B-44235, SEPTEMBER 21, 1944, 24 COMP. GEN. 241

B-44235: Sep 21, 1944

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THE FINANCIAL NEEDS OF WHICH CORPORATIONS WERE SPECIFICALLY PRESENTED TO THE CONGRESS IN THE BUDGET ESTIMATES UPON WHICH THE GENERAL APPROPRIATION (ACT OF JUNE 28. 1944) FOR THE OFFICE OF THE COORDINATOR WAS BASED. ALTHOUGH SAID CORPORATIONS WERE NOT MENTIONED BY NAME IN THE APPROPRIATION. 1944: I HAVE YOUR LETTER OF AUGUST 29. AS FOLLOWS: REFERENCE IS MADE TO SECTION 213 OF THE INDEPENDENT OFFICES APPROPRIATION ACT. SPECIFIC AUTHORIZATIONS WITH REGARD TO THE OBLIGATIONS AND EXPENDITURES OF SUCH CORPORATIONS HAVE BEEN INCLUDED IN THE APPROPRIATION ACTS. THE CORPORATIONS HAVE ENTERED INTO NUMEROUS LONG TERM AGREEMENTS WITH FOREIGN GOVERNMENTS AND THE FUNDS THUS AUTHORIZED. ARE NEEDED TO CARRY OUT THE COMMITMENTS MADE INCLUDING EMPLOYING THE NECESSARY PERSONNEL AND OBTAINING NEEDED SUPPLIES AND EQUIPMENT.

B-44235, SEPTEMBER 21, 1944, 24 COMP. GEN. 241

RESTRICTION AS TO EXPENDITURES, ETC., BY AGENCIES IN EXISTENCE MORE THAN ONE YEAR THE PROHIBITION IN SECTION 213 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1945, AGAINST THE USE AFTER JANUARY 1, 1945, OF APPROPRIATED FUNDS FOR THE EXPENSES OF ANY AGENCY WHICH HAS BEEN IN EXISTENCE FOR MORE THAN ONE YEAR, UNLESS SPECIFICALLY PROVIDED FOR BY THE CONGRESS, HAS NO APPLICATION TO PRECLUDE EXPENDITURES BY OR GRANTS OF FUNDS TO CORPORATIONS CREATED TO CARRY OUT THE PROGRAM OF THE COORDINATOR OF INTER-AMERICAN AFFAIRS, THE FINANCIAL NEEDS OF WHICH CORPORATIONS WERE SPECIFICALLY PRESENTED TO THE CONGRESS IN THE BUDGET ESTIMATES UPON WHICH THE GENERAL APPROPRIATION (ACT OF JUNE 28, 1944) FOR THE OFFICE OF THE COORDINATOR WAS BASED, ALTHOUGH SAID CORPORATIONS WERE NOT MENTIONED BY NAME IN THE APPROPRIATION.

COMPTROLLER GENERAL WARREN TO THE COORDINATOR OF INTER-AMERICAN AFFAIRS, SEPTEMBER 21, 1944:

I HAVE YOUR LETTER OF AUGUST 29, 1944, AS FOLLOWS:

REFERENCE IS MADE TO SECTION 213 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1945, ( PUBLIC LAW 358, 78TH CONGRESS, APPROVED JUNE 27, 1944), WHICH STATES THAT NO FUNDS SHALL BE MADE AVAILABLE TO OR USED TO PAY THE EXPENSES OF ANY AGENCY OR INSTRUMENTALITY IN EXISTENCE FOR MORE THAN ONE YEAR FOR WHICH THE CONGRESS HAS NOT SPECIFICALLY APPROPRIATED FUNDS OR SPECIFICALLY AUTHORIZED THE EXPENDITURE OF FUNDS.

