Mr. SCHMIDT. The memo states that it must be submitted by the close of business, February 1, 1960.

Mr. GOOLD. That is true, yes, sir.

Mr. SCHMIDT. So this went out December 31, 1959.

Does this not give rise to the possibility that someone who did have a conflict of interest could have disposed of his holdings prior to filling out his form?

Mr. GOOLD. Yes. May I state that we considered that possibility at the time we devised the form. We felt, and we still feel today, that if a person had true conflict of interest, his holdings would be such that they would not be readily disposed of.

I have no doubt if someone owned some shares of stock that were listed on the New York Stock Exchange, for example, that they could have disposed of those very readily. But ordinarily, we felt those would be minor holdings. Whereas on the other hand, if a person owned a business, ordinarily it would take more than 30 days to liquidate an interest in such a business.

Mr. ROBERTS. Mr. Chairman, may I supplement the statement Mr. Goold has made?

Senator SYMINGTON. Mr. Roberts.

Mr. ROBERTS. I think, Mr. Counsel, you must recognize that the Department of Agriculture has offices not only all over this country, but about a hundred of them throughout other areas of the world. It takes some time to get forms of this kind out to the people who are in the categories where the form is required to be executed.

You have to give an employee at least an ample opportunity to fill out the form and send it in. It requires a reasonable time, and there intervened, we thought, a reasonable time from the first of January until, I think, the first of February, 30 days.

Senator SYMINGTON. But could you not ask them when you sent the form to tell you of anything they had disposed of between the 31st of December to the 1st of February?

Mr. GOOLD. Yes, we could have. We did not consider it necessary for the reasons I have outlined.

Mr. ROBERTS. We could

Senator SYMINGTON. For example, if a man was dealing heavily in the grain business in your Department and he had stock in a grain corporation and you sent him a notice December 31 and he gets it on the 5th of January, he could move his holdings, and if he knows he is in trouble, which he would, if he had any sense, he would move them either at a loss in order to get rid of them, and then he files a clean statement on February 1.

Now, inasmuch as the committee has heard that that happened in some cases, we are just wondering why, when you sent your form out on the 31st of December, you did not say any holdings that you have now and liquidate between now and the 1st of February, please register on this form, that is, if you wanted to keep the employee as an employee of the Department of Agriculture.

Mr. GOOLD. May I state we had no instance brought to our attention where anyone liquidated holdings during that period of time and we would surely appreciate receiving any information that may be available in that regard.

Mr. SCHMIDT. Mr. Goold, on the resignation of Mr. Corey, what was his position as far as the Department of Agriculture, was he a civil service employee?

Mr. GOOLD. Yes, he was a civil service employee.

Mr. SCHMIDT. I wish you would clear up the record from the last hearing; there was confusion as to his status.

Mr. GOOLD. Thank you. Yes.

Mr. Chairman, at the last hearing, Mr. Corey was asked his position in th Federal Government, whether it was under civil service or under another type of appointment. He did not respond and the question was asked of me. I was speaking from memory and stated he was under schedule A in the Department. He was under civil service. Senator YOUNG of North Dakota. I am not clear yet. Is it a requirement that an office such as Mr. Corey held be under civil service? Mr. GOOLD. Yes, that is a requirement.

Senator YOUNG of North Dakota. He has to be a civil serviceMr. GOOLD. It is a position in the competitive civil service, yes, sir, Senator Young.

Mr. SCHMIDT. He testified he did not take an examination for that particular job. Was he appointed then by someone in the Department on the basis of a previous examination?

Mr. GOOLD. Yes. You see, Mr. Corey had been a career employee in the Federal Government for a period of some 8 years from 1938 until 1946. Once an employee's career status is established, he need not file for another examination; he can be appointed to a position for which he meets qualification standards without an examination.

Mr. SCHMIDT. So at the time for that particular job he did not take a competitive examination for that?

Mr. GOOLD. No, sir, he did not.

Mr. SCHMIDT. Was his resignation accepted by the Department without any special notation or anything other than the usual resignation?

