June 27 (Bloomberg) -- The Central Intelligence Agency secretly paid more than $33,000 in 1970 to cover the cost of White House thank-you notes to supporters of President Richard Nixon's decision to invade Cambodia, newly released agency documents show.

The financing of the notes, done at White House request, was one part of a complex relationship between the Nixon White House and the CIA that eventually drew the agency into the Watergate scandal.

CIA officials were aware that paying for the thank-you notes could be controversial and took steps to conceal the true purpose of the expenditure from government auditors outside the agency, the records show.

``Think we can go ahead and do this. Have to be careful as to way this is documented -- that's the only thing,'' said Warren Magnusson, the CIA's deputy director for liaison and planning, in a telephone conversation with White House Staff Secretary John Brown on May 26, 1970, according to a transcript of the call.

The transcript was part of more than 700 pages of previously classified material that was released by the CIA yesterday in response to a 1992 Freedom of Information Act request from the National Security Archive, a Washington-based group. The released documents were heavily redacted.

The documents, known within the CIA as the ``family jewels,'' were compiled in 1973 on the order of then-director James Schlesinger. They detailed a long history of CIA activities that, in the words of one agency official, then- Director of Security Howard Osborn, ``conflict with the provisions of the National Security Act of 1947.''

Surveillance of Activists

Those activities include CIA surveillance of antiwar activists and other domestic political dissidents and agency involvement in assassination plots against foreign leaders such as Cuba's Fidel Castro. Those activities were extensively aired by congressional investigating committees in the 1970s.

The CIA's current director, Michael Hayden, said yesterday in a note to agency employees that the documents are ``reminders of some things the CIA should not have done.'' He added that they ``provide a glimpse of a very different era and a very different agency.''

Arthur Hulnick, a 30-year CIA veteran and professor of international relations at Boston University, said the release of the ``family jewels'' fulfills a promise by the agency to periodically declassify documents in the public interest.

``The agency was supposed to do this,'' he said.

Watergate Affair

Schlesinger ordered the documents compiled as news was breaking of the agency's involvement in the Watergate affair. The CIA had provided help to former agents Howard Hunt and James McCord, who were convicted for their roles in the 1972 break-in at the Democratic National Headquarters in Washington.

The agency later told the FBI, at Nixon's request, to curtail its investigation of Watergate on the grounds that it would damage national security.

According to the documents, the White House request for CIA funding for the thank-you notes surfaced in a telephone conversation between Brown and Magnusson four weeks after Nixon announced in a nationally televised speech that he was sending U.S. troops into Cambodia.

Supply Routes

Nixon's action was aimed at disrupting the supply routes of North Vietnamese troops who were fighting U.S. forces in neighboring Vietnam. His decision triggered a nationwide wave of protests on college campuses.

Magnusson, 85, said today in an interview from his home in Springfield, Virginia, that he didn't recall the incident. He said he retired from the CIA in 1979.

The documents also showed how the Nixon administration and its political embarrassments became intertwined with the CIA.

In October 1972, CIA Director Richard Helms asked the agency to prepare a report on fugitive financier Robert Vesco, who was accused by federal authorities of making $200,000 in illegal contributions to Nixon's re-election campaign of that year.

A short time later, after some agency employees came across evidence of ``high-level American intercession on behalf of Mr. Vesco,'' Helms abruptly canceled the project, the documents showed.

Vesco fled to Costa Rica after federal authorities accused him of stealing $224 million from a mutual fund. He spent the next two decades in various Central American and Caribbean nations in order to avoid extradition to the U.S. He ended up in Cuba, where he was sentenced in 1996 to 13 years in prison for marketing an unproven cancer medication, according to Time magazine.

To contact the reporter on this story: Ken Fireman in Washington at kfireman1@bloomberg.net; Jeff Bliss in Washington at jbliss@bloomberg.net

Last Updated: June 27, 2007 10:45 EDT