SINCE THE FISCAL YEAR 1942, THIS OFFICE HAS HAD AUTHORITY IN ITS APPROPRIATION ACTS TO CREATE AND CAPITALIZE CORPORATIONS TO ASSIST IN CARRYING OUT ITS PROGRAMS. ALSO, SINCE THE BEGINNING OF THE FISCAL YEAR 1943, SPECIFIC AUTHORIZATIONS WITH REGARD TO THE OBLIGATIONS AND EXPENDITURES OF SUCH CORPORATIONS HAVE BEEN INCLUDED IN THE APPROPRIATION ACTS. THE CORPORATIONS HAVE ENTERED INTO NUMEROUS LONG TERM AGREEMENTS WITH FOREIGN GOVERNMENTS AND THE FUNDS THUS AUTHORIZED, INCLUDING THOSE SUMS ALREADY GRANTED TO THE CORPORATIONS, ARE NEEDED TO CARRY OUT THE COMMITMENTS MADE INCLUDING EMPLOYING THE NECESSARY PERSONNEL AND OBTAINING NEEDED SUPPLIES AND EQUIPMENT. THESE AUTHORITIES AND AUTHORIZATIONS ARE CONTAINED IN THE CURRENT APPROPRIATION ACT ( NATIONAL WAR AGENCY APPROPRIATION ACT, 1945, PUBLIC LAW 372, 78TH CONGRESS, APPROVED JUNE 28, 1944) UNDER THE HEADING " OFFICE OF THE COORDINATOR OF INTER-AMERICAN AFFAIRS" AS FOLLOWS:

"* * * CAUSING CORPORATIONS TO BE CREATED UNDER THE LAWS OF THE DISTRICT OF COLUMBIA, ANY STATE OF THE UNITED STATES, OR ANY OF THE OTHER AMERICAN REPUBLICS, TO ASSIST IN CARRYING OUT THE COORDINATOR'S PROGRAM AND CAPITALIZING SUCH CORPORATIONS: PROVIDED, THAT CORPORATIONS HERETOFORE OR HEREAFTER CREATED OR CAUSED TO BE CREATED BY THE COORDINATOR PRIMARILY FOR OPERATION OUTSIDE THE CONTINENTAL UNITED STATES SHALL DETERMINE AND PRESCRIBE THE MANNER IN WHICH THEIR OBLIGATIONS SHALL BE INCURRED AND THEIR EXPENSES ALLOWED AND PAID WITHOUT REGARD TO THE PROVISIONS OF LAW REGULATING THE EXPENDITURE, ACCOUNTING FOR AND AUDIT OF GOVERNMENT FUNDS, AND MAY, IN THEIR DISCRETION, EMPLOY AND FIX THE COMPENSATION OF OFFICERS AND EMPLOYEES OUTSIDE THE CONTINENTAL LIMITS OF THE UNITED STATES WITHOUT REGARD TO THE PROVISIONS OF LAW APPLICABLE TO THE EMPLOYMENT AND COMPENSATION OF OFFICERS AND EMPLOYEES OF THE UNITED STATES: * * *"

IT WILL BE NOTED THAT THESE AUTHORITIES AND AUTHORIZATIONS ARE GENERAL IN THE SENSE THAT THE VARIOUS APPROPRIATION ACTS DO NOT NAME THE CORPORATIONS INVOLVED.