Mr. GOOLD. Yes, and I will have to take the responsibility for that decision, sir. At the time of his resignation we knew that Mr. Corey held conflicting holdings which were not compatible with his Government job in any way. We knew it was in the interests of the Department for him to resign and for him to resign swiftly, and to that end we did accept his resignation rather than moving to discharge him, because had we moved to discharge him, procedural requirements for removal would have taken much longer.

We did, too, want to get the case over to the Department of Justice as quickly as we could, and those considerations entered into the acceptance of his resignation.

Senator YOUNG of North Dakota. May I ask a further question. Is there any civil service requirement that a man like Mr. Corey disclose any stock that he might hold which would involve a conflict of interest?

Mr. GOOLD. No, Senator Young, there is no civil service requirement to this effect.

Senator YOUNG of North Dakota. The Secretary of Agriculture has to hire these people on the basis of the civil service register? Mr. GOOLD. On the basis of the civil service register, yes.

Senator SYMINGTON. I would like to ask this question. I see in the letter accepting his resignation when you knew he was in trouble,

you say:

Appropriate arrangements will be made to pay you for the annual leave you have earned.

Is that customary when an employee resigns under fire, to give any relief?

Mr. GOOLD. Sir, we could not keep him from exercising this right; he had earned the annual leave, and we had no right to deprive him

of it.

Am I right on that, Mr. Counsel?

Mr. KOEBEL. Leave is guaranteed; he earned it.

Mr. GOOLD. Leave is guaranteed.

Senator YOUNG of North Dakota. Mr. Chairman, I would like to say, some of these civil service requirements are a bit "screwy." I merely want to point out, if a new area Federal Housing Administrator was hired, one of the civil service requirements is that to qualify, he must have a certain minimum salary record previous to the time of his application. A person, for example, who had a big company, which did a lot of business, a very successful person would not be eligible unless he had a certain salary previous to that time.

Mr. GOOLD. Those are some qualification standards, Mr. Senator. Mr. SCHMIDT. Mr. Goold, these 12 cases which you now have under investigation as a result of this memorandum sent out December 31, 1959, have any of those people been suspended from their position? Mr. GOOLD. No, sir, we have found no reason to suspend them at this time. As I stated, we did not find any case where their position put them in conflict by virtue of their holdings.

Mr. ROBERTS. Mr. Schmidt, I think it should be said, too, for your information, that many of these forms are still under review. We do not know whether further cases will be brought to our attention that may require some further

Mr. SCHMIDT. That is, more than these 12 you are talking about? Mr. ROBERTS. We have not completed the review of the 15,000. Senator SYMINGTON. Is this memo 1436 you are talking about? Mr. ROBERTS. Yes, sir.

Senator SYMINGTON. Mr. Roberts, you and I have been around the Government a good bit. Handling the kind of money that you people handle all over the world, as you have emphasized, do you not think you ought to have put this form out before?

Mr. ROBERTS. Well, Mr. Chairman, let me say this to you: I think when we put the form out, we strengthened very substantially our procedures. I think it can be said, however, fairly to the Department, that for many, many years, the Department has taken reasonable steps to call to the attention of its employees the laws that are applicable to their employment and to which the Department intends that they shall comply.

It was after the Fountain committee hearing, and I read the testimony, that I concluded myself that we should strengthen our procedures. We reviewed our regulations. We amended them and strenghtened them, and as a part of the entire strengthening process, we determined that it was advisable to do something along the lines that are required by memorandum 1436.

I think we are the first Department of Government of any size which has done this as extensively as we have.

One or two other Government agencies require limited declarations-the Internal Revenue Service being one; Maritime Commission being another.

We wanted to be certain before we went ahead with it that we did not create a morale problem among our employees, because as Mr. Goold has said, it is considered by many employees as being an invasion of their privacy. We wanted to be sure that we were not creating a morale problem within the Department in doing it.

Thus we did not get it out as rapidly as we might otherwise have done.

Senator SYMINGTON. But you finally decided it was the right thing to do?

Mr. ROBERTS. It was the right thing to do, yes, sir; and we are going to make it permanent.

