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able to the General Accounting Office, we doubt any appreciable number would be affected.

Senator ERVIN. The General Accounting Office, as I understand it, is a part of the legislative branch of the Government rather than of the executive?

Mr. KELLER. That is correct.

Senator ERVIN. We sometimes boast that Congress has the power of the purse under the Constitution, but some of the experiences that the General Accounting Office has had with ICA would seem to indicate that that is probably a boast which, in certain areas, has very little validity to it.

Mr. KELLER. We certainly have had a problem on access to information. The question of access to information, insofar as the General Accounting Office is concerned, has become more acute in the last 2 or 3 years than at anytime in the past.

In my opinion there are two reasons. I feel that in the last 2 or 3 years, we have been reaching into and probing some of the more sensitive programs in the defense area, and in the foreign aid area.

Secondly, the claim of executive privilege has been raised quite often in different areas in the last few years. The claim of executive privilege, through the years, has arisen and subsided. It has become acute from time to time since the beginning of our Government.

There is one particular point in our case which distinguishes it from any other case of executive privilege. In our case we have a specific law which says, in effect, that the Comptroller General shall have access to any information of the executive departments that he needs, to carry out the work of his office.

I have examined the legislative history of the 1921 act very carefully, and no question of executive privilege was raised at the time the legislation was under consideration.

Consequently, I think it quite clear the Congress intended that the General Accounting Office should, and would, have access to all information that it needed to carry out its duties and responsibilities.

As I pointed out in my statement, the first act was vetoed by President Wilson but executive privilege was not the basis. It was a question as to whether the President should have power to remove the Comptroller General.

I would like to add one thing more, Mr. Chairman: In an opinion of the Attorney General in 1925 a question was raised by the then War Department as to whether the Comptroller General had a right to obtain certain information in connection with the award of the contract. The Secretary of War submitted the question to the Attorney General for an opinion.

The opinion of the Attorney General is reported in 34 Opinions of the Attorney General at page 446. The substance of the Attorney General's reply is as follows:

It will be observed that the Comptroller General states that this requirement is made necessaryand that was a requirement for informationin order that a satisfactory audit may be made. What papers or data he should have to make such an audit would seem to be a matter solely for his determination. Moreover, section 313 of the Budget and Accounting Act provides and then he quotes section 313 of the Act.

Senator ERVIN. It might be well if you could supply us with a copy of the Attorney General's opinion for the record.

Mr. KELLER. Yes, sir; I would be glad to, Mr. Chairman. (The document referred to follows:)

[34 Op. Atty. Gen. 446]


March 21, 1925. The SECRETARY OF WAR.

SIR: Your letter of January 2, 1925, states that under a decision of the Comptroller General your Department is called upon by the General Accounting Office to furnish information relative to contracts showing that the lowest bid was accepted or, if otherwise, a detailed statement of the reasons for accepting other than the lowest bid.

The decision referred to is that of March 8, 1924 (3 Dec. Comp. Gen. 604). In it reference is made to the statute providing that all contracts requiring the advance of money or in any manner connected with the settlement of public accounts shall be deposited in the General Accounting Office (R.S. 3743, sec. 304, Budget and Accounting Act of June 10, 1921, 42 Stat. 24), and it was said (p. 605):

“The requirement of section 3743, Revised Statutes, as amended, that all contracts shall promptly be deposited in this office is obviously for the purposes of a satisfactory audit of the expenditures thereto, and in connection therewith it is competent for this office to prescribe the papers which shall constitute or accompany the contracts to be so deposited.

“The acceptance by an administrative officer of other than the lowest bid would ordinarily not be questioned if the reasons assigned for that action appear satisfactory, but the action in that respect by administrative officers is not conclusive on the accounting office. It appears, therefore, that a satisfactory audit of expenditures, whether pursuant to formal or informal contracts, requires at least an affirmative showing that the lowest bid was accepted or, if otherwise, a detailed statement of the reasons for accepting other than the lowest bid.”

You request an opinion “as to whether, according to law,” you are bound to furnish this information.

