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The CIA’s Classified Relationships With U.S. Publicly Traded Companies And The FCPA

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One of the more obscure portions of the Foreign Corrupt Practices Act states:

“With respect to matters concerning the national security of the United States, no duty or liability under [the books and records and internal controls provisions] shall be imposed upon any person acting in cooperation with the head of any Federal department or agency responsible for such matters if such act in cooperation with such head of a department or agency was done upon the specific, written directive of the head of such department or agency pursuant to Presidential authority to issue such directives.”

This provision further states:

“Each directive issued under this paragraph shall set forth the specific facts and circumstances with respect to which the provisions of this paragraph are to be invoked. Each such directive shall, unless renewed in writing, expire one year after the date of issuance. Each head of a Federal department or agency of the United States who issues such a directive pursuant to this paragraph shall maintain a complete file of all such directives and shall, on October 1 of each year, transmit a summary of matters covered by such directives in force at any time during the previous year to the Permanent Select Committee on Intelligence of the House of Representatives and the Select Committee on Intelligence of the Senate.”

Documents (albeit substantially redacted) found in the CIA’s Freedom of Information Act Electronic Reading Room shed light on this obscure FCPA provision while at the same time raise more questions.

In this 1978 memo the provision is described as follows:

“In order to maintain the confidentiality of the various types of ongoing classified relationships which CIA has with U.S. publicly held corporations, Congress, at the urging of OGC and OLC, adopted an amendment to the statute which essentially exempts a corporation from the Act’s disclosure requirements with respect to specific matters concerning the national security when directed to do so in writing by the head of a Federal agency responsible for such matters. However, Congress attached two conditions to an agency’s ability to issue such specific directives: a) Prior to the beginning of the issuance process, there must be a Presidential approval of the various categories of directives which will be subsequently issued; and b) On October of each year, the two Congressional Intelligence Oversight Committees must be given a summary of the matters covered by any directives in force during the previous year. Accordingly, in order to comply with the Act’s provisions, CIA must first compile and submit for White House approval a list of the types of CIA/publicly held corporation relationships which will be covered by specific directives in the future.”

The remainder of this document is largely redacted.

This additional 1978 document describes the origins of the FCPA provision as being “the potential impact on various covert CIA operational and procurement practices presented by the enactment of the Foreign Corrupt Practices Act of 1977.” Large portions of this document are also substantially redacted.

This 1980 document references “six particular categories of classified relationships between the Agency and publicly held corporations.” The document then outlines the following “pertinent data” what should accompany each specific directive.

“a) the name of the corporation involved together with the name and title of the corporate official to whom the directive will be issued;

b) a concise description of the relationship it has with CIA along with any background materials which may be useful in this regard;

c) the anticipated kinds of false statements it may be required to make on its corporate books and/or to its internal auditors; and

d) the name and extension of the Agency employee who is the designated point of contact with the corporation for the relationship in question.”

In terms of the specific directives to corporations, the document states:

“Under no circumstances will the corporation be allowed to retain the original directive, and a copy will only be left in those cases where the corporation both insists on having one and has approved facilities for the storage of classified material.”

While these rather limited (and substantially redacted) CIA documents relevant to the FCPA are interesting, they obviously raise more questions about the FCPA’s obscure “national security” provision.

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