“- 19 - Those proprietaries which engaged in the shipment of weapons or other items on the Munitions Control list required Agency assistance in obtaining the necessary export licenses., The ownership of the companies was discussed with State Department Office of Munitions Co”
“the equity in this foreign entity which constructed low cost housing in one of the less developed countries of the world. The Agency's equity was sold to WUPESKY, a private company which, provided cover for an Agency employee who managed the Agency's foreign low cost housing”
“13-00000 ATTACHMENT B (6) Item No. 107, 128, 129, 279 MSS pp. 123, 132, 133, 403 ■ (S) CCS states that all four items which refer to Fairways Corporation as a CIA-owned proprietary company . are still classified since they describe intelligence sources and methods by iden”
“stringent in the extreme. ’ The disposal of proprietaries has also generally proceeded along legal and ethical lines with more than due concern for con flicts of interest. Most notable in this spectrum of actions was the degree to which the Agency tried and did in fact avoid”
“action taken by DCD on behalf of OER; we do not deem it pertinent but forward it for consideration. J. ITT: Attachment E contains what we consider to be all the data on DCD/ITT relationships relevant to the inquiry. k. Robert R. Mullen and Company: Attachment F is two requests (1”
“13-00000 ATTACHMENT B (6) Item No. 107, 128, 129, 279 MSS pp. 123, 132, 133, 403 (S) CCS states that all four items which refer to Fairways Corporation as a CIA-owned proprietary company are still Classified since they describe intelligence sources and methods by identify”
“13-00000 SCba%L1 DDA 77-2412 28 APR 1977 MEMORANDUM FOR: Mr. Halpern FROM: H. G. Bean Acting Executive Officer/DDA SUBJECT: Fairways Corporation REFERENCE: Attached memorandum from Central Cover Staff 1. With reference to paragraph 4 in the attached memorandum from ”
“and Services of the CIA, was presented in court. In the affidavit the Mr. Brownman delineated the relationship between CIA and SAT and the .authorities for purchasing and later selling the capital stock of SAT. He also defined the employment status of the plaintiffs as not b”
“continue. Today, the CIA operates 45 major proprietaries, of which 25 are in the process of liquidation. The 16 biggest proprietaries did a gross total of $4 million business in 1975, compared with an average volume of $75 million annually in the heyday period of proprietari”
“proprietary companies in the United States? Mr. Angleton. Well, there's one case that comes to mind. 22 : I can't remember the details but I think that as result of it, one of our deputy directors had a big project with this 24 company and they dropped it because the Fore”
“incorporated, paid taxes, all this type of thing. 23 Q The salaries of these people, although paid indirectly. 24 were paid by the CIA? 25 Photocopy from I Gerald Ford Library SECRET NW 50955 DocId: 32275518 Page 61”
“or not there was a written or informal agreement of such a relation ship at the time the proprietary or its assets were acquired from the Agency? Indicate for each instance the nature of the business, the dollar amounts of the transactions involved and the period of years d”
“incorporated, paid taxes, all this type of thing. 23 Q. The salaries of these people, although paid indirectly. 24 were paid by the CIA? 25 Photocopy from Gerald Ford Library SECRET NW 50955 DocId: 32275454 Page 61”
“corporation operating out of the residence of its president in Northern Virginia; the company provides cover for one Agency officer who provides behavior psychology assistance to the DDO. RECEIVED) FROM NOV 6 1975 -1]-- CIA V I, A KE1”
“- 32 - PI 49. MHRUCHE A Liechtenstein anstalt which is a general use standby asset; no employees. 50. MHCLUMP A Liechtenstein anstalt which serves as a standby asset . for general reinsurance use; no employees. 51. BGJASMINE A European insurance and reinsurance company”
“b. To sell the firm on a sole-source basis to either outside buyer without soliciting public bids would be contrary to sound business practice and would attract even more adverse publicity. c. Both offers were made directly to officials of the CIA and not to the stockholders”
“1974, the arbitrator ruled in favor of Air America. This decision caused an additional $1,304,243 to accrue to the Agency from the SAT sale. This was the sum of the $1.2 million under arbitration plus accrued interest, less the.Agency's share of arbitration costs. DECLASSIFI”
