs, and some of the port operations — isn’t it?

Mr. Stovall. In some ways, this is similar.

Mr. Moss. In some ways?

I recognize it is not on all fours, but it is similar in some respects.

Mr. Stovall. I think one distinction between that point was that in that case there was a greater hazard and potential loss in even arriving at Vietnam, whereas here I think they do now have a better means of identifying that these things arrived in Vietnam, but not what happened to them after they got there.

Mr. Moss. Thank you, Mr. Chairman.

Mr. Moorhead. And I gather from your statement, Mr. Stovall, you say that possibly this — let’s call it sloppy financial management — was justified in the beginning because of an emergency situation. ¶

But that now the system should be corrected so that CORDS will be able or you will be able, to check on their stewardship of the funds and the resources that are assigned to them. ¶

Is that correct?

Mr. Stovall. We recognize that the situation in 1967 was chaotic, to say the least, and that a decision was made at that time that it would not be feasible to attempt refined financial controls. And we would not attempt to pass judgment on that.

But we do feel that 1971 is an entirely different situation and that, regardless of the merits of the position taken in 1967, we think it ought to be reassessed and some controls established now.

Mr. Moorhead. I think it is a pretty clear picture that the quickest way to get resources for this program to Vietnam was to take it out of the tremendous resources of the Department of Defense and move it there quickly, without the bother and time consumed by setting up a proper organization that GAO and the Congress could properly check on.

Mr. Stovall. I think, Mr. Chairman, that this really points up the central message that we got out of this. The difficulty and the possibility of going back later and ever finding out by reconstructing what really did happen insofar as the specific use is concerned is not there.

Mr. Moorhead. Do you find a receptive attitude toward setting up a proper system? ¶

Or is there opposition to that? {p.138}

Mr. Stovall. We haven’t fully explored that. We have had brief discussions within the past few days that — I have the impression that it would be quite difficult to — this is the feeling in the Department of Defense — that it would be quite difficult and would require modification of their normal supply procedures to accommodate this.

But we have not explored it far enough to say anything conclusive. That is another point that we are planning to follow through.

Mr. Moorhead. I am asking that because I want to get an idea of how strong our report and our recommendations should be.

One final question before I yield to the other members for questioning— ¶

Does the General Accounting Office have any estimate as to the number of refugees in South Vietnam?

Mr. Stovall. We have done work in this area at various times. The earlier figures wouldn’t be good now. I don’t know whether we have — such figures or not. I don’t believe that we do, Mr. Chairman.

Mr. Duff. In the earlier report that we submitted. But I don’t know how old those figures are.

Mr. Stovall. I think the figures that we have are about 2 years old. I wouldn’t want to rely on them.

Mr. Moorhead. Wo had testimony yesterday, if I recall it, that the figure ranged from a low of around 500,000 to a high of around 6 million.

Do you have any idea today which figure is closer to accurate for refugees?

Mr. Stovall. This would be a hazardous guess on my part, Mr. Chairman. I really don’t know.

We would be glad to try to get a figure for you.

Mr. Moorhead. If you would, and be careful about the definition of refugees, which we got into yesterday.

There are refugees actually receiving refugee assistance, and then there are refugees whose assistance has terminated, but we don’t know what has happened to them. And then, of course, there are refugees gainfully employed, happily settled in the new community that would probably no longer be called refugees.

Mr. Stovall. Now, if I am clear as to your question, you are concerned with the current number who are still in a refugee category? Or the cumulative figure?

Mr. Moorhead. Well, both, really.

Mr. Stovall. Both.

Mr. Moorhead. The very narrow category are those that are classified as refugees and are receiving assistance. But this assistance expires in either 60 days or 6 months, if they are resettled.

But I think that what we want is probably the figure for the narrow definition. We had some accurate testimony on that yesterday.

Mr. Stovall. I think in building it up, we would try to build it up by category and come up to the figure rather than to try to deal in one blanket total.

Mr. Moorhead. While you are looking for information on refugees, I notice on page 11 that you said ¶

“a large number of new refugees were generated in 1970.”

Do you know that number? How many were generated in 1970?

Mr. Stovall. I am not sure that these figures are complete, Mr. Chairman, but I do have a statement here that the statistics prepared {p.139} by CORDS in May 1970, show that there were about 156,200 civilian and military disabled; 25,800 registered and nonregistered orphans; and about 131,000 war widows in South Vietnam.

I am afraid that is not directly responsive to your question, though.

Mr. Moorhead. Can you obtain the number of refugees generated in 1970?

Mr. Stovall. We have a figure cited on page 116 of our long document that the Government of Vietnam has — reports a total refugee population of 548,805 in August 1970.

Mr. Moorhead. Was that new refugees in 1970?

Mr. Stovall. No, sir. That was the numbers of refugees so categorized at that point.

Mr. Moorhead. So that clearly does not include the number whose entitlement to payment has expired, but who are still — in common parlance — refugees?

Mr. Stovall. I read from a statement here that beginning in April 1970, a category of refugees in a return-to-village status was added, and that that had been about 249,000 in August 1970.

Mr. Chairman, I am quite skeptical about all these figures. ¶

I don’t believe they are very reliable.

Mr. Moorhead. That seems to be the case, generally.

Mr. Stovall, why was there a large number of refugees in 1970? ¶

What actions caused that?

We get rosy reports about the success of the pacification program, and yet CORDS’ own testimony that you quote there were large numbers of refugees.

Mr. Stovall. I don’t think I could answer that very well, Mr. Chairman. ¶

We could include that in our response to get information and furnish it to you.

(The information follows:)

______________________

A review of our files on Vietnam refugees showed that we do not have current or old statistics concerning the total number of refugees whose assistance has terminated, and those who have been resettled. Since our work was performed 1 year ago, we also do not have information on the number of refugees currently receiving assistance. ¶

Therefore, we requested AID officials at AID’S Bureau for Vietnam, Office of Rural Development, to provide us with the information you desire. The information furnished by AID is explained as follows:

The total number of refugees officially registered by the Vietnam Government since 1965 is about 3.5 million; plus an estimated 2 million persons who had been temporarily displaced from their homes. The 2 million persons are designated as war victims and have not been registered as refugees.

AID does not collect data on refugees who have been resettled, and advised us that any statistics that might be found concerning the total number of refugees paid resettlement allowances over the past several years are probably not reliable. However, AID did provide us with statistics which they believe to be reasonably accurate showing that 195,813 refugees had been paid their full resettlement allowances during the period from January 1, 1970, to June 20, 1971. AID also provided information showing that 770,669 refugees received some assistance during the same period but such assistance had been terminated prior to June 20, 1971. AID further advised that the active caseload of refugees receiving assistance at June 20, 1971, was 587,204.

Our files also do not contain current information on reasons for the recent increase in the number of refugees. During our queries at AID, we were advised that there was a substantial increase in the numbers of new refugees during the last 3 months of 1970 and the first 3 months of 1971. ¶

This was caused primarily by relocation of approximately 50,000 Montagnards in the Central Highlands, and Vietnam Army actions in the U-Minh Forest of the Delta that generated 35,000 refugees. ¶

In the earlier part of 1970, there was also an increase in the number of refugee statistics as reflected on page 116 of our survey back- {p.140} ground document This increase, however, was due primarily to a change in the reporting system to include the category “refugees in return-to-village process” not previously reported. ¶

We do not have nor were we able to obtain information on the number of refugees generated in 1970.

______________________

Mr. Moorhead. It seems to me that if you had a successful pacification program, you would have a small number of refugees, unless there was some other reason, such as our bombing of villages that caused people to flee from their homeland into Saigon, or the coast areas.

Mr. Erlenborn?

Mr. Erlenborn. Mr. Stovall, I get the message from your statement today that when CORDS was formed, it was not conceived to be a separately funded program. ¶

Therefore, CORDS has no budget of its own, but is funded from appropriations that were made to other organizations such as the Defense Department, the AID and CIA. ¶

Consequently, whatever funds have been spent in the CORDS program have not been separately identified.

Is that a proper observation?

Mr. Stovall. Yes, sir.

Mr. Erlenborn. And your recommendation is not necessarily that they set up a separate budget for the purpose of appropriating for the CORDS program, but rather that CORDS accounts for the materiel and services it receives from these other organizations, is that correct?

Mr. Stovall. Yes.

We think that the circumstances are such that there should be a focal point of financial control as a part of the management of the programs. We haven’t yet developed our views as to what would be the best way of accomplishing that. But we do think this is a major matter that should be considered, and this is primarily, of course, relatable to the flow of the funds and support from the Department of Defense. We were able to find an audit trail insofar as the AID support is concerned.

Mr. Erlenborn. How about the CIA?

Mr. Stovall. We did not look at that.

Mr. Moorhead. Would you repeat that? We did not what?

Mr. Stovall. We did not look at that.

Mr. Erlenborn. Do you generally audit CIA funds?

Mr. Stovall. No.

Mr. Erlenborn. Does anyone?

Mr. Stovall. I don’t know, sir.

Mr. Erlenborn. Maybe we ought to discuss this some other time.

Mr. Stovall. I am skirting here, obviously.

Mr. Erlenborn. I don’t want to put you on the spot. But you are not recommending, as I understand it, that CORDS be funded by a separate line item in somebody’s budget for the purpose of audit?

Mr. Stovall. We think that at this stage in the game would be premature for us to draw those kinds of conclusions.

We do think, though, that there ought to be a consideration of this problem from the viewpoint of what kind of financial stewardship and financial responsibility should be there in order to have reporting back to the Congress, and just to know what is being consumed in the programs. {p.141}

And proceed from there to consider the mechanisms, or the budgetary devices, or even the appropriations by which this should be accomplished. I think we would like to progress to that point rather than leap for it now.

Mr. Erlenborn. So, accounting for the expenditure of funds can’t be done by looking at a CORDS budget, as you pointed out, but can you identify the expenditure of funds, say, in the Defense Department budget, and follow the course of the procurement and expenditure?

In other words, the funds that are appropriated and spent can be accounted for, can they not?

But you may not be able to identify whether they were spent for CORDS or for military purposes, is that a fair assumption?

Mr. Duff. Yes, they can be accounted for.

Mr. Erlenborn. And that is what leads you to say that it is a misinterpretation to say that the $1.7 billion of funds are lost and not accounted for. You can’t account for them being spent in the CORDS operation?

Mr. Duff. We certainly didn’t intend to imply that.

Mr. Erlenborn. I don’t suppose we will see a headline in the paper tomorrow of $1.7 billion funds not lost. ¶

I guess that would not be news.

But it isn’t lost, is it?

Mr. Stovall. Well, we added one more sentence and said that we don’t know. ¶

We did not intend to infer it in that statement, but we don’t ideally know.

Mr. Erlenborn. You say here on page 8 that some of the responsible officials and the directors were unaware of the amounts obligated under their programs and in some instances did not know the amounts in their budgets. ¶

Do they have budgets?

Mr. Stovall. I think in fairness to those officials, they are not required to know this. And in the normal sense they do not have authorized budgets, they do have — what would be the best form — program plans?

In broad terminology, they do make plans and submit them, and those are incorporated, as I understand, in the requirements as the budget is assembled coming up the line.

But our concern was primarily with the return of either the resources or funds down the channel, that they are not required to have budgetary accountability in that sense. But they do submit estimates of their needs, and I believe those estimates are considered in the assembly of the military budgets.

Mr. Erlenborn. I note here on page 7, you say the equivalent of about $300 million was made available of U.S. controlled, or local owned currency, piaster accounts. ¶

Are these funds included in anyone’s budget?

Are local owned currencies subject to the, appropriations process?

Mr. Duff. The way they are generated, eventually they are subject to it, such as from the Public Law 480 programs and so forth, and these funds are available for use.

I am not too familiar with all of the requirements, but they are made available for use in the contract agreement.

Mr. Erlenborn. Let me see if I can understand this. {p.142}

We appropriate funds for Public Law 480, we then procure the foodstuffs, we send them to Vietnam, they are sold there, and that generates local currency.

Now, those funds, are they discretionary, does the Ambassador, or someone in MACV, have discretionary use of those piasters, or are they subject then to appropriations by Congress before they can be spent?

Mr. Duff. The agreements specify at the time the sales agreement is made, going back to the Public Law 480, of what percentage of these funds, for instance, will be used for defense purposes, or security assistance, and these funds do accumulate and are available to the mission director.

Mr. Erlenborn. Without appropriation?

Mr. Duff. Without appropriation.

But they do go through the budget process within the agency where they prepare their budgets and so forth, as requested, and they are approved by the agency.

In other words, the man in the field does have to ask for authority before he expends the funds.

Mr. Erlenborn. But they are not subject to appropriations by Congress. They are discretionary within the limit of the Public Law 480 law and the agreement—

Mr. Stovall. The congressional appropriations would have been an earlier consideration when they were put in the initial program.

Mr. Erlenborn. I notice also on page 7, you say funds in lesser amounts in each case, 1 percent or less of the total were budgeted for self defense, prosperity, and so forth.

