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THE CIA AND THE CULT OF INTELLIGENCE

FIVE: Proprietary Organizations

As far as depots of "untraceable
arms," airlines and other
installations are concerned,
one wonders how the CIA could
accomplish the tasks required
of it in Southeast Asia
without such facilities.
-- LYMAN KIRKPATRICK
Former CIA Executive Director
U.S. News and World Report
October 11, 1971

LATE one windy spring afternoon in 1971 a small group of
men gathered unobtrusively in a plush suite at Washington's Mayflower
Hotel. The host for the meeting was Professor Harry Howe
Ransom of Vanderbilt University, author of The Intelligence
Establishment, a respected academic study of the U.S. intelligence
system. He was then doing research for another book on the
subject and had invited the others for drinks and dinner, hoping
to gather some new material from his guests, who included ex-CIA
officials, congressional aides, and David Wise, co-author of The
Invisible Government and The Espionage Establishment, two of
the best books on the CIA and clandestine intelligence operations
ever published. Someone brought up the CIA's use of front companies.
"Oh, you mean the Delaware corporations," said Robert
Amory, Jr., a former Deputy Director of the CIA. "Well, if the
agency wants to do something in Angola, it needs the Delaware
corporations."
By "Delaware corporations" Amory was referring to what are
more commonly known in the agency as "proprietary corporations"
or, simply, "proprietaries." These are ostensibly private
institutions and businesses which are in fact financed and controlled
by the CIA. From behind their commercial and sometimes
non-profit covers, the agency is able to carry out a multitude of
clandestine activities-usually covert-action operations. Many of
the firms are legally incorporated in Delaware because of that
state's lenient regulation of corporations, but the CIA has not
hesitated to use other states when it found them more convenient.
The CIA's best-known proprietaries were Radio Free Europe and
Radio Liberty, both established in the early 1950s. The corProprietary
Organizations • 135
porate structures of these two stations served as something of a
prototype for other agency proprietaries. Each functioned under
the cover provided by a board of directors made up of prominent
Americans, who in the case of RFE incorporated as the National
Committee for a Free Europe and in the case of RL as the American
Committee for Liberation. But CIA officers in the key management
positions at the stations made all the important decisions
regarding the programming and operations of the stations.
In 1960 when the agency was preparing for the Bay of Pigs
invasion and other paramilitary attacks against Castro's Cuba, it
set up a radio station on desolate Swan Island in the Caribbean
to broadcast propaganda to the Cuban people. Radio Swan, as
it was called, was operated by a New York company with a
Miami address, the Gibraltar Steamship Corporation. Again the
CIA had found a group of distinguished people-as usual, corporate
leaders with government ties-to front for its clandestine
activities. Gibraltar's president was Thomas D. Cabot, who had
once been president of the United Fruit Company and who had
held a high position in the State Department during the Truman
administration. Another "stockholder" was Sumner Smith, also of
Boston, who claimed (as did the Honduran government) that his
family owned Swan Island and who was president of the Abington
Textile and Machinery Works.
During the Bay of Pigs operation the following year, Radio
Swan ceased its normal fare of propaganda broadcasts and issued
military commands to the invading forces and to anti-Castro
guerrillas inside Cuba. What little cover Radio Swan might have
had as a "private" corporation was thus swept away. Ultimately,
Radio Swan changed its name to Radio Americas (although still
broadcasting from Swan Island), and the Gibraltar Steamship
Corporation became the Vanguard Service Corporation (but with
the same Miami address and telephone number as Gibraltar). The
corporation, however, remained a CIA proprietary until its dissolution
in the late 1960s.
At least one other agency proprietary, the Double-Chek Corporation,
figured in the CIA's operations against Cuba. Double-
Chek was founded in Miami (which abounds with agency
136 THE CIA AND THE CULT OF INTELLIGENCE
proprietaries) in 1959, and, according to the records of the
Florida state government, "brokerage is the general nature of the
business engaged in." In truth, Double-Chek was used by the
agency to provide air support to Cuban exile groups, and it was
Double-Chek that recruited the four American pilots who were
killed during the Bay of Pigs invasion. Afterward the CIA, through
Double-Chek, paid pensions to the dead fliers' widows and warned
them to maintain silence about their husbands' former activities.
When the CIA intervened in 1964, Cuban exile pilots-some of
whom were veterans of the Bay of Pigs-flew B-26 bombers
against the rebels. These pilots were hired by a company called
Caramar (Caribbean Marine Aero Corporation), another CIA
proprietary.
