I believe there is a witness list before you, and our first witness this morning will be Hon. James P. Goode, Acting Assistant Secretary of the Air Force for Manpower and Reserve Affairs.

Welcome, Mr. Secretary.

STATEMENT OF HON. JAMES P. GOODE, ACTING ASSISTANT SECRETARY OF THE AIR FORCE (MANPOWER AND RESERVE AFFAIRS

Mr. GOODE. Good morning, Mr. Chairman. I am James P. Goode, Acting Assistant Secretary of the Air Force, Manpower and Reserve Affairs. I appreciate the opportunity to appear before your subcommittee this morning to discuss Air Force open mess operations, rules, and regulations governing clubs and messes, the procedures we utilize to administer, supervise, and police our clubs and planned action to preclude future problems in club management.

At the secretarial level, we provide broad policy guidance to the Air Staff. The Air Staff, through several agencies, is responsible for issuing necessary regulations concerning the establishment, operation, and administration of the clubs. These procedures are implemented at every level of command.

Commanders of the major commands and installations have latitude in determining the need for a club and its scope of operations to include what is determined best for the people served. However, this latitude cannot permit deviations from the basic principles which require that the assets of these clubs be soundly managed and wisely expended to assure the maximum possible benefits for the membership.

All levels of command are expected to attain an effective club program, including strict accountability for funds and property. The only acceptable performance in the administration of clubs is a scrupulous adherence to the highest ethical standards by those involved.

The Air Force has 537 open messes which generate $282 million of business annually. With an operation of this magnitude, we expect and we encounter discrepancies and irregularities. However, to minimize these management problems, our club operational policies and procedures are continually being reviewed and revised.

Additionally, we audit, investigate, and inspect the operation of individual clubs to insure compliance with our directives and with sound business practices. As discrepancies and/or irregularities are discovered, corrective measures are applied. These management reviews and corrective action have been taking place as long as there has been a Department of the Air Force.

Periodically, we also make open-mess operations a special interest area for our auditors and investigators. Such was the case in September 1969. I have with me today representatives from the agencies involved with club operation at Headquarters, USAF. These gentlemen will discuss the findings of these special audits and investigations and the corrective actions we have taken or plan to take.

Major General Dupont, the Assistant Deputy Chief of Staff for Military Personnel, will discuss the responsibilities of the Deputy Chief of Staff, Personnel, and Lieutenant Colonel Fortescue of his staff will present a briefing on the overall operation of our clubs.

This briefing will review how the various staff agencies work together in club supervision. He will be followed by Mr. Row, the Associate Auditor General; Brigadier General Cappucci, the Director of Special Investigations, and a member of his staff, Mr. O'Donnell; and Major General Cheney, the Judge Advocate General. These gentlemen will provide some of the general information regarding personnel who are currently under investigation for alleged club irregularities.

Our briefings will include the administrative actions taken since last August, when we made a complete review of our club system. I know that you are interested primarily in the current club irregularities and the actions we have taken and planned to preclude recurrences. We shall strive to provide this information.

Additionally, we will attempt to provide your committee any additional information needed to pinpoint problem areas. I respectfully request that certain specific details of individual cases currently under investigation be withheld at this time. To discuss these details prior to final disposition of the cases could have an undesirable impact for at least two reasons: First, we could jeopardize the success of the legal proceedings, and, second, we could jeopardize the rights of the individuals involved.

Consequently, we also request that the appearance of any accused, suspect, or witness before the subcommittee be delayed until completion of pending or future court-martial proceedings, or such time as a suspect is cleared of culpability.

I will now turn these proceedings over to General Dupont.

Senator INOUYE. Mr. Secretary, before hearing from General Dupont, may I ask a few questions which I feel relate to the level of your command.

Who at the secretarial level is directly responsible for the oversight of the open-mess system and who reviews activities of the Air Staff to assure that basic policy decisions are being implemented?

