0Gc 7S- SUi----]

DDIA Regrstry ,1 q -78cowl 2Y-6,991__SECRET

3 1 AUG 1978

MEMORANDUM FOR: Deputy Director for OperationsDeputy Director for Administration

:Chief, Soviet/East European Division

SUBJECT : Liquidation Plan for DDO OperationalActivity PDDYNAMIC

1. Action Requested: Approval of the attachedLiquidation Plan for Operational Activity PDDYNAMIC.

2. Background: PDDYNAMIC is a Ukrainian-languagepublisher and distributor with the main office inNew York City (Prolog Research Corporation) and the publishingand operational offices in Munich, Germany (Ukrainian Societyfor Studies Abroad). The association has been funded by theAgency since 1949. Our objective is to distance ourselvesfrom the management of the company for operational securityreasons, while continuing to maintain our support of theActivity through a noncontrolled subsidy.

The Agency will retain its role of funding thePDDYNAMIC activity, which will be accomplished with fundstransferred to the company's account by OF/MD upon requestfrom SE Division. The assets of the company have anestimated market value of less than $10,000. The stockcertificates held by OF/CSAD/PSB will be returned to the'company for safekeeping when liquidation is completed.

3. Recommendation: The attached Liquidation Planhas been concurred in by the appropriate Agency componentsand is recommended for your approval.

DECL ASSIFIEDAND RELEASED BYCENTRAL INT ELLIGENCE AGENCYSOURCESMETHODSEXEMPTION3B28 (:—NAZIWARCRIMESDISCLOSUREACTDATE 2007

AttachmentsA. Liquidation PlanB. Concurrence Sheet

E2 IMPDETCL BY C:-

FROM

SECRET

Date

SECRET

2

APPROVED:

By the Direction of the DDA

:I]

SSA/DDA V

By the Direction of the DDO

C/EPDS

17 007 1978

SECRET

SECRET

LIQUIDATION PLAN FOR SE DIVISION OPERATIONAL ACTIVITY PDDYNAMIC

1. Terms of the Plan: The provisions of thisLiquidation Plan apply to the dissolution of the Agency'sproprietary relationship with PDDYNAMIC.

2. Background: PDDYNAMIC is a Ukrainian-languagepublisher and distributor with the main office in New York City(Prolog Research Corporation) and the publishing andoperational office in Munich, Germany (Ukrainian Society forStudies Abroad). The Agency has been funding this activitysince 1949 to support covert action operations. The New Yorkoffice is incorporated under the laws of the State of New Yorkas a commercial taxable enterprise with stock issued (theshareholders are employees of the company) and the Munich officeis a non-profit association certified for operating in Germany.

3. Approval for Termination: SE Division recommendationfor termination of the Agency's proprietary role in PDDYNAMIC,dated 9 June 1978, was approved by the ADDO on 10 June 1978.

4. Financial Statements: Financial statements as of30 June 1978 are attached. Statements for the period ending30 September 1978 will be provided to the Office of Financewhen liquidation and transfer are completed.

5. Method of Liquidation: Agency proprietary interestin PDDYNAMIC will be liquidated by returning the signed stockcertificates to the PDDYNAMIC stockholders. We will alsotransfer the PDDYNAMIC pension plan managed by L: a to anoutside insurance firm so that PDDYNAMIC can deal with themdirectly. Severance payments will be made to the New Yorkemployees (two weeks' pay for each year's service not to exceedone year's salary) when liquidation completed and funds aremade available.

6. Disposition of Assets: Assets will remain in placeas part of this continuing Activity.

7. Final Audit: Activity PDDYNAMIC is scheduled forAudit in early October 1978.

8. Accounting and Write-Off: The Office of Finance isauthorized to accept the October 1978 financial statements forrecording in the Agency's system of accounts.

,SECRET

Date

5-4,1-1(11

Date

I SEP l97d

Kirector of Finance •

Central Coveiataff Date4 OCT 1978

1 2 OCT 197

767

Office

SECRET

CONCURRENCE SHEET

:3 of General Counsel

6 SEP 191B

Office of Comptroller Date

Director of Logistics Date

* On the basis that the Activity will continue operations andsupport Agency interest rather than be terminated in thenormal sense, the write-Off of property assets is authorizedas an operational expenditure to the Project.

SECRET

E2 IMPDETCL BY(1_

...SECRET

SECRET

0 JUN 1978

MEMORANDUM FOR: Acting Deputy Director for Operations

FROM

:Chief, Soviet/East European Division

SUBJECT Liquidation of PDDYNAMIC as aProprietary Activity

1. This memorandum recommends approval to liquidatePDDYNAMIC (publisher and distributor of Ukrainian-languagematerial) as a proprietary and to continue this specialactivity as a noncontrolled subsidy.

