The Foster Report

CHAPTER 3: What is Scientology?

54. Let me start with some quotations: -

"Scientology is the study of knowledge in its fullest sense" (40)

"Scientology brings you truth" (41)

"Scientology brings you Total Freedom" (42)

"Scientology applies modern scientific methodology to resolve the problems posed by philosophy, and has come up with the answers" (43)

"[Dianetics is] that part of Scientology that deals with mental anatomy" (44)

"Scientology is an aim at total knowledge" (45).

"Dianetics - the Modern Science of Mental Health" (46)

"Scientology is applied philosophy" (47)

"Scientology as it applies to life is seen as a study in statics and kinetics, which is to say a study of the interplay of no motion and all motion, or less motion and more motion" (48).

"Scientology has evolved techniques which elevate the State of Man so that a person gradually becomes increasingly aware of his own spiritual nature" (49).

"Through Scientology, Man has the means to better himself, increase his abilities and raise his I.Q." (50).

"[Scientology is a] fabric of falsehood, fraud and fantasy" (51).

"The creation of Dianetics is a milestone for Man comparable to his discovery of fire and superior to his inventions of the wheel and arch" (52)

"Scientology is the first and only Anglo-American development in the field of the human mind" (53).

"Dianetics is the answer to human suffering" (54)

"Scientology [is] that information about life which in this period of Earth it is no longer the least bit safe to try to get along without" (55)

(40) Dianetics: Evolution of a Science, p. 1.
(41) ibid.
(42) ibid.
(43) ibid.
(44) ibid.
(45) ibid, p. 5.
(46) Title of Mr. Hubbard's best-sold book.
(47) Passim.
(48) Scientology: 8-8008, p. 7.
(49) Kangaroo Court, p. 42.
(50) Dianetics: ES, p. 6.
(51) Anderson Report, p. 48.
(52) Dianetics: MSMH (1968), p. ix.
(53) Dust Jacket of Dianetics: MSMH (1956).
(54) Scientology handbill, undated but copyright claimed by 
    Mr. Hubbard for 1969.
(55) Character of Scientology, p. 5.


"[Scientology] is a fraud" (56)

"Dianetics is the most advanced and the most clearly presented method of psychotherapy and self-improvement ever discovered" (57)

"But Dianetics is not a psychotherapy and it is not psychosomatic medicine. Those who want and need these things find Dianetics swiftly efficacious in these fields and so think of it as a psychotherapy" (58)

"The technology of Scientology is a completed workable system of religious philosophy which possesses application capable uniformly of raising or recovering the spiritual condition of an individual to a more desirable level, either to make the less able able or to make the able more able" (59)

"A scientologist is a person who keeps making things go right" (60)

"Scientology is a practical everyday philosophy - a technology - of the human spirit" (61)

"1. Dianetics is an organised science of thought built on definite axioms: it apparently reveals the existence of natural laws by which behaviour can uniformly be predicted in the unit organisms or society.

"2. Dianetics offers a therapeutic technique with which we can treat any and all inorganic mental and organic psychosomatic ills with assurance of complete cure in unselected cases . . . (This statement is accurate to date - it is conceded that further work may demonstrate some particular case somewhere which may not entirely respond" (62)

55. It will be seen that some of these quotations relate to Dianetics. Historically, this came first. and Scientology was developed later. Although distinctions can be drawn between the two, they are very closely connected and it would be impossible today to study or practise the one without the other. When I asked the Scientologists, near the end of my Enquiry, what part Dianetics played in relation to Scientology at the present time, they told me that
"Cases tend to follow the course of development of Dianetics and Scientology. When an individual is completed on Dianetics he is ready for Scientology grades and Clearing. Dianetics brings health. It puts the body right so that it does not get in the way of freedom. Scientology brings ability, spiritual freedom and immortality. Scientology is senior in that it solves any and all troubles that may have occurred in Dianetics and solves as well any that may have occurred in Scientology.

Mankind, at this time, is so battered about and preached to about being an animal and is so relatively inactive in this push-button

(56) Mr. Richard Crossman, answering a supplementary question in the 
    House of Commons, Hansard, Vol. 772 col. 474-75.
(57) Cover of Dianetics: MSMH (1956).
(58) Science of Survival, p. vii.
(59) Character of Scientology, p12.
(60) ibid, p. 33
(61) Dianetics: ES, p.6.
(62) ibid, p. III.


civilisation that he has a long way to rise to get his foot on the first rung of the ladder. He thinks of himself as a body. Dianetics takes care of the unsavoury aches, pains and with medical help, ills of the body so that he can get his mind off it.

With Dianetics completed he is now ready for his Scientology grades. Not having neglected the first steps of Dianetics he can achieve results in Scientology.

Dianetics is a science of the mind (dia - through, noos - mind) developed before 1950 and considerably refined since. It takes care of the aches and pains and psychosomatic ills of the body. lt was and is the answer to psychosomatic medicine and in the hands of ministers is used as pastoral counselling.

Scientology is a religion. Its period of development was from 1951 onward. Its target is spiritual freedom and ability."

In this Report I shall use the word "Scientology" to include Dianetics throughout, except on those few occasions where it is necessary to distinguish between them, in which case I shall make the distinction explicit.

56. In so far as Scientology is theoretical, it consists of a set of statements about the world, about man, and about the relationship between the two. In so far as it is practical, it consists of a set of procedures carried out by one person on another. A Scientologist, for my purposes, is someone who accepts the theories whether or not he participates in the practices. Scientologists themselves would probably not agree: to them participation in the practices is a necessary feature of membership.