Mr. GOODE. I would say my office is primarily responsible for the general supervision of policies relating to the open-mess management. Of course, I do have counterparts in our office. There is a counterpart in the Secretary's office. We have an Assistant Secretary, you know, for financial management, who would generally supervise audit activities that Mr. Row, the Associate Auditor General, is engaged in. We have the Assistant Secretary for I. & L., who is responsible for certain construction and installation activities, and there are-we have General Counsel in the Air Force who is also concerned with investigations of possible criminal activity.

So we do have some general staff assistants level, but the primary responsibility for supervision of officers' mess and NCO clubs woud be morale, generally under morale and personnel and be my responsibility.

Senator INOUYE. And what is the procedure whereby basic policy is made at the secretarial level? For example, if a program is to be established or eliminated, how would this policy be decided at your level? Mr. GOODE. Well, could you be a little more specific as to what particular policy?

Senator INOUYE. Let us say, for example, it was felt that it would be in the best interests of the United States to do away with slot machines.

Mr. GOODE. I see. Well, that would be a matter that would come under my jurisdiction.

Senator INOUYE. What sort of procedure would you follow?

Mr. GOODE. Well, as you know, slot machines are a very contentious problem. Slot machines have been made illegal in the United States, but they have not been illegal overseas. They generate a tremendous amount of income. They also create certain morale problems. There is no question that some individuals have not been judicious in the use of machines. They have also led to certain irregularities which will be discussed in some of our briefings. And since they involve a great deal of cash, they are a potential source of problems as far as accountability, audit, things of this sort.

However, they generate a tremendous amount of revenue. I believe it was some $26 million last year. It is very difficult to cut off these operations peremptorily, but this matter has been the subject of some

concern.

Senator INOUYE. Let us say that it has been found at the lower command level that it may be well for the Air Force to do away with slot machines. What procedure would you follow in making this a part of basic Air Force policy? Do you have committees that meet on such questions or are you the one that makes the final decision? Mr. GOODE. Yes.

Senator INOUYE. You are the one who has the final review of the decisions, if any?

Mr. GOODE. Well, the operation of the clubs in general is, of course, delegated down to the lowest level. We do have a council which is in charge of the distribution of central welfare funds that make periodic recommendations to the Chief of Staff of the Air Force involving the operations of certain funds and the Chief generally makes some of these decisions.

Now, we have relatively supervisory responsibility at the secretarial level as to the general operation of these activities, but we do not engage in the operational details, the day-to-day administration of the clubs. That is generally delegated down below.

The specific problem of slot machines has been the subject of constant concern and the Chief has indicated that he wants our procedures tightened up to assure that there is not any abuse or improper operation of the slot machines and any irregularities in their administration. But he has been reluctant to terminate completely the operation of the machines. That particular decision has been considered my office, and we have gone along with the Chief's recommendation to tighten up our procedures.

Senator INOUYE. Let us assume that your office issues a policy decision to prohibit certain types of shows on bases. Can the clubs carry on these shows in the face of a ban which was issued by your office?

What I am trying to ask is, Do you have absolute control over the organization and operation of these clubs?

Mr. GOODE. Oh, I see what you are talking about.

I believe the Secretary can issue a broad general policy guidance prohibiting certain types of shows, if he wishes to, and then it would be a responsibility for the commanders in the field to implement that policy and obey those instructions. And if they were violated, they

could be the subject of disciplinary action. We would take disciplinary action. We would have as a mechanism for determining whether there has been any violation of instructions emanating from the Secretary's office, the normal procedures which will be discussed in more detail of audits, inspections, and other things conducted by General Cappucci, and various other available staff inspection agencies, and if there are any improprieties or irregularities or disobedience of regulations, this would be grounds for proper disciplinary action.

Senator INOUYE. You note in your statement that individual commanders have wide latitude in making decisions.

Mr. GOODE. That is right.

Senator INOUYE. As a result of this probe, is there any evidence to show that certain commanders perform in such a manner that more direct central controls are desirable?