THIS OFFICE HAS CAUSED FIVE CORPORATIONS TO BE CREATED, NAMELY, THE INSTITUTE OF INTER-AMERICAN AFFAIRS, INSTITUTE OF INTER-AMERICAN TRANSPORTATION, INTER-AMERICAN EDUCATIONAL FOUNDATION, INC., PRENCINRADIO, INC., AND INTER-AMERICAN NAVIGATION CORPORATION. IN EACH CASE THESE CORPORATIONS HAVE BEEN CREATED TO CARRY OUT PROGRAMS OF THE OFFICE IN THE OTHER AMERICAN REPUBLICS. IT IS TRUE THAT IN SOME CASES THE CORPORATIONS HAVE BEEN CAPITALIZED IN PART WITH FUNDS ALLOCATED TO THE OFFICE FROM THE EMERGENCY FUND FOR THE PRESIDENT; HOWEVER, IN EACH SUCH CASE THE PROGRAM OR PROGRAMS CARRIED OUT BY THE CORPORATIONS HAVE BEEN DISCUSSED SUBSEQUENTLY WITH THE HOUSE SUBCOMMITTEE ON DEFICIENCIES. IN ALL OTHER CASES THE CORPORATIONS HAVE BEEN CAPITALIZED FROM FUNDS APPROPRIATED TO THE OFFICE BY THE CONGRESS AND THE PROGRAMS TO BE UNDERTAKEN BY THE CORPORATIONS WERE SPECIFICALLY DISCUSSED WITH THE CONGRESS PRIOR TO THE TIME SUCH FUNDS WERE APPROPRIATED. FOR EXAMPLE, PAGES 981 TO 1003 OF THE HOUSE HEARINGS ON THE NATIONAL WAR AGENCIES APPROPRIATION BILL, 1945 RECORDED THE TESTIMONY GIVEN ON THE PROGRAM OF THE INTER-AMERICAN EDUCATIONAL FOUNDATION, INC. THE OBJECTIVES AND OPERATIONS OF WHICH AGREEMENTS WERE MADE, WERE TO BE MADE, THE AMOUNT EXPENDED IN EACH AND THE CONTRIBUTION OF EACH PARTICIPATING COUNTRY WERE SET FORTH. ON PAGES 1065 TO 1069 OF THE HEARINGS, STATEMENTS WERE GIVEN AT THE REQUEST OF MR. WIGGLESWORTH FOR THE INSTITUTE OF INTER-AMERICAN AFFAIRS, INTER-AMERICAN NAVIGATION CORPORATION AND THE INTER-AMERICAN EDUCATIONAL FOUNDATION, INC., SHOWING THE COMPLETE FINANCIAL STATUS IN RESPECT TO EACH ONE. THE COMMITTEE WAS ALSO FURNISHED WITH A COMPLETE STATEMENT OF THE OTHER TWO CORPORATIONS, PRENCINRADIO, INC., AND THE INSTITUTE OF INTER-AMERICAN TRANSPORTATION, BUT BECAUSE OF CERTAIN CONFIDENTIAL MATERIAL IN THIS INFORMATION, THESE WERE NOT PRINTED IN THE RECORD. THE TESTIMONY HAS AT ALL TIMES MADE IT VERY CLEAR AND THE CONGRESS HAS UNDERSTOOD THT THE FUNDS MADE AVAILABLE TO THESE CORPORATIONS WERE TO BE THE BASIS FOR INTERNATIONAL UNDERTAKINGS BY THIS GOVERNMENT CALLING FOR OPERATIONS EXTENDING OVER A NUMBER OF YEARS. (SEE HOUSE HEARINGS: SECOND DEFICIENCY APPROPRIATION BILL, 1941; FIRST SUPPLEMENTAL NATIONAL DEFENSE APPROPRIATION BILL" 943; NATIONAL WAR AGENCIES APPROPRIATION BILL, 1944; NATIONAL WAR AGENCIES APPROPRIATION BILL, 1945, AND SENATE HEARINGS: NATIONAL WAR AGENCIES APPROPRIATION BILL FOR 1945.)

THE BUREAU OF THE BUDGET IN ITS BULLETIN NO. 1944-45:2 DATED AUGUST 1, 1944 HAS ASKED THAT ESTIMATES OF APPROPRIATIONS OR LEGISLATION AUTHORIZING THE EXPENDITURE OF FUNDS BE SUBMITTED AS SOON AS POSSIBLE FOR ALL AGENCIES OR INSTRUMENTALITIES AFFECTED BY THE PROVISIONS OF SECTION 213 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1945, WHICH ARE EXPECTED TO CONTINUE TO FUNCTION BEYOND THE TIME PERMITTED UNDER THE SAID SECTION.