You include there protection from terrorism or Phoenix. ¶

Less than 1 percent of these funds was spent on the Phoenix program, is that correct?

Mr. Stovall. Yes, sir.

Mr. Erlenborn. Does that include military appropriations, DOD appropriations, that went into CORDS?

Mr. Stovall. These statements were based on the information that our people could get in Vietnam, and I think we do not know the details of this.

Mr. Erlenborn. My recollection of Mr. Nooter’s testimony yesterday I think would tend to conflict with this as to the amount.

Would my colleagues agree that he gave the indication that Defense contributed considerably more to Phoenix, that AID did not directly, so that AID would account for little or no spending on the Phoenix program. ¶

He gave me the impression that the military portion of the CORDS operation would be considerably more than one percent.

Mr. McCloskey. My recollection is that it sounded like more than two or three to one, with the majority of the Defense funding going into Phoenix, as opposed to AID, but that is just a recollection.

Mr. Erlenborn. Thank you, Mr. Chairman.

Mr. Moorhead. Mr. Moss?

Mr. Moss. Mr. Stovall, your report, or your statement today indicates a dissatisfaction on the part of the General Accounting Office with the accounting procedures used by CORDS. ¶

Doesn’t the GAO have authority to require an improvement in the accounting by CORDS? {p.143}

 

Mr. Stovall. Not in the sense of requiring. ¶

We have responsibility for prescribing principles and for doing all we can to help or urge or push the agency toward developing satisfactory accounting.

Mr. Moss. Isn’t CORDS subject to sections 112 and 113 of the Budget and Accounting Act?

Mr. Stovall. I have forgotten the specific terms of those sections. I don’t have them with me.

Mr. Moss. Well, section 112 reads:

The Comptroller-General of the United States, after consulting the Secretary of the Treasury and the Director of the Bureau of the Budget concerning their accounting, financial reporting, and budgetary needs, and considering the needs of the other executive agencies, shall prescribe the principles, standards and related requirements for accounting to be observed by each executive agency, including requirements for suitable integration between the accounting processes of each executive agency and the accounting of the Treasury Department

Requirements prescribed by the Comptroller General shall be designed to permit the executive agencies to carry out their responsibilities under section 113 of this part, while providing a basis for integrated accounting for the Government, full disclosure of the results of the financial operations of each executive agency, and the Government as a whole.

It goes on then and into section 113:

The head of each executive agency shall establish and maintain systems of accounting and internal control designed to provide one full disclosure of the financial results of the agency’s activities to adequate financial information needed for the agency’s management purpose necessary. Three, effective control over accountability for all funds, property and other assets for which the agency is responsible, including appropriate internal audit for reliable accounting.

Mr. Stovall. I would say that does apply to CORDS.

Mr. Moss. It does. ¶

Then you have more than the power to just suggest?

Mr. Stovall. We prescribe principles.

Mr. Moss. Have you prescribed a principle here that is being met?

Mr. Stovall. The Comptroller General has prescribed the principles within which the Department of Defense is responsible for developing its accounting, and we are saying here that the accounting is not satisfactory. ¶

It is the Department of Defense’s responsibility to take the actions necessary to make it satisfactory, and it is our responsibility to continue to point it up.

Mr. Moss. Does that place the responsibility on DOD or on the General Accounting Office.

Mr. Stovall. On the head of the agency.

Mr. Moss. I thought it placed it on the accounting office, as I read it.

Mr. Stovall. For the Comptroller General to prescribe principles.

Mr. Moss. Principles that are adequate to achieve certain specific results.

Mr. Stovall. And he has prescribed those principles in general terms. I don’t think that CORDS would have to operate under special principles. I think the basic principles—

Mr. Moss. Wouldn’t the accounting under which the Government operates produce the kind of information you want from CORDS? It is not exemptive, you have said.

Mr. Stovall. It is not exempt. The General Accounting Office has not approved the accounting systems in this area, because the Department of Defense has not — {p.144}

Mr. Moss. Aren’t they supposed to be applied to all areas within the Department of Defense unless there is some agreement to exempt them?

Mr. Stovall. Yes, sir.

Mr. Moss. And there has been no agreement to exempt this operation from the accounting requirements?

Mr. Stovall. No.

Mr. Moss. So it is not now meeting the prescribed accounting requirements within the Department of Defense?

Mr. Stovall. That is correct.

Mr. Moss. Because you cannot establish with any reasonable degree of certainty the disposition of funds expended on materiel, equipment, goods, and services?

Mr. Stovall. That is our view.

Mr. Moss. And if you were to rely on records within the Department of Defense here in Washington, you would only get general categories, you would not get the specific detailed information which is maintained in the field, is that correct?

Mr. Stovall. I think that is correct.

Mr. Moss. Well, let’s put it another way. ¶

Have you ever encountered a case in your auditing of the activities overseas where the records here in Washington are more complete than those in the field?

Mr. Stovall. Not in my experience, no.

Mr. Moss. It has not, in my experience, either, and that is why I asked the question. So it would appear that short of assigning broad categories to these expenditures, you cannot find what happened to the billion seven?

Mr. Stovall. That is correct.

Mr. Moss. If they were requisitioned, and we will say the billion three was requisitioned from DOD and shipped to Vietnam, are there any end-use audits indicating what happened after it was received in Vietnam?

Mr. Stovall. There are some end-use audits. I don’t know the extent of them at this stage. There are end-use audits supposedly made by the defense auditors.

Mr. Moss. In making the study upon which this report was based were end-use audits made available to the General Accounting Office?

Mr. Stovall. I am not aware of this. This is in the further work that we need to do, because I think we will need to get those in Washington. There is no record that I know of that our people in Saigon got them.

Mr. Moss. Would the end-use audits be normally kept in Washington, or in the field?

Mr. Wohlhorn. Well, if I may, sir, the end-use audits would be made by the internal audit, which is stationed in Washington, and to my knowledge, they have not made an audit of CORDS as such. The end-use audits would be end-use audits of what was turned over to the Vietnamese for all categories, not specifically for CORDS.

Mr. Moss. There would be no audit from the time the Vietnamese received materiel from that point on?

Mr. Duff. We are not that familiar with the specific audits that were made during this survey. We can’t answer your question categorically. It is possible in DOD audits, their end use inspections, that they may make certain spot checks within the Vietnamese forces. {p.145}

Mr. Moss. You wouldn’t have any way of knowing whether those covered material listed as being requisitioned under authority of CORDS or under the authority of MACV?

Mr. Duff. Well, when you say the authority of CORDS, this is where the line of responsibility really gets diffused because of the various funding elements that go into CORDS.

Mr. Moss. Are they so badly drawn as to make it impossible to reconstruct in a meaningful manner an audit of what happened to the material?

Mr. Duff. I don’t think we could ever reconstruct what has happened in the past, and if I might just try to use an example here, I think it would clarify it more than I can by trying to talk around it.

For instance, a lot of the forces that are employed, the Vietnamese forces that are employed in CORDS programs, are part of the military, so this equipment goes into the Vietnamese military depot system, and some of that equipment would come out into the Vietnamese forces that are employed in the CORDS programs, which is what I am trying to say.

Mr. Moss. Now, are you saying that materiel in the Vietnamese depot system is requisitioned by CORDS?

Mr. Duff. The units—

Mr. Moss. The Vietnamese military units would be requisitioned by CORDS, to go with equipment, supplies of various types?

Mr. Duff. The units would requisition on the Vietnamese military logistics system, and the units could be employed in CORDS program, yes, sir.

Mr. Moss. They would be requested by CORDS? Somebody would have to take the initiative to do something, so we would assume that if a unit is going to come out of the ARVN forces and be assigned to CORDS, that the initiative would almost have to come from within CORDS, wouldn’t it?

Mr. Duff. Well, the various forces, just like our own National Guard—

Mr. Moss. I know all about that. But that still doesn’t answer the question as to where the initiative lies. These things don’t happen just spontaneously. ¶

Someone has to give an order or someone has to make a request.

Mr. Duff. That is correct.

Mr. Moss. And if it is a CORDS operation, the authority is within CORDS, is it not, to take the initiative? Would it be within anyone else?

Mr. Duff. I think the CORDS organization is such that it is very difficult to visualize it as an order coming from the top of CORDS and going down through the channels.

Mr. Moss. I didn’t get that impression. I spent quite a bit of time with the director of CORDS. He seemed to me to be a man firmly in control of his organization.

Mr. Duff. I don’t mean by my statement to say that he is not in control.

Mr. Moss. I can imagine him getting hold of someone else and telling them what to do, but I can’t imagine very many outside of the Ambassador or General Abrams getting hold of him and telling him what to do. {p.146}

Mr. Duff. I was referring to a military unit.

Mr. Moss. A military unit functioning under CORDS?

Mr. Duff. Yes, correct.

Mr. Moss. How did it get under CORDS? That is the question I am asking.

Mr. Duff. I am afraid I can’t answer that.

Mr. Moss. Well, then, how do you know whether that should even be considered within the scope of your study as a possible item of cost, or is it considered in this billion seven?

Mr. Duff. Well, we were not able, as we stated, to follow exactly an audit trail of the financing of CORDS. Now, the review that we made was a preliminary survey. We identified this as a problem. Now, to what extent or how deep that problem is at this point, we do not know.

Mr. Moss. Why is CORDS operating in this very loose manner? ¶

It was not created in any period of extreme urgency. ¶

Things were fairly well organized out there. ¶

The time that CORDS was established, wasn’t Bob Komer the first director of CORDS? ¶

Ambassador Komer was the director of CORDS?

Mr. Stovall. Yes, sir.

Mr. Moss. He went out there after making this study, and at least he represented to this committee, a well-defined plan or operation. ¶

At what point did the General Accounting Office first look at the CORDS operation to determine the efficiency of it or the adequacy of record-keeping?

Mr. Duff. This survey was initiated, I believe, the summer of 1970.

Mr. Stovall. Just about a year ago.

Mr. Moss. In 1970. Well, I was out there in 1970. ¶

Again, I have no indication that they were under any strain or stress such as characterized during the period of 1965 and 1966 when we had the port failures and the PX failures and the military construction problems. ¶

Is there any explanation why they have failed to develop any kind of a meaningful accounting procedure in this organization?

Mr. Stovall. Their explanation, Mr. Moss, as I mentioned, was that there was a top decision, and I am not acquainted with how that decision was made, that it was a more reasonable approach and a more practical approach at that time to have this loosely organized meshing of a management line without the related financial management responsibility being moved from the supporting organization. ¶

I am not well enough acquainted with this to defend it or otherwise.

Mr. Moss. Mr. Stovall, the accounting is not being handled by the supporting organizations adequately, or you would from them be able to get material you cannot get from CORDS. ¶

Isn’t that correct?

Mr. Stovall. Yes. This is what we are bringing out here.

Mr. Moss. So really nobody is watching the store there during this period? Let’s say they are not giving much attention to it?

Mr. Stovall. In the financial sense, such as we are describing here.

Mr. Moss. In prudent accounting sense, yes.

Mr. Stovall. yes.

Mr. Moss. It is important for us to know. ¶

One of the major criticisms — I have noticed in the last few days it is being made by Vice President Ky, it is the charge of corruption, and we all know that corruption in Vietnam frequently is related to forms of diversion of {p.147} supplies of every conceivable type, and if we have a billion seven, and let’s say that it might ultimately be accounted for — I do not know, and I do not think anyone else knows — but at least, the fact that it could build up to that magnitude is rather discouraging because it could constitute a very significant part of resources diverted, could it not?

Mr. Stovall. But I would like not to leave the impression that we are saying that it has been diverted because we do not know.

Mr. Moss. I recognize you are not saying that it has been, but I also recognize that you cannot say that it has not been.

Mr. Stovall. Correct.

Mr. Moss. And that is the thing that disturbs me because if you have a meaningful accounting system, for accounting for taxpayers’ dollars as we should, this kind of thing should not happen. ¶

It probably is not the second time. It is just the continuation of the first. ¶

But it has been happening in Vietnam rather regularly, in almost all areas of our activity. ¶

We cannot account for significant amounts of materiel, or money, or whatever that has been committed to the effort out there. ¶

Is that not correct?

Mr. Stovall. And the essence of our statement here is that we think it is time that such accountability be established.

Mr. Moss. We said that in a report of this committee in 1966, rather pointedly, and we detailed some of the areas that we thought were urgent and, if you recall, you appeared before this committee in 1965 and in 1966 and we discussed the lack of adequate personnel in the country to do the kinds of auditing and maintain the kind of oversight that would insure reasonable accountability for the resources committed by this Government to the Vietnamese effort. ¶

We do not seem to have achieved it quite yet, do we?

Mr. Stovall. Beg your pardon?

Mr. Moss. I say we do not seem to have achieved that kind of result yet. ¶

We still cannot get the kind of accounting for, in this case billions, or hundreds of millions of dollars would be a little less spectacular — hundreds of millions of dollars of goods, services, and money.

That is all I have. Mr. Chairman, at this time.

Mr. Moorhead. Mr. McCloskey?