Often the weapons and other military equipment for an operation
such as that in the Congo are provided by a "private" arms
dealer. The largest such dealer in the United States is the International
Armament Corporation, or Interarmco, which has its
main office and some warehouses on the waterfront in Alexandria,
Virginia. Advertising that it specializes in arms for law-enforcement
agencies, the corporation has outlets in Manchester in England,
Monte Carlo, Singapore, Pretoria, South Africa, and in
several Latin American cities. Interarmco was founded in 1953 by
Samuel Cummings, a CIA officer during the Korean war. The circumstances
surrounding Interarmco's earlier years are murky, but
CIA funds and support undoubtedly were available to it at the
beginning. Although Interarmco is now a truly private corporation,
it still maintains close ties with the agency. And while the
CIA will on occasion buy arms for specific operations, it generally
prefers to stockpile military materiel in advance. For this reason,
it maintains several storage facilities in the United States and
abroad for untraceable or "sterile" weapons, which are always
available for immediate use. Interarmco and similar dealers are
the CIA's second most important source, after the Pentagon, of
military materiel for paramilitary activities.
Proprietary Organizations • 137
The Air Proprietaries
Direct CIA ownership of Radio Free Europe, Radio Liberty,
and the Bay of Pigs proprietaries, and direct involvement in Interarmco
are largely past history now. Nevertheless, the agency is
still very much involved in the proprietary business, especially to
support its paramilitary operations. CIA mercenaries or CIAsupported
foreign troops need air support to fight their "secret"
wars, and it was for just this purpose that the agency built a huge
network of clandestine airlines which are far and away the largest
and the most dangerous of all the CIA proprietaries.
Incredible as it may seem, the CIA is currently the owner of one
of the biggest-if not the biggest-fleets of "commercial" airplanes
in the world. Agency proprietaries include Air America, Air Asia,
Civil Air Transport, Intermountain Aviation, Southern Air Transport,
(DELETED) and several other air charter companies around
the world.
Civil Air Transport (CAT), the original link in the CIA air
empire, was started in China in 1946, one year before the agency
itself was established by Congress. CAT was an offshoot of General
Claire Chennault's Flying Tigers, and during its early days it
flew missions of every kind in support of Chiang Kai-shek's unsuccessful
effort to retain control of the Chinese mainland. When
Chiang was finally driven out of China in 1949 , CAT went with
him to Taiwan and continued its clandestine air operations. In
1950 CAT was reorganized as a Delaware corporation under a
CIA proprietary holding company called the Pacific Corporation.
In a top-secret memorandum to General Maxwell Taylor on
"unconventional-warfare resources in Southeast Asia" in 1961,
published in The Pentagon Papers, Brigadier General Edward
Lansdale described CAT's functions as follows:
CAT is a commercial air line engaged in scheduled and nonscheduled
air operations throughout the Far East, with headquarters
and large maintenance facilities located in Taiwan.
CAT, a CIA proprietary, provides air logistical support
under commercial cover to most CIA and other U.S. Govern138
THE C I A AND THE C U L T 0 FIN TEL L I G ENe E
ment agencies' requirements. CAT supports covert and clandestine
air operations by providing trained and experienced
personnel, procurement of supplies and equipment through
overt commercial channels, and the maintenance of a fairly
large inventory of transport and other type aircraft under both
Chin at [Chinese Nationalist] and U.S. registry.
CAT has demonstrated its capability on numerous occasions
to meet all types of contingency or long-term covert air
requirements in support of U.S. objectives. During the past
ten years, it has had some notable achievements, including
support of the Chinese Nationalist withdrawal from the mainland,
air drop support to the French at Dien Bien Phu, complete
logistical and tactical air support for the Indonesian
operation, air lifts of refugees from North Vietnam, more
than 200 overflights of Mainland China and Tibet, and extensive
air support in Laos during the current crisis....
The air drops at Dien Bien Phu occurred in 1954 when the U.S.
government decided not to come directly to the assistance of the
beleaguered French force but did approve covert military support.
1954 was also the year of the airlift of refugees from North Vietnam
to the South. These were non-secret missions, but the CIA
could not resist loading the otherwise empty planes that flew to
North Vietnam with a cargo of secret agents and military equipment
to be used in a clandestine network then being organized in
North Vietnam. Like other guerrilla operations against communist
countries, whether in Europe or Asia, this CIA venture was a
failure.