IN CONNECTION WITH THIS REQUEST, THIS OFFICE WOULD APPRECIATE YOUR ANSWERS TO THE FOLLOWING QUESTIONS. IN VIEW OF THE AUTHORITIES AND AUTHORIZATIONS (QUOTED ABOVE) GRANTED THIS OFFICE IN ITS APPROPRIATION ACTS, AND THE FACT THAT IT IS NOT BELIEVED THAT THE PROVISIONS OF SECTION 213 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1945 WERE DIRECTED TOWARDS GOVERNMENT CORPORATIONS CREATED UNDER SPECIFIC STATUTORY AUTHORITY AND CAPITALIZED WITH APPROPRIATED FUNDS FOR THE CARRYING OUT OF PROGRAMS DISCUSSED WITH AND APPROVED BY THE CONGRESS, WILL THE PROVISIONS OF SAID SECTION PREVENT (1) THE CORPORATIONS CREATED BY THIS OFFICE FROM EXPENDING ANY FUNDS AFTER JANUARY 1, 1945, WHICH WERE MADE AVAILABLE TO THE CORPORATIONS PRIOR TO JANUARY 1, 1945, AND (2) ANY FURTHER CAPITALIZATION OF OR GRANTING FUNDS TO SAID CORPORATIONS AFTER JANUARY 1, 1945 FROM FUNDS AVAILABLE TO THIS OFFICE?

IN CONNECTION WITH QUESTION (1) ABOVE, YOU ARE INFORMED THAT ONE OF THE CORPORATIONS, INTER-AMERICAN NAVIGATION CORPORATION, FILED A CONSENT OF DISSOLUTION WITH THE SECRETARY OF THE STATE OF DELAWARE ON FEBRUARY 25, 1944 AND WAS ISSUED A CERTIFICATE OF DISSOLUTION. UNDER THE LAWS OF THAT STATE, THIS CORPORATION MAY CONTINUE TO LIQUIDATE ITS ASSETS AND EFFECT SETTLEMENT OF CLAIMS FOR THREE YEARS FROM THE DATE OF DISSOLUTION. VIEW OF THESE FACTS, WOULD THIS CORPORATION BE PREVENTED, AFTER JANUARY 1, 1945, FROM MAKING PAYMENTS IN CONNECTION WITH THE SETTLEMENT OF ITS AFFAIRS? WOULD THE ANSWER TO THIS QUESTION APPLY AS WELL TO A CORPORATION WHICH MIGHT OBTAIN A CERTIFICATE OF DISSOLUTION SOMETIME BETWEEN NOW AND JANUARY 1, 1945?

IN CONNECTION WITH QUESTION (2) ABOVE, YOU ARE INFORMED THAT, TO DATE, THE CORPORATIONS HAVE BEEN CAPITALIZED EITHER BY THE PURCHASE OF CAPITAL STOCK ON THE PART OF THE COORDINATOR, AS AGENT FOR THE UNITED STATES, OR BY GRANTS OF FUNDS (SEE DECISION B-24827 OF THE COMPTROLLER GENERAL DATED APRIL 3, 1942). THE CONTRACT AUTHORITY OF $2,500,000 CONTAINED IN THE CURRENT APPROPRIATION ACT WAS ESTIMATED, JUSTIFIED, AND OBTAINED FOR THE SPECIFIC PURPOSE OF FURTHER CAPITALIZING THE INTER-AMERICAN EDUCATIONAL FOUNDATION, INC. WOULD IT BE NECESSARY TO OBTAIN FURTHER AUTHORITY FROM THE CONGRESS IN ORDER TO EFFECT THIS ADDITIONAL CAPITALIZATION OF THE CORPORATION AFTER JANUARY 1, 1945?