2. PDDYNAMIC is a Ukrainian-language publisher and dis-tributor with the main office in New York City (Prolog ResearchCorporation) and the publishing and operational office inMunich, Germany (Ukrainian Society for Studies Abroad).The proprietary leaders were part of a Ukrainian undergroundcouncil established in the Ukraine in 1944 who were sentto the West after World War II to establish a foreignrepresentation and attempt to obtain help from Western powers.The Agency established a relationship with the council membersin 1949 for use in "early warning" operations. After theroll up of the Ukrainian underground in 1953, the groupestablished Prolog Research Corporation. The Agency hasbeen funding this activity since that date for covert actionoperations. The New York office is incorporated under thelaws of the State of New York as a commercial taxableenterprise with stock issued (the shareholders are employeesof the company who have endorsed blank stock certificatesissued in their names, which are held in OF/CSAD/PSB forsafekeeping); the Munich office is a non-profit associationcertified for operating in Germany.

3. The Agency's guidance and management of this activityis through the activity's president who is a wittingassociate. The activity currently has a staff of 12 employees(10 in New York and 2 in Germany) of which four in New Yorkare officially witting of Agency support. The assets of thecompany have an estimated market value of less than $10,000.

APPROVED:

/fr/7-8perationseputy 'rector o

SECRET

2

4. This activity publishes a monthly journal(Suchasnist) with a press-run of 2,000 copies and a quarterlyInformation Bulletin with a press-run of 2,000 copies. Inaddition, books (the majority of which are by Soviet Ukrainianauthors who are unable to get their works published internally)and pamphlets are published by the activity. During a12-month period approximately 25,000 items of activity-produced literature are distributed to the Soviet Ukraine.This material is highly regarded by the recipients.

5. Our objective in changing PDDYNAMIC from a proprietaryto a noncontrolled subsidy is to further distance ourselvesfrom the management of the company for operational securityreasons while continuing to support their operations. Thefollowing changes need to be accomplished to effect anorderly transition:

• A. Return the signed stock certificates to thecompany shareholders.

B. Tran c fer the PDDYNAMIC pension plan managedto an outside insurance firm so

that PDD AMIC can deal with them directly.

C. Make severance payments to the New Yorkemployees (two weeks' pay for each year'sservice not to exceed one year's salary).

• This step is a safety measure to removeclaims in the future from PDDYNAMIC employeesfor unpaid benefits.

D. Finally, we plan to relocate the New Yorkheadquarters to Munich, Germany. This willsimplify cover and minimize overhead costs.

SECRET

E2 IMPDETCL C.

SECRET

SECRET cowr

26 JUA 19,7

MEMORANDUM FOR: ComptrollerDeputy Director for Operations

Chief, Soviet/East European Division

Acting Chief, Evaluation & ProgramDesign Staff

Request for Allocation of FY 1978Year-End Savings

1. This memorandum recommends your approval to increase .PDDYNAMIG's FY 1978 funding by re-programming DDO FY 1978year-end savings. The allocation of these funds now willenhance SE Division's . management of this activity.

2. On 20 June 1978 the Special Coordination Committeereviewed and endorsed the increase in FY 1978 funding forOperational Activity PDDYNAMIG to be used to relocate theHeadquarters of the Ukrainian emigre organization from theU.S. to Munich, Germany, to compensate for loss in dollarpurchasing power, and to include a modest increase in theUkrainian-lananage publishing and distribution program. Werequest f: _lbe added to PDDYNAMIC FY 1978 approvedfunding evei: (A)C7, to relocate the Headquartersin Munich, Germany and (B) r- -1 to offset loss in dollarpurchasing power and fund a'fiode -gt increase in publishingand distribution.

3. This activity is part of the SE special activitiesprogram recently revalidated by the SCC and the President.The requested funds do not represent any increase in theoperational level, and do not require further policy approvalor Congressional notification.

FROM •

VIA :

SUBJECT :

r---------,...7:,---.F,T,TF.,7-----„-;-.---,„--,---L-------1 . :;.N31 7.iVE 1:ila t-P.:■ 7iN',',E :::,:.:7,0.ES

i...) NEfHODS ;.'41/1):..V.D,

2 9 JUN )978

Date

Cdmptroller

DDO/SE/SA/C_

Distribution:

Date

11:pas (23 Jun 78)

3 JUL 1978

- Addressees (to be returned- Comptroller- Executive Registry- DDO- ADDO- DDO Registry- AC/EPS- C/SE- SE/BF

1-SE/SA/Memo Chrono1 - SE SA/7DYNAMIC Development El Pläns File—

to C/SE)Original11111111

/ae).

SECRET

2

CONCUR:

John H. stein /Deputy Director for Operations

APPROVED:

SECRET

SECRET

18 November 1977

MEMORANDUM FOR THE RECORD

FROM : C-C/EPDS/COMPT/MRB

SUBJECT : Operational Activity PDDYNAMIC - FY 78 Renewal

REFERENCE: Memorandum for the ADDO from C/EPDS, dated14 November 1977; Subject: FY 1978 Renewal forActivity PDDYNAMIC

1. On 16 November 1977 the ADDO approved the FY 1978renewal of Operational Activity PDDYNAMIC in the amount of$230,000 rather than theC_ _Orequested.

2. The referenced EPDS memorandum noted that only(1 ') was available in the SE Division budget for thisactivity and recommended that it be approved for thatbudgeted amount. The ADDO concurred in the recommendationwith the comment that an amendment above the budget levelof C: could be submitted at a later date when theSCC issue is resolved.

err pry.