By "the Indonesian operation," Lansdale was referring to the
covert air and other military support the CIA provided to the
rebels of the Sukamo government in 1958.* The "more than 200
* Allen Pope, the pilot wbo was sbot down and captured during this
operation by tbe Indonesian government, was a CAT pilot. Six months after
his release in 1962 he went to work for anotber CIA proprietary, Southern
Air Transport. The attorney for Southern at that time was a man named
Alex E. Carlson, wbo had only a year before been the lawyer for Double·
Cbek Corporation when tbat CIA proprietary bad furnished the pilots for
tbe Bay of Pigs.
Proprietary Organizations 139
overflights of Mainland China and Tibet" that Lansdale mentioned
occurred mainly during the 1950s (but continued well into the
1960s), when the CIA supported, on its own and in cooperation
with the Chiang Kai-shek government, guerrilla operations against
China. CAT was the air-supply arm for these operations, and it was
in a CAT plane that Richard Fecteau and John Downey were shot
down by the communist Chinese in 1954.
By the end of the 1950s, CAT had split into three separate
airlines, all controlled by a CIA proprietary holding company, the
Pacific Corporation. One firm, Air America, took over most of
CAT's Southeast Asia business; another, Air Asia, operated a
giant maintenance facility on Taiwan. The portion still called CAT
continued to fly open and covert charter missions out of Taiwan
and to operate Nationalist China's scheduled domestic and international
airline. CAT was best known for the extravagant service
on its "Mandarin Jet," which linked Taipei to neighboring Asian
capitals.
In 1964, about the time of the mysterious crash of a CAT
plane, * the CIA decided that running Taiwan's air passenger service
contributed little to the agency's covert mission in Asia, and
that the non-charter portion of CAT should be turned over to the
Chinese Nationalists. But the Nationalists' own China Air Lines
had neither the equipment nor the experience at that time to take
over CAT's routes, and the Nationalist government was not pre-
* CAT's former public-relations director, Arnold Dibble, wrote in the
Saturday Review of May II, 1968: "A highly suspicious crash of a C-46
claimed the lives of fifty-seven persons, including that of perhaps the
richest man in Asia, Dato Loke Wan Tho---the Malaysian movie magnate--
and several of his starlets from his Cathay studios. The full story of this
crash has yet to be unraveled; what is known has not been told because it
has been kept under official and perhaps officious wraps. There has never
been, for instance, an official airing of the part played by two apparently
demented military men aboard who had stolen two radar identification
manuals (about the size of a mail-order catalog) in the Pescadores Islands,
hollowed them out with a razor blade so each would hold a .45 caliber
pistol. The manuals and one pistol were found, but fire and perhaps inadequate
investigation marred the evidence. It was never definitely determined
if the weapons had been fired."
140 THE CI A AND THE C U L T 0 FIN TEL L I GENe E
pared to allow the CIA to abandon Taiwan's principal air links
with the outside world. The CIA could not simply discontinue
service, because such action would have offended the Chiang
government and made uncertain the continued presence of the
agency's other proprietaries and intelligence facilities on Taiwan.
The negotiations over CAT's passenger routes dragged on
through the next four years. The CIA was so eager to reach a
settlement that it sent a special emissary to Taiwan on temporary
duty, but his short-term negotiating assignment eventually turned
into a permanent position. Finally, in 1968 another CAT passenger
plane-this time a Boeing 727---crashed near the Taipei airport.
This second accident caused twenty-one deaths and provided
that rarest of occurrences on Taiwan, a spontaneous public
demonstration-against U.S. involvement in the airline. Bowing
to public pressure, the Nationalist government then accepted a
settlement with the agency: China Air Lines took over CAT's
international flights; CAT, despite the agency's reluctance, continued
to fly domestic routes on Taiwan; and the CIA sweetened
the pot with a large cash payment to the Nationalists.
Air America, a spin-off of CAT, was set up in the late 1950s
to accommodate the agency's rapidly growing number of operations
in Southeast Asia. As U.S. involvement deepened in that
part of the world, other government agencies-the State Department,
the Agency for International Development (AID), and the
United States Information Agency (USIA)-also turned to Air
America to transport their people and supplies. By 1971, AID
alone had paid Air America more than $83 million for charter
services. In fact, Air America was able to generate so much
business in Southeast Asia that eventually other American airlines
took note of the profits to be made.