WE WOULD REGARD IT AS A MATTER OF THE MOST SERIOUS CONSEQUENCE IF ANY ACTION SHOULD BE TAKEN THAT WOULD QUESTION, IF ONLY TEMPORARILY, THE ABILITY OF THESE CORPORATIONS TO CARRY OUT AGREEMENTS ENTERED INTO WITH THE VARIOUS GOVERNMENTS IN LATIN AMERICA. THESE AGREEMENTS HAVE BEEN ENTERED INTO IN GOOD FAITH; THE OTHER GOVERNMENTS ARE CONTRIBUTING LARGE SUMS OF MONEY, PERSONNEL, EQUIPMENT AND SERVICES; AND WORK IS BEING CARRIED OUT UNDER THESE BILATERAL AGREEMENTS IN EIGHTEEN COUNTRIES. THE PROGRAMS HAVE BEEN EXPLAINED IN DETAIL TO THE APPROPRIATION COMMITTEES EACH YEAR. THE POSITION OF THE UNITED STATES IN LATIN AMERICA WOULD BE GREATLY JEOPARDIZED IF ANY DOUBT AS TO THE SANCTITY OF THIS GOVERNMENT'S WRITTEN OBLIGATIONS SHOULD BE RAISED. WE SHOULD, THEREFORE, APPRECIATE AS PROMPT A REPLY AS POSSIBLE TO THE QUESTIONS ASKED IN ORDER THAT THESE AGREEMENTS MAY BE CARRIED ON AFTER JANUARY 1, 1945 WITHOUT INTERRUPTION.

SECTION 213 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1945, APPROVED JUNE 27, 1944, 58 STAT. 387, PUBLIC LAW 358, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

AFTER JANUARY 1, 1945, NO PART OF ANY APPROPRIATION OR FUND MADE AVAILABLE BY THIS OR ANY OTHER ACT SHALL BE ALLOTTED OR MADE AVAILABLE TO, OR USED TO PAY THE EXPENSES OF, ANY AGENCY OR INSTRUMENTALITY INCLUDING THOSE ESTABLISHED BY EXECUTIVE ORDER AFTER SUCH AGENCY OR INSTRUMENTALITY HAS BEEN IN EXISTENCE FOR MORE THAN ONE YEAR, IF THE CONGRESS HAS NOT APPROPRIATED ANY MONEY SPECIFICALLY FOR SUCH AGENCY OR INSTRUMENTALITY OR SPECIFICALLY AUTHORIZED THE EXPENDITURE OF FUNDS BY IT. * * *

THAT SECTION WAS PROPOSED AS AN AMENDMENT TO THE INDEPENDENT OFFICES APPROPRIATION BILL H.R. 4070 BY SENATOR RUSSELL, WHO STATED THE PURPOSE THEREOF AS FOLLOWS (QUOTING FROM PAGE 3119, VOL. 90, CONGRESSIONAL RECORD, 78TH CONGRESS, 2ND SESSION):

MR. PRESIDENT, THE PURPOSE OF THE COMMITTEE AMENDMENT, WHICH IS APPARENT FROM A READING THEREOF, IS TO RETAIN IN THE CONGRESS THE POWER OF LEGISLATING AND CREATING BUREAUS AND DEPARTMENTS OF THE GOVERNMENT, AND OF GIVING TO CONGRESS THE RIGHT TO KNOW WHAT THE BUREAUS AND DEPARTMENTS OF THE GOVERNMENT, WHICH HAVE BEEN CREATED BY EXECUTIVE ORDER, ARE DOING.

REGARDLESS OF WHAT AGENCIES MIGHT BE AFFECTED, THE PURPOSE OF THIS AMENDMENT IS TO REQUIRE THEM ALL TO COME TO CONGRESS FOR THEIR APPROPRIATIONS AFTER THEY HAVE BEEN IN EXISTENCE FOR MORE THAN A YEAR.