/2 7?

.7-1 9 /7 7 22 Sept 77 29 Sept 77

IN OUT

PERIOD

FROM TO

1 Oct 77 30 Sept 78

AMT THIS ACTION

FY

C--

19 78

(-

TOTAL FUNDS AUTHORIZATION

DA177

ADDO csi

)1-EXEMPT FROM

COMPARTMENTEDP/S REVIEW

P/S REVIEW

---1:10

2

(5)FORM 8148 OBSOLETE PRENIOUS10 . 75 EDITIONS SECRET E2, IMPOET CL. BY: 357737

OPERAIIONALII

1

ITY ACTIONPDDYNAMIC

TYPE OF ACTION F I /C lxxi OTHER

NEW OPACT

APPROVAL

DIVISION

Soviet/East European

OBJECTIVE

A.2AMENDMENT

NO.

FIELD STATION' TARGET COUNTRY

RENEWAL

FY 19 78BRANCH

SE/SAG

DESK

CA

EXTENSIONCASE OFFICER DATE

12 Sept 77

TERMINATIONROOM NO.

3D0119

BUILDING

HQSTELL

EXT.

RED BLACK

1073 611INTENDED SOLELY FOR COL-LECTION PER SEC 662 OFFOR. ASSIST. ACT

NOT INTENDED SOLELY FOR COLLECTION

PER SEC 662 OF FOR. ASSIST. ACT

NOTE ATTACH COPY OF DCI CERTIF CATION OF COMPLIANCE WITH SEC 662 OFFOR. ASSIST. ACT WHERE ACTIVITY IS NOT INTENDED FOR COLLECTION

CONCURRENCES OF DIVISIONS

MEMOATTACHED

ORGANIZATIONAL

ELEMENT TYPED NAME (and Signature).40

/ SE/ SAG • 1_ 79 .4.2,_ 12 S.F_P W7

C/SE/BF

C/SE/OSGPlans Officer

DC/SE

DATES

OUT YES NO

C/SE

---3 /4( Yee P70C-414'......) 15 sEp 1971—L)

CONCUHHLNLES OF OTHER COMPONENTS

(Type in Organizational Element and Name Below Onlywhen Concurrence Obtained by Originating Element.)

DATE

YES

MEMOATTACHED

NO

With recommendations .contained in the

Evaluation & Program Design Staff's memorandum

APPROVAL

4C/CAS

C/CCS/PRG

C/EPDS/EG

EPDS/COMPT

C/EPDS

Signed) g::A / 1

3/ 2 7 OCT 1977

2-4.,/ 7 7

APPROVING AUTHORITY(Tit/ & Signature) FOR DDO USE ONLY

(..,:/r((/'77

•

C-1-\ •••

E-2 IMPDET.CL BYL

1 4 NOV 1977

MEMORANDUM FOR: Associate Deputy Director for Operations

PROMChlei, Evaluation & Program Design Staff

SUBJECT FY 1978 Renewal of Activity PDDYNAMIC

1. Action Requested: SE Division requests renewal ofActivity PDDYNAMIC for FY 1978 in the amount of C.although only r _D is 'available in the SE Divisionbudget for this activity. This Staff recommends thatPDDYNAMIC be approved for the budget amount of 0.

2. Background: Activity PDDYNAMIC supports PrologResearch Corporation, located in . New York, the publishingand operational . element of the Ukranian Liberation Group.An affiliate in Munich publishes a political-literarymagazine, books, pamphlets and leaflets which are infil-trated into the USSR for clandestine distribution or passedto official Soviet representatives or travelers abroad.Prolog activities and publications are •designed to provideintellectual and moral support to those Ukranians insideSoviet Ukraine who seek moderation of the Soviet politicalsystem.

3. Four disseminations resulted from contacts by aPDDYNAMIC asset with Ukranian travelers to the Soviet Union.

.A PDDYNAMIC asset in Munich, who is in touch with identifiedintelligence officers in the Chinese People's RepublicEmbassy in Bonn, passed Prolog materials to these contactswhich was later published in the Peking Review. The Prologgroup has also continued the effort begun in FY 1977 toextend their contacts and cooperation with other nationalminority groups abroad who are attempting to contact andinfluence their compatriots inside the Soviet Union.

4. A proposal before the SCC Special Activities WorkingGroup which calls for expansion of this program has beenreferred to the State Department for preparation of a paperdefining policy on minorities in the USSR. Should thisexpansion eventually occur, SE Division has plans to take-initial steps to relocate the headquarters of Prolog fromNew York to Munich and ta change the funding of the PDDYNAMIC

activity from proprietarystatus to that of a non-controlledSubsidy to simplify cover problems and minimize overheadcosts.

6. Staff Position: The Evaluation and Program DesignStaff recommends nnrnval of this renewal request at the

.budgeted level of <1, ,Z7 The Central Cover Staff concursin this recommendation. Chief, Covert Action Staff advisesthat this activity is in accordance with the provisions ofSection 662 of the Foreign AssistanceAct.

, . /

CONCUR:

1. As submitted

2. With recommendations Contapie Paragraph 1 ofthe EPDS memorandum (...2

3. Other ADDO comment ib---

4"—fi-r4* C..^0gok -434.