One private company, Continental Airlines, made a successful
move in the mid-1960s to take some of the market away from Air
America. Pierre Salinger, who became an officer of Continental
after his years as President Kennedy's press secretary, led Continental's
fight to gain its share of the lucrative Southeast Asian
business. The Continental position was that it was a questionable,
if not illegal, practice for a government-owned business (even a
Proprietary Organizations • 141
CIA proprietary under cover) to compete with truly private companies
in seeking government contracts. The CIA officers who had
to deal with Continental were very uncomfortable. They knew
that Salinger had learned during his White House days of the
agency's activities in Southeast Asia and, specifically, of Air
America's tie to the CIA. They feared that implicit in Continental's
approach for a share of the Southeast Asian market was the
threat that if the agency refused to cooperate, Continental would
make its case publicly-using information supplied by Salinger.
Rather than face the possibility of unwanted publicity, the CIA
permitted Continental to move into Laos, where since the late
1960s it has flown charter flights worth millions of dollars annually.
And Continental's best customer is the CIA itself.
But even with Continental flying in Laos, the agency was able
to keep most of the flights for its own Air America. This CIA airline
has done everything from parachuting Meo tribesmen behind
North Vietnamese lines in Laos to dropping rice to refugees in the
Vietnamese highlands. Air America has trained pilots for the Thai
national police, transported political prisoners for the South Vietnamese
government, carried paymasters and payrolls for CIA mercenaries,
and, even before the Tonkin Gulf Resolution, furnished
pilots for secret bombing raids on North Vietnamese supply lines
in Laos. It has also been accused of participating in Southeast
Asia's heroin trade. Air America's operations regularly cross
national boundaries in Southeast Asia, and its flights are almost
never inspected by customs authorities. It has its own separate
passenger and freight terminals at airports in South Vietnam, Laos,
and Thailand. At Udorn, in Thailand, Air America maintains a
large base which is hidden within an even larger U.S. Air Force
facility (which is ostensibly under Thai government control). The
Udorn base is used to support virtually all of the "secret" war in
Laos, and it also houses a "secret" maintenance facility for the
planes of the Thai, Cambodian, and Laotian air forces.
Before the cease-fire in Vietnam, Air America was flying 125
planes of its own, with roughly 40 more on lease, and it had about
5,000 employees, roughly 10 percent of whom were pilots. It was
one of America's largest airlines, ranking just behind National in
142 THE C I A AND THE C U L T 0 FIN TEL L I G ENe E
total number of planes. Now that the U.S. military forces have
withdrawn from the Vietnamese theater, the role of maintaining
a significant American influence has reverted largely to the CIAand
Air America, under the circumstances, is finding its services
even more in demand than previously. Even the International
Supervisory and Control Commission, despite the membership of
communist Poland and Hungary, has signed a contract with the
CIA proprietary to support its supervision of the Vietnam ceasefire.
In 1973, Air America had contracts with the Defense Department
worth $41.4 million.
A wholly owned subsidiary of Air America, Air Asia, operates on
Taiwan the largest air repair and maintenance facility in the Pacific
region. Established in 1955, Air Asia employs about 8,000 people.
It not only services the CIA's own planes, it also repairs
private and military aircraft. The U.S. Air Force makes heavy use
of Air Asia and consequently has not had to build a major maintenance
facility of its own in East Asia, as would have been
necessary if the CIA proprietary had not been available. Like Air
America, Air Asia is a self-sustaining, profit-making enterprise.
Until the CIA decided to sell it off in mid-1973, Southern Air
Transport, another agency proprietary, operated out of offices in
Miami and Taiwan. Unlike CAT, Air America, and Air Asia, it
was not officially connected with the Pacific Corporation holding
company, but Pacific did guarantee $6.6 million loaned to it by
private banks, and Air America loaned it an additional $6.7 million
funneled through yet another CIA proprietary called Actus
Technology. Southern's role in the Far East was largely limited to
flying profitable routes for the Defense Department. Other U.S.
government agencies have also chartered Southern on occasion.
In the first half of 1972 it received a $2 million AID contract to
fly relief supplies to the new state of Bangladesh.