57. There is, however, an important distinction to be drawn between two classes of Scientologists. The first is best described as the "Scientology leadership", consisting of those for whom Scientology s a full-time occupation which provides their only livelihood. Mr. Hubbard stands at the head of this class, and would seem still to be the single policy-maker, but the pyramid of power within the Scientology organisations contains many others who take part in the administrative and executive functions. The other class I shall call the "followers of Scientology". These are people from all walks of life in different parts of the world who accept some or all of the beliefs of Scientology and seek betterment, fulfilment or perhaps only solutions to their present personal problems through Scientology "processing". The two classes are not wholly distinct, since there is an intermediate stage at which a follower, desiring more processing but unable to pay for it, may be offered employment by the leadership to enable him to continue with his processing. So far as I know, recruitment to the leadership is largely by this route, but the broad distinction between the leaders and the followers is important for many of the matters with which this Report is concerned.

(a) The Founder

58. Before describing the organisation, the finances, and the theories and practices, of Scientology, it is necessary to say something about their genesis. This lies exclusively with Mr Hubbard, who is rightly described by Scientologists as their Founder. Mr Hubbard is an American citizen, born in Nebraska in 1911 and raised in the State of Montana. He is a man of many parts: at different times in his career he has earned his living as an


explorer, a film producer, a United States Naval Officer, and a prolific writer of science fiction. His academic career is a little obscure: it seems that he attended the George Washington University in 1932 but left without graduating. He later rectified this omission by acquiring the degree of Doctor of Philosophy from the Sequoia University, Southern California, but the Anderson Board reported that this institution was not accredited with the appropriate U.S. Educational Authorities, and I have not seen this finding denied by the Scientology leadership. He also holds the degree of Doctor of Scientology which, again according to the Anderson Board, he conferred on himself (63). For a number of years he was referred to in Scientology literature as a "Doctor of Philosophy", but after the Anderson Report the following announcement appeared on 8th March 1966 in "The Times": -

I, L. Ron Hubbard of Saint Hill Manor, East Grinstead, Sussex, having reviewed the damage being done in our society with nuclear physics and psychiatry by persons calling themselves "Doctor" do hereby resign in protest my university degree as a doctor of philosophy (PhD), anticipating an early public outcry against anyone called Doctor; and although not in any way connected with the bombs of "psychiatric treatment" or treatment of the sick, and interested only and always in philosophy and the total freedom of the human spirit I wish no association of any kind with these persons and do so publicly declare, and request my friends and the public not to refer to me in any way with this title.

(signed) L. Ron Hubbard"

59. Mr Hubbard began to develop Dianetics in about 1948 and developed Scientology from it after about 1952 (64). With very few exceptions, every book, pamphlet, article, journal and policy document printed, duplicated, distributed or published by Scientologists which I have seen bears Mr Hubbard's name either as sole author or as the owner of the copyright. He is, by common consent, a man of forceful personality, which comes through very clearly in his writings. Since this Report includes quotations from many of these I can safely leave Mr Hubbard to speak for himself without further introduction.

60. It is, as I understand it, not in dispute that Mr Hubbard was the absolute ruler of Scientology at all events until 1966 (65): all its theories, practices and policies stem from hum, and he had total de facto control over the organisation. between 1958 and 1968 (when the Home Office declared him as an undesirable alien and refused him further admission to Britain) he directed Scientology from its headquarters at Saint Hill Manor, East Grinstead, Sussex. Since then he appears to have transferred his Headquarters to the high seas, spending most of his time on board one or other of the six vessels operated by the "Sea Org", cruising under the Panamanian flag.

61. In the course of answering one of my questionnaires, the Scientology leadership told me that "in 1966 L. Ron Hubbard resigned from the active

(63) Anderson Report, p. 40.
(64) Anderson Report, p. 41.
(65) The Anderson Board so found, and there is no subsequent denial 
    on record from the Scientology leadership.


running of Scientology organisations". While this assertion is supported by the fact that Mr. Hubbard's resignation as a director from a number of Scientology companies is recorded on their files at the Companies Register, a number of recent policy documents are less consistent with it. The following two are fairly typical examples: -

Date 1 April 1970

To: HCO EXEC SEC WW for action
Info: ECWW, WW personnel

From: Ron

Subject: Management

Reference: HCO P/L 12 Feb 1970 Issue II, ECWW, Primary
           Duties of

I am glad to have such good reports of concentration on your Primary Duties as outlined in the above Policy Letter.

Your actions to implement the Policy greatly help.

There are undoubtedly actions and situations WW is involved in which lie outside these Primary Duties which could be handed over to more appropriate terminals

Each WW staff member (excluding Guardian WW and Franchise Offices) should survey his post and area and make three separate lists:

(a) Post actions that effect or contribute to the actual Primary Duties.

(b) Post actions you are currently concerned with that are not covered in (a).

(c) Problems you have on your plate not concerned with (a).

(d) Anything in (b) or (c) you think I should be urgently advised of.

Send them to HCO ES WW who will look them over, sort out any confusions, make any needed corrections, and send them with her comments and suggestions to me.

Items on (d) lists may be forwarded at once.

It will then be possible to sort out and put right any conflicts or distractions that may exist.

I wish to do all possible to make things run smoothly for you.
LRH ek.ei

Love, Ron,


L. RON HUBBARD Founder."


Date 1 April 1971

To: All Staff, SO and Scn Orgs
    LRH Comms

From: Ron

Subject: Routine of Thurs Reports

Your Thursday Reports are reports to me and I appreciate them. It's a tremendous flood of data reflecting tons of action to get the show on the road.

