B-212724, OCT 17, 1983, OFFICE OF GENERAL COUNSEL

B-212724, OCT 17, 1983, OFFICE OF GENERAL COUNSEL

PRECIS-UNAVAILABLE

MR. ROBERT M. MCGOWAN:

DEAR MR. MCGOWAN:

THIS IS IN RESPONSE TO THE LETTER OF JULY 9, 1983, WITH ENCLOSURES, TO THE PRESIDENT OF THE UNITED STATES, WHICH WAS SIGNED BY YOU AND BY MESSRS. CHARLES E. DEWITT, NORMAN E. HOFFMAN, PETER R. ROLLIN, AND JAMES M. MARTIN. YOU ARE CONCERNED WITH THE STATUS OF CERTAIN RETIRED MILITARY PERSONNEL EMPLOYED BY SAUDI ARABIAN AIRLINES. YOUR LETTER WAS FORWARDED TO US BY THE WHITE HOUSE ON AUGUST 12, 1983, FOR A RESPONSE TO YOU.

YOU INDICATE THAT YOUR CONCERN, AS A RETIRED MEMBER OF A UNIFORMED SERVICE, IS THAT DECISIONS OF THE COMPTROLLER GENERAL HAVE DETERMINED THE SAUDI ARABIAN AIRLINES TO BE AN ENTITY OF THE SAUDI ARABIAN GOVERNMENT. AS A RESULT, ANY RETIRED MILITARY MEMBERS WHO ACCEPT EMPLOYMENT WITH THE AIRLINES COME WITHIN THE PROHIBITION OF ARTICLE I, SECTION 9, CLAUSE 8, OF THE UNITED STATES CONSTITUTION. THAT CLAUSE PROHIBITS ANYONE WHO HOLDS AN OFFICE UNDER THE UNITED STATES FROM ACCEPTING COMPENSATION FOR EMPLOYMENT WITH A FOREIGN GOVERNMENT UNLESS THE CONGRESS CONSENTS. RETIRED OFFICERS OF THE UNIFORMED SERVICES ARE CONSIDERED AS HOLDING OFFICES UNDER THE UNITED STATES. THE CONGRESS HAS GRANTED ITS CONSENT TO ACCEPT EMPLOYMENT WITH A FOREIGN GOVERNMENT IF THE SECRETARY CONCERNED AND THE SECRETARY OF STATE APPROVE. PUBLIC LAW 95-105, AUGUST 17, 1977, 91 STAT. 844, 859- 860. WHEN EMPLOYMENT WITH A FOREIGN GOVERNMENT IS ACCEPTED BY A RETIRED REGULAR OFFICER WITHOUT THE REQUISITE APPROVAL, AN AMOUNT IS WITHHELD FROM HIS RETIRED PAY EQUAL TO THE AMOUNT RECEIVED FROM THE FOREIGN GOVERNMENT.

IT IS YOUR POSITION THAT THE SAUDI ARABIAN AIRLINES IS NOT AN ENTITY OF THE SAUDI ARABIAN GOVERNMENT; RATHER, YOU INDICATE THAT IT IS A PRIVATE CORPORATION AND NOT A GOVERNMENT ENTITY. IN SUPPORT OF THIS, YOU POINT OUT THAT THE AIRLINES IS REGISTERED WITH THE UNITED STATES GOVERNMENT AS A CORPORATION AND HAS A CORPORATE OFFICE IN KANSAS CITY, MISSOURI, AND TWO SATELLITE OFFICES IN OTHER STATES. YOU HAVE ENCLOSED WITH YOUR LETTER THE AIRLINES' BY-LAWS AND ANNUAL REPORT AS EVIDENCE OF ITS CORPORATE STATUS.

EMPLOYMENT WITH SAUDI ARABIAN AIRLINES BY RETIRED REGULAR OFFICERS OF A UNIFORMED SERVICE HAS BEEN THE SUBJECT OF DECISIONS OF THE COMPTROLLER GENERAL. HOWEVER, IN THOSE CASES A DETERMINATION OF THE AIRLINES' RELATIONSHIP TO THE GOVERNMENT OF SAUDI ARABIA WAS NOT IN ISSUE, BUT RATHER WAS STATED AS A FACT BY THE DEPARTMENT OF DEFENSE OFFICIALS REQUESTING THE COMPTROLLER GENERAL'S DECISION. PRIOR TO YOUR LETTER THIS ISSUE HAS NOT BEEN RAISED. FURTHERMORE, THE MATERIALS YOU HAVE SUBMITTED TEND TO LEND SUPPORT TO THE POSITION THAT THE SAUDI ARABIAN AIRLINES IS AN INSTRUMENTALITY OF THE SAUDI ARABIAN GOVERNMENT.

SPECIFICALLY, UNDER ARTICLE I OF THE BY-LAWS OF THE AIRLINES "THE SAUDIA ARABIAN AIRLINES CORPORATION IS A PUBLIC AND INDEPENDENT ORGANIZATION HAVING LEGAL CAPACITY AND ATTACHED TO THE MINISTRY OF DEFENSE AND AVIATION." ARTICLE IV PROVIDES THAT THE CORPORATION IS MANAGED BY A BOARD HEADED BY H.R.H. MINISTER OF DEFENSE AND AVIATION OR HIS NOMINEE. THE BOARD HAS EIGHT OTHER MEMBERS APPOINTED BY A RESOLUTION OF THE COUNCIL OF MINISTERS ON NOMINATION BY THE MINISTER OF DEFENSE AND AVIATION. THE EIGHT BOARD MEMBERS INCLUDE, AMONG OTHERS, THE DIRECTOR GENERAL OF CIVIL AVIATION AND REPRESENTATIVES OF RELATED GOVERNMENT UNITS. THE FACT THAT THE AIRLINES MAINTAINS CORPORATE OFFICES IN THE UNITED STATES OR ELSEWHERE HAS NO BEARING WHATEVER ON ITS OWNERSHIP OR CONTROL.

THE DIFFERENCE BETWEEN PRIVATE AND PUBLIC BUSINESS IN SAUDI ARABIA MAY NOT BE THE SAME AS IT IS IN THE UNITED STATES AND WE HAVE NO KNOWLEDGE OF THE FINANCIAL ARRANGEMENTS APPLICABLE TO THE AIRLINES. HOWEVER, THE FACT THAT THE AIRLINES IS "ATTACHED TO THE MINISTRY OF DEFENSE AND AVIATION" AND IS GOVERNED BY A BOARD OF DIRECTORS COMPOSED OF GOVERNMENT OFFICIALS WHO ARE MEMBERS OF THE BOARD BY VIRTUE OF THEIR POSITION IN THE SAUDI ARABIAN GOVERNMENT WOULD STRONGLY SUPPORT A CONCLUSION THAT THE AIRLINES IS CONTROLLED BY THE SAUDI ARABIAN GOVERNMENT.

IF SO, IT WOULD APPEAR THAT PERMISSION FOR EMPLOYMENT SHOULD BE OBTAINED AS PROVIDED BY PUBLIC LAW 95-105. UNTIL SUCH PERMISSION WERE OBTAINED, RECOUPMENT OF YOUR RETIRED PAY FOR THE PERIOD OF YOUR EMPLOYMENT WOULD BE REQUIRED UNDER EXISTING PRECEDENT.