2, 820, 144

The question of maximization of the funds to be made available to the war claims fund for payment of claims of former civilian internees is essentially involved in every phase and activity of the Office of Alien Property. Exorbitant attorneys' fees or salaries reduce the net value of that business enterprise by misuse of its assets. If claims are not properly handled and personnel is not properly selected for the administration of the affairs of the Office of Alien Property, all can result in extravagance and waste. The finances and accounting of the Office of Alien Property reflect, in some large measure, the answer to the maximization question.

The administrative expenditures of the Office of Alien Property, Department of Justice, are not financed out of general Treasury funds but rather with funds derived from seized property or received in connection with its administration. The authority for the administrative expenditures of the Office was initially provided through Executive orders, but more recently through acts of Congress.

The means of financing the administrative expenditures of the Office were originally prescribed by Executive orders which provided essentially for the use for this purpose of funds under the control of the Office. Beginning with the fiscal year 1945, the amounts expendable have been governed by annual authorizations by Congress. The means of financing administrative expenses provided by the Executive orders are as follows:

1. The administrative fund remaining from the World War I alien property custodianship.

2. Funds derived from property vested in World War II including

(a) General transfers to the administrative fund of cash derived from property vested in World War II.

(b) Recoveries of expenses from vested enterprises and other properties.

3. Recoveries of expenses incurred in representing persons residing behind enemy lines, in court, or administrative actions or proceedings.

4. Miscellaneous receipts occurring from activities of the Office. The use of World War I administrative expense funds was authorized by Executive Order No. 9142, which transferred the World War I Alien Property Custodian functions from the Department of Justice to the Office of Alien Property Custodian. The use of funds derived from World War II vested property was provided by Executive Order No. 9325, issued for the specific purpose of authorizing the Office to defray its expenses out of the proceeds of vested property; such properties may be used whether or not the amounts expended are practicably allocable to a specific property. The section of Executive Order No. 9193 delegating to the Custodian responsibility for the representation of persons residing behind enemy lines, in court, or administrative proceedings includes a provision that the costs and expenses of such representation may be recovered by the vesting of a portion of the property in which the person represented is found to have an interest equal to such costs and expenses. Miscellaneous receipts have come into existence through the sale by the Office of republished foreign publications, the sale of catalogs describing vested patents, and in other similar ways.

The Independent Offices Appropriation Act (Public Law 358, 78th Cong., 2d sess.) enacted on June 24, 1944, provided for congressional authorization of expenditures after January 1, 1945. While this act did not specifically refer to the Office of Alien Property Custodian, it was considered that its spirit required the Office to request from Congress authorization to make expenditures for the 6 months beginning January 1, 1945. Section 213 of this act, an amendment proposed by Senator Russell, of Georgia, provides as follows:

After January 1, 1945, no part of any appropriation or fund made available by this, or any other, Act shall be allotted or made available to, or used to pay the expenses of, any agency or instrumentality, including those established by Executive order after such agency or instrumentality has been in existence for more than one year if the Congress has not appropriated any money specifically for such agency or instrumentality or specifically authorized the expenditures of funds by it.

Although the act related only to expenditures subsequent to January 1, 1945, the Office of Alien Property Custodian considered it preferable to base its request for authorization on the entire fiscal year ending June 30, 1945. Accordingly, the agency's budget of $4,000,000 for administrative expenses for the fiscal year, which had been previously reviewed and approved by the Bureau of the Budget, was examined by Congress and an authorization permitting this expenditure was included in Public Law 529, approved December 22, 1944. The section of this law applying to the Office of Alien Property Custodian is as follows:

The Alien Property Custodian is hereby authorized to pay out of any funds or other property or interest vested in him or transferred to him all necessary expenses incurred by the Office of Alien Property Custodian in carrying out the powers and duties conferred upon the Alien Property Custodian pursuant to the Trading With the Enemy Act of October 6, 1917, as amended (50 U. S. C. App.): Provided, That not to exceed $4,000,000 shall be available for the entire fiscal year 1945 for the general administrative expenses of the Office of Alien Property Custodian, including the objects as specified in section 201 of the National War Agency Appropriation Act, 1945, printing and binding, rent in the District of Columbia, and all other necessary general administrative expenses: Provided further, That after June 30, 1945, the Office of Alien Property Custodian shall not incur any obligations for the expenses of said Office, except pursuant to a further annual authorization by the Congress specifically therefor.

This provision permitted the defraying of the expenses of the Office of Alien Property Custodian from the same sources provided by the Executive orders cited above. The only change was that the expenditure of the funds was now authorized by an act of Congress.

On October 15, 1946, the administration of alien property was transferred from the independent office of Alien Property Custodian to the Department of Justice. It was not until the fiscal year 1949, however, that the Department of Justice transferred from the Office of Alien Property all of the administrative accounting records to the Administrative Division of the Department of Justice. During the fiscal year of 1949 the Office of Alien Property transferred $50,000 of its administrative funds to the administrative department of the Department of Justice for the performance of these administrative functions for the Office of Alien Property. In the fiscal years subsequent to that date, including the fiscal year ended June 30, 1952, the Office of Alien Property has transferred annually to the Department of Justice for these

administrative functions an amount of $100,000 from its administrative authorization.

While this amount has been authorized for transfer, there is apparently no responsibility on the part of the Department of Justice to account to the Office of Alien Property for the expenditure of this fund. There are no records in the Office of Alien Property showing the actual expense incurred by the Department of Justice arising from the assumption of certain administrative functions for the Office of Alien Property. Presumably the amount transferred to the Department of Justice is to compensate for additional personnel and other office expenses due to the added burden of handling the Office of Alien Property administrative functions. The amount transferred to the Administrative Division of the Department of Justice should be based upon actual expenditures of the Department of Justice and not the mere transferring of a round sum totaling $100,000 per annum to be commingled with the budget of the Department of Justice. The budget of the Department of Justice is appropriated out of the General Treasury funds. In the absence of an actual accounting by the Department of Justice for its expenditures in connection with the Office of Alien Property administrative functions, there is nothing to indicate whether or not the Department of Justice has expended more or less of this fund on the administrative affairs of the Office of Alien Property.

REPRESENTATION COSTS AND EXPENSES

As indicated above, under Executive Order No. 9193, delegating to the Custodian, and subsequently the Office of Alien Property, responsibility for the representation of persons residing behind enemy lines, in court, or in administrative proceedings, there is included a provision that the costs and expenses of such representation may be recovered by the vesting of a portion of the property in which the person represented is found to have an interest equal to such costs and

expenses.

Since the date of this Executive order, the Office of Alien Property had incurred representation costs and expenses in the amount of $353,936.46, which amount was duly vested in accordance with the Executive order. All of this amount has not been collected, however; and, due to various reasons, $8,512.10 of these charges have been written off as uncollectible. Of the remaining balance, amounting to $345,442.36, there has been actually collected $333,700.10. A balance of $11.724.26 remained uncollected at June 30, 1952.

In conversation with employees of the Comptroller's office in New York, the impression has been gained that very little effort is being made at this time to collect these unpaid balances, and that from time to time orders come from the Washington office to write off certain amounts as uncollectible. As indicated above, a total of $8.512.10 had been written off at June 30, 1952. Employees have stated that, during the active participation in this program during the war, the Office of Alien Property, through the Department of Justice, made a concentrated effort to collect these fees, using the United States attorneys in the field. At this time, however, the collections are slow and of small amounts. and there is no estimate as to what portion of the remaining