“deny the true ownership 4 relationship of SAT by CIA. It is noted, however, that the opera- the tional activities performed by SAT on behalf of CIA were and remain classified. As a part of the Agency’s defense in this suit, an affidavit of Mr. Harold L. Brownman, Deputy Dir”
“3 unable to raise by January 20, 1973, the additional funds required for the original purchase price of $5.9 million', including the Air America debt, that the Agency proceed with liquidation plans and dismissal of SAT employees not later than February 1, 1973. On January 11,”
“incorporated, paid taxes, all this type of thing. 23 0. The salaries of these people, although paid indirectly. 24 were paid by the CIA? 25 Photocopy from Gerald Ford Library SECRET NW 50955 Docld:32204971 Page 61”
“Agency and the National Transportation Safety Board. Specific problems were discussed, usually with the Office of General Counsel of the agency concerned by the CIA General Counsel. The Air Proprietaries dealt with State Department and the Agency for International Developmen”
“missions of these corporations in support of the national security of the United States would have been impossible if United States Government ownership had been officially admitted. Within this context it is the statutory responsibility of the Direct of Central Intellige”
“/ <MEMORANDUM OF -W DOES THE CIA POSSESS THE LEGAL AUTHORITY T.O SELL A WHOLLY-OWNED GOVERN-. MENT AIRLINE WITHOUT RECOURSE TO- THE FEDERAL PROPERTY AND ADMINISTRATIVE RECF FROM SERVICES ACT OF 1949, AS AMENDED? OCT 30.1975 I. FACTS CIA There exist two airline corpora”
“14-00000 xsil, — D * Gadauam 0279172 1 -3- press mention during NHCOWEL Annex B lists and discusses under several sub-categories the 42 organizations with which the Agency has had some direct or indirect operational ties in the past which were not cited in the press du”
“89-19 accomplished without revealing ownership by CIA, CIA approved exploring the sale of SAT to its previous owner and current • nominal President, Mr. Stanley Williams. The CIA took reasonable precautions to assure that a fair market price was received for the sale of SAT”
“police supplies, and equipment. The Covert Procurement Staff has, had a .relationship withan officer .in the firm for over 15 years. The officer agreed to allow us to place orders through his corporation to major, suppliers of this equipment with a billing to an Agency nation”
“-5- A foreign travel service company which operates in a Southeast Asia country and provides cover for an agent targeted, against the local Communist Party. The company was established in 1973 with an initial investment of $5,900. Operating proprietaries whose commercial pu”
“facility enables site audits of Agency covert projects by experienced Agency auditors. 67. VWCADENZA A Maryland company located in Bethesda, which is used as cover for an Agency employee who provides electoral and political analysis on South American and European elections; ”
“-131- of some 26 CIA-owned companies. In country locations where physical contact with the nearest CIA station is not operationally discreet, proprietaries can provide pay outlets and other adminis- trative services for CIA personnel and agents. On occasion, firms based in ”
“-134- kinds realized in 1975 ($4 million), the total gross income would have aggregated $116 million. Actually, the CIA reports that for this for this period gross income aggregated at $1,606 million. By this measure, CIA’s biggest proprietaries are shadows of their former ”
“ostensibly by an Agency employee whose journalistic services are utilized in support of foreign operations. Proprietary Management LPPANDA Complex The below three companies support a one man accounting and management company in Europe which provides services to other propr”
“5 that individuals out in the field are not particularly astute at costing their contracts. Doole gave excellent advice in this area. Moreover, Doole was quick to advise when an operation is bordering on not being responsive to the demands of good/management. Houston, cited o”
“Manhattan which is styled as a management consulting firm; the entity will be dissolved in the near future as soon as other cover facil ities are available for the individuals presently covered by . the entity; used by New York Base personnel for employment attribution and ”
