Congress this week approved changes in law that will permit undercover CIA officers serving overseas to keep salaries from their civilian jobs even when they exceed what they would have been paid by the federal government.
In the past, if CIA officers earned more than their government pay while working undercover in jobs at companies or consultancies, for example, they were required to return all of the excess to the government, former senior intelligence officials said.
 
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The one proviso is that the combination of salary, allowances and benefits that the undercover officer retains from his or her private employer cannot "significantly exceed" what would have been paid an equal-level CIA employee, unless the CIA director determines that the excess is needed to protect the officer's real identity. The director's decision, under the law, "shall be final and conclusive and shall not be subject to review by any court."
"We lost very good officers when they decided, why should I generate this kind of income and give it back?" one of those former officials said yesterday. "They decided to do [the cover job] for real and quit the discomfort that came with being with the CIA."
The legal changes are part of a major effort to get more and better human intelligence on terrorist groups by encouraging more CIA officers to take undercover positions abroad, working outside U.S. embassies -- where they have diplomatic immunity but no opportunity to hide their connections to the U.S. government.
The changes are in the fiscal 2005 intelligence authorization bill approved by Congress on Tuesday and described in the House-Senate conference report released yesterday in a section titled "Intelligence Operations and Cover Enhancement Authority."
If the new undercover CIA officers work for private companies or as consultants or owners of small businesses in Middle Eastern countries during the day, the theory goes, they will be able to recruit their own local agents. In that case, the CIA would not have to depend entirely on foreign intelligence services for information in such countries as Jordan, Egypt, Syria and Saudi Arabia, as they do today.
Assuming such cover -- "nonofficial cover," or NOC in agency terms -- abroad is more complicated than most people realize, former clandestine officers said.
"If they think this NOC business is a magic bullet, they are out of their minds," said one former senior official who has had direct knowledge of such programs.
It takes time and patience to establish a CIA officer under cover before he or she can recruit locals as spies, this official said. Reminded that former CIA director George J. Tenet was criticized in Congress when he said in a speech last February that it would take five more years to rebuild the clandestine service, the former official said that Americans abroad cannot penetrate al Qaeda quickly.
"Tell me what the cover job is going to be in Syria -- selling insurance? Selling popcorn?" he asked. "Do we expect to fool anyone by sending an officer to Iraq as a security guard by day and having him recruiting Iraqis as agents by night?"
The new legislation removes other bureaucratic hurdles for CIA undercover officers. Such officers, described in the bill as "designated employees," will now benefit from a "nonofficial cover employee retirement system." The officers would not be able to participate in any other federal retirement program unless they ended their undercover roles, in which case they could transfer to a different federal retirement program as long as they are in government service.
An undercover officer will file federal and state tax returns "as if that employee is not a federal employee" and gain the deductions and tax treatment based on his private employment income.
What remains unclear is whether other practices that hobbled the nonofficial cover program in the past will be continued. For example, in the past undercover officers were required to fly on American-owned airlines, one former official said. When their cover jobs were with large corporations, usually the top corporate officer had to be informed and give approval -- and when a new chief executive officer took over, he or she had to approve.
"We occasionally had a change in leadership and our man was let go because the new chief didn't approve," a former official said.
On occasion, the case officer decided to quit the agency rather than drop a corporate job. "That happened regularly in the past where they were very good jobs and then officer said, 'So long,' " the former official said.