-.:7e.k4r144,ArL4 9^—

-2-

EMT

SECRET

MEMORANDUM FOR: Associate Deputy Director for Operations

SUBJECT: FY 78 Renewal of Activity PDDYNAMIC

1. PDDYNAMIC is SE Division's operational activity forthe support of a national minority emigre group, that ofthe ZP/UHVR (Ukrainian Liberation Council) and more directlyits publishing and operational element, Prolog ResearchCorporation, which is located in New York. An affiliatein Munich, the Ukrainian Society for Studies Abroad, publishesa monthly political-literary magazine, Suchasnist (ContemporaryTimes), books, pamphlets and leaflets (primarfri—in Ukrainian)which are infiltrated into the USSR for clandestine distribution,or passed to official Soviet representatives or travelersabroad. Prolog activities and publications are designed toprovide intellectual and moral support to those Ukrainiansinside the Soviet Ukraine who seek moderation of the Sovietpolitical system.

2. PDDYNAMIC activity is in furtherance of DDO ObjectiveA.2 and is in compliance with the provisions of Section 662of the Foreign Assistance Act of 1961 (as amended) in thatit was covered by the first Presidential Finding of 10January 1975 and subsequently reported to the appropriateCongressional committees. PDDYNAMIC is part of the SEDivision covert action program targeted at the USSR andEastern Europe, has been reviewed by the Special CoordinationCommittee of the National Security Council and was approvedby President Carter on 4 March 1977.

3. A proposal is now before the Special ActivitiesWorking Group which calls for an ,expansion of this programwith emphasis on increase of contact and support to othernational minority groups abroad which are targeted atnational minorities in the USSR. If the proposal isendorsed by the SCC and approved by the President, we intend,to seek an amendment to this OPACT to increase FY 1978funding by $155,000 to a total of $420,000. This increaseis not contemplated in the FY 78 program and would have tobe met by a reserve release.

SECRET E2 IMPDETCL BY 0556081V.,r".;.'.!‘ ,.. , ■...,...7.7,..

siNs:; ,:::. •:.-,,,,..;:, ,.!::. i...,'.JRcEs

, kJ i'.'C,...'itid,;S li.,1VuLVIU

SECRET

-2-

ACCOMPLISHMENTS:

4. During the twelve month period of FY 1977, anestimated total of 25,500 items of PDDYNAMIC-producedliterature will be distributed to the target area. Thisincludes copies of the Suchasnist, the Information Bulletin, and books and pamphlets published by Prolog anddistributed through one of the following means: handcarried by travelers to the Ukraine; hand carried to EastEurope and mailed to the Ukraine from there; mailed fromthe West; passed directly to Ukrainians traveling to theWest; and other special methods.

5. During FY 1978, over 70 Prolog collaboratorstraveled to the USSR, many carrying in Prolog literature torelatives, friends and contacts in the Ukraine. Suchvisitors had over 400 contacts with Soviet citizens fromwhom they obtained information on conditions in the SovietUnion, news of dissident activity, and the treatment ofarrested dissidents, including those subjected topsychiatric abuse. (See Annex A for a sample messagesmuggled out of a Soviet prison protesting the inhumanetreatment of prisoners and relayed to Prolog contactsby relatives of the prisoners). Much of the materialbrought into the Ukraine by the visitors is then manuallyduplicated and circulated inside the country.

6. Prolog has published a total of thirteen booksduring FY 1978, the majority of which are by Soviet Ukrainianauthors who are unable to get their works published internally:The range of titles include poetry, biography, novels,essays, and a variety of hard-hitting books on historical orcontemporary topics such as "Chronicles of Life in SovietConcentration Camps", Sosnovsky's "History of UkrainianPolitical Thought", and items on Ukrainian politics andculture. In addition in FY 1977 the monthly Suchasnistwas continued with a press run of 2,000 copies, eaCN- month,and the letter-sized Information Bulletin (for mailing toSoviet institutions and party leaders) was printed fourtimes in a press-run of 2,000 copies each and mailed intothe Ukraine.

SECRET

SECRET

-3 .-

7. PDDYNAMIC/29 continued to spearhead the Prologinternal contact program by twice yearly trips to Europeto meet, vet, brief and debrief Ukrainian students, touristsand academics who travel to the Soviet Ukraine. Thiscontact program has been continuing successfully for over15 years with no serious incidents. The purpose of the.program is to maintain personal contacts with bothdissidents and non-dissidents in various parts of theUkraine; the result has been a large variety of reportingabout political and economic events in the more remoteprovinces of the Ukraine. This information was proveduseful to SE Division reports officers for general backgroundinformation on the Ukraine and has also resulted in four .disseminations.