I have already given in No. 1 Programmes the basic actions needed to handle the major problems in orgs. Management at WW, Cont. and local level is mostly concerned with co-ordinating actions necessary to achieve the targets on the Programmes. Thursday Reports are not really necessary for this action, and the Reports are really my greatly valued comm lines to individual staff members.

So if LRH Comms will just mail the weekly packs of reports to me via OTL DK.

Your reports really keep me in touch with you.

Management lines have their own report and data lines. I'll back them up with broad advices and policies, as always.

Thursday Reports are my lines from individuals regardless of post or status. I value them very highly, as I value you.

LRH: nt.ei.

Love, Ron




62. In a letter to me dated 27th June 1970, Mr. Hubbard expresses the hope that my Report "will restore to me my lovely home in England which I am told is more beautiful than ever with the grounds bursting in blossom and where I had already retired. I will admit to having been somewhat irked in the last three years to be deprived of it . . ." Since this letter is headed "c/o Saint Hill Manor, East Grinstead, Sussex", I assume that this is the home he refers to. As will be seen in section (c) of this Chapter, this property was acquired on 16th January 1967 by the Church of Scientology of California (which describes itself as "a non profit Corporation in U.S.A. Registered in England"), and now stands in its books at a little over £160,000. According to the document which I quote in paragraph 68 below, the vendor was Mr. Hubbard.

63. It may perhaps also be relevant here to note that a report form, recommended by Mr. Hubbard in a Policy Letter dated 29th January 1970 to senior Scientology officials for reporting on the state of their organisations, contains these questions: -


26. Were any "threats" received from Creditors this week? ...................

27. Is the Org paying off any debt to LRH ? .....................

28. Is the Org paying off any debt to Pubs Org? .....................

29. Is the Org paying off any debt to the Sea Org ? .....................

30. Is the Org paging off any debt to SH ? .....................

31. Is the Org paying its 10 per cents? .....................

(b) Organisation in the United Kingdom

64. In answer to my first questionnaire, the Scientology leadership told me that there were now probably upwards of 150,000 people in this country who would call themselves Scientologists, with about 200 new members joining every week. About 60,000 had undergone "processing" at the two major centres at Saint Hill Manor or in London in the last five years, and an estimated further 15,000 had received free auditing. A further unspecified number had received auditing from "Missions" and individual auditors, and "emergency assists" had been given to other persons who had been injured or hurt.

65. The Scientologists also told me that the total number of their employees working in the United Kingdom had increased from about 95 in September 1965 to about 250 in May 1970, of which about 10% were performing management - as opposed to mere executive - functions. Ten were receiving processing in May 1970; any member of the staff may have free auditing if he wants it.

Local branches are now called "Missions" and these are located in the following places: -

* Burton on Trent
Sutton, Surrey
* Helensburgh
* London, N.W.3.
Petersfield, Hants.
Jersey, C.I.
Brightlingsea, Essex.
London, N.19.
of which the first ten have full Mission status. "Franchises" have also been granted to Missions in Loughborough, Quorn, Sheffield and Wymondham, as well as to those marked with an asterisk in the above list.


66. The writing paper on which representatives of the Scientology leadership now communicate with me is headed: -
"The Church of Scientology [of California (66)]

The Hubbard Scientology Organisation

WORLD WIDE. Founder: L. Ron Hubbard"

and at the bottom carries the following imprint: -
"Church of Scientology of California (A Non-Profit Corporation in the U.S.A. Registered in England)".
67. I asked the Scientologists what organisations connected with Dianetics and/or Scientology existed at the present time which were either incorporated in the United Kingdom or, being incorporated elsewhere, engaged in activities or were represented, in the United Kingdom. The reply was as follows: -
"(a) At the present time there are no active organisations connected with Dianetics or Scientology incorporated in the United Kingdom. There are a number of companies which are inactive and I believe that a number of them might have been wound up or are in the process of being wound up. These are H.A.S.I. (London) Ltd., HCO (WW) Ltd., HCO (St. Hill) Ltd., Hubbard Communications Office Ltd., Scientology Publications Ltd., Scientology Library and Research Ltd., HASI Ltd., and Dianetic Association Ltd.

(b) The main activities of Scientology in the United Kingdom are carried on by the Church of Scientology of California (non-profit Corporation in California registered under Part X of the Companies Act) with its branches at St. Hill Manor, London, Brighton and Swansea. There are also a number of Missions chartered by the Church which are listed under a separate answer. In Scotland there is the Hubbard Academy of Personal Independence and the Advanced Organisation, which are run by the Hubbard Foundation Scotland.

(c) Of course there are a number of other organisations in which Scientologists are actively involved. I do not know precisely how many but broadly the list would cover the National Council for Civil Liberties, the Scientology Ex-Service Men and Women's League, The National Trust, Conservation Society, the British Medical Association, the Royal College of General Practitioners, Campaign against Psychiatric Atrocities, Society for Individual Freedom, the Association for Health Development and Aid etc."

68. The true reasons for the transfer of the entire business to the Church of Scientology of California are very fully set out by Mr. Hubbard in the following HCO Executive Letter dated 12th March 1966: -

(66)These words appear sometimes but not always.



To: All Staffs

From: Ron


Well at last we are able to consolidate our corporate status in the UK and Commonwealth and S.A.