“1000 (th i 2-/1 ri CLVlL ! IVE9 OM1 LILO 2. Interprogres Interprogres is a new subsidiary of the Mullen Company formed in 1971, as a result of contacts developed at the Zagreb Trade Fair in Yugoslavia. It is a pilot operation aimed at expanding East West commercial r”
“wo were all rejected because merger with another supplemental was not an acceptable solution and the apparent conflict of interest was too great. The sale of SAT to the President of the firm, Mr. Stanley Williams was another area of possible conflict of interest. However, Mr”
“proprietaries. CCS files are unclear on the point, but there are indications that Director Colby may have responded to the question in a manner which could have been construed as admission of CIA sponsorship of Fairways. In any case, CCS files contain other evidence that the ”
“spent by the proprietary f. for salaries, purchase of equipment, or for other purposes. The Agency 1 either supplemented its original expenditure with additional monies or the proprietary might have made a profit during these years. This proprietary, at Agency direction, now ”
“to date, no use has been made of the entity by the Agency. MOMARRON This proprietary was established in the Far East • ; by two foreign agents of the Agency to provide support services for Agency-sponsored air opera tions. The company failed, at least partly due to embezzl”
“21 - IV. A DESCRIPTION OF THE VARIOUS PROPRIETARIES The operational needs of the Agency have required it to venture forth into many areas where proprietaries were a perceived necessary vehicle. These areas have included air support, media publications. proprietary manageme”
“information, supplemented by interviews with project personnel: 2. A11 but three of the 42 terminated but hither- to unexposed project organizations and 24 of the 55 or ganizations which actually had no Agency ties are some how related to project organisations or funding i”
“14-00000 COW TIE TAFT Ol press mention during MHDOWEL. Annex B lists and discusses under several sub-categories the 42 organizations with which the Agency has had some direct or indirect operational ties in the past which were not cited in the press during MH- 0/ DOWEL,”
“-3- need for proprietaries has declined as a result of a general shift in emphasis away from covert action; transfer of Radio Free Europe and Radio Liberty to the Board of International Broadcasting with funding through State Department; continuing liquidation of the assets ”
“Co., made donations’ in the company names and the Agency notified the Com missioner of Internal Revenue about the donations so that they could be treated as corporate tax deductions. 7a/ - 209 - . TOP SECRET”
“writing and research talents are utilized exclusively by the Agency in support of overseas operations. This company is wholly subsidized by the Agency. WUDIRK A group of -three companies in New York which, provide cover for personnel assigned • to FR Division's New York Bas”
“-2- and covert activities; and they provide services not securely available through normal commercial facilities. Because these instrumentalities are established as private organizations, they must be established and managed, to the extent possible, in accordance with practi”
“• ' " 7959 T X"A0***9z67 49(8-68 5 y d w TOP SECRET -3- employees are paid additional compensation to act as infomers and to report to the Office of Security on any potential security problems which they observe among their fellow employees at ‘ the Agency. A few outs”
“entity, which provided status and, access cover for several case officers in the Far East, was sold in 1975 to unwitting purchasers.. There have been no Agency contacts with the purchaser since then. All sale pro ceeds were returned to the Agency. CALANCET This proprietary”
“and petition for cancellation of certificate and termination of exemption authority was filed with an effective date of December 30, 1973. On December 31, 1973, the sale was closed, the note to Air America was paid off, and Stanley G. Williams became the sole owner of SAT. I”
“Agency. Neverthe less, an indigenous employee of the entity, and a contact of the Agency Station in the country involved, was allowed to take over the name and clientele and continue the business. No commit ments or agreements were made for continued use of the business, ”
“oreps - 85 - several non-profit organizations under Agency control. An unwritten condition of the sale was that the Agency would contract with the new organizi- ation for scientific research of interest to the Agency in the amount of about $900,000 over an eighteen month p”