8. PDDYNAMIC/29 continued personal and mail contactwith PDDYNAMIC/74 in Munich, whose organization, TheUkrainian Society for the Study of Asian Problems (USSAP),is in •contact with identified intelligence officers of theChinese People's Republic based in the PRC Embassy in Bonn.Materials on the Ukrainian nationality question prepared byProlog were relayed to the PRC representative in Bonn andresulted in an article in the Peking Review 22 October 1976,entitled "Underground Ukrainian Organization: SovietNational Oppression Denounced". Soviet press reactionindicated their strong displeasure with Chinese exploitationof this troublesome nationality question. In June 1977,PDDYNAMIC/74 was introduced to a new PRC representativewho had arrived to replace the former contact who wasreturning to Peking where he will be responsible for Sovietaffairs.

9. In New York, PDDYNAMIC/64 has maintained periodiccontact with a Soviet Ukrainian official at the UnitedNations and has provided a series of in-depth assessmentsof the official. PDDYNAMIC/57, a young and energetic officer,has continued his work among young people in Canada andWestern Europe by encouraging and guiding their work inpublicizing the abuses of the Soviet GULAG system. Hehas also maintained contact with Soviet deportee LeonidPlyushch, who was released from a Soviet psychiatricinstitute in February 1976. Plyushch has been enrolled asa contributor to Suchasnist and the Prolog book publishingprogram.

SECRET

SECRET

-4-

10. There has been a continUed drumbeat of attacksin the Soviet press against the "Ukrainian bourgeoisnationalists" in general and the Prolog magazine Suchasnist in particular by such Soviet organs as Literaturna Gazeta,Radyanske Literaturoznavstvo, Vitchyzna and Vsesvit. Personalattacks (on PDDYNAMICS 2, 3, 4, 17, 29, and 30) and on theZP/UHVR organization appeared in atleast a dozen books andjournals indicating that Prolog materials and activitiesare reaching their target. (Attached as Annex B is a resumeof the most significant attacks).

11. Finally, the Prolog group has continued the effortbegun. in the last fiscal year of extending their contacts..._and cooperation with other national minority groups abroadwho are attempting to contact and influence their compatriotsinside the Soviet Union. . A second volume of documentsdealing with the nationality problems (similar to thatpublished during FY 1976) has been collected and is beingpublished in Russian. More active support to such groups,however, has not been possible due to severe budgetrestrictions in FY 1977.

PROBLEMS:

12. As in previous years, the major problem faced by theProlog group has been the perennial lack of adequate fundsfurther aggravated by continuing inflationary increasesin cost of living, publishing and overhead costs. Themajority of personnel has been maintained at salary levelswell below comparative salaries of other organizations.Although we are asking for a modest increase to coverinflationary costs, most of these funds will be utilizedfor overhead costs with little left for personnel increases.

PLANS:

13. PDDYNAMIC/29 will travel to Europe several timesduring the coming year to continue the program of vetting,briefing and debriefing regular sources and new travelers tothe Ukraine. In addition, during his trips he will alsowiden his working contacts with other groups and individualsconcerned with the nationalities problem in the Soviet Union.In the event that the proposal currently before the SpecialActivities Working Group for expansion of the minorities

SECRET

SECRET

-5-

program is approved, he will be in a position to providethese groups (Baltic, Byelorussian, Crimean Tatar,Armenian, and Georgian) with operational support andwith help in expanding their programs of contactoperations and publication and distribution of materialsin their native languages.

14. Also, in the event that the expansion is approved,we plan to take initial steps to relocate the headquartersof Prolog from New York to Munich and to change the .funding of the PDDYNAMIC activity from a proprietarystatus to that of a non-controlled subsidy to simplifycover problems and minimize overhead costs. Such anarrangement would also put the Prolog leaders closer ta-the target areas and to the major centers of emigre activityin Europe. Such a relocation would necessitate the transferof several Prolog officers to Munich with initial one-time travel and transfer costs which cannot be absorbedin the present budget.

15. Finally, Prolog plans to continue publication ofthe Ukrainian language journal Suchasnist, the Information Bulletin, and to publish as many of the twenty Ukrainianlanguage manuscripts (which they have already reviewed,edited and prepared for printing) as the budget will allow.Included in this list is a wide range of titles includingsuch samizdat materials as Snyehiryev's "Nen t ko Moya Nen'ko"(Mother, My Mother), the letters of imprisoned writersLysoviy and Strilaniy, and various essays-, poems- and memoires.-In connection with the 60th Anniversary of the Soviet Union;the group plans to publish Maystrenko's "Sixty Years ofNationalities Policy of the CPSU", and his "History of theCommunist Party Ukraine, Vol III", Solchanyk and Hunchak's"Documents on the Development of the Ukrainian PoliticalThought", Koshelivec's "Literary Policy of the CPSU in theUkraine", and several titles on economics, criticism ofMarxism and political essays. The cost of this proposedpublication is estimated at approximately(: _23, aboutdouble the amount the group has been able to devote totheir publications in previous years. Should the proposal

SECRET

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-6-

for the expansion of the minorities program be approved,it is planned to utilize a portion of those funds tocover this expansion of published materials.

COSTS:

16. It is requested that PDDYNAMIC be renewed' for FY 1978 in the amount ofC, :3-

Source of Funds

Funds for PDDYNAMIC were included in the SE

An additional um of ;)is.required to maCiftainDivision Operational Program in the amount ofs

operations at the present level and to offset inflation(this increase in necessary due to budgetary restrictionsin FY 1976 and FY 101771. Funds for PDDYNAMIC in FY 1978were budgeted atC_ less than current ,operationalrequirements indicated. This is presently,An unfundedrequirement. The FY 1979 program includedL.- Otocover this activity. An additional sum ofC., be required in FY 1979 to maintain activity at the FY 1978operational level.

