Furthermore, when the foreign-aid program had been established in 1948, the debates had included discussion of the accounting on foreign aid and the necessity for availability of information to Congress.
At that time Senator Arthur Vandenberg, the Michigan Republican, commented:
“There are several points in the bill where it is provided that Congress is to be advised. In addition, we are creating ... the ‘watchdog’ committee [Joint Committee on Economic Cooperation] ... which will be entitled to all information of every character at all times.”
Despite the law and the intention of the lawmakers, the ICA had clamped the secrecy lid on, and kept it on. ICA also rejected GAO requests for information on foreign-aid spending in Formosa, India, Vietnam, Pakistan, France, Turkey, and others.
In its investigation of but one of the foreign-aid programs—the one in Laos—the Hardy subcommittee unearthed enough evidence of incompetence, laxity, mismanagement, and fraud to fill scores of pages of an official report.
The military program for a 25,000-man Laotian army, for example, arose from a political decision made by the State Department and contrary to the recommendations of the Joint Chiefs of Staff and the Defense Department. “Significant military opinion has suggested a force of 12,000 to 15,000,” the Hardy subcommittee reported.
The subcommittee also found favoritism, conflict of interest, and bribery in connection with ICA contracts in Laos. “Edward T. McNamara, [ICA] public works and industry officer, accepted bribes totaling at least $13,000 from Willis H. Bird and Gerald A. Peabody of the Universal Construction Co., in return for helping them secure lucrative contracts and overlooking deficiencies in their performance.”
The subcommittee reported dozens of incidents of minor officials’ showing favoritism toward firms that later employed them. One sharp charge was aimed at the man who headed the United States Operations Mission (USOM) during part of this period.
“Carter dePaul, former USOM director, sold his 1947 Cadillac upon his departure from Laos to Gerald A. Peabody, head of Universal, at an inflated price [about $3000]. Uncontroverted evidence indicates the vehicle was at that time inoperable, and that shortly thereafter it was cut up and the pieces dropped down an abandoned well. In the interim, it had stood rusting in front of Universal’s main office, where it was the subject of scornful amusement by Laotians and Americans alike.”
More shocking than the frauds was the evidence dug up by the subcommittee showing that U. S. Embassy officials in Laos and high ICA officials in Washington took no effective remedial action after receiving reports of corruption and mismanagement. Greater energy was obviously being expended in hiding the mess from Chairman Hardy and his investigators.