FBI investigators have begun combing through contracts worth more than $16 million paid by the Agency for International Development to the Airlie Foundation in Warrenton, Va., and to a George Washington University Medical Center group associated with Airlie.
AID officials would not specify the reason for the FBI investigation. But an affidavit filed in U.S. District Court in Los Angeles on Dec. 6 quotes Stephen Eiko, a former aide to Rep. Daniel J. Flood (D-Pa.), as saying that Airlie Foundation's executive director, Murdock Head, was the source of $87,000 in payments between 1971 and 1973 to Flood, former Rep. Otto Passman (D-La.) and Elko.
The affidavit quoted Elko as saying that, in return for the payments, Flood provided assistance in securing government funds for the Airline conference center.
Both Flood and Passman have denied the allegations in the affidavit. Head issued a statement last month in response to the allegations. The statement said: "The Airlie Foundation has made no contributions to any elected official, political party or political campaign. There have been no requests for assistance in return for support from any member of Congress or their representatives."
Head could not be reached for comment yesterday on the investigation at AID.
AID General Counsel Markham Ball said he was in the process of gathering up records of AID's Airlie contracts for an in-house investigation by the agency's auditor general when he was requested on Friday by the FBI to produce the Airlie contracts.
Ball declined to say whether FBI investigators were looking into the payoff allegations against Flood, Passman and Elko but he said AID is conducting its own inquiry into the charges.
A spokesman for the FBI declined yesterday to comment on the investigation.
AID has awarded $16.6 million in contracts to Airlie and the group at George Washington University which was set up in conjunction with the foundation. The contracts, which stretch back to 1971, were for population seminars, training films land teaching materials in population control and studies on disseminating the population control information abroad.
In February 1975, a former senior AID official charged that Passman had exerted "loud and clear" pressure on the agency to approve money for population work by Airlie House.
The official, Jarold A. Kieffer, wrote President Ford that he had been "directed" by then AID deputy administrator John E. Murphy to make the $5 million grant "as soon as possible." Kieffer said in his letter to the president that "the whole transaction and the coercion involved, in effect, constitute the making of government decisions for secret reasons 'outside official channel'."
Murphy said at the time that he had received calls from Passman urging approval of the proposal.
The proposal was for and "international center for population dynamics" in the Washington area. It was submitted to AID on June 20, 1974, by George Washington University and by the university's "Airlie Division of Medical and Public Affairs," Head, the director of the Airlie conference center, was a cosigner of the application.
Kieffer said he had been asked to resign as director of AID's overseas population programs after his dispute with Murphy on funding this center.
Kieffer, reached yesterday by telephone in Los Angeles, said that he had several confrontations with his superiors at AID over projects involving Airlie House, beginning in 1972. In that year, the agency approved funding of a "dialogue center" project which brought Latin American military and professional leaders to Airlie House for discussions on population problems.
Kieffer said that he went to then-deputy AID administrator Maury Williams to suggest that the agency fully evaluate the program before the full $5 million requested be spent. However, he said, Williams told him in February 1973 that "the pressure was so great he had to give way." He said the full $5 million would be spent for the "dialogue center."
Kieffer said that he also learned in August 1972 that $10 million had been taken from the population budget without his knowledge and earmarked for a Bahama livestock-raising project favored by Flood. Kieffer said that when he complained to Williams, the deputy administrator had the money transferred back to the population bureau and took the requisite $10 million from a contingency fund instead.
Herbert Beckington, AID auditor general, said yesterday that he ordered "an official review" of the contracts to Airlie and the George Washington University Medical Center.
Beckington said that he initiated the investigation into the contracts "when this thing broke a couple of weeks ago regarding allegations involving Mr. Flood and others." The AID official said he had received files from the agency's population bureau and from AID Director John J. Gilligan's personal records.
"If we believe that the information we come up with is of interet to the Justice Department it is our duty to provide that information," said Beckington.