Budget

See attached breakdown.

Foreign Funds

Approximately 48% of all PDDYNAMIC funds isexpended in German or other West European currencies.Conversion from U.S. dollars is handled by PDDYNAMIC.

Funding

In accordance with the approved Administrative Plan.

Accountability

All funds are accounted for in accordance withAgency regulations and the PDDYNAMIC Administrative Plan.

Cash Resources:Beginning Cash BalanceSubsidy

• Income from Sales of Books & SubscriptionsTotal Cash Available

Less ExpendituresEnding Cash Balance

•Expenditures:Fixed Expenses New York Office:

Payroll & Fringe BenefitsOffice Administration

Sub-Total Fixed Expenses

SECRETPDDYNAMIC BUDGET BREAKDOWN

FY - 1978

FY-1977

FY-1978 FY-1979

Operating Expenses:Operational TravelPurchase of Books & PublicationsEntertainmentPublishing CostsDistribution CostsAffiliated Group (Munich) *Research & Contact Operations **

Sub-Total Operating Expenses

Total Expenditures

(:, 3 C57,000 60.000 6Z,000

$ 132,050 138,900 $ 145,800•

* See Annex 1** See Annex 2

SECRET

Total Payroll & Fringe Benefits

SECRETAnnex 1

FY-1977

FY-1978 FY-1979 Payroll & Fringe Benefits:

Salaries 121,200 $ 127,000 $ 133,000

&

InsuranceContributions

Registration

to Employees Pension Plan

Dues

Fixed Expenses:

RentElectricityTelephoneOffice SuppliesTaxes & LicensesMaintenance & RepairsMiscellaneous Expenses

Total Fixed Expenses:

S 7 C r)7L Ja.

Breakdown of Research & Contact Operations (Munich)

rResearchContact OperationsReverend I. Hryniokh (Stipend)

• SECRET

Annex 2

Breakdown of Affiliated Group (Munich)

Payroll & Fringe BenefitsOffice ExpensesPublishing Expenses: Suchasnist

Total Affiliated Group Expenses:

FY-1977 FY-l978' FY-1979

$ 31,400

32,800 $ 34,000

Total Research & Contact Ops. Expense

SECRET

ADMINISTRATIVEPLAN

66171-DD/S 72-

PPB

MEMORANDUM FOR: Deputy Director for PlansSpecial Support Assistant, DDS

SUBJECT: Administrative Plan for CA StaffProprietary Project QRDYNAMIC

I. Objective

1. The objective of Project RDYNAMIC is toexploit nationalistic, cultural and other dissidenttendencies which exist in Ukraine, and to exert pressureon the Soviet ; , 1,11e for greater national and intellectualfreedom. ORDY;alie appeals to dissident elements in Ukraineto whom it lends its moral, political and material assistance.It attempts to stimulate and widen the scope of theiractivities by publishing literary, political, historicalworks conducive to the awakening and growth of nationalconsciousness.

Instrumentality and Background

2. a. The publication activity of Project pRDYNAMICis handled through pRTENURE of New York, New York,incorporated under the laws of New York as a commercialtaxable enterprise for the purpose of research and study ofinternational communism as specified in the Certificate ofIncorporation.

b. Basic policy guidance and direction isprovided by the Agency through the project case officer inmeetings with the president of pRTENURE or with other officers,as appropriate. For cover purposes the Board of Directorshas responsibility for the conduct of QRTENURE activitiesin accordance with its charter and by-laws, and subjectto the following limitations and requirements:

(1) Amendments to the charter and by-laws will require the prior approval of the CAStaff and the concurrence of the General Counsel.

CA-71-2053 •1

Exchlded ■;.:11

0EGFET ,

1

(2) ORTENME will not perform servicesfor fees without the approval of CA Staff andthe concurrence of the Central Cover Staff.

(3) All officers and directors shallbe approved by CA Staff. In additions thetreasurer shall be approved by the Office ofFinance.

c. All publications originate in Europethrough CRTERRACE, in Munich, Germany.Operational contact is limited to the New Yorkoffice, with no contact in Germany.

Need for Administrative Plan

3. In August 1970 the project formerly known asAERODYNAMIC was transferred from the Soviet Bloc Divisionto the Covert Action Staffs and redesignated QRDYNAMIC.Therefore, this Administrative Plan is written to reflectcurrent operating procedures.

IV. Approvals

4. QRDYNAMIC was approved in the amount of$231 0 000 for FY 1972 and is programmed for $250,000 forFY 1973.

V. Recision

5. Concurrent with the approval of the AdministrativePlan for CA Staff Proprietary Project ORDYNAMIC, the FourthRevised Administrative Plan for SB Division CA ProjectAERODYNAMIC is hereby rescinded.

VII. Recommendation

6, The attached Administrative Plan for CA StaffProprietary Project QRDYNAMIC has been concurred in by theAgency components of interest and is recommended for yourapproval.