Mr. McCloskey. Thank you, Mr. Chairman.

Mr. Stovall, I have been trying to piece out from the testimony today and yesterday the nature of the money going into the Phoenix program, and I would like to describe to you my dilemma, and perhaps you can clarify it.

Under the country team concept in Vietnam the Ambassador is chief of everything; Deputy, Comusmacv, and General Abrams is adviser to the Ambassador. ¶

The Ambassador makes the final decision, is that not correct?

Mr. Stovall. The chain, I believe, is that the Ambassador is at the top of the structure, and Comusmacv next, and in relation to CORDS, the Director of CORDS, who also carries the rank of Ambassador.

Mr. McCloskey. Deputy, Comusmacv, is Ambassador Colby. ¶

Then underneath the Deputy, Comusmacv, of CORDS, there appears to he roughly 6,000 U.S. personnel, of whom 817 are civilian. ¶

Yesterday, testimony was offered that 722 of that 817 are AID or State Department employees with the great majority employed by {p.148} AID. ¶

As I recall, about 620 are AID, and perhaps 100 are State Department. ¶

The testimony yesterday was that half of the AID personnel are assigned to the pacification program in South Vietnam.

Now, from that point, with half of the AID personnel assigned to pacification, we find that the primary pacification effort in 1971 is the Phoenix program, the neutralization of the so-called infrastructure. ¶

And yet only 1 percent of the funds of AID are allocated to the Phoenix program under your testimony today, although half of the AID people are engaged in pacification, and pacification Phoenix is the targeted area.

Can you tell me, to clear up my dilemma, how much money can be traced into the Phoenix program from various sources that you looked at in preparing this report?

Mr. Stovall. I am looking to see if we have it here. ¶

No, sir, we do not have that.

Mr. McCloskey. Now, the Phoenix program started essentially in 1967, so we have 1967, 1968, 1969, 1970, 1971, and now 1972, 6 years. ¶

Can you tell me when, for the first time, the South Vietnamese put in any of the money for the Phoenix program?

Mr. Stovall. We do not have that information.

Mr. McCloskey. So the GAO does not know how much money has been spent for Phoenix, does not know where that money has come from that goes into Phoenix, or what proportion of the total CORDS money goes into Phoenix. ¶

Are those three statements correct?

Mr. Stovall. That is correct.

Mr. McCloskey. How could I find those figures? ¶

Who would I look if the General, Accounting Office cannot tell me?

Mr. Stovall. I am not sure that I can advise you either.

Mr. McCloskey. Well, is there any question but that — let me go back to your own testimony. ¶

If I read it correctly, Phoenix is the target program, is it not, of pacification this year? ¶

There is no question about that. ¶

That is the first priority listed in your testimony here, “to eliminate the remaining Communists, political, and military strength.”

Mr. Stovall. May I recheck that?

Mr. McCloskey. Top of page 5.

Mr. Stovall. I believe they consider military security to be the first priority, or territorial security.

Mr. McCloskey. Yes, territorial security. ¶

These objectives are aimed at achieving a smooth continuation of the 1969 plan but with renewed effort to eliminate the remaining Communists and reduce military strength: That is a reference to the 1970 plan. At the bottom of the page, the 1971 plan appears, titled “Community Defense and Local Self-Development Plan,” as a follow-on to the 1970 plans.

Now, the point that I would like to pursue is in this goa1 of providing effective security for 100 percent of the people. ¶

In the rural countryside of Vietnam, which was originally composed of some 12,700 hamlets, and now down to a little over 10,000 hamlets, there are two ways to bring security to 100 percent of the people. ¶

One is to generate refugees and force people to leave their homes and come into Government controlled areas. ¶

The alternative is to assure control of the hamlets in the countryside so that the people can be protected from the Vietcong and the Communist forces. {p.149}

Now, over the last 7 years, the generation of refugees, until at least 1970, was the primary means of bringing people under Government control, was it not?

Mr. Stovall. I do not think I could answer that.

Mr. McCloskey. You cannot answer that. ¶

Well, Mr. Stovall, how can we break down the amount of money spent to take care of refugees and the amount of money spent to generate refugees over the past 7 years?

Mr. Stovall. I do not think you can under the present system. ¶

Under the improved accounting that we are recommending here and which we think is greatly necessary, one should be able to account for this in terms of the accounting for the program. ¶

I do not believe you could do it now.

Mr. McCloskey. Can you give a breakdown out of your figures and documents for the amount of money we have spent for refugees during the past 7 years? ¶

In other words, the amount we have spent for the benefit of refugees? ¶

For example, the sheets of tin, the rice that we give them, the various benefits?

Mr. Stovall. No. I do not think that we can.

Mr. McCloskey. Was the answer no?

Mr. Stovall. The answer was no.

Mr. McCloskey. Is it possible that the AID cannot tell us how many dollars we have spent to help refugees?

Mr. Stovall. No, in the sense that I cannot tell you here today. Perhaps this can be obtained, but we do not have it today.

Mr. McCloskey. Could you suggest to me how the subcommittee could get these figures? ¶

I want to say this, Mr. Stovall, I am familiar with the debate conducted between AID, CORDS, and military personnel in the past few years over the productivity of the generation of refugees. ¶

There has been a recent case up in Quang Ngai Province in the My Lai area where the Government of South Vietnam has deliberately generated refugees and our people have opposed this course of conduct as counterproductive. ¶

This appears to be the major issue of debate in the pacification program, as to when we generate refugees, when we help refugees, and whether or not we are creating a Communist infrastructure when we burn a village down and generate refugees.

It certainly seems to me, that at the very least we ought to account for the funds expended to generate refugees on the one hand and to ameliorate their difficulties on the other.

Can you suggest to me what course of action that this subcommittee should follow, what witnesses and agencies should testify before us, in order to tell us these facts?

Mr. Stovall. I think that our statement here, Mr. McCloskey, would say that we are just not aware of where those facts could be obtained.

Mr. McCloskey. Well, is there a definite listing in the AID budget of money spent for refugees?

Mr. Stovall. I do not have the figure here, but I assume that AID has such a figure. ¶

But we do not know how much other money might have been spent from other budgets, other appropriations.

Mr. McCloskey. In your accounting, did you come across a CORDS term, “rice denial”? {p.150}

Mr. Stovall. I would not like to refer to our work as our accounting. It is less definitive. We did something much less. We just went out and tried to get information.

Mr. McCloskey. I appreciate that.

Did you run across the concept “generation of refugees” in your study?

Mr. Stovall. If I may search here for just a moment, Mr. McCloskey.

I don’t believe so. I don’t seem to have a reference to it here. You are referring to it as an accounting category or as a responsibility category?

Mr. McCloskey. Yes, sir.

Mr. Stovall. I don’t seem to find it here.

Mr. McCloskey. Well, I have been handed the AID budgetary proposal under table 3 of the title “Refugee Relief and Social Welfare,” and there is this statement: “The number of new refugees” — and this is during the year 1970 — ”just over a 100,000 was roughly the same as in 1969, but substantially down from over 300,000 during 1968.”

Now, this would indicate that each year the AID was handling a certain number of refugees and presumably spending certain amounts of money for the relief and the benefit of those refugees. But there is no reference to amounts in the accounting figures that are furnished us that will indicate to us, or that you can determine from the records you have looked at; is that correct?

Mr. Stovall. Not that I have seen. It may well be that AID could furnish a further breakdown of these figures. We don’t know.

Mr. McCloskey. I think I am belaboring a point on which your study hasn’t included. But I would like to commend you on this study. It gives us information which, from my experience as a visiting Congressman to Vietnam 2 months ago we were unable to get from the highest sources in the CORDS operation. ¶

I think it is imperative, Mr. Chairman, that in an operation which is obviously headed by the U.S. Ambassador with a military operation subordinate to him which includes the whole pacification program under the U.S. State Department, we ought to assist in some breakdown of the military obligations and the State Department operations, in order to account for both.

If we are financing a refugee operation costing hundreds of millions of dollars and yet, at the same time, the Ambassador insists on military obligations which in effect doubles the needs for refugee operations, we have under the guise of a military operation, an operation conducted by the State Department, and that is a unique enough situation that it seems to me that we ought to lay down some precedents and guidelines in this investigation. ¶

I feel that we have an obligation to determine who is controlling what and the costs involved, because if the State Department is making these decisions to generate refugees, and 90 percent of the cost is spent in the military operations to carry out the State Department policy, then it might very well affect what we allocate and appropriate for that State Department policy.

I confess that if GAO doesn’t know these facts, this committee has a great deal of work to do to elicit them.

Thank you very much.

Mr. Moorhead. I share your concern. ¶

I don’t know whether this is part of an intentional jumbling of the figures so that they could be {p.151} more free of control by the Congress, or how much it has been accidental. ¶

I think probably it is a little bit of both.

Mr. Stovall, on page 7 of your testimony, you have totals of approximately $4 billion for the CORDS program. Does this include the salaries of military, State Department, and AID personnel assigned to CORDS?

Mr. Stovall. Yes, sir.

Mr. Moorhead. You testified that there were some 13,300 personnel assigned to CORDS, is that correct, sir? I believe it was on page 6 of your testimony.

Mr. Stovall. 13,300, I believe, was the figure.

Mr. Moorhead. How many of those 13,000 are U.S. American citizens?

Mr. Duff. In our report here, that is a classified figure, Mr. Chairman.

Mr. Moorhead. I beg your pardon?

Mr. Duff. That figure is classified, Mr. Chairman.

Mr. Stovall. We have something of a problem there, Mr. Chairman, in that these figures we are working from, having been obtained in Vietnam, and we are using the classifications that were on them in Vietnam. ¶

It is possible that there have been some declassifications of figures here that we are not aware of, and I don’t know whether there may have been some declassifications of this figure.

As it is stated in here, it is a classified figure. If we could check that and submit it for the record, perhaps.

Mr. Moorhead. If it has been declassified.

Mr. Stovall. If it has been declassified. It may have.

Mr. Moorhead. The number of American citizens as opposed to the number of Vietnamese citizens, you have the figure, but it is classified?

Mr. Stovall. We will try to get it declassified and submit it for the record, if we may.

Mr. Moss. Mr. Chairman, would you yield?

Mr. Moorhead. Certainly, Mr. Moss.

Mr. Moss. Who has the figures? You say you have them, but you will have to get them declassified. Who classified them?

Mr. Duff. I would assume, Congressman Moss, that the schedule that our people took these figures from, and this is the schedule in this document, that the schedule itself was classified with this classification.

Mr. Moss. What is the classification on it?

Mr. Duff. Confidential.

Mr. Moss. Confidential.

It would have minimal impact upon the security of the Nation if released. I can’t see how it would have any adverse impact on the security of the United States.

Mr. Stovall. We would agree. It is just that we also are obliged to follow the rules of the game here. We will try to trace it back and get it declassified.

Mr. Moss. Well, we have asked for a legal opinion from the counsel to GAO as to what these rules are.

Mr. Chairman, I don’t think the committee should be at the mercy of some arrangement conducted by the General Accounting Office. I think this committee should request — {p.152}

Is that AID mission figures, the table that it was taken from?

Mr. Duff. I would assume we obtain it at CORDS.

Mr. Stovall. I think it was at CORDS.

Mr. Moss. I think that we should ask on an urgent basis that that material be declassified.

Mr. Stovall. Mr. Chairman, I might suggest, I think it was a CORDS figure, and since it is in the military chain, I think that chain probably will run back to the military rather than AID.

Mr. Moss. Well, the classifier under the Executive order is empowered to declassify, so it shouldn’t have to run through a chain. It would be a case of going back to where it was classified.

Mr. Duff. Congressman Moss, I would like to make a statement to try to clarify a little bit of this about the classification. ¶

Under our normal procedures, if this were an audit report, the classification by paragraph which we had placed on it, would have been the classification on the supporting documents.

Mr. Moss. I realize that.

Mr. Duff. I would just like to go through the procedures, if I may. ¶

The amount of information that is in this report which we have a classification on may not be classified, because we would have used the supporting documentation. ¶

Maybe we only took two sentences out of that document or a schedule. ¶

A report such as this would have been submitted to the Defense Department with a request for a security review. ¶

So when we say that this particular schedule is classified, it may not be, but we do not know this at this point, because whatever document we took it from was classified.

Mr. Moss. You see, that is precisely the point that I was making this morning, and we went over this in the committee for quite a number of years, as to the effect of a classification upon Congress or upon an arm of Congress.

Now, you say you would submit this to DOD, and they would then declassify sections of it for you. ¶

They would review it for classification, and they might declassify some and insist upon the need for classification in other areas.

Mr. Duff. That is correct.

(The material referred to above follows:)

__________


TYPE OF PERSONNEL

 
Location
 
Military
 
Civilian
3rd country
nationals
Local
national
Total
Saigon 20117219347739
Field 4,991 1  6451716,75612,563
Total 5,1928171907,10313,302

 

This total includes 97 personnel provided by the Department of State.