The big stumbling block has been Inland Revenue's refusal to grant non-profit status to limited companies. Without that we could not transfer the various organizations and US assets in the UK and Commonwealth to a UK or Commonwealth company.

For nearly 10 years, HASI Inc Arizona, has had to continue to operate in the UK and Commonwealth. In 1955 it found it cost the US office a fortune to support their overseas interests and they could not afford them. Currency exchange laws in UK. Aust, NZ etc. made it impossible for the Scientology offices there to pay the US office back for anything it furnished or did. This one way flow could be reduced by giving no service but even so left the US company at risk without pay.

In the mid-fifties a 12 man Board of Directors of which I was not a member determined to transfer all the HASI overseas offices to limited companies and be shut of them. I was appointed trustee for transfer.

But all the properties were non-profit and by the laws of Arizona no property of a non-profit company can be transferred to a profit company. Inland Revenue refused non-profit status to each of the limited companies I organized and I could not transfer the US assets to them. This was hard because the tax crazy UK and Commonwealth governments (their peoples are the highest taxed people in the world) demanded a limited company operate a year before Inland Revenue would say it was non-profit. So we would form a limited company and then after a year have the tax nuts say "No" and have to start all over again. This went on for 10 years! They would have gained all these US assets but no, they would not award a non-profit status.

HASI Ltd, HCO Ltd. local proprietary limited companies, one after another got the axe from Inland Revenue.

If you think that didn't make problems . . . . . !

Meanwhile the US offices continued to scream, cut off this expense of supporting England!

I supported a lot of these overseas companies with my own funds trying to get them to stand on their own feet. And at last in 1960 I organized the Saint Hill organization to help technology and to support the UK and Commonwealth. By Jan. 22, 1963, I was able at last to cut off the bulk of US support funds and handle things from Saint Hill for the overseas area particularly.

Finally, in January of 1966 while handling another lot of stupidity by Inland Revenue and UK accountants, I was able to sort out the picture.


The Church of Scientology of California was willing to take over all US, Commonwealth and South African interests. It is a Federal certified US non-profit corporation and Inland Revenue will apparently accept its certificate.

Thus for the first time I can execute my orders as Trustee and transfer the UK and Commonwealth properties off the back of the US HASI.

The companies are no longer absorbing US funds to keep going and a method of returning the US investment has been worked out by furnishing films and service to the US and not putting any further US funds into the Commonwealth. The Church of Scientology of California is willing to undertake this.

Rapidly the C of S of Calif as a foreign corporation (not as a new friendly society just being registered) is being qualified to do business through the UK and Commonwealth and every HASI office abroad is being turned over to it.

This means no change in staff or character of business. It means a change of name and bank accounts. All successful executive secretaries will be retained and things will go on as usual.

Every company of Scientology abroad is being turned over to C of S of Calif. by HASI, Inc. Arizona. This means HASI Ltd, HCO Ltd, and any and all inactive companies as well.

This finally gets me off the hook as personally supporting these companies.

I remain the US agent to effect the transfer and a HASI board minute of Feb. 20, 1966, directs all staffs and officers to assist me in making the transfer to C of S of Calif everywhere in the UK and Commonwealth.

I am of course a board member of C of S of Calif. and remain as Executive Director of the orgs.

Saint Hill, which was mine, is being sold to C of S of Calif, the other orgs are simply being given.

I receive no salary for my work and have no service contract with any organization. But I am consigning to C of S of Calif exclusive use of my name in connection with Scientology.

This makes a single, neat corporate structure.

Saint Hill (and probably London) begins to operate as C of S as of 5 April 1966. Other orgs will as fast as the Legal Officer at Worldwide can effect qualification of C of S in their countries.

The International Executive Division at Saint Hill is in firm control of Scientology and will continue to be and remains the Int Exec Div of each org in the world, authorized by their boards.

Such transfers are usually attended by a lot of heads rolling. But our statistics are mainly up and nothing desperate is planned.

Suppressives hate to see up statistics and as this new corporate structure will result in soaring statistics, being relieved of tax burdens. I dare say a


lot of rumour will be started to make people insecure about it. But if getting very legal and all arrangements solid is insecurity then mountains are the sea.

Our corporate structure has been attacked many times But oversees it could not be consolidated due to Inland Rev/enue. Some people are naive enough to believe the purpose of such offices is to collect tax. It isn't. It's a mechanism invented by suppressives to stamp on rising statistics. Don't believe it? Well, what would happen if you got a rise? That would be an up statistic for you but there would be a fine for it by Inland Revenue! They just refused to accept US assets, that's all The only cheerful note is that they'll break their own governments before they break us!

So we're getting all straight now, it seems. And good news! As all auditors will be ministers, ministers have in many places special privileges including tax and housing allowances.

Of course anything is a religion that treats the human spirit. And also Parliaments don't attack religions. But that isn't our real reason - it's been a long hard task to make a good corporate structure in the UK and Commonwealth so the assets could be transferred.

Apparently we've done it.

LRH: ml


Copyright © 1966
by L. Ron Hubbard

69. Dealing first with the overseas companies, recent searches at Companies House show the following: -
i) Hubbard Association of Scientologists was incorporated in Arizona on 10th September 1952 with an authorised capital stock of $200,000. It was duly registered here under Part X of the Companies Act. Mr. Hubbard and his wife Mary Sue are both shown as directors.

(ii)) Hubbard Association of Scientologists International was incorporated in Arizona on 1st September 1954 "to establish a religious fellowship and association for research into the spirit and the human soul and the use and dissemination" of Mr. Hubbard's findings. It also was duly registered here under Part X of the Companies Act. Both Mr. and Mrs. Hubbard were directors, but resigned on 21st July 1965.

