Cheng Asked: What are comments on 2004 Time Magazine article on Senate Intel Committee NOC compensation by cover companies?

Yes, I am aware in 2004 that the Senate Intelligence Committee considered an administrative process to allow NOCs to keep some form of compensation that cover companies may provide in excess of their normal CIA compensation and benefits To my knowledge nothing ever came of this and personally I do not believe it is a good idea to formalize this. It has been handled on a case-by-case basis within the CIA over the years

The Company has historically channeled most all NOC funding through the Cover Company. This includes the NOC’s CIA salary, housing allowance, dependent educational allowance, if any and any “office expenses” negotiated between the Company and the Cover Company. The Company even reimbursed to the Cover Company any expenses associated with Social Security tax (FICA) payments and medical insurance payments incurred. In some cases, the Company even “paid” the Cover Company a “fee” for their services. Of course, all payments and NOC funds channeled through the Cover Company were handled by a funding mechanism set up by the CIA so the ultimate source could not be determined. In cases where the Cover Company’s compensation package to the NOC exceeded that allowed by the CIA, the NOC reimbursed the excess funds to the CIA and the CIA, in turn, reimbursed the Cover Company.

Once in the field, when the NOC officer conducted legitimate Cover Company business, expenses were incurred by the Cover Company itself, not reimbursed by the CIA. There were, however, a few exceptions when the Cover Company was very small and otherwise not doing significant business in the host foreign country.

Now on a case-by -case basis, there have been instances where the Cover Company has provided certain non-monetary compensation to the NOC with the approval of the Company. In my own case, on one occasion when my Cover Company supervisor was exceptionally pleased with the result of a business deal, he asked me to go to the Philippines “with my family over Christmas” and while there to call on a few local companies for him. This, in effect, was a one-week vacation at a beach resort at Cover Company expense. Further, the Cover Company also gave me a very generous monthly entertainment allowance to take clients to dinner, golf, tennis and even on short regional trips throughout the 18 years I was their representative. That allowance packed on a lot of pounds on my waistline over the years.