It will be observed that the Comptroller General states that this requirement is made necessary in order that a satisfactory audit may be made. What papers or data he should have to make such an audit would seem to be a matter solely for his determination. Moreover, section 313 of the Budget and Accounting Act provides (p. 26):

“All departments and establishments shall furnish to the Comptroller General such information regarding the powers, duties, activities, organization, financial transactions, and methods of business of their respective offices as he may from time to time require of them; and the Comptroller General, 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. * * * "Respectfully,

JOHN G. SARGENT." [Italics supplied.] Senator O’MAHONEY. Mr. Chairman, may I ask a question ? Senator ERVIN. Yes, Senator O'Mahoney.

Senator O’MAHONEY. Mr. Keller, has this report been submitted by you to this committee with the approval of Mr. Campbell ?

Nr. KELLER. Yes, sir.
Senator O’MAHONEY. I beg your pardon?
Mr. KELLER. You mean my testimony this morning?
Senator O'MAHONEY. Yes.

Mr. KELLER. Yes, sir; it has his complete approval and endorsement.

Senator O’MAHONEY. You speak in your testimony of the General Accounting Office having called these matters to the attention of

appropriate committees of the Congress. I assume you have made these facts available to committees of both the House and the Senate?

Mr. KELLER. Yes, that is correct.
Senator O'MAHONEY. Would you name them, please?
Mr. KELLER. Appropriations, Government Operations-

Senator O’MAHONEY. I was wondering whether you had sent it to the Appropriations Committee.

Mr. KELLER. Government Operations, Armed Services where the military departments are involved; the Foreign Affairs Committees of Congress where ICA is involved. The same would be true on both sides.

Senator O'MAHONEY. I notice your reference here to some of the foreign aid problems which have arisen and concerning which you have received no reports.

I notice Mr. Staples at the table with you.
Mr. KELLER. Mr. Staples is our expert in that area.

Senator O'MAHONEY. I recently asked the General Accounting Office for some information with respect to the foreign currencies held by the International Cooperation Administration which have been received in return for agricultural surpluses, and from the expenditures of the Development Loan Fund.

The situation set forth in a public report of the International Cocperation Administration is to the effect that money appropriated by Congress from the Treasury of the United States, in other words, American dollars, has been expended in these two operations in return for the food surpluses transmitted to foreign countries, and in payment therefor we have received foreign currencies, namely, the paper money of the foreign states, and also we have received agreements from some of these states to repay development loans in foreign currencies.

For example, there was the case of a Development Loan Fund to the Government of Taiwan to build, or help to build, a multiple-purpose water conservation dam on the Island of Taiwan or Formosa, as it is popularly called.

The announcement of the Development Loan Fund through the State Department which was made, as I recall, probably last October, contained the information that the loan amounted to $21.5 million, that it would be repaid in principal and interest over a period of some 30 or 35 years, the interest rate being 31/2 percent, and the payments being made in the paper currency of Chiang Kai-shek. This is typical of the loans that are being made.

The report of the International Cooperation Administration showed that as of December 31, 1957, the United States held foreign currencies of the equivalent value of some $21/2 billion, as I recall.

It was clear that this money could not be spent in the countries which issued it without the consent of the countries that issued it, because of the fear that it would cause inflation.

In other words, we could not, the United States could not, spend this foreign currency in the country to which the surplus food had been sold without the consent of that country and, of course, we could not use that $21,2 billion of foreign currency to pay the interest on the United States national debt or pay any principal or any loan that the United States has made.

Are these facts which I have recited substantially correct?

Mr. STAPLES. They are substantially correct, Senator. I am not familiar with the details of the recent development loan to Taiwan; I am familiar with that project, and I understood there was a loan in progress.

I am not familiar with the details on that, but I assume what you have said is correct.

Senator O'MAHONEY. Mr. Chairman, I am going to ask permission to insert in the record the Department of State announcement with respect to that loan.

But what I would like to inquire about is, have you sought to make a broad investigation of these expenditures? Has the General Accounting Office gone into them at all?

Mr. STAPLES. We have gone into it in various ways, Senator, and many others have gone into it, too.

I recall the occasion when I went up to see you and furnished you with that report that you referred to before, which was made by a special team appointed by the Director of ICA to make an examination of the whole situation of foreign currencies.

