State Department:

U.S. Involvement in the American Club in Greece

NSIAD-88-207: Published: Sep 22, 1988. Publicly Released: Oct 25, 1988.

Additional Materials:


Joseph E. Kelley
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Office of Public Affairs
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Pursuant to a congressional request, GAO reviewed the Department of State's involvement with the defunct American Club in Greece.

GAO found that: (1) the U.S. Embassy in Athens, Greece, established the club as an employee association in 1948; (2) the club closed in 1985, leaving unpaid debts, including employee severance payments, social security payments, bank loans, and utility bills; (3) embassy staff did not comply with regulations regarding monitoring the club's activities; (4) a former embassy employee improperly personally cosigned a club loan; (5) the Embassy implied to Greek authorities that the cosigner had diplomatic immunity, although State regulations did not allow such immunity for employees' personal debts; and (6) Greek courts held the U.S. government responsible for the club's debts. GAO also found that: (1) State and the Department of Justice believe that the U.S. government will ultimately pay the club's debts, but the agencies disagree over the source of funding to settle the claims; and (2) State instituted procedures to reduce the government's potential liability for similar debts, including issuing a statement regarding support for private clubs and requesting annual statements from the clubs.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The lawsuit has been settled, and the settlement has been paid from State Department appropriations.

    Recommendation: The Secretary of State should resolve with the Attorney General which funds will be used to pay the out-of-court settlements of the specific cases involving the American Club in Greece.

    Agency Affected: Department of State

  2. Status: Closed - Implemented

    Comments: State has taken significant steps toward addressing the shortcomings identified in the GAO report. State has tightened its operational regulations and placed obligations and accountability on the ambassadors or their designees to oversee the associations' operations. Monitoring association activities is also one of the functions of State's Office of Commissary and Recreation Affairs.

    Recommendation: The Secretary of State should hold ambassadors or their designees responsible for monitoring employee associations, as provided in the Foreign Affairs Manual, and ensure that such activities are operating in a financially responsible manner.

    Agency Affected: Department of State

  3. Status: Closed - Not Implemented

    Comments: State believes that the current policy of considering waiver of immunity on a case-by-case basis is more appropriate. State asserts that a policy of blanket waiver would not serve the interests of the United States, State Department, or its personnel, who may be subjected to personal liability without due process of law or in retaliation against them as U.S. diplomatic representatives.

    Recommendation: The Secretary of State should remind specifically involved employees that State will waive their diplomatic immunity if they attempt to evade personal debts or other personal liability that may accrue to them in their capacity as officers in embassy associations.

    Agency Affected: Department of State


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