Senator SYMINGTON. I would like to ask you, you feel that you have everything as a result of this sad case of this fellow Corey, have done everything now to prevent something like this recurring?

you

Mr. GOOLD. Mr. Chairman, I can only say that until we find that someone has evaded us in another manner, we feel that we have taken what reasonable steps we can. We are constantly alert to try to improve our procedures. Every case that comes, we evaluate our procedures in the light of the case, and if we find improvements, we want to make them, and we want to make them as soon as we possibly can. In direct response to your question, at this moment, except for a vigorous followup of all of the information that we get as a result of the questionnaire, I know nothing more that we can do, sir.

Senator SYMINGTON. You feel that now you have taken steps to prevent a future occurrence of this character?

Mr. GOOLD. We can never stop dishonesty, sir, as you know. But if our employees are honest, as we know the vast majority to be, we feel that our regulations will be adequate.

Senator SYMINGTON. You see, Mr. Corey says that he got something last June which he read.

Mr. GOOLD. Yes.

Senator SYMINGTON. And that was the reason that he felt that he ought to get rid of his holdings. My only point is that if you had done something before that time, he would have had to sign a misstatement of fact in order to conform to the regulation. You have done that now as of the 31st of December, and I think that is fine. But I was wondering if you had any other plans or if this is now your position with respect to these problems?

Mr. GOOLD. The basic tenets of 1436 are our position at the present time.

Senator SYMINGTON. Thank you, sir.

Senator Cooper.

Senator COOPER. May I ask if you have considered inquiring of possible appointees to supervisory posts of the Commodity Service, these questions before they are actually appointed?

Mr. GOOLD. Yes, indeed, sir. The regulations provide that before a person can be appointed now, he must execute this form before he comes on duty.

Senator SYMINGTON. How high does that go?

Mr. GOOLD. To the top.

Senator YOUNG of North Dakota. Would you yield a moment there. Is this a civil service requirement?

Mr. GOOLD. No, sir; this is a Department of Agriculture require

ment.

Senator YOUNG of North Dakota. So far as the Civil Service Commission is concerned, they can own $1 million worth of stock?

Mr. GOOLD. I do not know; they will have to speak for themselves. Senator YOUNG of North Dakota. Is that not true?

Mr. GOOLD. Well, of course, I am sure that the Civil Service Commission would insist that employees meet the statutory provisions in regard to conflicts of interest. But what they do to assure that prior to appointment, they would have to speak for themselves.

Senator YOUNG of North Dakota. They do not do anything at all, do they? That is, to check their stockholdings?

Mr. GOOLD. I do not know.

Senator YOUNG of North Dakota. I never heard of it.

Senator SYMINGTON. Mr. Counsel.

Mr. SCHMIDT. Mr. Goold, Mr. Corey testified that his immediate superior was Mr. Frank R. McGregor.

Mr. GOOLD. Yes, sir.

Mr. SCHMIDT. Mr. McGregor resigned from the Department effective October 7, 1959. Did you investigate his situation and did you find any evidence of conflict of interest?

Mr. GOOLD. We made a limited investigation concerning Mr. McGregor at the time before we turned the matter over to the Department of Justice, which was September 30, 1959. We had not found anything that showed any activity on his part that was in conflict with his job as an official of our Department.

Mr. SCHMIDT. Mr. McGregor has furnished us a copy of his resignation.

Mr. GOOLD. Yes, sir.

Mr. SCHMIDT. Which states:

Employee resigned by letter dated October 7, 1959, to return to private business. This resignation is accepted in lieu of preferment of charges.

Mr. GOOLD. That is right.

Mr. SCHMIDT. There were no charges filed against Mr. McGregor? Mr. GOOLD. Yes, there were charges to be filed.

Senator SYMINGTON. What were they?

Mr. GOOLD. Charges of deception, sir. At the time Mr. McGregor came on duty with the Department of Agriculture, June 23, 1954, he filed with the Department copies of letters which purported to be resignations from Frank R. McGregor & Associates, and the Council for Independent Business.

He also filed with us copies of letters which purported to be acceptances of those resignations.

The charges we were prepared to place against Mr. McGregor were that, contrary to the assurances he had given to the Department that he had severed his business ties, he had not done so, as he was holding