But within the CIA, Southern Air Transport was primarily important
as the agency's air arm for potential Latin American
interventions. This was the justification when the CIA took control
of it in 1960, and it provided the agency with a readily available
"air force" to support counterinsurgency efforts or to help bring
down an unfriendly government. While Southern awaited its call
Proprietary Organizations • 143
to be the Air America of future Latin American guerrilla wars, it
"lived its cover" and cut down CIA's costs by hiring out its planes
on charter. (
DELETED
) When the CIA brought Tibetan
tribesmen to the United States in the late 1950s to prepare them
for guerrilla forays into China, the agency's Intermountain Aviation
assisted in the training program.
Then, in the early 1960s CIA air operations grew by leaps and
bounds with the expansion of the wars in Southeast Asia and the
constant fighting in the Congo.
(
DELETED
) But a reporter visiting Tucson in 1966 still
wrote, "Anyone driving by could see more than a hundred B-26s
with their armor plate, bomb bays, and gun ports." Not long after
this disclosure appeared in the press, (DELETED) were made
available to (DELETED) to build hangars for the parked aircraft.
Prying reporters and the curious public soon saw less.
In 1965, Intermountain Aviation served as a conduit in the sale of
144 THE C I A AND THE C U L T 0 FIN TEL L I G ENe E
B-26 bombers to Portugal for use in that country's colonial wars
in Africa. The sale directly violated the official United States
policy against arms exports to Portugal for use in Angola, Mozambique,
or Portuguese Guinea. The U.S. government, at its highest
level, had decided to sell twenty B-26s to Portugal, and the CIA
proprietary was following official orders. Theoretically, the embargo
on weapons exports for use in Portugal's colonies remained
intact-but not in fact. The U.S. government was, thus, doing
covertly what it had forbidden itself to do openly.
Through the spring and summer of 1965, seven B-26s were
flown from Arizona to Lisbon by an English pilot hired by an
ostensibly private firm called Aero Associates. By September the
operation's cover had worn so thin that Soviet and Hungarian
representatives at the United Nations specifically attacked the
transaction. The American U.N. delegation conceded that seven
B-26s had been delivered to Portugal, but Ambassador Arthur
Goldberg stated that "the only involvement of officials of the
United States has been in prosecuting a malefactor against the
laws of the country." This was a simple mistruth. Ambassador
Goldberg, however, may have not known what the facts were.
Adlai Stevenson before him had not been fully briefed on the Bay
of Pigs invasion and wound up unknowingly making false statements
at the U.N.
The same techniques were used to distort the prosecution of the
"malefactor." Ramsey Clark, at the time Deputy Attorney General,
got in contact with Richard Helms, when the latter was the
CIA's Deputy Director, and the agency's General Counsel, Lawrence
Houston, to discuss the Portuguese airplane matter. Agency
officials assured Clark that the CIA had not been involved. Recalling
the case, Clark says, "We couldn't have gone to trial if
they [the CIA] had been involved. I don't see how you can just
prosecute the little guys acting in the employ of a government
agency."
Still, the United States had been exposed as violating its own
official policy, and, for political reasons, those knowledgeable
about the facts refused to intervene to aid "the little guys." Thus,
one agency of the government, the Justice Department, unwittingly
Proprietary Organizations • 145
found itself in the curious position of prosecuting persons who had
been working under the direct orders of another government
agency, the CIA. Five indictments were finally secured, but one
of the accused fled the country, and charges against two of the
others were dropped. But in the fall of 1966 the English pilot, John
Richard Hawke, and Henri Marie Fran~ois de Marin de Montmarin,
a Frenchman who had been a middleman in the deal, were
brought to trial in a Buffalo, New York, federal court.
Hawke admitted in court, "Yes, I flew B-26 bombers to Portugal
for use in their African colonies, and the operation was arranged
through the State Department and the CIA." However,
CIA General Counsel Houston flatly denied under oath that the
agency had been involved in the transaction. Houston did reveal
that the agency "knew about" the bomber shipment on May 25,
1965, five days before it began, and that this information had been
passed on to the State Department and eleven other government
agencies. He also said that on July 7 the CIA was "informed"
that four of the B-26s had actually been delivered to Portugal;
again the CIA gave notice to State and other agencies. He did
not explain why, if the U.S. government had so much intelligence
on the flights, nothing was done to stop them, although their
flight plans had been filed with the Federal Aviation Administration
and Hawke, on one mission, even inadvertently buzzed the
White House.
The jury found Hawke and Montmarin innocent. Members of
the panel later let it be known that they had not been convinced
that the two accused had deliberately violated the law. (
DELETED
146 • THE CIA AND THE C U L T 0 FIN TEL L I G ENe E
DELETED )
Former Director Helms, however, refused to fly (DELETED)
because he believed that its commercial cover was too transparent.