THE APPROPRIATION (58 STAT. 537) FOR SALARIES AND EXPENSES OF THE OFFICE OF THE COORDINATOR OF INTER-AMERICAN AFFAIRS CONTAINS EXPRESS AND SPECIFIC AUTHORITY FOR YOUR OFFICE TO PAY ALL NECESSARY EXPENSES IN CREATING AND CAPITALIZING CORPORATIONS. THE ESTIMATES SUBMITTED TO THE CONGRESS AS A BASIS FOR THIS APPROPRIATION AND SHOWN IN THE WAR SUPPLEMENT TO THE BUDGET FOR 1945, PAGES 168 TO 172, SPECIFICALLY SET FORTH THE AMOUNTS BELIEVED REQUIRED FOR THE ACTIVITIES OF THE FIVE CORPORATIONS TO WHICH YOUR SUBMISSION REFERS, AND SUCH ACTIVITIES AND ESTIMATES WERE FULLY DISCUSSED BEFORE THE SUBCOMMITTEE OF THE HOUSE COMMITTEE ON APPROPRIATIONS, AS INDICATED IN YOUR SUBMISSION. THE CONGRESS HAS THUS SPECIFICALLY APPROPRIATED FUNDS INCLUDING THE AMOUNTS REQUIRED FOR THE FIVE CORPORATIONS, AS REPORTED TO THE CONGRESS IN THE BUDGET AND IN THE HEARINGS, SUPRA, NOTWITHSTANDING THAT THE PARTICULAR CORPORATIONS ARE NOT DESIGNATED BY NAME IN YOUR APPROPRIATION ACT. IF SAID SECTION 213 OF THE INDEPENDENT OFFICE APPROPRIATION ACT BE CONSTRUED AS REQUIRING THAT THE CONGRESS APPROPRIATED FUNDS FOR THE EXPENSES OF THE FEDERAL AGENCIES OR INSTRUMENTALITIES THEREIN REFERRED TO BY SPECIFICALLY NAMING THEM IN THE APPROPRIATION IT WOULD IN EFFECT NULLIFY THE STATUTORY PROVISIONS QUOTED IN YOUR LETTER FROM THE APPROPRIATION FOR YOUR OFFICE AUTHORIZING YOUR OFFICE TO CREATE AND FINANCE CORPORATIONS AND APPROPRIATING MONEYS THEREFOR WHICH, AS ABOVE INDICATED, WERE BASED IN PART UPON ESTIMATES FOR THE NAMED CORPORATIONS IN QUESTION. IT IS AN ESTABLISHED RULE OF STATUTORY CONSTRUCTION THAT ACTS OF THE CONGRESS ARE NOT TO BE CONSTRUED TO PRODUCE ABSURD RESULTS. ARMSTRONG PAINT AND VARNISH WORKS V. NU- 1ENAMEL, 305 U.S. 315.

ACCORDINGLY, BOTH QUESTIONS 1 AND 2 POSED IN THE SIXTH PARAGRAPH OF YOUR LETTER ARE ANSWERED IN THE NEGATIVE, WHICH ANSWERS EQUALLY ARE APPLICABLE TO LIQUIDATION EXPENSES OF ANY OF THE NAMED CORPORATIONS, EITHER BEFORE OR AFTER JANUARY 1, 1945, FROM CURRENT APPROPRIATIONS OTHERWISE AVAILABLE THEREFOR. NO FURTHER AUTHORITY FROM THE CONGRESS WOULD APPEAR NECESSARY TO PROVIDE ADDITIONAL CAPITALIZATION AFTER JANUARY 1, 1945, TO THE NAMED CORPORATIONS PREVIOUSLY CREATED BY YOUR OFFICE, THE FINANCIAL ACTIVITIES OF WHICH WERE INCLUDED IN THE BUDGET ESTIMATE SUBMITTED TO THE CONGRESS.