In other words, were the results of administration so uneven as to suggest that more direct controls would have resulted in better performance?

Mr. GOODE. I think our reviews did indicate that there were certain types of activities that did need tightening up. You mentioned slot machines. We found, for example, in USAFE, U.S. Air Forces in Europe, they have a very fine program which will be described in more detail. If you wish to prevent any discrepancies in operations you keep a check on the daily take, to identify significant variations that would lead to suspicion that there may be something wrong. They are very tightly supervised and controlled.

As a result of those procedures coming to the attention of higher headquarters, we did issue instructions at high level to have similar procedures made applicable world-wide as far as the operation of these things.

We have also issued command directives from the Chief's office, to all major commands concerning the problems involved as a result of notoriety that has been achieved in some of the press concerning the irregularities in some of the messes, to assure that existing procedures which we think are relatively adequate are assiduously followed.

We found for the most part there wasn't too much difficulty with our regulations and our procedures. The problem was that they weren't being followed in the field.

Senator INOUYE. What happened when the commander did not follow your instructions?

Mr. GOODE. Well, we have taken action to try to prevent recurrences of these things, to tighten up and to relieve individuals who have not been following their instructions and in certain cases where there has been gross disregard.

Senator INOUYE. Have these commanders been disciplined?

Mr. GOODE. The individuals, the supervisors who have been involved. There have been certain actions taken, yes. And General Cheney will discuss the details of these actions in more detail later.

Senator INOUYE. Would you suggest from the study made that greater centralization of controls by your office would be desirable? Mr. GOODE. It is possible that as a result of some of these reviews, we may consider some greater provisions at the secretarial level, but I am convinced for the most part the Secretary must rely upon the

integrity of his supporting commanders to achieve the compliance, the full compliance with these directives.

It is obviously impracticable to have too much centralized control in an operation of this magnitude. We have to have certain flexibility of operations. I think more of an audit procedure to test the compliance with existing regulations is probably more in order, perhaps a little more frequent inspections and audits could be invoked, but I would avoid overcentralizing the supervision of these clubs and compounding our problems.

Senator INOUYE. In your statement, you have indicated that special surveys have been made in the past. How often have these surveys been made, and how did they compare in scope and in results with the most recent surveys?

Mr. GOODE. Well, as you know, we do have continuous procedures that have been in operation in the normal course of events for a very thorough review of Air Force activities. The functions of the Inspector General of the Air Force is to supervise periodically the readiness of operational units, the degree of compliance with procedures, regulations that are current, and he has from time to time special items of interest as a result of special activity or matters coming to the attention of the Chief or the Secretary which are constantly reviewed and investigated.

He has all of the facilities at the various commands and their staffs plus his own special staff. In addition, we have other activities that are constantly engaged in supervising their own functional areas of responsibility such as the Auditor General in connection with financial matters, the budgetary reviews that are constantly made concerning funds and things of this sort, and personnel as far as the assignment of people and their compliance with morale and welfare regulations and things of this sort.

There are many staff officers constantly concerned with special aspects of their functional areas that are continually reviewed.

Now, in connection with the special survey that I referred to in September 1969, it was primarily concerned as will be described in more detail by Mr. Row with problems that result in administration of cash assets, and there was concern about whether our procedures were adequate, whether we had sufficient internal controls, for example, to safeguard against possible theft and pilferage. And that was a special subject that was reviewed and led to certain changes in procedures and recommendations which were made and which in the main were adopted and implemented as will be described.

Now, from time to time, as we come across certain types of special activities or certain cases demonstrating that there has been an irregularity which could have been corrected by the adoption of another auditing technique or procedure, and that is recommended to be adopted, it is adopted and applied uniformly throughout the Air Force.

But the degree of compliance with existing procedures is the responsibility of the Inspector General to check on periodically. He does this regularly as part of his duties.

Senator INOUYE. Because of the coincidence in time and schedule, I feel compelled to ask this next question. Why did the Air Force begin