(iii) The Church of Scientology was incorporated in California on 18th February 1954, and changed its name to "The Church of Scientology of California" on 19th June 1956. On a notice dated 22nd March 1966, both Mr. and Mrs. Hubbard are shown as directors, but they resigned on 27th September 1966. It seems that two months earlier - on 1st August 1966 - Mr. Hubbard also resigned as President, but this was not notified to the Registrar until more than three years later, on 2nd September 1969. Other directors come and go: in one period of 32 months there were 13 changes. At a special meeting of the Trustees held on 26th February 1966 a resolution was


passed "that in order to better achieve Article 2(b) of the Articles of Incorporation a seminary be established to be called the Hubbard College of Scientology and that it shall first be situate at Saint Hill Manor, East Grinstead . . . and be so administered that it be granted charitable status". There are references on the file to a "Mother Church", apparently the Church of American Science of Camden, New Jersey.
70. Of the other Scientology companies mentioned in the Scientologists' reply to my question, searches conducted at Companies House between July and October 1970 disclose the following: -
(i) H.A.S.I. (London) Limited was incorporated on 20th December 1963. Only two £1 shares have ever been issued. Its main object is "to conduct and carry on any and all kinds of scientific research, especially with reference to the human mind, spirit and soul, in mental, psychosomatic and allied fields . . . by means of . . . Scientology". Mr Hubbard has never been a director. No annual returns have been filed since 31st December 1968.

(ii) H.C.O. (WW) Limited was incorporated on 5th December 1963. Again, only two £1 shares have been issued. Its main object is the same as that of H.A.S.I. (London) Limited. Mr. Hubbard has never been a director. Again, no annual returns have been filed since 31st December 1968.

(iii) H.C.O. (St. Hill) Limited was also incorporated on 5th December 1963. Once more, only two £1 shares have been issued. Its main object is the same as that of H.A.S.I. (London) Limited. Mr Hubbard has never been a director in a report for the two years down to 5th April 1969, the directors said that the Company had engaged in no activities.

(iv) Hubbard Communications Office Limited "trading as Hickstead Garage" was incorporated on 30th December 1960 with an authorised share capital of £300,000, divided into 1000 £1 voting shares, 3,380 non-voting £25 "A" shares and 40,400 non-voting £5 "B" shares. Eleven of the £1 voting shares have been issued one to Mr. Hubbard and another to his wife. None of the other shares have been issued. Mr. Hubbard is a governing director not subject to retirement. No annual returns have been filed since 26th May 1967. According to a statement in lieu of prospectus, the company was going to grant a franchise to the Hubbard Association of Scientologists in return for "a red apple and sixpence per annum . . . said contract being subject to good usage but without termination date".

(v) Scientology Publications Limited was incorporated as long ago as 30th January 1954. Mr Hubbard holds 51 out of 57 £1 shares issued Both he and his wife were appointed directors on 24th November 1955. He but not she - resigned on 30th December 1966. No annual returns have been filed since 31st December 1967.

(vi) Scientology Library and Research Limited was incorporated on 7th February 1964. Here again, only two £1 shares have been issued. The main object is once more "to carry out scientific


reseach". Mr Hubbard had never been a director, and no annual returns have been filed since the end of 1968.

(vii) HASI Limited (actually called "Hubbard Association of Scientologists International Limited") was incorporated on 20th June 1960 with an authorised share capital of £250,000 in 10,000 £25 shares, of which f28,750 was issued. Mr and Mrs Hubbard were both directors: he resigned in 1966, she in 1968. No annual returns have been filed since December 1968.

(viii) Dianetic Association Limited is the oldest company of all, having been incorporated on 3rd November 1951 as a company limited by guarantee. Its main object is "to encourage and develop science and practice of the method of psychotherapy known as Dianetics and of other methods approved by the Association". Membership is open to any person "who has passed an examination or other test approved by the Council", furnishes "evidence of professional competence" or "is thought by the Council to be a fit person". Mr Hubbard was a director until 18th May 1957. The last annual return was filed on 31st December 1968, according to which the Company had conducted no activities.

There is no indication on the files of any of these companies having been wound up, or being in the process of being wound up.

71. Soon after HASI Limited was formed in 1960, Scientologists were invited to subscribe for its shares at £25 each. When Hubbard Communications Office Limited was formed soon afterwards, it was suggested that HASI Limited should allot to that company 3000 of its voting shares in return for 3000 of the latter's non-voting shares, thus giving the holders of H.C.O. Limited's voting shares (of which only 11 were ever issued) control over both companies. This scheme was eventually abandoned because, it was said, HASI Limited had not obtained non-profit status. What happened instead was that the holders of HASI Limited's £25 shares were invited to sell them to HASI of Arizona for 1/- and a "lifetime membership", the seller to pay the stamp duty: -

"Hubbard Communications Office,
37 Fitzroy Street,
London, W.1.

Tel: LAN 3601-4

Dear Shareholder,

As you may know, the government would not grant HASI Ltd. a non- profit status and we are going to remain HASI Inc. of Arizona.

Therefore, HASI Arizona, a bigger company, is offering to buy your share for 1/- and a lifetime membership (gratis).

This way you are enabled to be "aboard" the organization that contains the bulk of Scientology activity. HASI Arizona is the Org where the Main Show is going on and we don't want to leave you sitting in a Side Tent just because of a government's error. So this offer is to bring you over to the Big Tent. And the Main Show is starting. Technology has been researched and polished to a fine point and we've started to E X P A N D.