______________________

Mr. Moss. It has always been my position, insofar as it relates to Congress, and the arms of Congress, that that is advisory, because classification takes place under authority of the Executive order, which can only be binding upon executive agencies, not upon the General Accounting Office, not upon this committee. ¶

It is advisory to us, and certainly we should give it the greatest care and consideration.

But if we have a different judgment — and here is just a tabulation {p.153} of employees, x number of us, x number of Vietnamese — it couldn’t by any stretch of the imagination impair the security of this Nation.

 

Mr. Duff. Mr. Congressman, that was the point that I was trying to make.

Although perhaps we have it classified in here—

Mr. Moss. The point you are making is trying to explain to me something which I have been over many, many times in every year for the last 16 or 17 years. ¶

So I am quite familiar with all of the procedures.

The thing I don’t like is that it, in effect, delegates to an executive department the authority to determine the availability of information developed for the use of the Congress by an arm of the Congress. ¶

I think it is advisory to us. ¶

I don’t think it is binding on us. ¶

And that is a very significant difference.

Mr. Duff. I was just trying to make the point that this small schedule may not have been classified by the Department of Defense.

Mr. Moss. I realize that. I realize that.

That item, like this report here — where is it, this report here? You have got sections of it marked “secret.” And then you will go down for a few lines, and then it says “confidential.” And then a few more lines it will be “secret” again. And then some would be unclassified.

But if you were taking it from this routinely, you would classify an excerpt at the highest classification of the document itself. ¶

That is the custom. ¶

It is a custom that leads to a proliferation of over-classification of needless and senseless classification of material having no relevancy at all to the security of the Nation.

Mr. Duff. After we would have submitted our report to the Defense Department for a security review, then it would have been classified as it came back to us by the Defense Department.

Mr. Moss. By what authority does the Defense Department gather the right to classify a report of the General Accounting Office of the United States?

Mr. Stovall. Well, in your original question—

Mr. Moss. It doesn’t get it by law.

Mr. Stovall. Mr. Moss, we will try to deal with this in responding to your original question.

Mr. Moss. I think Mr. Stovall understands precisely what I am trying to get at here.

Because you have done it doesn’t mean it is right. ¶

Because you have done it doesn’t mean it is required of you.

I think sometimes we have to challenge practices in order to halt them. ¶

Otherwise, they keep expanding and growing. ¶

They permeate the whole Government.

Mr. Moorhead. I agree with Mr. Moss. ¶

I think it is ridiculous to have a classification on the number of Americans in the CORDS program.

Mr. Stovall. Mr. Chairman, that table that I referred to is at the top of page 7 in the document before you.

Mr. Moorhead. Can you give us the percentage of Americans who are military and the percentage which are not military?

Mr. Stovall. I think, if you can make a rough calculation, or we could refine it later, but it would come right from this table at the top of page 7. ¶

It is around 40 percent, I believe. {p.154}

I am including in that, though, the locals.

Mr. Moorhead. Were you relating military to other Americans?

Mr. Stovall. That is a different relationship.

Mr. Moorhead. That is a different figure, and it shows, as far as American personnel are concerned, the great preponderance are military.

Mr. Stovall. Yes. About seven-eighths of the total Americans are military.

Mr. Moorhead. Without revealing the figures, can you give us the percentage of the Americans who are assigned to the Phoenix program?

Mr. Stovall. If we may look just a moment, Mr. Chairman — in relation to total Americans?

Mr. Moorhead. In relation to total Americans.

Mr. Stovall. I think something like 8 percent.

Mr. Moorhead. And for the local nationals, what percent are assigned to the Phoenix program?

Mr. Stovall. We don’t have that figure, Mr. Chairman. We just have a total for national locals.

Mr. Moorhead. On page 10 of your testimony, you state:

As of August 31, 1970, 13,708 members of the Vietcong infra-structure had been neutralized during the year.

Can you tell us what neutralized means?

Mr. Stovall. I don’t know the full extent. ¶

I presume neutralized means either one way or the other taken out of circulation by being killed or moved out, or other means. ¶

I don’t know the full description. ¶

But it is eliminated.

Mr. Moorhead. Do you have a breakdown of the 13,708 in the various categories?

Mr. Stovall. No, we do not.

Mr. Moorhead. You don’t have that even in this classified report?

Mr. Stovall. I will recheck.

We have some information on that. It is classified secret. It is at the top of page 90 in your document.

Mr. Moorhead. Did you say 90?

Mr. Stovall. Yes. The top of page 90.

Mr. Moorhead. Do you have a cost breakdown of the Phoenix program for, let’s say, on an annual basis?

Mr. Stovall. I don’t find such a figure, Mr. Chairman. ¶

I don’t think we have that figure.

Mr. Moorhead. Do you have a cost breakdown per persons neutralized?

Mr. Stovall. I don’t believe I can answer that, Mr. Chairman.

Mr. Moorhead. On page 2 of your testimony you refer to imperfections in the CORDS program.

Apart from the accounting imperfections, which are monumentally imperfect, what other imperfections were you referring to?

Mr. Stovall. We were using that term in a general sense, that I think it is well known that some of the problems of management in correlation and coordination are still there. And we have no specific thing in mind — I am advised that we have more — yes, on page 11 of the statement we cite some of those, bottom of page 11 of my statement.

Mr. Moorhead. Thank you. {p.155}

On page 3 of your testimony you say:

“It” — and I take it you are referring to the classified document — “has not and will not be subjected to the strict review processes normally employed to our reports.”

I understand that it has not, and that is understandable. But why will it not?

Mr. Stovall. Our intent was that we think the document has served its purposes and that we will build on that and do further work. We were just intending to convey that we do not plan to proceed with all of the detailed checking that would be required to ultimately nail down this 160 pages and issue it to the Congress as a report.

That doesn’t mean that we aren’t going to go ahead. We intended to use this as a plan and as a base for further work and other reports. We will draw from it. I intended to convey that we are not going to put it through all the further processes for issuing it ultimately as a GAO report.

We feel it is accomplishing the purpose we intended, as the first step from which to go ahead with further work and other reports. We will draw from the financial portion particularly, section 12, which we have at the top of our list for further review of financial accountability matters.

Mr. Moorhead. You go on to say:

“It has not been submitted to the responsible agencies for official comment.”

Mr. Stovall. For official comment. We did give it to them simply as a document that we thought might be helpful to them.

At least, we gave it to the Secretary of Defense, Secretary of State, the Administrator of AID, and the Director of the Office of Management and Budget. We went through a considerable process in Vietnam trying to assemble this information and we thought that this might help to get a perspective on the whole CORDS organization that was not readily available elsewhere. We thought that it might be helpful even to the Departments themselves to have some of this information.

We did at the same time ask them to tell us if they saw any errors and inaccuracies and wrong figures, and so forth, to please let us know.

And I believe that AID mentioned to me that one figure we were using in the report where we cited the contributions by AID. And they recently told me that apparently we had inadvertently picked up the amount of their budget request rather than the amount of ultimate budget authorizations. It doesn’t make a great deal of difference. But this kind of thing is a possibility in the document.

Mr. Moorhead. AID representatives in their testimony yesterday before the Subcommittee indicated that the South Vietnamese pacification program was a relatively smooth-running operation. ¶

Would you agree with this?

Mr. Stovall. I would rather not be so presumptuous as to pass a judgment on that, Mr. Chairman. If by smooth-running they were talking comparatively, they might very well have a point. ¶

In the sense that we are talking about here, I don’t believe that it is smooth in the sense of financial accountability.

Mr. Moorhead. Any of you who have been out there, would you care to comment on that? {p.156}

Mr. Duff. No, sir.

Mr. Stovall. I would like to make one further observation.

From the AID viewpoint, as I understand it, all of the people in the field have actually moved from under AID’s management oversight and jurisdiction and are under the jurisdiction of CORDS. ¶

So to that extent I should think that AID would be experiencing less operating difficulties, because the management line from the people going up from the provinces would go to CORDS rather than back to AID proper.

Mr. Moorhead. On page 155 of your document, appendix 2, which is marked unclassified, you describe the pacification-studies group, and you report that they issued some 75 reports.

Did you obtain copies of these reports?

Mr. Stovall. I don’t know.

Mr. Duff. If they did? they would be with our field staff in Vietnam.

Mr. Moorhead. That is all I have.

Mr. Moss?

Mr. Moss. I haven’t very many questions, Mr. Chairman.

On page 10 of your statement, item 7:

The Government has also attempted to establish an effective people’s information system to explain the Government programs and to elicit public participation.

How much is committed to this program? Or is that classified?

Mr. Stovall. There is a paragraph in the other document which, if I may read it, touches on this.

Mr. Moss. Give me the page.

Mr. Stovall. Bottom of page 108. It is under the heading of the people’s information program. Although the Public Affairs Office does not segregate costs, we estimate that from 1968 through 1970 about $46 million of their budget, the Public Affairs Office budget, was either directly or indirectly related to pacification and development, including the people’s information program. I am afraid that is a murky figure also.

Mr. Moss. Afraid it is what?

Mr. Stovall. Murky figure also.

Mr. Moss. I would think so.

Mr. Stovall. When I started reading I thought it was just People’s Information.

Mr. Moss. When you refer to the Public Affairs Office, are you referring to just—

Mr. Stovall. That really does not answer your question. That is the whole pacification element.

Mr. Moss. Is there any stepup this year in the funding of the people’s information program?

Mr. Stovall. We do not have those figures, Mr. Moss.

Mr. Moss. Mr. Chairman, I would urge that we get that figure from the U.S. Mission in Saigon, the total for — this program is operated by the Government of Vietnam?

Mr. Stovall. Yes.

Mr. Moss. Or is it operated by CORDS?

Mr. Stovall. I think that it would be properly characterized as operated by the Government of Vietnam with CORDS in an advisory capacity. {p.157}

Mr. Moss. Would it be funded by CORDS, or a supporting agency funding CORDS?

Mr. Stovall. That is my understanding.

Mr. Moss. I would ask, Mr. Chairman, that the staff be instructed to get totals for the years 1969, 1970, 1971.

Mr. Moorhead. I think those would be very significant figures. ¶

Mr. Stovall, did you study any of the operations of the U.S. Information Agency in Vietnam?

Mr. Stovall. Only from the extent that they would have been contributing to CORDS, and this element that we are speaking of now would have been the JUSPAO element — that would have come from USIA, but we did not look at it as an entity in itself.

Mr. Moorhead. Do you know how many USIA personnel are in South Vietnam?

Mr. Stovall. I do not think we have that figure here. We could readily get it.

Mr. Moorhead. If you could readily get it, we would like to have that for a number or years back.

Mr. Stovall. The numbers of USIA people in Vietnam for several years back.

Mr. Moorhead. Several years back.

(The information follows:)

__________


U.S. INFORMATION AGENCY PERSONNEL EMPLOYED IN VIETNAM AS OF JUNE 30, 1967-71

 June 30, 1967June 30, 1968June 30, 1969June 30, 1970June 30, 1971
Americans 1178383 1  7468
Local and 3d country nationals 2  396266269227221
Total 513349352301289

 

Includes 4 Foreign Service officers on loan from Department of State.

Breakdown between local and 3d country nationals not available at USIA, Washington.

______________________

Mr. Moss. Page 4 of your statement. ¶

You say basically the pacification programs are programs of the Republic of Vietnam. ¶

Are they, or is CORDS deeply involved in the operation of this program?

Mr. Stovall. Mr. Moss, if I may.

Mr. Moss. Yes, indeed.

Mr. Stovall. We make that statement in light of the official statements by the people responsible for the CORDS program in Vietnam, and General Abrams’ statement, other official statements, that these are Vietnam programs.

Of course, the CORDS is deeply involved.

Mr. Moss. Well, as you make your studies, though, you are conscious of the fact of the dependence or Congress upon your product to make many of its judgments, aren’t you? ¶

So we need an independent assessment as to the accuracy of these statements. ¶

We have every reason to believe they are not accurate. ¶

You go out with the committee and you hold hearings in Saigon or in any of the other centers where there are concentrations of U.S. personnel in Vietnam, and you put those staff people and the directors under oath and take their testimony, you find that the things they tell you don’t hold up, and they totally go to pieces. ¶

They just aren’t valid. ¶

And in the process of auditing or study- {p.158} ing these programs, and I use “audit” in the very broadest sense, don’t you arrive at an independent judgment as to the accuracy of some of these claims? ¶

To really meet our needs, you should.

Mr. Stovall. If you are referring to our basic approach, yes, we do.

Mr. Moss. How do we find out then what your judgment is?

Mr. Stovall. In this particular situation, I’d like to go back to my original observation, that this was a first-step survey to try to get some perspective and information. ¶

As a general proposition we do try to reach judgments. ¶

I am not sure in this case, though, that we would have the means of carrying this particular point through to a judgment of whether it is a Vietnamese program or a U.S. program.

Mr. Moss. Well, Vietnamese, we will say, in broad outlines. ¶

But how is it operated, by Vietnam or is it operated by CORDS?