He preferred instead to travel on legitimate commercial airlines.
Less reluctant was Vice President Hubert Humphrey, who often
used (DELETED) Gulfstream during his 1968 presidential campaign.
(
DELETED
)
Perhaps the CIA's most out-of-the-way proprietary was located
in Katmandu, Nepal. It was established to provide air support for
agency-financed and -directed tribesmen who were operating in
Chinese-controlled Tibet. CAT originally flew these missions, as
indicated by General Lansdale's reference to CAT's "more than
200 overflights of Mainland China and Tibet." But flying planes
from Taiwan to the CIA's operational base in northeastern India
proved too cumbersome; thus the Nepalese proprietary was set up.
As the Tibetan operations were cut back and eventually halted
during the 1960s, this airline was reduced in size to a few planes,
heli~opters, and a supply of spare parts. Still, up to the late 1960s,
it flew charters for the Nepalese government and private organizations
in the area.
The CIA's Planning, Progamming, and Budgeting Staff back in
Langley believed that the airline's usefulness as an agency asset
had passed, and the decision was made to sell it off. But, for the
CIA to sell a proprietary is a very difficult process. The agency
feels that it must maintain the secrecy of its covert involvement, no
matter how moot or insignificant the secrecy, and it does not want
to be identified in any way, either before or after the actual transProprietary
Organizations • 147
action. Moreover, there is a real fear within the Clandestine
Services that a profit will be made, and then by law, the CIA
would be obliged to return the gain to the U.S. Treasury. The
clandestine operatives do not want to be troubled by the bureaucratic
red tape this would entail. It simply goes against the grain
of the clandestine mentality to have to explain and justify such a
transaction to anyone-let alone to the bookkeepers at the
Treasury.
Unloading Southern Air Transport in 1973 proved to be something
of a fiasco for the agency. Following past practice, the CIA
tried to sell it quietly to a former employee-presumably at an
attractive price-but the effort failed when three legitimate airlines
protested to the Civil Aeronautics Board. They complained that
Southern had been built up with government money, that it had
consequently received lucrative charter routes, and that it represented
unfair competition. When word of this prospective sale
got into the newspapers, the CIA backtracked and voluntarily
dropped Southern's CAB certification-greatly reducing the airline's
value but guaranteeing that the agency could sell it off in
complete secrecy.
And with the Nepalese airline, CIA found a buyer who had
previously worked for other agency air proprietaries. Since he was
a former "company man," secrecy was preserved. He was allowed
to purchase the airlines for a small down payment. Following
highly unorthodox business procedure, the airline itself served
as collateral for the balance due. A CIA auditor at headquarters
privately described the sale as a "giveaway," but this was the
way the Clandestine Services wanted the affair handled. The
new owner remained in Miami although all his airlines' operations
were in Nepal. Within a comparatively short period of time,
he liquidated all the airline's assets. He wound up with a considerable
profit, but the agency made back only a fraction of its
original costs. The Clandestine Services was pleased with the sale,
in any case, because it had been able to divest itself of a useless
asset in a way both to guarantee maximum security and to assure
the future loyalty and availability of the buyer. (
DELETED
148 THE CIA AND THE CULT OF INTELLIGENCE
DELETED
)
While the ethics of transactions of this sort are questionable,
conflict of interest laws presumably do not apply to the CIA; the
Central Intelligence Agency Act of 1949 conveniently states that
"The sums made available to the Agency may be expended without
regard to the provisions of law and regulations relating to the
expenditure of Government funds." In any case, the use of proprietary
companies opens up to the participants an opportunity to
make substantial profits while "living their cover."
The fact remains that CIA proprietaries are worth hundreds of
millions of dollars, and no one outside the agency is able to audit
their books. And, as will be seen later in this chapter, CIA headquarters
sometimes has only the vaguest notion about what certain
proprietaries are doing or what their assets are. Undoubtedly, there
are wide opportunities for abuse, and many of the people involved
in fields such as the arms trade, paramilitary soldiering, and covert
air operations are not known for high ethical standards. While
only a few agency career employees would take money for personal
gain, there is little to prevent officers of the proprietaries from
doing so, if they are so inclined.