As HASI Arizona does not have capital stock, we can't offer to exchange HASI Arizona stock for HASI Ltd. stock. But we can and do offer you your Lifetime Membership. This is the way it's done.

By law, HASI Arizona, as transferee, has to make a nominal monetary payment. We are therefore offering you the nominal consideration of 1/- for your share (mark the consideration of 1/ on the form in the space provided.) That means that as soon as we receive your share transfer form we shall send you the sum of 1/- plus a HASI Lifetime Membership.

When you have completed the form please post it to: -

      Controller of Stamps,
      Direct Post Section,
      West Block,
      Barrington Road,


The Controller of Stamps will calculate the stamp duty (approx 4d for 1/-) and notify you of the duty you have to pay. When you have paid this sum the stamped form will be returned to you, and you then forward it to us.

We shall very much appreciate it if you will complete the transaction as soon as possible.

Yours sincerely,

HCO Area Secretary.

P.S. In the event you have more than one share, you may effect the transfer, and name someone of your choice for the Lifetime MEMBERSHIP or HASI Arizona will buy it (them) from you for the nominal consideration of £25.

72. This offer was later increased to 1/- plus a Fellowship at Saint Hill, the purchasers to pay the stamp duty: -

Saint Hill Manor,
East Grinstead,

18 October 1965

Dear Sir or Madam,

We wish to bring to your attention that the H.A.S.I. Inc. of Arizona offers you, without further dues, a Fellowship of the College of Scientology now under construction at Saint Hill and to buy your share in H.A.S.I. Ltd. for one shilling. H.A.S.I. Arizona is the proprietor of the College.


(2) The object of this operation is to transfer the activities of H.A.S.I. Ltd. to H.A.S.I. Arizona, and so gather all Scientology activities in one large organisation. This will aid efficiency and permit economies. We are confident of your support in this progressive measure.

(3) The benefits of a Fellowship of the college are 10% discount on all books and meters purchased through the organisation and not marked 'net' or 'no discount' in price lists (usually items costing 6/- or less). If you have International membership the discount will be increased to 30% on books and 20% on meters.

(4) A share transfer form is enclosed which on completion should be forwarded in the enclosed envelope to H.A.S.I Inc. of Arizona, Saint Hill Manor, East Grinstead. Stamp duty on the transfer will be paid by H.A.S.I. Ltd.

(5) It is regretted that this offer cannot be kept open indefinitely, therefore, it will apply only to transfers received up to and including the 15th December, 1965.

Yours faithfully,

Mary Sue Hubbard

M. S. Hubbard, Secretary,BR> H.A.S.I. Inc. of Arizona

73. There are two further companies on the English register which were not mentioned in the answer to my question: -
(i) Scientology Consultants to Industrial Efficiency Limited, another £2 company incorporated on 23rd May 1957, whose annual returns for once are up to date. Its main object is "to increase the efficiency of companies, businesses, organisations and individuals by the specialised techniques of Scientology." Mr Hubbard has never been a director.

(ii) Hubbard Explorational Company Limited, which was not incorporated until 22nd November 1966. Mr. Hubbard (described as an "Expedition Supervisor") holds 97 of the l00 £1 shares, and he and his wife are the only directors. Mrs. Hubbard is the Secretary. The main object is "to explore oceans, seas, lakes, rivers and waters, land and buildings in any part of the world and to seek for, survey, examine and test properties of all kinds."

74. Two further Scientology organisations deserve mention. The form of Contract and release which I quote in paragraph 135 below is expressed to be made with "Operations and Transport Services Limited." No company of that name has ever been incorporated in the United Kingdom, and none is registered under Part X of the Companies Act, as it would have to be if it were a company incorporated abroad which has a place of business in the United Kingdom.

75. Lastly, there is an entity called the "Sea Org" which came to my notice in the course of my enquiry. I asked the Scientologists to supply me


with full particulars of its nature and activities, and this was Mr. Gaiman's reply: -
"(I have a personal theory that the Sea Org was set up by a consortium consisting of Granada TV, the News of the World, the Daily Mail, and the "People" to provide them with copy for the summer of 1968).

The Sea Org (Sea Organisation) was actually started in 1966-67. At about that time Mr. Hubbard had resigned his trusteeships and directorships and from the active participation in the running of all the Churches of Scientology.

At that time, as I understand it, he was very interested in ancient civiliations and wanted to take a boat to the Mediterranean to do some exploring and research. Some Scientologists went with him, and, as usually happens, more wanted to join. One result of his researches was the book "A Test of Whole Track Recall", which you probably have read.

Inevitably, the Sea Org, which was a colloquial name which stuck, grew.

After the former Health Minister made his famous announcement to the House on 25th July 1968, the Home Office wrote to Mr. Hubbard informing him that he would be refused leave to land in the U.K. in spite of the fact that as early as 1963 all his landing conditions had been permanently revoked.

The Sea Org became more or less permanent, and the members of the Sea Org today have a number of functions. The first is to assist Mr. Hubbard with his researches. Most of them are experienced Scientologists and expert auditors. Some of them tour the world on goodwill missions, and visit the various Churches to bring advice and assistance. They are today very much interested in the philosophy of management, which Mr. Hubbard has been recently researching

They are sea-born for a number of reasons. One is that Mr. Hubbard is sea-born. Another is that it has been found that it is excellent training for people to come to grips with sea and with the workings of ships. It is a practical experience which it is not easy to find on land, and makes for competent, practical people. Another is that a ship is a very quiet and safe environment, free from the distractions of shore life, and is a good place in which to engage in auditing and research. They also appear to have a lot of fun.