Mr. Stovall. These are the questions that we would try to get answers to, but whether we can overturn the official stated policy position of the United States, I think, is a rather formidable undertaking. ¶

I believe our efforts could be better applied in the type of financial controls and management controls and that sort of thing than to attempt to establish judgments in a very high policy area, such as this.

I would be concerned that even if we established such a judgment, whether that would be of any great value as a GAO judgment. ¶

I would hope that we could stay in fields in which we could be a little more definitive and thereby be of service to the committees and to the Congress in those fields where we can find places to put our feet on the ground.

Mr. Moss. Let’s take the statement in the second sentence: ¶

“As previously stated, much of the monetary support for the programs comes from the United States, but the programs are Vietnamese programs.”

Is it “much of” or “most of“?

Mr. Stovall. In the sense of the ultimate support, it would be most of it.

You are referring to the second and third stages of the circuitous support of Public Law 480 and other programs.

Mr. Moss. The direct funding of the program, most of it would be from U.S. source, wouldn’t it?

Mr. Stovall. Yes. ¶

We could have said “most” rather than “much.”

Mr. Moss. What percentage would have been Vietnamese budget?

Mr. Stovall. We could have said “most.”

Mr. Moss. I think it conveys a different judgment if it is most of the monetary support.

In none of the programs here do we come upon any land reform costs; is that correct? ¶

Is that being handled at all by CORDS now?

Mr. Stovall. I understand that it is in there, but I am not successful at the moment in finding it. I understand that there is an element of land reform cost, in here.

Mr. Moss. Is this the only program of land reform in Vietnam and one that is operated under CORDS, or is there a separate one? AID has a land reform role. Is it under two ministries of Vietnam or under one ministry?

Mr. Stovall. If I might, I would like to check that and submit it for the record.

Mr. Moss. Would you? {p.159}

Mr. Moorhead. Without objection, it is so ordered.

(The information follows:)

______________________

The Agency for International Development provides advice and financial assistance for the Vietnamese Land Reform program. Under this program the Government of Vietnam will (1) purchase and redistribute land to tenant farmers and (2) identify the boundaries and distribute titles to the land of about 1400 Montagnard hamlets. While U.S. assistance is an AID responsibility, CORDS field advisors also participate in the program.

AID Vietnam estimated in August 1970 that U.S. dollar contributions will total about $40 million. U.S. dollar funds will be channeled through the Commodity Import Program to offset the inflationary effects of the Government of Vietnam’s land purchases.

The Government of Vietnam budgeted a total of $VN25 billion from 1968 through 1971. The Government’s Ministry of Land Reform and Agriculture and Fishery Department has primary responsibility for the Land Reform program. Field representatives from seven other Government ministries also assist in the implementation of the program.

______________________

Mr. Moss. Now, under the U.S. budget of $2.1 billion, page 7, of your statement, the financing of CORDS for the 3 years, 1968 through 1970, you stated the Government of Vietnam budgeted the equivalent of about $1.6 billion.

Are you aware of any of the details of the Vietnamese budgeting of that $1.6 billion?

Mr. Stovall. I am told that we do not have the details of that.

Mr. Moss. You have no information on that at all?

Mr. Duff. Other than what was given to us.

Mr. Moss. Is that the Vietnamese Government budget, or is it covered under their military budget or what?

Mr. Duff. The only reference we have is the Government of Vietnam national budget.

Mr. Moss. I wonder, Mr. Chairman, if we can determine from the U.S. mission in Saigon whether that $1.6 billion was reviewed as the law permits by the President of the United States to determine whether or not it was necessary.

Mr. Moorhead. We will try to find that out.

Mr. Moss. It says during your surveys, you received incorrect and conflicting figures from CORDS directorates. Is that about eight direct reports or how many?

Mr. Duff. Eleven.

Mr. Moss. Eleven;

Do you have that listed in this report, the 11 directorates of CORDS?

Mr. Duff. Yes, sir.

Mr. Moss. Are those conflicting figures identified in the report?

Mr. Duff. I think we have one schedule in there showing the differences.

Mr. Stovall. There is a table on page 142 of the big document that shows relative differences of figures. ¶

The problem, of course, arises from the fact that there is no firm responsibility, and in some cases, the directorate goes out and tries to get information. In other cases, they don’t exert as much energy. They do arrive at totals as we showed in here.

For example, and I think I would be safe on reading the totals here, that for 1969 a set of figures submitted to the Senate Foreign Relations Committee totaled $1,335 billion; a set of figures that we asked {p.160} for and got at that time, totalled $1.354 billion; a set that was prepared for National Security Council added up to $1.368 billion; and our staff in Saigon as a part of our work there tried to take all those and bring them into one set as best they could as to what they thought was a set of figures for fiscal 1969, and they came up with $1.362 billion.

I would like to emphasize again, I would not put full faith in any of these figures.

Mr. Moss. I quite agree. ¶

But even if we concede the very sloppy accounting and the lack of accounting in the CORDS operation, the DOD should be able to give us the details of what they made available to CORDS, shouldn’t they?

Mr. Stovall. They should.

Mr. Moss. And AID should certainly be able to give us the same details.

Mr. Stovall. We were able to find a trail insofar as the AID figures.

Mr. Moss. The problem is with DOD.

Mr. Stovall. Yes, sir.

Mr. Moss. While we are doing this, back on my underlying theme here, what is there in those figures, as they break down into their various parts, that could adversely affect the security of the United States in your judgment?

Mr. Stovall. I don’t see anything.

Mr. Moss. It might be embarrassing to the agencies or departments mentioned in the revealing of facts of discrepancies between figures, but certainly it could not bear upon the security of the Nation, could it?

Mr. Stovall. I don’t see how it could.

Mr. Moss. So that would appear to be in abuse criteria imposed under the classifier, Executive Order 10501, in making these figures confidential.

Do you think it was a conscious classification, or just part of the routine, that you classify it all?

Mr. Stovall. We didn’t see any indication in here of a conscious effort to overclassify. ¶

At least I am not aware of any.

Mr. Moss. Did you see any evidence of any conscious effort not to classify?

Mr. Stovall. I am not in a good position to answer that, because these were all handled by our staff in Saigon.

Mr. Moss. I am not talking about classification as it appears here, because this was taken off of the tabulation supplied by your staff, and in keeping with custom, they applied the same classification here.

Mr. Stovall. I don’t know, because the basic rule that our people were instructed to follow was just to follow the classification of the documents from which these figures were taken. ¶

I am really not in a position to answer what intent was back of this.

Mr. Moss. I think that is all the questions I have, Mr. Chairman.

Mr. Moorhead. While we are on the subject of classification, Mr. Stovall, do you have in the General Accounting Office people who — either by training or work experience — could be called classification experts?

Mr. Stovall. Some of us in the school of hard knocks become almost classification experts, but I am not aware of anyone that we would categorize as an expert. We have had considerable exposure to this. ¶

Mr. Duff is about as much of an expert as we have. {p.161}

Mr. Moorhead. But when you have a GAO report and the Department of Defense says this paragraph should be top secret or confidential, don’t you negotiate with them and say why do you classify that?

Mr. Stovall. We regularly do this in attempts to get them declassified or the classification reduced. ¶

And also, in trying to get at this, if we find that it is a particular word or a particular phrase sometimes, we will try to sit down and find ways of expressing the substance in a different combination of words and sometimes then it is agreed that it can be declassified.

There is a lot of negotiation in this, but we try in every case to get our reports declassified in every way that we can. ¶

We have tried and are continuing many kinds of devices, including the device that if we cannot get all of the report declassified, but the main message is, we sometimes can put the classified portions aside in a classified supplement. ¶

We are continually trying for all kinds of devices that we can possibly use to make these things public, because we realize that we are in the position that if we don’t do that we become more of a captive along the lines that Mr. Moss is talking about.

We try to meet it in every way that is available to us within the basic rules under which we operate.

Mr. Moorhead. If a Member of Congress came into the possession of a document that was classified, but upon reading it, he thinks it is ridiculous to have it classified, could we turn to you for advice as to whether the classification is proper?

Mr. Stovall. We would be glad to offer advice. We would be very happy to, in an informal fashion, anything we could do along those lines.

Mr. Moorhead. Thank you, Mr. Stovall.

Mr. Phillips, Mr. Cornish.

Mr. Phillips. Have we established the fact as to whether or not there have been any internal audits in the CORDS program since it began operating?

Mr. Stovall. We understand there have been some, and I don’t know whether we have the information here or not.

Mr. Duff. I believe there are a couple.

Mr. Phillips. How many have there been? ¶

I am not talking about the evaluation studies that were referred to earlier, but actual audits of where the funds went, how they were used, how effectively they were spent, that type of thing.

Mr. Duff. I don’t think such an audit could be made under the circumstances.

Mr. Phillips. Because of the administrative dispersal of the program?

Mr. Stovall. I am told that AID had mentioned a figure of 12 audits, but I don’t know the composition of that.

Mr. Phillips. You have not examined any of those.

Mr. Stovall. I am not aware of any of them. Our people in Saigon may have them. We have had no difficulty getting access to them.

I think we made a statement there were 12 audit groups that theoretically had responsibility, or have responsibility. This is on pages 143 and 144 of the main document, and it is unclassified. ¶

But that only {p.162} two of them, insofar as we know, two of those 12 units had done any actual auditing.

Mr. Phillips. Do you suppose that a close look at those audits would shed any more light on what has happened to hundreds of millions of dollars in this program?

Mr. Stovall. We will be doing this as a part of our further work, yes.

Mr. Phillips. Thank you, Mr. Chairman.

Mr. Moorhead. Mr. Cornish.

Mr. Cornish. Thank you, Mr. Chairman.

Mr. Stovall, earlier in these hearings, your deputy, Mr. Charles Hylander, testified that 71 percent of the revenues received by the Government of Vietnam came from the U.S. taxpayer either directly or indirectly.

Do you recall that testimony? ¶

Did you have any part in its preparation or review?

Mr. Stovall. In the pressure of allocation of our time for different hearings, he prepared that one and I worked on this one. ¶

I don’t personally know about that item.

Mr. Cornish. You are familiar with it, though?

Mr. Stovall. I am not too familiar with that statement, but if I can’t answer the question here, I would be glad to furnish it for the record.

Mr. Cornish. This relates back to a point which Mr. Moss was touching on, and that is where you make the statement that the Government of Vietnam budgeted the equivalent of about $1.6 billion.

Now, I would assume if Mr. Hylander is correct, and the GAO is correct, that 71 percent of those revenues, which came out in this budget, that 71 percent probably could be applied to that 1.6 billion, could it not, inasmuch as these funds are all fungible?

Mr. Stovall. It is certainly possible.

Mr. Cornish. So actually this statement here is a little bit misleading. ¶

It is correct technically, that the United States budgeted $2.1 billion, and the Government of Vietnam budgeted the equivalent of about $1.6 billion, but in the actual source of the funds, those figures would be quite different, wouldn’t they?

Mr. Stovall. I think that our statement referred to the direct sources, yes, and if you consider the Public Law 480.

Mr. Cornish. I am talking about the subsidy and the monetary rate of exchange, and some very direct types of grants or gifts made to the Government of Vietnam, besides Public Law 480, generations of local currencies.

Mr. Stovall. Those figures I think would be substantially different.

Mr. Cornish. I wonder if there would be a possibility of making a recalculation based on the testimony of Mr. Hylander as to the actual contributions made toward this program from that point of view?

Mr. Stovall. I would like to discuss that with him and the people who are familiar with it. I don’t know whether we could do that or not. We could try.

Mr. Cornish. Well, perhaps you could not make a precise figure, but certainly an estimate.

Mr. Chairman, I wonder if at this point in the record, if that information could be provided. {p.163}

 

Mr. Moorhead. It could be supplied for the record. I think it should be.

(The information follows:)

______________________

We estimate that about 50 percent of the Government of Vietnam budget expenditures for CORDS is supported by the United States. The revenues of the Government of Vietnam (71 percent of which we estimated are derived, directly or indirectly, from the United States) do not cover all expenditures. The deficit is financed by borrowings from the National Bank of Vietnam.

______________________

Mr. Stovall. Would you be referring to that as something to submit for the record or for later information?

Mr. Cornish. For the record, Mr. Stovall.

Thank you very much, Mr. Chairman.

Mr. Copenhaver. Mr. Chairman, I will be brief.

May I first of all say, I think Mr. Cornish may be underestimating the amount of U.S. contribution, if you consider the sources of even 30 percent GVN contribution to their budget. ¶

Most of that, I submit, is also based upon indirect U.S. programs and activities.

I submit that the total indirect and direct U.S. contribution may approach 90 percent, not 71 percent.

With regard to the comment on—

Mr. Cornish. Well, may I interject? I am excluding therefrom, the deficit spending involved.

Mr. Copenhaver. The deficit spending, the taxation aspect which you got into with Mr. Hylander earlier, and so forth.

Mr. Cornish. Well, mathematically, I don’t think the figure could be 90 percent, excluding deficit spending.

Mr. Copenhaver. I want to keep their views open when they review this, you see, to attempt to go beyond even the 71 percent.

