Representative Hardy was also chairman of his own Foreign Operations and Monetary Affairs Subcommittee. This subcommittee (of the House Government Operations Committee) was responsible for investigating the handling of more than 60 billion dollars in foreign aid by the State Department and the International Cooperation Administration (ICA).
The Hardy subcommittee had a small staff of a half dozen headed by John T. Reddan, the chief counsel. Under the best circumstances, Hardy knew that they would be able to look into only a few reports of mismanagement or fraud. But a little scrutiny should soon tell whether the internal investigations of ICA were being conducted in such a manner that the Congress could rely on ICA to police itself.
To find out how well ICA was performing, it was necessary to examine the files of complaints of fraud or mismanagement and to determine how these complaints were being followed up by ICA investigators. But the ICA barred Hardy’s committee staff members from examining the investigation files as well as the evaluation reports ICA was making on its own operations. Such files, Chairman Hardy was told, would contain “advice, recommendations and conclusions,” and, according to President Eisenhower’s May 17, 1954, letter, therefore, could not be released.
The investigation proceeded nonetheless. It was slow work, but with patience and persistence Chief Counsel Reddan, Counsel Richard Bray, Jr., Counsel Miles Q. Romney, and Investigator Walton Woods pieced together the information ICA had denied them. They got it by interviewing former government employees, examining the files of business firms with government contracts, and taking trips to other lands to personally examine foreign-aid spending.
The little country of Laos in southeast Asia was one of the first on which they concentrated. The picture was not pretty. The administration of U.S. aid was creating at least as many problems as it was trying to solve.
The aid program in Laos started in January 1955, when that nation was granted its full independence. Laos had been a part of French Indochina with Cambodia and Vietnam. Independence for Laos had meant that the United States took over the support of its entire military budget—41 million dollars in 1955, 47 million dollars in 1956, 43 million dollars in 1957, and 30 million dollars in 1958. Most of it went to support a 25,000-man army. The subcommittee later concluded that this military aid plus about 1.5 million dollars annually in economic assistance added up to the fact that the United States was “virtually supporting the entire economy.”
As early as June 1957, the subcommittee received reports indicating the foreign-aid program in Laos was being damaged by waste, inefficiency, and poor judgment. After preliminary inquiries, the formal investigation was started on April 10, 1958.
The requests for ICA files on Laos foreign-aid spending were rejected by ICA Director James W. Riddleberger. The ICA also barred Chairman Hardy from files on India, Bolivia, Brazil, and Guatemala.
A few months later, the ICA refused to let the GAO auditors see the files on Laos.
Chairman Hardy was irked with the frustration, but downright furious at what he considered to be a disregard of the law. Certainly the ICA reports on Laos should be made available to the GAO, for the Budgeting and Accounting Act of 1921 provided explicitly that all records of all departments must be made available to the GAO auditors.