(Adds CIA comment in paragraphs 12-13) By David Morgan WASHINGTON, Sept 28 (Reuters) - The U.S. government apparently derived no clear benefit by recruiting ex-Nazis as Cold War spies, but potentially huge gaps remain in the public record of U.S. ties to World War Two war criminals, according to a report issued on Friday. The report to Congress, by an interagency group that examined the United States' use of German and Japanese war criminals during and after the war, also said the CIA had no set policy for hiring former war criminals to spy on postwar foes including the Soviet Union. The group, created by the Nazi War Crimes Disclosure Act of 1998 and Japanese Imperial Government Disclosure Act of 2000, has released more than 8.5 million pages of previously classified government documents dating back to 1933. The list includes the entire 1.2 million-page operational file of the CIA's World War Two forerunner, the Office of Strategic Services. The 139-page report addressed a post-Sept. 11 trend toward greater government secrecy by laying out recommendations to improve what it called a broken declassification system. It said agency resistance to disclosure drove overall project costs up nearly three-fold to $30 million. But a section of the report containing contributions by individuals and agencies involved in the effort suggests the disclosure has been less than complete. Elizabeth Holtzman, a former New York congresswoman and member of the panel, said the group received files on about 60,000 former Nazi and Japanese war criminals but did not have the names of all collaborators, particularly those in Eastern Europe and the former Soviet Union. "Even though we employed various search strategies to obtain these documents, there are undoubtedly huge gaps in our work," she said. HISTORICAL RECORD Holtzman also called into question the value of recruiting spies among former Nazis, who were sometimes blackmailed into serving as double agents by the Soviets. "It is not clear that Nazis provided us with any useful intelligence, and we know that in some cases at least they were a serious detriment to us," she added. "Given the intelligence failures of the Iraq war, it might be important for U.S. policymakers to understand that using very bad people for intelligence activities does not automatically get us very good results, and instead, may get us very bad results," Holtzman said. The report noted that the CIA began withholding files after the Sept. 11 attacks in 2001 but relented in 2005 after lawmakers in Congress threatened to hold public hearings. In the end, the CIA said it released an unprecedented 145,000 pages of documents. "The CIA has provided vital support to this effort, including taking an aggressive stance on the declassification of documents," CIA spokesman George Little said. Formally known as the Nazi War Crimes & Japanese Imperial Government Records Interagency Working Group, the panel said in its report that newly declassified records provide important historical detail about U.S. actions in World War Two and the Cold War. Richard Ben-Veniste, another group member, said in the report that some of the latest documents, which were declassified in late 2006, show that the CIA had no clear policy about hiring former Nazis. He cited a November 1960 CIA document quoting an agency official as saying: "We have no strong feelings against the use of a convicted Nazi today, provided he has something tangible to offer and is kept under close control. The question remains -- what has he to offer?"