Mr. Cornish. I will amend my language to say at least 71 percent.

Mr. Copenhaver. At least 71 percent. ¶

With regard to the question of any DOD audits, first of all, let me indicate that the DOD press release clearly gives the impression that they are regularly auditing these programs, and I presume that GAO will check in, will you not, to see what kind of auditing they have been doing.

Subsequently, the DOD press release narrows down its statement and says, “We make regular audits of the commodity portion of the $2.1 billion that has gone in.” ¶

My question is, do you have any breakdown between that amount which was materiel and commodities and that which would be for service, of the $2.1 billion?

Mr. Duff. You are getting to a point here where we can’t really sort that out, because we do not know what part of the DOD $1.7 billion, how it came down and filtered into the CORDS operation. ¶

We couldn’t do it, and Defense could not do it, either.

Mr. Copenhaver. Therefore, when they state that documentation concerning the delivery of materiel that supports the obligations questioned by GAO has been and will continue to be reviewed by the DOD audit agency as part of the continuing audits of the MASF program for Vietnam, is that accurate?

Mr. Duff. I think that is a true statement. ¶

But again, here, they are auditing it from a military standpoint coming down through the depot system and going into the military assistance service funded Vietnamese depots, and they do do that. They have regular staffs over there, just like we do. {p.164}

Mr. Copenhaver. Where am I mistaken? ¶

If they do that, explain to me why you can’t trace it through them?

Mr. Duff. Because there is a lot more going into the military assistance funded operations in Vietnam, than the CORDS. ¶

You have the whole support of the Vietnamese Army; you have the support of the free world military forces over there, and what we are saying is you cannot break down and identify the portion of the DOD, $1.7 billion, which we got from budgetary documents, which is equipment, commodities, and so forth, which went into this CORDS organization.

Mr. Stovall. There may be some semantics problems here, but it is my impression that they are using these terms quite broadly, and when they say delivery, they really mean landed in Vietnam.

Mr. Copenhaver. That is true, not only DOD, but AID also. ¶

Their interpretation of end use audit and perhaps what yours is, is somewhat different, I think.

Mr. Stovall. I think this is part of the problem. ¶

We are talking about a completely different thing than they are talking about, but in making generalizations, the way in which they express it is true until you start to analyze it.

Mr. Copenhaver. May I read you one other statement of the DOD press release before I leave this, to get a comment from you on this, and this is relevant to the preceding comment—

The largest part of the $1.7 billion, for example, about $1.3 billion, was budgeted to provide military hardware and other commodities to the regional and popular forces (RF/PP {sic: RF/PF}) under the Military Assistance Service-Funded Program (MASF). This fact is recognized in the GAO survey. Commodities are brought into Vietnam through the U.S. Army logistics system and are turned over to the Republic of Vietnam Armed Forces (RVNAF) for distribution. CORDS participates to a limited degree in computing requirements but does not participate in ordering or delivery of commodities.

This is the point you are making.

Mr. Stovall. That is right.

Mr. Copenhaver. In essence, what you are really saying is that DOD is bypassing CORDS? ¶

CORDS participates to a limited degree in computing requirements, but does not participate in ordering or delivery. ¶

As I read this, it means that DOD is bypassing CORDS in the distribution, and that equipment is going to the Army GVN in an intermixed way, is that correct, with CORDS not being singled out from the other programs?

Mr. Duff. The equipment commodities and so forth which are delivered by the DOD to the Vietnamese forces, enter the Vietnamese logistical system. ¶

CORDS does not get involved in receiving the equipment or disseminating it to these forces, that is correct.

Mr. Copenhaver. Take Phoenix, for example; for all we know then, Phoenix may be actually funded to a far greater extent than even AID or DOD say they are; isn’t that possible?

Mr. Duff. We wouldn’t know.

Mr. Copenhaver. You wouldn’t know, but would DOD know?

Mr. Duff. I can’t answer that. I don’t know.

Mr. Copenhaver. Certainly, it would be the minimum, but it could be, say, double or triple what they claim, couldn’t it?

Mr. Duff. I don’t know. {p.165}

Mr. Copenhaver. To go on to another point, do I understand from your statement that GAO has had to release reports to the Congress and the public marked classified, which in GAO’s opinion should not have been classified?

Mr. Stovall. I think we were talking about degree, which prevails in all of these elements. ¶

I was not referring to whole reports, but rather to just a general proposition, and we were referring in particular, I believe, to one item in this report. ¶

There are occasions where we don’t see the basis for classification, but which we have no power to change it.

We are, I think, on record at various times, periodically, that there are fairly frequent situations in which we don’t think a particular item should be classified, not a whole report necessarily, but a particular item, because we would look at it generally as a paragraph-by-paragraph situation.

Mr. Copenhaver. Has GAO been refused information from State, DOD, CIA, AID, or elsewhere, of classified information?

Mr. Stovall. Could I clarify or amplify your question? ¶

We have been refused information, and we so testified, Mr. Duff and I, before the Senate Appropriations Committee just 2 weeks ago. And we had a prepared statement on that point.

I do not recall any situation where we were refused because of a document having been considered to be classified.

Mr. Copenhaver. What was the basis for refusal?

Mr. Stovall. Excuse me. ¶

I am reminded that in the case of CIA, we don’t have audit authority there, so if we could set that one aside.

Mr. Copenhaver. Who was it who refused you, and what time frame are we talking about?

Mr. Stovall. Department of Defense and Department of State.

Mr. Copenhaver. What time frame are we talking about? How recently have you been refused?

Mr. Stovall. Continuously up to now.

Mr. Copenhaver. On what basis were you refused information?

Mr. Stovall. We will be glad to provide you a copy of that prepared statement, but it was on the basis of — well, I believe as it was described in the testimony, it was on the basis that they do not believe that GAO should receive inspection reports or internal working papers and future planning documents. ¶

That covers a lot of territory

(The statement follows:)

__________


Prepared Statement of
Oye V. Stovall,
Director, International Division,
U.S. General Accounting Office

Mr. Chairman and members of the committee, we are appearing in response to your request for our views on the problems of access to records and information needed for performance of our audit responsibilities relating to the military assistance programs.

One of the most important duties of the General Accounting Office is to make independent reviews of agency programs and to report to the Congress the manner in which Federal departments and agencies carry out the laws enacted by the Congress. ¶

The Congress in establishing the General Accounting Office, recognized that the Office would need to have complete access to the records of the Federal agencies, and provided the basic authority in section 313 of the Budget and Accounting Act, 1921, (31 U.S.C. 53, 54) as follows:

“All departments and establishments shall furnish to the Comptroller General such information regarding to powers, duties, activities, organization, financial {p.166} transactions, and methods of business of their respective offices as he may from time to time require of them; and the Comptroller, or any of his assistants or employees, when duly authorized by him, shall, for the purpose of securing such information, have access to and the right to examine any books, documents, papers, or records of any such department or establishment.”

GAO auditors, like all auditors, have to some degree always encountered problems in obtaining access to records and information. These are “occupational hazards” but we usually have been able to resolve most of our problems without undue difficulty. ¶

However, in our reviews of military assistance programs, we have encountered increasing difficulties in obtaining information needed to effectively evaluate and report on the administration of these programs. ¶

During the past year or so a number of our audit assignments involving the foreign assistance programs have been hampered and delayed with the result that we have had to some extent curtail the scope of the audit, in effect being precluded from fully carrying out our responsibilities in these cases.

It is not practical to raise the day-to-day access problems to the level of formal top requests and denials, and we have no evidence that any of the situations we have encountered involve the exercise of executive privilege. ¶

Absolute denial of access to a document is quite rare. ¶

Our reviews are hampered and delayed more by the time-consuming delaying tactics employed by the various organizational elements within and between the Departments of Defense and State in screening records and in deciding whether such records are releasable to the General Accounting Office. ¶

It is not unusual for our auditors to request access to a document at an overseas location and be required to wait several weeks while such documents are screened up the channels from the overseas posts and through the hierarchy of the Departments of Defense and State.

Our experience in making a study of the military assistance training program at the request of the chairman, Senate Committee on Foreign Relations, is an example of the problems we have encountered in obtaining access to information. ¶

In our report to the chairman on this study in February 1971 we summarized our problems with access to records and set forth the following conclusion, which we believe points up the problems of access to records and the effect of these problems on our ability to carry out effective reviews.

“During our review of the training program on behalf of the Senate Foreign Relations Committee, representatives of the Departments of Defense and State have withheld or delayed the release of MAP reports and records essential to a full and complete review and evaluation of this program which is financed by considerable appropriated funds. The access-to-records problems experienced by our staffs during this review are a continuation of similar problems the GAO has encountered over the years in reviewing DOD programs, particularly evaluations of military assistance programs.

“While the DOD has taken the position in the past that future planning information is not releasable to GAO because it is subject to change, we do not believe that the DOD components should use this position to deny our access to such Information as the operational status and capabilities of MAP recipient countries’ forces merely because it is included as a part of future planning information.

“We believe further that the denial of access to routine reports prepared by MAAG personnel in the performance of advisory functions, on the basis that they are evaluative in nature, is unreasonable. The type of data and reports withheld from us during this review are necessary in our examination of the program as well as our review and evaluation of the administration of the program by the MAAG’s and by other DOD elements. In our opinion, it is essential for us to have access to all papers, records, and data which are available to those DOD personnel who make the program decisions in order that we can ascertain how their decisions were made and whether all available pertinent data was considered in reaching the decisions.

“The denial of our access to the CINCPAC program evaluation group reports also impaired our review of this program. In carrying out its statutory audit responsibilities, GAO gives do regard to the effectiveness of the internal audit of an agency, such as the MAP audits performed by the CINCPAC activity and other DOD groups. In conducting our audits on behalf of the Congress, we make use of internal audit reports and other internal evaluations and perform such independent tests of the records as we feel to be justified under the circumstances. {p.167}

”If we are permitted extensive use of internal audits and other evaluative reports, we are able to concentrate a greater part of out efforts in determining whether action has been properly taken by responsible officials, on the basis of the facts presented in these reports and evaluations, to correct identified program weaknesses. This also helps to eliminate duplication and overlapping in audit effort, and promotes full utilization of existing audit and investigative data.

“We believe that this access-to-records problem involves a matter that critically affects our future ability to conduct on behalf of the Congress thorough and complete reviews of the MAP. In order for GAO to carry out its legal authority to make independent reviews of MAP, it must have access to and make appropriate review and analysis of all DOD reports and records which evidence the expenditure of appropriated funds.

“We believe further that these objectives can be achieved if the Secretary of Defense will refrain from issuing guidelines which have the effect of limiting our reviews and will instead, instruct DOD subordinate commands to take a more cooperative, flexible, and realistic approach in the release of data and information requested by GAO in future MAP reviews.”

In early 1970, we undertook a review of the U.S. assistance to the Philippine Government in support of the Philippine Civic Action Group at the request of the Chairman, Subcommittee on U.S. Security Agreements and Commitments Abroad, Committee on Foreign Relations, U.S. Senate. ¶

The Departments of State and Defense delayed our work on this assignment to the extent that we had to curtail the scope of our review and qualify our report to the chairman. ¶

Appendix II to our report to the Chairman (B-168501, dated June 1, 1970) set forth our problems as follows:

“ACCESS-TO-RECORDS DIFFICULTIES

“We were unable to complete our work and report on this assignment within a reasonable time because of the time-consuming screening process exercised by the Departments of State and Defense before making records available for our examination. Our work was seriously hampered and delayed by the reluctance of the Departments to give us access to the documents, papers, and records which we considered pertinent to our review. In general, we were given access to only those documents, papers, and records which we were able to specifically identify and request, and then we were given access only after time-consuming screening at various levels within the Departments.

“Members of our staff were required to wait for periods of 2 weeks to 2 months to look at some documents they had requested and frequently the documents proved to be of little value for our purposes. We were also restricted by ground rules established unilaterally by the Departments that effectively limited our review in the field to the Departments very narrow interpretation of what it judged to be the scope of our review. This was perhaps the most restrictive limitation placed on our work, and it completely frustrated our attempts to review assistance to the Philippines that was not funded in the military functions appropriations.

“Our audit staff members in the field were advised that documents which they requested that were releasable to us under the restrictions of the so-called ground rules had to be dispatched to Washington for departmental clearance. By early May 1970, only four of 12 documents which were requested by our staff members on January 28, 1970 had been released to them in Manila.

“Our letter to the Secretary of Defense * * * which is similar to a letter that we addressed to the Secretary of State, illustrates one of our many attempts to resolve our access-to-records problems. The reply from DOD * * * characterizes, in our opinion, the attitude of DOD during our review.

“Although we have been able to obtain sufficient information upon which to base this report, we are not certain that we have the full story. In view of the restricted access to records there is the possibility that the agencies may have withheld information which is pertinent to our study.”