, riGkeE.v.•

23Chief, Support GroupCovert Action Staff

2

SECRET

ADMINISTRATIVE PLAN FORCA STAFF PROPRIETARYPROJECT QRDYNAMIC •

I. Budget

1. a. Annually, a proposed operating budget willbe prepared for project CRDYNAMIC as a preliminary forecastof the requirements of the project for appropriated fundsfor the next two fiscal years. This proposed budget shallconform generally with the categories of expense as employedin the initially approved project renewals and/or amendments.

b. Upon approval of the CA Staff operatingprogram an annual renewal of project QRDYNAMIC will bepresented to the A/DDP for approval, within the limitationsof the allocation of funds available to the CA Staff fromappropriations. The operating budget, as included in theannual project renewal and approved by the A/DDP, shallconstitute the approved operating budget. No increase inthis total amount may be made except through a formallyapproved amendment of the project.

c. MPS/B0 will provide OPPB with a copy of themost recently approved budget for the project.

Funding

2. Funds shall be passed in accordance with instructionsprovided by Central Cover Staff to bank accounts of theQRTENURE in New York or its branch office in Munich, Germany.

Agency Certification and Approval

3. The Headquarters case officer shall review thefinancial statements submitted by QRTENURE (New York office)and QRTERRACE (Munich office) and attach his certificationthat to the best of his knowledge and belief the statementsare true and correct and the reported expenditures are within thescope of the project authorization. In addition, thefinancial statements shall be approved by an appropriateAgency approving officer and forwarded to the ProprietarySystems Branch, Commercial Systems and Audit Division,Office of Finance, at the earliest possible date and not

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t ec:.1•,..,tHc..;;111SECRET1.11■1111....n■Mon,Invol•■••••.•••

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SG ET

later than ninety days after the close of the accountingperiod. A copy of the financial statements shall beforwarded to the Office of Planning, Programming andBudgeting.

IV. Accounting in Agency Records

4. The Office of Finance is authorized toaccept the quarterly financial statements submitted byQETENURE and U.TERRACE required under paragraph 3 aboveand paragraphs 12 a8ob below, when properly certifiedand approved, for recording in the appropriate accounts.

V. Protection of Government Interest

5. a. Signed Memoranda of Understanding settingforth the relationship of ORTENURE with the Agency are notrequired of the present members of the Board of Directors.The Agency has been supporting the organization since 1950,and during this entire period the QRTENURE officials havebeen most cooperative and entirely willing to accept Agencyguidance and direction. It is felt that at this late datethey would not understand the reasons for formal documentationof the relationship and the effectiveness of the operationwould be impaired.

b. It shall be the responsibility of the CA Staffto ensure that the Chairman of the Board of Directors alwaysis aware of the authorities and responsibilities imposed uponO,RTENURE by this plan, and to provide a Memorandum of OralUnderstanding to this effect to the Office of Finance andOffice of General Counsel.

c. All ostensible shareholders of stock shallendorse in blank the stock certificates issued in theirnames. In addition, the trustees, officers and directorsof an instrumentality shall execute undated letters ofresignation which shall be retained by the Agency componentresponsible for the project. The executed stock certificateswill be forwarded promptly to the Proprietary Systems Branch,Commercial Systems and Audit Division, Office of Finance,for recording and custody.

VI. Personnel Policy

6. The employment of personnel l direct or throughcontract., and establishment of salaries and other benefits

-0-etnElOLU,.

shall be approved by CA Staff and shall be in accordancewith Hrt 230-9. If cover employment is provided for Agencypersonnel, such action requires prior coordination withthe Central Cover Staff for tax information and othermatters on an individual basis.

VII. Insurance Coverage

7. a. A medical and hospital insurance programhas been developed for QRDYNAMIC. This plan was approvedby DD/P, and the Office of Personnel.

b. The QRDYNAMIC proprietary has a pension planwhich was qualified by the Internal Revenue Service in 1962.This plan was approved by the DO? and Director of Personnel.The Agency has approved an increase of employer and employeecontributions from 6% to 7% of participants' earnings andhas agreed to supplement the plan's assets by about $281000.The plan is in the process of being revised to reflect thesechanges. The investment of the pension funds are to behandled by C._

VIII. Legal Services

8. The Office of General Counsel ' shall at all timesbe kept informed of the current status of the legalrequirements of the instrumentality and shall be responsiblefor accommodating its legal problems and for approving theuse and the fee of outside counsel. Any attorney used byQRDYNAMIC shall be Selected or approved by the Office ofGeneral Counsel.

Casualty Provisions

9. A casualty annex is not applicable to projectQRDYNAMIC. The need for the Agency to provide assistancefor any unusual sickness, injury or disability benefitswill be established by separate memoranda or amendment tothe project renewal as need arises.

X. Security Policy

10. In the utilization of individuals under thisproject the provisions of CSI 10-5 and CSIF 10-5 shall befollowed; any exceptions thereto require the prior approvalof the Office of Security or the CI Staff, as appropriate.