As the Sea Org itself is not part of the corporate Church of Scientology, there is not much in the way of policy documents affecting it. It seems that it just "growed up". I have been able to find a number of "Auditor" magazines which mention it, which I enclose.

Sea Org members are very dedicated Scientologists, and many sign a "billion year" contract on joining up, after their initial probation period. This may be likened to the final vows of some religious orders. It is a commitment. This does not preclude them from taking leave, which in my experience ranges from the normal 3 week holiday to periods of 2 years or more, nor from leaving the Sea Org altogether if they wish to.

They wear normal maritime uniform, which is optional when they are on land.


The Church has chartered some Sea Org vessels, originally to provide a safe environment for staff training and also to provide somewhere where students coming to Saint Hill could go in order to complete their training and auditing, which became more and more difficult at Saint Hill as the Home Office became more restrictive with visas."
In a later letter, Mr. Gaiman told me that Sea Org had, in the last five years, owned, chartered or operated no fewer than six ships: The Royal Scotman, Avon River, Enchanter, Aries, Neptune and Bolivar.

The following is the wording of the "billion year contract": -

"I , ... , DO HEREBY AGREE to enter into employment with THE SEA ORGANIZATION and, being of sound mind, do fully realize and agree to abide by its purpose which is to get ETHICS IN on this PLANET AND THE UNIVERSE and, fully and without reservation, subscribe to the discipline, mores and conditions of this group and pledge to abide by them.


(As per Flag Order 232)"

The following quotations from an HCO policy letter dated 7th December 1969 and signed by Mr. Hubbard may also be thought relevant: -
"It is very easy for a staff member and even an Ethics Officers to completely misunderstand Ethics and its functions. In a society run by SPs and controlled by incompetent police the citizen almost engramically identifies any justice action or symbol with oppression."

"Yet in the absence of true Ethics no one can live with others and stats go down inevitably. So a justice function must exist to protect producers and decent people."


"The Ethics Section is in Department 3. This department is called Inspection and Reports."

"In small orgs there is only one person in that department."

"Because he has files of damage reports and chits and because he can see and investigate, the Ethics Officer locates WHO is causing outnesses and suppressing the Org. By condition assignments, publication and Comm Evs he gets in Ethics (67).

"It occasionally happens that it is someone high up in the Org. It sometimes happens his seniors or the EC scold him for daring to report on things or to them. Then he knows the suppression is high up and he is delinquent in duty if he does not report it to the next highest Org and if no action there right on up to the Sea Org. Anyone removing him for daring to report the factual reports of his inspections

(67) The role and procedures of Scientology Ethics are described more 
    fully in Chapter 7 of this Report.


can be severely handled by upper organisations. The Ethics officer can only be in trouble if he fails to do his job and keep in Ethics."

(c) Finances

76. On 10th July 1970, I asked the Scientology leadership to supply me with copies of the certified accounts for the past five years of each of the Scientology and Dianetics organisations which had been active in the United Kingdom at any time during that period. The auditor of the Scientology organisations, Mr. D. B. M. Field, A.C.A. of East Grinstead, wrote on 3rd August 1970 as follows: -
"I am afraid that I cannot supply you with copies of the last 5 years' certified accounts at the moment, as I have not certified any accounts. I expect to have completed and certified the accounts by Christmas this year at the very latest, and possibly sooner."
77 I therefore asked instead for the draft accounts, uncertified, for the same five-year period, of these organisations. In answer to this, I was sent on 28th September 1970 three sets of draft accounts only: one for the 15 month period from 1st January 1965 to 5th April 1966, and one each for the years ending 5th April 1967 and 5th April 1968. Those ending in 1969 and 1970, I was told, would not be ready for "several months".

78. A search of the Companies Register confirms that, despite the requirements of the Companies Act, no accounts have ever been filed for these companies.

79. These draft accounts, evidently regarded by the Scientology leadership as the accounts reflecting the financial affairs of Scientology in the United Kingdom, disclose the following information relevant to this enquiry: -

(i) Those for the period 1st January 1965 to 5th April 1966 are headed "Hubbard Association of Scientologists International Inc.", while those for the two succeeding years are headed "Church of Scientology of California, Diocese of the United Kingdom." This would seem to accord with what Mr. Hubbard says in the policy letter dated 12th March 1966 which I have quoted in paragraph 68 above.

(ii) The accounts show the following sources and amount of income: -

                    1.1.65-5.4.66    year to 5.4.67   year to 5.4.68
Training and 
processing less        £279,418         £418,326         £973,239

Gross profits from 
sales of books,          23,046           28,662           66,341
meters and sundry

Other                     6,184           10,289           36,438

                       --------         --------       ----------
Total Income           £308,648         £457,277       £1,076,018

On any view, Scientology in the United Kingdom during this period was a big, and fast expanding, business.


(iii) Among the conventional business expenses appear the following:

                      1.1.65-5.4.66   year to 5.4.67  year to 5.4.68
                        £    % of       £    % of        £    % of
                             total           total            total
                             income          income           income

Staff salaries        82,691  23.7   138,517  30.3    175,556  16.4
Directors' salaries    3,125   0.9     2,914   0.6      2,383   0.2
Advertising and 
 Promotion            35,995* 10.3    21,048   4.6     50,913   4.7
Commissions payable   10,126   2.9    33,039   7.2     63,723   5.9
Postage and Carriage  16,493   4.7    24,636   5.4     50,677   4.7
Travelling and Motor 
 expenses             6,549    1.9     7,288   1.6     15,672   1.5
Provision for bad
 debts                42,150  12.1    39,426   8.6      7,487   0.7

* including "printing, stationery and sundry office expenses."