Following our review in the Philippines we initiated a study of U.S. assistance to the Government of Thailand. In an attempt to avoid the conditions previously experienced, the Comptroller General on June 26, 1970, wrote to the Secretaries of Defense and State citing the problems experienced in the Philippines review, requesting that they eliminate the necessity for the lengthy screening process, and citing the scope and authority for our review as follows:

* * * the scope of our review will be broad enough to permit our representatives to investigate all matters concerning the receipt, disbursement, and appli- {p.168} cation of public funds related in any way to our relations with the Government of Thailand. Pursuant to the authority of section 313 of the Budget and Accounting Act of 1921, 31 U.S.C. 54, representatives of the General Accounting Office will be requesting officials in your Department for access to, and when we consider necessary, copies of any books, documents, papers, or records in the custody or control of your Department which we believe may contain information regarding the powers, duties, activities, organization, financial transactions, and methods of business related to the scope of the review.”

Unfortunately, we have experienced similar problems in obtaining access to documents required for our review of assistance to Thailand.

In connection with processing our report on the review of the military assistance training program mentioned earlier, the Special Assistant to the Assistant Secretary of Defense, International Security Affairs, in a letter dated September 25, 1970, stated:

“Similarly, the Department of Defense cannot permit to go unchallenged that section of the report concerning complaints that the GAO auditors were hindered and delayed in their efforts because the Department of Defense had denied them access to 5-year MAP planning data and to inspection and evaluation reports known as PEG reports. Apart from the fact that custom, tradition, and precedent have decreed that information of such internal nature will not be disclosed outside the executive branch in order to preserve the confidentiality of the relationship of superior and subordinate, an understanding was also reached a number of years ago between the General Accounting Office and the Department of Defense whereby planning data and inspector type reports would not be provided. The Department is, therefore, both surprised and chagrined over the fact that the GAO would endeavor to make such an issue over these specific categories, an issue which had been resolved years ago.”

A copy of this Department of Defense letter was sent to the chairman of the committee by the Department.

In transmitting our report to the chairman the Comptroller General took note of this Department of Defense letter and advised as follows:

“In regard to the Department’s position concerning the access-to-records matters discussed in the report, the General Accounting Office has never reached such an understanding with the Department of Defense. To the contrary, we have always maintained that we are entitled by law to have access to, and the right to examine, all records of the Department of Defense and its component commands that we consider pertinent to the matter or subject under review.

“The inspection and evaluation reports referred to in the Department of Defense letter are management reports prepared by a program evaluation group of the unified command headquarters. We have always regarded complete access to reports of this type as necessary in order for us to carry out the responsibilities we have to the Congress.”

The policy of the executive branch, with respect to release of information to the Congress, was set forth by the President in a memorandum to the heads of executive departments and agencies, on March 24, 1969, as follows:

“The policy of this administration is to comply to the fullest extent possible with congressional requests for information. While the executive branch has the responsibility of withholding certain information the disclosure of which would be incompatible with the public interest, this administration will invoke this authority only in the most compelling circumstances and after a rigorous inquiry into the actual need for its exercise. For those reasons executive privilege will not be used without specific Presidential approval.”

Although the Departments of State and Defense indicate in their directives that it is their policy to provide maximum cooperation and assistance to the General Accounting Office, we have found it quite difficult to obtain the information which we need to conduct our reviews relating to foreign assistance activities.

In our discussions with departmental officials, they have frequently stated that the documents or information being withhold are not releasable to the GAO because of one or more of the following reasons:

(1) review, examination, or disclosure would seriously impair relations between the United States and other countries, or otherwise prejudice the best interest of the United States,

(2) access to documents including information and debates used in formulating policy decisions would seriously hamper a candid exchange of views within the agency; and {p.169}

(3) access to information on future planning would not be appropriate because it has not received the approval of the President or been presented to the Congress.

Notwithstanding our difficulties in the past we will continue to press for information we think is necessary for us to have in order to carry out our responsibilities.

Mr. Chairman, this concludes our prepared statement Mr. Duff and I will be glad to answer questions.

______________________

Mr. Copenhaver. Did they cite any law upon which they based their refusal to supply information because I understand the law is that GAO is entitled to receive all information, it being an arm of Congress.

Mr. Stovall. No citation of law. ¶

And we maintain that we have a right and responsibility to have access to all of that.

Mr. Copenhaver. Was executive privilege claimed?

Mr. Stovall. No; I should emphasize, too, that refusals, and we brought that out clearly in the testimony, normally are not simple or clear refusals. ¶

Our problem is more in the foot dragging and the delay and the obstacles that are placed in our way. ¶

We do not have very many direct refusals. No one in a subordinate position refuses us outright. ¶

They can seriously delay us, bringing things up through channels. These matters generally were overseas, sometimes at remote posts, so that if you delay 2 weeks while one man seeks permission of the next man up the channel, and on up, we can be delayed almost interminably on these things. ¶

So it is more delays than outright refusals.

Mr. Copenhaver. Do you believe that you ought to communicate each instance of refusal or delay to the Freedom of Information Subcommittee in order to apprise us of this.

Mr. Stovall. We do transmit all cases of refusals. ¶

The most recent one that comes to mind was the case of the Berlin occupational costs, which we transmitted to the committee.

Mr. Copenhaver. Have you been refused any information with regard to your current study on the pacification program by any agency?

Mr. Stovall. I am not aware of any, excluding CIA.

Mr. Copenhaver. Do I understand that you will in your further reviews of the pacification program go more deeply into the extent to which the United States in its advisory role engages in actual operations of the program?

Mr. Stovall. Our immediate objective is to try to get hold of this loose financial situation and deal with that. ¶

I think that we would like to avoid dissipating our forces, so to speak, since we do have a limited number of people, and we believe that we should concentrate on the relative likelihood of benefits or improvements. ¶

We would like to concentrate now on the financial and management control elements rather than some of the broader ones.

Mr. Copenhaver. But this question goes to that, and it is a followup to Mr. Cornish’s question. ¶

If our directive puts $2.1 billion, and the Government of Vietnam $1.6 billion, but of that, 70 to 90 percent is U.S. funds, it would seem to be necessary from the financial management control arrangement for GAO to determine what is the extent of our input in the decisionmaking and the operations process, if you see what I am trying to say.

We are supposedly the advisers over there. ¶

We ought to look into the extent to which our adviser role is actually taking place and to {p.170} what extent it is being accepted or rejected, and along that line, do we know, or are we going to find out what percentage of the $1.6 billion that the GVN supposedly was to put into this program has actually been put in.

Mr. Stovall. Yes, if we can.

Mr. Copenhaver. At this stage do you have any knowledge at all as to what extent they have actually contributed?

Mr. Stovall. No.

Mr. Copenhaver. Is it not a fact, though, with regard to Phoenix in a follow-on question to that which Mr. McCloskey tried to establish, that the GVN has put minimal contribution into Phoenix, regardless of what they are supposed to be contributing? ¶

Has not the Phoenix been almost entirely 100 percent a U.S. operated program?

Mr. Stovall. We do not know enough about that to answer it.

Mr. Copenhaver. I urge you to re-read your report, by the way, in that regard. ¶

I think you have a comment in there.

Mr. Stovall. Well, I believe you are referring to the item at the top of page 12 in the statement, that there has been poor cooperation between Vietnam officials in the Phoenix program and the lack of interagency cooperation has been one of the more significant factors hindering the program’s effectiveness.

Mr. Copenhaver. Let me read you briefly in this. It is classified. I cannot go too far, you see. What page does Phoenix begin under the report?

Mr. Stovall. About 87, I believe.

Mr. Copenhaver. Let me refer you to page 93.

Mr. Stovall. Well, I would recognize that statements made in here are better than my off-the-cuff statements to you.

Mr. Copenhaver. Would you be able then to testify the extent to which the Phoenix program is U.S. financed and that which is GVN financed?

Mr. Stovall. I am sorry, I did not follow that question.

Mr. Copenhaver. Having refreshed your recollection, would you be able to testify as to the extent — not the dollar figure, but the extent to which Phoenix is U.S. financed and that part which is GVN financed?

Mr. Stovall. Only to the extent that it is set forth here. I do not have any information beyond this.

Mr. Copenhaver. Having refreshed your recollection, what conclusion do you draw?

Mr. Stovall. Somehow, I don’t believe I am following your question. I am sorry.

Mr. Copenhaver. Having refreshed your recollection with regard to what is said on page 93, what conclusion would you draw with regard to the extent to which the United States has directly financed Phoenix as compared to the amount, or the extent to which the GVN has financed Phoenix?

Mr. Stovall. If you are referring to the—

Mr. Copenhaver. The second sentence of the first full paragraph.

Mr. Stovall. That is piasters.

Mr. Copenhaver. Compare that to the overall amount.

Mr. Stovall. Some of these are expressed in piasters, and I am not sure that I can safely make that translation. I will be glad to try to decipher it and make a better response. {p.171}

Mr. Copenhaver. You see my point. ¶

If you conclude, as I do, that this appears to be almost entirely U.S. financed, then your role has increased, has it not, in determining the degree and extent of the U.S. involvement in the Phoenix program?

Mr. Stovall. If I understand your question, and you are including the extent to which the various in-flows, even though they may be indirect in-flows, come in. ¶

I would certainly agree with you that most of it is financed by the United States.

Mr. Copenhaver. And in your followup, you would want to go in and determine what the actual role of the United States, is in the Phoenix program, is that correct?

Mr. Stovall. We do not contemplate in our immediate plans any attempt to concentrate on Phoenix. We are concerned with this as a general proposition, but not to concentrate on the Phoenix program.

In other words, we are concerned with some basic controls or lack of controls, and I do not think that any special relationship should apply in Phoenix insofar as any exception to financial control.

Mr. Copenhaver. Except that if you find a program which is 90 to 100 percent U.S. directly financed, as compared to one which is 20, 30, or 50 percent—

Mr. Stovall. Yes, that would lead us into attention to those which are most heavily financed by the United States.

Mr. Copenhaver. Have the CORDS people expressed any concern of or need for greater financial information in Vietnam to help them in determining whether the program was running according to plan?

Mr. Stovall. I am not aware without searching the record that we would have this information. It is conceivable it might be in here.

Mr. Copenhaver. Let me ask two additional questions, Mr. Chairman, and I will wind up. ¶

You do indicate in your report that a large amount of appropriations intended for one purpose were, I understand, transferred to other purposes; is that correct?

Mr. Stovall. Yes.

Mr. Copenhaver. As I interpret it, about 33 percent of the 1970 funds, and 28 percent of the 1969 funds.

Have you determined where they have gone to and how they have been spent?

Mr. Duff. No, we have not. ¶

And as the report stated, most of these figures in here are budgetary figures and estimates, and the only thing that we can testify to on that which we have in the report, that this is the difference between obligational figures that have been pulled together concurrent with the budgetary figures and showing up the difference. ¶

What happened to those, whether it was normal reprocessing, which was done all the time, or whether it was actually using them in some other program, we do not know.

Mr. Copenhaver. Is there any requirement of law that the agency which engages in that transfer be accountable for the use following transfer?

Mr. Duff. As long as it is within the same appropriation, I believe they can transfer it.

Mr. Copenhaver. They have full flexibility there?

Mr. Duff. Unless there is some specification by a line item or some program, I think they are free to reprogram.

Mr. Stovall. That is my understanding, also. {p.172}

Mr. Copenhaver. Finally, you have mentioned $2.1 billion as amount obligated to CORDS.

As I hurriedly went through the report chapter-by-chapter, I sought to make a rough dollar calculation of moneys in the report expended by the U.S.

I came out to a figure of about $913 million.

Now, can you relate what I found, to the $2.1 billion figure?

Are you saying the $913 million of the $2.1 billion was found to have foundation as to its allocation?

Mr. Duff. What is this 9 you are referring to?

Mr. Copenhaver. If you go through the report, each chapter contains a dollar figure as to how much GAO found by way of U.S. support for the CORDS program.

Mr. Duff. You are mentioning budgetary figures and estimates now?

Mr. Copenhaver. I really confess my confusion.

Mr. Duff. Well, we are confused, too. ¶

And we admitted that, that we could not get firm figures.

Mr. Copenhaver. Let me ask you this question.

The figures contained in your report for the support of the regional and popular forces, the national police, correction centers, for telecommunications, for village self-development, for military civic action, for provincial and municipal development, for Saigon civic development, for Phoenix, for information, for refugees — those dollar figures represent what?

Mr. Duff. Let me answer it this way. ¶

We obtained the best figures available as to what was CORDS, which may have been budgeted figures which came up through the directorates, what they had requested, to what they had planned.

Now, the figures that you have referred to by program, I assume, were taken from these documents. We came up with a total budgetary figure, including estimates, and so forth. And then we tried to find out how it was expended.

We could not go from the budgeted figures to how it was expended in the program. ¶

And this is what our report and our statement says.

Mr. Copenhaver. This is not being accusatory. ¶

But are you saying I added wrong?

Mr. Duff. No. I am answering plainly that we started with budgetary figures and we actually followed to where they were expended, and we could not determine—

Mr. Copenhaver. You say the budgetary figure was, what, 2.1?

Mr. Duff. Yes.

Mr. Copenhaver. But then you said you couldn’t account for $1.7 billion.