As can be seen, the CIA's proprietary corporations serve largely
in support of special, or paramilitary, operations. Some, of course,
were established for propaganda and disinformation purposes and,
like most other covert assets, proprietaries can also be used on
Proprietary Organizations • 149
occasion to further the espionage and counterespionage efforts of
the Clandestine Services. In the main, however, there has been a
definite trend in the agency for more than a decade to develop the
air proprietaries as the tactical arm for the CIA's secret military
interventions in the Third World. The fleets of these CIA airlines
have been continually expanded and modernized, as have been
their base facilities. In the opinion of most CIA professionals, the
agency's capabilities to conduct special operations would be virtually
nonexistent without the logistical and other support provided
by the air proprietaries.
The performance of the Pacific Corporation and its subsidiaries,
Air America and Air Asia, in assisting the CIA's many special ops
adventures over the years in the Far East and Southeast Asia has
deeply impressed the agency's leadership. The exploits of the contract
air officers in that strife-ridden comer of the world have
become almost legendary within the CIA. Furthermore, the advantages
of having a self-sustaining, self-run complex which requires
no CIA funds and little agency manpower are indeed much
appreciated by the Clandestine Services.
Without the air proprietaries, there could have been no secret
raids into Communist China. There could have been no Tibetan
or Indonesian or Burmese operations. And, most important of
all, there could have been no "secret" war in Laos. Even many
of the CIA's covert activities in Vietnam could not have been
planned, much less implemented, without the assurance that
CIA airlines were available to support such operations. Thus, it
is small wonder that the agency, when it moved to intervene in the
Congo (and anticipating numerous other insurgencies on the continent),
hastily tried to develop the same kind of air support there
that traditionally was available to special operations in Asia. And
one can easily understand why the planners of the Bay of Pigs
operation now regret not having made similar arrangements for
their own air needs instead of relying on the U.S. armed forces.
150 THE CI A AND THE CU L T 0 FIN TEL L I GENe E
The Fabulous George Doole
Although the boards of directors of the air proprietaries are studded
with the names of eminently respectable business leaders and financiers,
several of the companies' operations were actually long in the
hands of one rather singular man, George Doole, Jr. Until his retirement
in 1971, Doole's official titles were president of the Pacific
Corporation and chief executive officer of Air America and Air
Asia; it was under his leadership that the CIA air proprietaries
blossomed.
Doole was known to his colleagues in the agency as a superb
businessman. He had a talent for expanding his airlines and for
making them, functionally if not formally, into profit-making concerns.
In fact, his proprietaries proved something of an embarrassment
to the agency because of their profitability. While revenues
never quite covered all the costs to the CIA of the original capital
investment, the huge contracts with U.S. government agencies
resulting from the war in Indochina made the Pacific Corporation's
holdings (CAT, Air America, and Air Asia) largely selfsufficient
during the 1960s. Consequently, the CIA was largely
spared having to pay in any new money for specific projects.
Some of the agency's top officials, such as the former Executive
Director-Comptroller and the chief of Planning, Programming,
and Budgeting, felt uncomfortable with the booming business
Doole managed, but they did nothing to change it. The Executive
Director once privately explained the inaction: "There are things
here better left undisturbed. The point is that George Doole and
CAT provide the agency with a great number of services, and
the agency doesn't have to pay for them." Among the other services
he provided was his ability as a straight-faced liar: asked by the
New York Times in 1970 whether his airlines had any connection
with the CIA, Doole said: "If 'someone out there' is behind all
this, we don't know about it." At that time Doole had been working
for the CIA for seventeen years, and for most of those years
had held a CIA "supergrade" position.
Doole's empire was formally placed under the CIA's Directorate
Proprietary Organizations • 151
of Support on the agency's organization chart, although many of
its operations were supervised by the Clandestine Services. But so
little was known inside CIA headquarters about the air proprietaries
which employed almost as many people as the agency
itself (18,000) that in 1965 a CIA officer with extensive Clandestine
Service experience was assigned to make a study of their
operations for the agency's top officials.
This officer spent the better part of a year trying to assemble the
relevant data, and he became increasingly frustrated as he proceeded.
He found that the various proprietaries were constantly
trading, leasing, and selling aircraft to each other;* that the tail
numbers of many of the planes were regularly changed; and that
the mixture of profit-making and covert flight made accounting
almost impossible. He finally put up a huge map of the world in a
secure agency conference room and used flags and pins to try to
designate what proprietaries were operating with what equipment
in what countries. This officer later compared his experience to
trying to assemble a military order of battle, and his estimate was
that his map was at best 90 percent accurate at any given time.
