10. Implementation of Reorganization Plan No. 2 of 1970 (Office of Management and Budget; Domestic Council).

(a) Summary.-A review has been made of informational materials submitted by the Office of Management and Budget, at the request of the subcommittee chairman, concerning actions taken to implement Reorganization Plan No. 2 of 1970, which became operative on July 1, 1970. Followup is being maintained by the staff on further actions by OMB in implementing the plan.

(b) Benefits.-No estimate of benefits is possible at this time.

FOREIGN OPERATIONS AND GOVERNMENT INFORMATION SUBCOMMITTEE

FOREIGN OPERATIONS

1. U.S. Economic Assistance for Indonesia.

(a) Summary.-The subcommittee intensified its study of the resumption of U.S. assistance to Indonesia to determine the efficiency and economy of the Agency for International Development's operations. The subcommittee held hearings with AID officials in Washington on June 9, 1969, and in Indonesia on February 20, 23, and 24, 1970. Onsite investigations were made in Indonesia in October 1969 and February 1970. Transcripts of the hearings were not printed. The fiscal year 1969 appropriations for assistance doubled those of fiscal year 1968 and increased total U.S. expenditures for this purpose to more than $1 billion. Staff investigation of the expanded program disclosed a serious lack of Indonesian management expertise, coordination, and U.S. leadership in the implementation of U.S. and consortium aid programs for Indonesia, in addition to the questionable need for millions of dollars of U.S. economic aid.

Specific findings pertained to:

(1) the excessive programing of and questionable need for a $44 million program loan to finance the importation of commodities under the commercial import program (CIP);

(2) the AID mission's reluctance to submit claims against the Government of Indonesia for violations and irregularities under the aid program;

(3) the failure to control and determine the status and distribution of U.S.-financed commodities because of discrepancies and inaccuracies in the CIP arrival accounting system;

(4) the failure of the Agency for International Development and the Government of Indonesia to definitize aid priorities; and (5) deficiencies in the U.S.-financed training program which prevent the efficient determination of training requirements and knowledge as to the effective utilization of personnel previously trained.

Notable during the subcommittee's investigation was the lack of coordination between the United States and other members of the ninenation consortium providing economic aid to Indonesia. AID/Washington officials admitted that the "meshing together" of agricultural assistance offered by consortium members to Indonesia was a "real problem." Staff field investigation revealed that this lack of coordination existed not only in Washington but also in Indonesia. Very little action to coordinate assistance was taken until after the problem was revealed at subcommittee hearings.

(b) Benefits.-Millions of dollars in intangible benefits would result from tighter controls and the improved management and coordination of the total U.S. aid program for Indonesia.

2. U.S. Economic Assistance for Vietnam.

(a) Summary.-The subcommittee continued its surveillance over U.S. assistance programs for Vietnam and the subcommittee staff made a preliminary on-site investigation in South Vietnam in October 1969 followed by a full subcommittee on-site investigation in February 1970.

In March 1968, the committee called, in House Report No. 1142, 90th Congress, for "an aggressive new land reform program" to make certain U.S. assistance in that field was being used with the greatest possible economy and efficiency. A year later, President Thieu presented a bold proposal to a special session of the National Assembly aimed at abolishing all tenant farming in South Vietnam and distributing land to friend and foe alike. The landlords would be permitted to retain only the land which they personally tilled with their own two hands. The U.S. AID mission immediately responded by offering practical assistance in the form of funds and technical advice. Subcommittee staff investigation found a high sense of dedication and enthusiasm on the part of Americans working in the effort. In March 1970, the South Vietnam National Assembly adopted the bold new land reform program which, if carried out, will help transfer real economic and political power from the hands of the few to the hands of the many and speed the building of a more truly democratic

nation.

(b) Benefits.-Savings of thousands of lives and billions of dollars would result from speedy implementation of the Vietnamese land reform program.

3. U.S. Economic Assistance for Thailand.

(a) Summary.-U.S. economic assistance to Thailand, until 1963, was provided to promote economic and social development. By the beginning of 1964, economic development in Thailand had achieved such success that it was planned to phase down U.S. economic aid over the next few years to the point where it could be terminated. However, a change in U.S. policy occurred when Thailand could no longer fully meet AID's criteria for granting large amounts of economic aid on economic grounds alone. Since 1965, U.S. security interests have provided the principal justification for economic aid to Thailand.

Security and accelerated rural development became the primary U.S. goals and the United States has provided more than $150 million in commodities, technical assistance, and training since 1965 to accomplish these goals.

Preliminary investigation by the subcommittee staff in 1969 indicated that economic assistance was provided to Thailand in amounts. far in excess of initial budget proposals and millions of dollars worth of commodities and equipment were unnecessarily provided and not being properly or fully utilized, adequately or effectively maintained, and contributing little, if at all, to the security and rural development of Thailand. Despite this waste and inefficiency, the United States is still providing millions in materials, technical assistance, and training with millions more of the same aid programed in the future.