Mr. Duff. We could not relate the expenditure of the $1.7 billion of funds to the budgetary programs of CORDS.

Mr. Copenhaver. But when I add up the figures here, I come to a figure of about $900 million to $1 billion. That is all the figures I find in here. ¶

I don’t find the $2.1 billion and I don’t find the difference between that and the $1.7 billion which GAO states cannot be accounted for by DoD.

I am not being accusatory. I am asking where I have gone wrong in my addition.

Mr. Duff. I don’t know what you did. {p.173}

 

Mr. Copenhaver. Could I ask this for the committee?

Could you go through your report, with the chairman’s permission, and supply for the committee the dollar breakdowns by program which you have presented in your report? ¶

Would you be willing to do that, Mr. Stovall?

Mr. Stovall. I don’t think we can.

If I might go back to the original proposition, that our people in Saigon were asked to go out and dig up whatever they could dig up — they did go. ¶

And we put it in this document.

We said that this has not been through our review processes and this document is not a referral GAO report. If we went on through these stages, we may well come to the 900 figure.

I seriously doubt that we can give it the degree of mathematical refinement which I believe you are hopeful of getting here. ¶

And I would rather, as I have indicated, not stress the importance of mathematical refinement or even balancing in this document, but rather the proposition that there is an awful lot of looseness here. And we would like to move on to that.

We can have a try at this, but I am not at all sure that the various elements of this document will add up mathematically.

Mr. Copenhaver. If you would do that, I would appreciate that very much.

Mr. Chairman,—

Mr. Moss. Why don’t you get together after the hearing—

Mr. Stovall. May I go back to your original question now as to what it is you would like us to do?

Mr. Copenhaver. May I conclude by asking this?

Is it correct, then, that GAO doesn’t know and that probably no one in the Government actually does know how much has been expended on a program like Phoenix?

Mr. Stovall. Yes. ¶

We have said we don’t know. ¶

We don’t know of anyone else who knows.

Mr. Copenhaver. Thank you, Mr. Chairman.

Mr. Moorhead. Thank you, Mr. Stovall.

I trust that you would be willing to answer any questions that we put in writing to you, particularly after Ambassador Colby testifies. We may want to ask you about his testimony.

Mr. Stovall. We will be glad to.

Mr. Moorhead. Thank you very much for staying with us. ¶

You were very patient and very helpful to this subcommittee.

The subcommittee will adjourn until Monday morning, when we will hear Ambassador Colby in room 2154, Rayburn House Office Building.

The subcommittee is now adjourned.

(Whereupon, at 1 p.m., the hearing was adjourned, to reconvene at 10 a.m., Monday, July 19, 1971.)

{Page 174 is blank} {p.175}

 

 

Source: The printed hearings (cited below).

By CJHjr: Photocopied at 141%, scanned, converted to text (OCR: FineReader 7.0), formatted (xhtml/css), links, text {in braces}, text beside a green bar |, text in yellow boxes, bold-face, bold-italics, highlighting, added paragraphing (for ease of reading) marked with this trailing paragraph symbol: ¶ .

This document (the second Phoenix hearings): July 16 1971 hearing, pages 123-173, U.S. Congress, House Hearings, U.S. Assistance Programs in Vietnam (U.S. Congress 92-1, House Committee on Government Operations, Subcommittee on Foreign Operations and Government Information, Hearings, July 15 {a.m., p.m.}, 16, 19, 21, and August 2 1971, 4+362 pages) {SuDoc: Y 4.G 74/7:V 67/4, CIS: 72 H401-3, OCLC: 235387, LCCN: 71616178 pf, DL, WorldCat}. Ensuing report: U.S. Assistance Programs in Vietnam (U.S. Congress 92-2, House Report No. 92-1610, House Committee on Government Operations, October 17 1972, 5+107 pages) {SuDoc: [Y 1.1/8:]92-2:H.RP.1610, Serial Set: 12976-6, CIS: 72 H403-19, OCLC: 540690, LCCN: 72603272 pf, WorldCat} {Full text: pages 1-46 2.4mb.pdf, pages 47-97 2.8mb.pdf, pages 99-107 501kb.pdf, omitting page 98 and repeating page 107, instead, at the start}.

Next: July 19 1971 hearing (pages 175-242) {460 kb}.

See also:

The first Phoenix hearings: Vietnam: Policy and Prospects, 1970 {58.4mb.pdf, source}, “Hearings on Civil Operations and Rural Development Support Program” (U.S. Congress 91-2, Senate Committee on Foreign Relations, Hearings, February 17, 18, 19, 20, and March 3, 4, 17, 19, 1970, and Appendix, 7+750 pages) {SuDoc: Y 4.F 76/2:V 67/17, CIS: 71 S381-2, OCLC: 119418, LCCN: 76610214 pf, DL, WorldCat}.

The third Phoenix hearings: Nomination of William E. Colby to be Director of Central Intelligence (U.S. Congress 93-1, Senate Armed Services Committee, Hearings, July 2, 20 {a.m., p.m.}, 25, 1973, 3+186 pages) {SuDoc: Y 4.AR 5/3:C 67/3, CIS: 73 S201-27, OCLC: 800312, LCCN: 73603022 pf, DL, WorldCat}. Witnesses: William E. Colby, Robert F. Drinan, Samuel A. Adams, Paul Sakwa, David S. Harrington, Kenneth B. Osborn.

Vietnam Policy Proposals: Hearings on nine proposed items of legislation to end the U.S. war in Vietnam (U.S. Congress 91-2, Senate Committee on Foreign Relations, Hearings, February 3, 4, 5, and March 16, 1970, 5+405 pages) {SuDoc: Y 4.F 76/2:V 67/16, CIS: 70 S381-7, OCLC: 78825, LCCN: 74606991 pf, DL, WorldCat}.

National Veterans Inquiry on U.S. War Crimes in Vietnam (Citizens’ Commission of Inquiry on U.S. War Crimes, Washington D.C., December 1-3 1970), transcript, 117 Congressional Record 4238-4271 (U.S. Congress 92-1, March 1 1971, Permanent Edition (red bound)) {SuDoc: X.92/1:117/PT.4, ISSN: 0883-1947, OCLC: 05058415, LCCN: 12036438 pf, GPOCat, LL: paper, microfiche, DL, WorldCat}. Witnesses: Robert Bowie Johnson Jr., Mike McCusker, Daniel K. Amigone, Greg Motoka, Kenneth Barton Osborn, Norman Kiger, Gail Graham, Steve Noetzel, Edward Murphy, Daniel Alfiero, Louis Paul Font, Robert Master, Peter Norman Martinsen, T. Griffiths Ellison, Ed Melton, Chuck Hamilton, Lee Meyrowitz, Gordon S. Livingston, Greg Turgeon, Richard Altenberger, Bob Connelly, Robert Lifton, Chaim Shatan, Donald Engel, Gary Thamer, Steven Hassett, Kenneth Campbell, Sam Rankin, Phillip Wingenbach, Tod Ensign, Larry Rottmann, Robert Osman.

Winter Soldier Investigation (Vietnam Veterans Against the War Inc., Detroit Michigan, January 31, February 1-2, 1971), transcript, 117 Congressional Record 9947-10055 (U.S. Congress 92-1, April 6 1971, Permanent Edition (red bound)) {SuDoc: X.92/1:117/PT.8, ISSN: 0883-1947, OCLC: 05058415, LCCN: 12036438 pf, GPOCat, LL: paper, microfiche, DL, WorldCat}; 117 Congressional Record E 2825-2936 (U.S. Congress 92-1, April 6-? 1971, Daily Edition (green bound)) {SuDoc: X/A.92/1:117/???-???, ISSN: 0363-7239, LCCN: 80646573 pf, OCLC: 02437919, GPOCat, LL: paper, microfiche, DL, WorldCat}.

American Prisoners of War in Southeast Asia, 1971 (U.S. Congress 92-1, House Committee on Foreign Affairs, Subcommittee on National Security Policy and Scientific Developments, Hearings, March 23, 24, 25, 30, 31, April 1, 6, 20 {vvaw}, 1971, 9+583 pages) {SuDoc: Y 4.F 76/1:P 93/4/971/PT.1, CIS: 71 H381-9, OCLC: 15634210, LCCN: 77612471 pf, WorldCat}, witness: Larry Rottmann (volunteer coordinator, Vietnam Veterans Against the War), April 20 1971, pages 406-423. CIS: “Description of charged mistreatment of prisoners in South Vietnam by American forces; report of receiving Officers Candidate School instruction on the use of torture.”

link

Legislative Proposals Relating to the War in Southeast Asia {44.14mb.pdf, source} “Hearings before the Committee on Foreign Relations, United States Senate, Ninety-Second Congress, First Session, on S. 376, S. 974, S.J. Res. 82, S.J. Res. 89, S. Con. Res. 17, S. Res. 62, and S. Res. 66” (U.S. Congress 92-1, Senate Committee on Foreign Relations, Hearings, April 20-May 27 1971: “April 20, 21 and 22, 28, May 3, 11, 12, 13, 25, 26 and 27, 1971,” 7+726+12 pages) {SuDoc: Y 4.F 76/2:AS 4/13, CIS: 71 S381-18, OCLC: 198272, LCCN: 79614140 pf, DL, WorldCat}, witness: John Kerry (VVAW: Vietnam Veterans Against the War), Thursday April 22 1971, 11:05am-1:00pm, pages 179-210 {3.1mb.pdf}.

House Ad Hoc Hearing for VietnamVeterans Against the War (U.S. Congressmen Jonathon Bingham and Paul Findley, presiding, Friday, April 23 1971, Venue: U.S. Congress, House of Representatives), transcript, 117 Congressional Record 13104-13118 (U.S. Congress 92-1, May 3 1971, Permanent Edition (red bound)) {SuDoc: X.92/1:117/PT.10, ISSN: 0883-1947, OCLC: 05058415, LCCN: 12036438 pf, GPOCat, LL: paper, microfiche, DL, WorldCat}. Witnesses: Larry Rottmann, Forest Lindley, Les Johnson, Arthur Egendorf, Kip A. Kypriandes, Phillip Lowley, Vinny Giardina, Michael Paul McCusker, William W. Lemmer, Alex Prim, Robert McLaughlin, Jack Smith, David B. Maize.

Senate Ad Hoc Hearing for Vietnam Veterans Against the War (U.S. Senator George McGovern, presiding, Friday, April 23 1971, Venue: U.S. Congress, Senate, Room G-103 New Senate Office Building), transcript, 117 Congressional Record 15392-15405 (U.S. Congress 92-1, May 17 1971, Permanent Edition (red bound)) {SuDoc: X.92/1:117/PT.12, ISSN: 0883-1947, OCLC: 05058415, LCCN: 12036438 pf, GPOCat, LL: paper, microfiche, DL, WorldCat}. Witnesses: Scott Camil, Vinny Giardina, Melville L. Stephens, Basil Paquet, Joe Nielsen, Dale Granata, Everett Carson, Forrest Lindley Jr., Samuel Miller, David A. Lamenzo, Jon Bjornson, Ken Provan.

Ad Hoc Hearings on Command Responsibility for War Atrocities in Vietnam {copy} (U.S. Congressman Ron Dellums, presiding, April 26, 27, 28, 29, 1971, 9:30 a.m.–12:30 p.m., Venue: U.S. Congress, House of Representatives, Caucus Room, Cannon House Office Building), transcript, The Dellums Committee Hearings on War Crimes in Vietnam: An Inquiry into Command Responsibility in Southeast Asia (New York, Vintage Books, 1972, 13+355 pages) {LCCN: 79039897 pf, ISBN: 0394717678, WorldCat}. Witnesses: Five West Point graduates (Fred Laughlin, Gordon Livingston {Iraq, copy}, Robert B. Johnson, Greg Hayward, Ron Bartek, Michael O'Mera), five former military intelligence special agents and PoW interrogators {omitted from the linked source}, ten former Americal Division members (Gary Battles, Charles David Locke, Terry Mullen, Steve Padoris, Daniel S. Notley, John Beitzel, Guadalupe G. Villarreal, Daniel Barnes, Thomas Cole, William Toffling), overview of air war, pacification, and forced urbanization (John Sack, Kenneth Campbell, Randy Floyd, Elliot L Meyrowitz).

Bertrand Russell Tribunal, “International War Crimes Tribunal” (Stockholm Sweden, May 2-10 1967; Roskilde Denmark, November 20 – December 1 1967).

Tiger Force: “Buried Secrets, Brutal Truths: Tiger Force, an elite fighting unit in Vietnam, left a trail of atrocities in that country that have been concealed from the public for three decades.” (The Blade, Toledo Ohio, October 22 2003, February 15, March 28, April 6, May 2, May 12 2004).

This document is not copyrighted and may be freely copied.

CJHjr

Charles Judson Harwood Jr.

Posted Sept. 18 2004. Updated May 10 2009.

http://homepage.ntlworld.com/jksonc/docs/phoenix-hcgo-19710716.html

Visitors (all pages, from Feb. 10 2008):