It is one of the more acute problems in our foreign affairs, which is engaging the attention of the State Department, the Treasury, and ICA.

Just how the problem can be solved is one of the stumbling blocks, and even that team did not come up with any real solid answers. Just what we are going to do about this accumulation of local currencies in various foreign countries is a big problem.

We have gone into it; we have measured it and looked at it from the standpoint of the statutes governing it, and everything that has been done has been in accordance with the statutes.

Now, the problem is what to do with these foreign currencies. I might observe at this point, too, that the creation and the activities of the Development Loan Fund by virtue of the repayment of loans, both principal and interest in local currency, is going to aggravate the problem of the accumulating large balances.

Senator O’MAHONEY. The accumulation is proceeding

Mr. STAPLES. It is progressively getting higher and higher, and what to do with the local currencies

Senator O'MAHONEY. The present budget submitted to Congress this year asked for $750 million for the Development Loan Fund as against $500 million which was appropriated for fiscal 1959.

The present budget also requests an additional appropriation of $225 million for the Development Loan Fund to be allocated to fiscal 1959, making the total appropriation for 1959, if it is granted by Congress, $725 million, with the new request at $750 million.

But my point in referring to these matters was merely preliminary to my question about the refusal of Government agencies involved to give any information with respect to Pakistan and the other countries that you mentioned here on pages 17 and 18.

We previously submitted, I am reading from your statement, the bottom of page 17— We previously submitted a summary of our findings on Pakistan on February 9, 1959, to the House Foreign Affairs Committee and the International Operations Subcommittee, House Committee on Government Operations. The agency also has withheld from our examination several evaluation reports pertaining to country aid programs currently under examination by us and on which reports to the Congress are in process. These evaluations concern India, Bolivia, Brazil, and Guatemala.

Mr. STAPLES. That is correct.

Senator O’MAHONEY. Have there been other investigations by the General Accounting Office ?

Mr. STAPLES. Well, we also referred to the reports on Laos.
Senator O’MAHONEY. I mean current reports.

Mr. STAPLES. No, we do not have any of the current reports. Those are the ones we are currently working on, and what we do, Senator, is as we undertake the examination of a specific country, program we inquire as to all available material that the agency has in connection with that country, and if they have made an evaluation report


Senator O’MAHONEY. Do you send your agents to these foreign countries?

Mr. STAPLES. Generally we do; yes, sir.

Senator O'MAHONEY. Has your right to go into these countries to make the investigation ever been challenged ?

Mr. STAPLES. No, sir; it has not.

Senator O'MAHONEY. The only challenge is to the delivery of documents which you asked for?

Mr. STAPLES. The delivery of these evaluation reports, specifically the evaluation reports that are especially labeled and noted here in our statement.

Senator O’MAHONEY. Well, I think that, perhaps, it would be proper for me to remark for the record, Mr. Chairman, that when the Development Loan Fund was first set up the Mutual Security Act contained an illustration of the looseness with which Congress

sometimes approaches these problems.

The provision was made in that law that a report should be made to Congress—this is the first law, the law of 1957, I think—that a report should be made to the Congress on every loan, but after it had been committed, not before; and when, in the last session of Congress, the extension or modification of the act was requested, it went so far as to provide to eliminate that report on each project after it had been committed, to provide that there should be no report until the President made his final report for the year.

So that we have here a clear instance of the appropriation of American dollars to enable this country to send food to nations which need it, to people who need it, but under a law passed by Congress at the request of the State Department, I may say, which denies the Congress any information with respect to the loans before they are made, and which now apparently denies to the General Accounting Office the right to get the reports on evaluation which it needs to carry out the provisions of the act by which it was established.

Senator Ervin. All of which sustains the point made by Senator Hruska, in which you concur and in which I agreed, that the Congress itself is abdicating its functions and whittling away its own powers by delegating them?

Senator O'MAHONEY. That, I regret to say, is very true.
Senator Ervin. Senator, have you finished your questions?
Senator O'MAHONEY. Yes, Mr. Chairman.

40377 0–59—pt. 1-5

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