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XI. Audit

11. An audit program shall be developed andimplemented in accordance with the requirements ofNR 31-1. The prior approval of the Chief, Audit Staffis required for the employment of either witting orunwitting accountants for audit purposes.

XII. Financial Accounting and Reporting

12. a. ORTENURE shall maintain financial recordsand accounts of a type consistant with its ostensiblecharacter, as prescribed or approved by the Office ofFinance, and shall submit to the CA Staff on a quarterlybasis the following financial statements (except theannual statement of fixed assets) within 30 days followingthe close of each calendar quarter:

(1) Balance Sheet.

(2) Statement of Income and Expense.Disbursements made to OTENURE independentfield contracts will be reported under the"research" category and will not be itemized.However, separate accounts will be maintainedfor these expenses.

(3) Statements of Cash Receipts andDisbursements prepared in the manner to clearlydistinguish between funds received from theAgency and non-Agency sources, if applicable.

(4) Annual Statement of Fixed Assets.The president of (=ENURE, or his designee,shall attach to these financial statements hiscertification that, to the best of his knowledgeand belief, they accurately reflect thefinancial status of ORTENURE„ and that the bankreconciliation has been reviewed through (date)the date of the most recent bank statement.

b. pi/TERRACE shall submit to OATENURE, within15 days following the close of each calendar month, aCash Receipts and Disbursement Statement to include cash onhand at the beginning of the period, income received in amanner to clearly distinguish between Agency funding\

4

reported as receipts from QRTENURE and funds receivedfrom other sources $ expenses by general categories andcash on hand at the end of the period. The principalagent of the overseas group $ or his designee / shallattach to these financial statements his certificationthat, to the best of his knowledge and belief, theyaccurately reflect the financial status of QRTERRACEactivities and the disposition of funds during thereporting period. These reports shall be transmittedby QRTENURE to CA Staff along with QRTENURE's quarterlyreporting.

XIII. Borrowing, Lending v and Pledging Assets

13. QRDYNAMIC is not authorized to borrow or lendany funds, to mortgage or pledge any of its assets (exceptfor occasional educational loans not to exceed $500900each to students with operational potential), without priorHeadquarters approval, which shall be in accordance withparagraph 4 o $ HHB 230-1.

XIV. Investment Policy

14. There is no requirement for QRDYNAMIC to makeany investments in securities or interest-bearing accounts.

XV. Real Property and Office Furnishings

15. The purchase or lease of real property and thepurchase of office furnishings requires the prior approvalof the designated CA Staff approving officer. The purchaseor construction of real property requires also the priorapproval of the Director of Logistics. Annual reports ofreal holdings shall be submitted to the Office of Logisticsin accordance with HR 45-15.

XVI. Limitation on Individual Disbursements and ContractualArrangements

. 16. Except for funding transactions, any disbursementsin excess of $5 $ 000 or contractual arrangements of more thantwelve months' duration shall require the prior approval ofthe appropriate CA Staff approving officer for projectQRDYNAMIC

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XVII. Administrative Expense Policy

17. a. Travel and subsistence expenses incurredby the owners, officers, directors, employees and anyindividual retained in a professional independentcontractor capacity on a fee basis shall be reimbursedon the basis of actual and necessary expenses, not toexceed $25.00 for domestic travel. For each specifictravel assignment when the cover per diem is inadequate,Chief, CA Staff may authorize only that amount which isjustified by the circumstances and required to mootauthorized expenses up to $40.00 per day for domesticTDY travel and up to $18.00 in excess of the maximumper diem allowance for the locality for TDY travel abroad.Air transportation less costly than first class shall beused to the extent practicable.

b. Entertainment expenses claimed forreimbursement will be on an actual, reasonable and necessarybasis and shall be supported by a statement giving date,place, type of entertainment, and identification of theperson(s) or parties entertained.

.XVIII. Contingency Casualty Plan

18. A contingency casualty plan for QRDYNAMIC isnot required. See paragraph 9, Section IX above.

XIX. Termination and Liquidation

19. QRDYNAMIC shall not be terminated without theprior approval of the Deputy Director for Plans and theDeputy Director for Support. In addition, a liquidationplan for the instrumentality shall be prepared for theconcurrence Of the responsible Agency components and theapproval of the Executive Director-Comptroller prior toimplementation.

APPROVALS:By direction oftrtImsgly

Ce- 17_.D 9Special Suppor-G Assistant, DDS

13f01972

By direction of the Drqr. ,i.()7)\

-:)\'-'-v'''(Signed) C • 200 JAN 1972,

C L Zj bU Da u

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OF/PSB/CSAD• 20 Dec 1971

Date

21 Dec 1971Date

22 DEC 1971Date

Chief, CommerCa Group

fsiC,Office of General Counsel

Date

11 JAN 1972

Date

•14-1:77

Date

D/OPPB

- of Security

Central Cover

1 8 JAN 1972Date111,8/3G/Projects

ADMINISTRATIVE PLAN FORCA STAFF PROPRIETARY

PROJECT ORDYNAMIC

CONCURRENCE SHEET

j . 5 DEC

C/CA/BA Date

Is! 16 Dec 1971WM/Staff Date .

/s/ Charles A. Briggs 5 JAN 1972

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