
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, September 25, 1995                   TAG: 9509250062
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-4   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

CASH SURPLUS DISCOVERY CAUSES CIA TO ORDER CHANGES IN SPY AGENCY

The Central Intelligence Agency director ordered changes at a secret government organization that manages the nation's spy satellite program after learning it had built up a huge cash reserve without informing overseers, a CIA official said Sunday.

By charging Congress in advance for multiyear, billion-dollar programs while spending on contracts occurred at a more leisurely pace, the National Reconnaissance Organization apparently accumulated as much as $1.7 billion.

Neither the Pentagon, CIA nor Congress was informed of the cash surplus, but a CIA official, who spoke on condition of anonymity, said there was no ``subterfuge'' at the NRO.

``I'm not trying to be dismissive of the problem, but it is more a question of proper financial management procedure than anything illicit or untoward,'' the official said.

CIA Director John M. Deutch began an inquiry into the NRO's finances in June and ordered changes in its bookkeeping and management. A new chief financial officer for the NRO is being installed.

``It's a matter of making sure that the budgetary process is clearer in terms of how money is spent, when, and what accounts it is in. It's a matter of clarifying the budgetary process for improved oversight,'' the CIA official said.

The Washington Post, citing unidentified Capitol Hill sources in Sunday editions, said the NRO's cash surplus could be as high as $1.7 billion. Other sources, however, told the newspaper the total could be less than $1 billion. The CIA official interviewed Sunday refused to specify the dollar amount.

The funds were discovered after the Senate Intelligence Committee raised questions more than a year ago about a new $300 million headquarters the NRO was building in suburban Virginia.

The committee determined that the agency was using base operating funds it already had without seeking a specific appropriation for the building.

NRO's funding is part of the Pentagon budget, but many of the agency's intelligence programs are under CIA supervision.

by CNB