Finally, Helms, then Deputy Director, was invited in to see the
map and be briefed on the complexity of the airlines. A witness
described Helms as being "aghast."
That same year the Executive Committee for Air (Ex Comm
Air) was formed in order to keep abreast of the various air proprietaries.
Lawrence Houston, the agency's General Counsel, was
appointed chairman, and representatives were appointed from the
Clandestine Services, the Support Directorate, and the agency's
executive suite. But the proceedings were considered so secret that
Ex Comm Air's executive secretary was told not to keep minutes
or even notes.
In 1968, Ex Comm Air met to deal with a request from George
Doole for several million dollars to "modernize" Southern Air
Transport. Doole's justification for the money was that every major
airline in the world was using jets, and that Southern needed to
* The CAT jet that crashed on Taiwan in 1968 was on lease from
Southern Air Transport.
r 52 THE erA AND THE C U L T 0 F r N TEL L r GENe E
follow suit if it were to continue to "live its cover." Additionally,
Doole said that Southern should have equipment as effective as
possible in the event the agency had to call on it for future contingencies
in Latin America.
Previous to Doole's request, the agency's Board of National
Estimates had prepared a long-range assessment of events in Latin
America. This estimate had been approved by the Director and
sent to the President as the official analysis of the intelligence community.
The conclusions were generally that political, economic,
and social conditions in Latin America had so deteriorated that a
long period of instability was at hand; that existing American
policy was feeding this instability; and that there was little the
United States could do, outside of providing straight economic and
humanitarian assistance, to improve the situation. The estimate
strongly implied that continued open U.S. intervention in the
internal affairs of Latin American nations would only make matters
worse and further damage the American image in that region. *
At the meeting on Southern Air Transport's modernization request,
Doole was asked if he thought expanding Southern's capabilities
for future interventions in Latin America conformed with the
conclusions of the estimate. Doole remained silent, but a Clandestine
Services officer working in paramilitary affairs replied that
the estimate might well have been a correct appraisal of the Latin
American situation and that the White House might accept it as
fact, but that non-intervention would not necessarily become
official American policy. The Clandestine Services man pointed out
that over the years there had been other developments in Latin
America-in countries such as Guatemala and the Dominican
Republic-where the agency had been called on by the White
House to take action against existing political trends; that the CIA's
Director had a responsibility to prepare estimates for the White
* This estimate came much closer to recommending future American
policy than almost any other paper previously prepared by the Board of
National Estimates. The board member in charge of its preparation was a
former division chief and chief of station in the Clandestine Services. He
and his colleagues apparently hoped that the estimate would have a direct
bearing on future agency covert operations in Latin America.
Proprietary Organizations • 153
House as accurately as possible; but that the Director (and the
Clandestine Services and Doole) also had a responsibility to be
ready for the worst possible contingencies.
In working to strengthen Southern Air Transport and his other
proprietaries, Doole and the Clandestine Services were following
one of the basic maxims of covert action: Build assets now for
future contingencies. It proved to be persuasive strategy, as the
Director personally approved Doole's request and Southern received
its several million dollars for jets. *
The meeting ended inconclusively. Afterward the CIA officer
who had been questioning Doole and the Clandestine Services man
was told that he had picked the wrong time to make a stand.
So if the U.S. government decides to intervene covertly in the
internal affairs of a Latin American country--or elsewhere, for
that matter-Doole's planes will be available to support the operation.
These CIA airlines stand ready to drop their legitimate charter
business quietly and assume the role they were established for:
the transport of arms and mercenaries for the agency's "special
operations." The guns will come from the CIA's own stockpiles
and from the warehouses of Interarmco and other international
arms dealers. The mercenaries will be furnished by the agency's
Special Operations Division, and, like the air proprietaries, their
connection with the agency will be "plausibly deniable" to the
American public and the rest of the world.
Doole and his colleagues in the Clandestine Services have
worked hard over the years to build up the airlines and the other
assets for paramilitary action. Their successors will fight hard to
retain this capability-both because they want to preserve their
own secret empire and because they believe in the rightness of CIA
clandestine intervention in other countries' internal affairs. They
know all too well that if the CIA never intervened, there would be
little justification for their existence.
* When the CIA tried to sell off Southern in 1973, only three propellerdriven
planes were listed in its inventory. It is not known what happened to
the jets, but it is a safe bet that somehow they have been transferred to a
better-hidden CIA proprietary.

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