US spy agency 'mislays' $2bn

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The super-clandestine National Reconnaissance Office (NRO), which operates America's spy satellites, has been accused of mislaying as much as $2bn (pounds 1.3bn) - more than an entire year's budget for the State Department.

The allegation, which is certain to bring new pressure on the US intelligence community to open itself up to more public scrutiny, was made by two senators who head the Senate Intelligence Committee, Arlen Specter of Pennsylvania and Bob Kerrey of Nebraska.

According to the senators, managers at the NRO "had no idea" what had happened to the money, which apparently had been allowed to accumulate in secret caches for use, allegedly, in the case of unexpected hitches or accidents in its satellite programme.

The NRO, the very existence of which was denied by the US government until only a few years ago, first ran into trouble with Congress in 1994 when it spent $300m building itself a new headquarters in a Washington suburb without informing anyone on Capitol Hill.

The errant $2bn apparently got lost principally because of the hall of mirrors that exists within the NRO itself, designed to prevent even its own sub-divisions from discovering what the others are doing. About $1bn has now been tracked down and taken back from the NRO to pay for other military programmes.

Created in 1960, the NRO is responsible for deploying high-powered satellites to eavesdrop on other governments' military movements and activities. It supplies the information from the satellites directly to the CIA and the armed forces.

Funding for the NRO is provided from the so-called "black budget" of $28bn a year that is approved by Congress annually but the exact purpose of which is never revealed. Most members of Congress themselves have little idea where the money goes.

The disappearance of the funds was initially uncovered by auditors sent to the NRO by John Deutch, the director of the CIA. While he had nominal control of the NRO's expenditure, until recently even he had little clue to its actual spending habits. That lapse is not likely to be repeated, however.