The subcommittee held hearings with responsible AID officials on June 16, 1969, and February 26, 1970. The transcripts were not printed.

(b) Benefits.-Not determinable until on-site investigation in Thailand and detailed audit and review are completed.

4. U.S. Economic Assistance for the Philippines.

(a) Summary.--During 1969, the subcommittee initiated a review of U.S. economic assistance activities in the Philippines. A public hearing was held on June 16, 1969. The main focus of the inquiry has been on the miracle rice program, including agricultural credit and education. The subcommittee hopes to visit the Philippines in the future and take a firsthand look at these programs.

(b) Benefits.-Not determinable until investigation is completed.

5. U.S. Economic Assistance for Africa.

(a) Summary.-The subcommittee has continued to review U.S. assistance programs for Africa. This review was intensified in the summer of 1969 and disclosed the increasing need for closer surveillance over the administration of U.S. assistance programs and the operations of AID missions in certain African countries.

(b) Benefits.-Not determinable until further investigations and detailed audit and review are completed.

6. U.S. Economic Assistance for Public Safety Programs.

(a) Summary. The subcommittee made an investigation of the economy and efficiency of U.S. public safety assistance programs overseas, particularly in South Vietnam and Brazil. Hearings on the Con Son prison affair were held on July 13 and 17 and August 12, 1970. The hearings will be printed.

(b) Benefits.-Officials of the Agency for International Development advised that the prisoners have been moved from the "tiger cages" at the Con Son prison and that the Government of Vietnam is demolishing the cages.

7. U.S. Economic Assistance to International Organizations.

(a) Summary.-During 1970, the subcommittee initiated an investigation into the economy and efficiency of U.S. participation in international organizations. Public hearings were held on May 1 and September 18 and 21, 1970. In November 1970, preliminary on-site surveys were made in Africa, and it is planned to continue the investigation in 1971.

(b) Benefits.-Not determinable until on-site investigations and detailed audit and review are completed.

8. International Debts Owed to the United States.

(a) Summary.-During 1970, the subcommittee continued its surveillance over the collection of debts owed to the United States. Hearings were held on September 22, 1970. It is planned to continue and intensify the subcommittee's monitoring of collections until such time as the problem of delinquent debts is substantially reduced. (b) Benefits.-Not determinable at this time.

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GOVERNMENT INFORMATION

1. Telephone Monitoring-Third Review.

(a) Summary.-Pursuant to its mandate to scrutinize the information practices of the executive branch, both in the light of propriety and efficiency and economy, the subcommittee recently submitted a questionnaire to all principal departments and agencies for the purpose of bringing up to date a long-standing study and survey of the telephone monitoring practices by the Federal Government. Two earlier committee reports have been issued on the survey: House Report No. 1215, "Availability of Information from Federal Departments and Agencies (Telephone Monitoring)," 87th Congress, 1st session; and House Report. No. 1898, Availability of Information from Federal Departments and Agencies (Telephone Monitoring; 2d review)," 87th Congress, 2d session. The study on monitoring does not involve the problem of third party interception of telephone conversations-so-called wiretapping when the third party is usually a Government official charged with law enforcement.

The earlier reports questioned the propriety of telephone monitoring, expressed concern about the costs involved and criticized the lack of regulations governing the practice.

Currently, a preliminary analysis of responses shows that of the 60 agencies queried about their telephone monitoring manners during fiscal 1970, 52 said that in some degree or another they permit their calls to be monitored while conducting Government business.

The Government's snooping techniques have changed but little over the last decade. Transmitter cut-off switches, tape recorders and induction attachments remain in the inventory of electronic listening-in gadgets, the rental or acquisition of which cost the taxpayers in the neighborhood of $135,000 annually. All of the monitoring agencies permit secretaries to listen in-usually, but not always, to the knowledge of the person making the call.

During fiscal 1970, agencies reported the use of 4,513 transmitter cut-off switches which cost the Government a total of $35,649 in rentals. Purpose of the switch is to drown out breathing or other background noises while listening in, surreptitiously or otherwise. With 1,004, the Navy is the most prodigious user of the device.

The fiscal 1970 survey further shows 136 listening-in circuits in use at an annual cost of $1,537. During the same period agencies utilized 166 telephone conversation recording machines at an acquisition cost of $88,892 and an annual operating cost of $8,065. Agencies also reported the use of induction attachments, acquired at a cost of $2,418. In compliance with the committee's earlier recommendations, most agencies now govern their monitoring practices with formal regulations. Notable exceptions are the Central Intelligence Agency, Department of Justice, the Peace Corps and the Renegotiation Board.

The study also included an inquiry into the reported eavesdropping on Government calls by private telephone companies. The American Telephone & Telegraph Co. denied that the Bell System monitors customer-to-customer conversations, but acknowledged that it does indulge in "service observing" practices which could include calls to Federal agencies and congressional offices. Results of the survey have been compiled in a committee print.