None of these calls for any special comment.

(iv) In each of the three periods, there is an item called "Expenditure on United States Mailing List and Promotion". In the first period, this amounts to £87,500; in each of the succeeding years it is charged at £70,000. In the first period only, there is also a "Franchise licence fee" of £27,064.

(v) After charging all these expenses, and others of a usual kind, the first period shows a loss of £59,939 and the following year shows a profit of £52,617.

(vi) Surprisingly, the last period - the year to 5th April 1968 - shows a loss of £20,297 despite the fact that the total income has more than doubled and that the conventional expenses have by no means risen in proportion. This loss is arrived at after charging the following items, none of which had been an expense of the business in either of the earlier periods: -

"Technical & educational" . . . .  . . . . . . . . .  £160,312
"Cost of research & expansion projects"  . . . . . . . £93,179
"Service charge for New York Scholars payable 
to Church of Scientology, New York"  . . . . . . . . . £15,741
"Losses on Rhodesian Mission Branch" . . . . . . . . . £33,171

Further, the item which in the previous year had been called "Printing, stationery and sundry office expenses - £23,606" has now become "Printing. stationery and sundry office expenses and Central Administration" and has leapt to £141,085, while "Legal and professional charges - £12,527" has become "Legal and professional and Consultancy" at no less than £175,479. The total of these new and increased items is £582,834.


(vii) The Balance Sheet as at 5th April 1968 shows that, on 16th November 1967, the business had acquired the freehold of Saint Hill Manor and its grounds (which had previously been held on a lease, apparently from Mr Hubbard) for an outlay of £79,410. Expenditure incurred on the buildings both before and after this date amounted to £81,203 and the property therefore stands in the books at £160,613.

(viii) Despite this major item of capital expenditure, the cash at bank and in hand on 5th April 1968 was £351,073, an increase of £238,420 over the year, on top of an increase of £91,964 in the previous year. Evidently, Scientology in the United Kingdom has no cash flow problem.

(ix) On the liabilities side, the following items appear as at 5th April 1968: -

"Amounts due to HASI Inc" . . . . . . . . . . . . . . £64,516
"Amounts due to U.S. Churches of Scientology" . . .  £227,500
"Amounts due to associated companies" . . . . . . . . £80,743

The second of these items has increased in successive Balance Sheets by the exact amount of successive charges for "Expenditure on U.S. Mailing List and Promotion" from which I infer that this expenditure, although charged to revenue in the accounts, has not in fact been paid.

(x) As against that, £3,129 is shown as "Owing by associated companies in the United Kingdom", but all of it is treated as a bad debt. £76,567 is shown as "Owing by Overseas Scientology Organisations", and a provision for bad debts is made against this in the sum of £37,269.

(xi) According to the balance Sheets, the following amounts, with the following provisions for bad debts, were "Owing by students" on the respective dates: -

                            5.4.66      5.4 67      5.4.68
Owing  . . . . . . . . . . £48,780     £57,946     £64,285
Less provision . . . . . . £25,689     £47,543     £50,824

(xii) The 1968 Balance Sheet also shows, for the first time, a single loan creditor at £10,059.

80. So much for the main business, owned during the period under review first by HASI and then by the Church of Scientology of California, both being Arizona companies registered here under Part X of the Companies Act as having a place of business in the United Kingdom. Under the provisions of those Acts, accounts should be filed annually relating to the whole of the company's business and not only to that in the United Kingdom. In fact, no accounts have yet been filed at all, and the drafts which were sent to me relate only to the United Kingdom business.

8l. As for the financial affairs of the other Scientology companies,

(i) No accounts have been filed by H.A.S.I. (London) Limited, H.C.O. (WW) Limited, Scientology Publications Limited, Scientology Library and Research Limited, Dianetics Association Limited or Hubbard Explorational Company Limited.

(ii) According to the latest available directors' report of H.C.O. (St. Hill) Limited, that company had on 5th May 1969 no fixed assets, and had lost £3,180 by that date. Mr Hubbard owes it £1,045.

(iii) Scientology Consultants to Industrial Efficiency Limited has filed up-to-date accounts, showing accumulated losses of £655 down to 31st October 1969.

(iv) According to the last set of accounts filed for Hubbard Communications Office Limited (which run to 30th April 1966) that company seems to have been conducting an unsuccessful garage business. The auditors' certificate is heavily qualified: various documents could not be traced, vehicles had vanished, "the sales figure in the trading account cannot be regarded as anywhere near accurate", and there had been litigation with a manager who went bankrupt. The company ended up owing Mr. Hubbard £1,056, and his successor's report as Chairman, dated May 1967, is worth quoting if only for its refreshing brevity: -

" My illustrious predecessor reported to you last year.

Unfortunately the financial state of our company is not as we would have liked it."

(v) From the accounts which have been filed by HASI Limited, it seems that before about 1966 this was the parent company for the Scientology branches in London, New Zealand and South Africa. However, since then. the company seems to have been dormant, and on 5th April 1968 the New Zealand branch of HASI of Arizona was shown as still owing it £747, the South African branch £7,307, and the London branch £6,913. Accumulated losses to that date are given as £11,928.


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