by Paul Simpson
We did find evidence, upon evidence, upon evidence where the CIA said: ‘No, don’t do it.’ The State Department or the White House said, ‘We’re going to do it.’ The CIA was much more professional and had a far deeper reading on the down-the-road implications of some immediately popular act than the executive branch or administration officials. One thing I really disagreed with Church on was his characterization of the CIA as a ‘rogue elephant.’ The CIA never did anything the White House didn’t want. Sometimes they didn’t want to do what they did.
Colby was certain about the effect that the work of the various committees was having on the CIA: ‘These last two months have placed American intelligence in danger,’ he said in May 1975. ‘The almost hysterical excitement surrounding any news story mentioning CIA or referring even to a perfectly legitimate activity of CIA has raised a question whether secret intelligence operations can be conducted by the United States.’
The end result of the various committees was that the CIA came under increased government scrutiny, not just operationally but also in terms of its budget. Its days of plausible deniability and acting at one remove from the president were gone. Thirty years after its creation, with a new DCI, future US President George H.W. Bush, the CIA was forced into a new role.
In addition to the openness being imposed on it by demands from the oversight committees, the CIA also had to deal with information being revealed publicly by one of their own former officers. Philip Agee, who had left the Agency in 1969, published Inside the Company: CIA Diary, an exposé of CIA practices, in Britain in January 1975. Supported by the KGB, it named 200 officers worldwide, and accused the CIA of corrupt practices: ‘In the CIA we justified our penetration, disruption and sabotage of the left in Latin America — around the world for that matter — because we felt morality changed on crossing national frontiers,’ Agee wrote. He added to his revelations in the extreme left-wing magazine Counterspy — and as a direct result, Richard S. Welch, the CIA station chief in Athens, was murdered in December 1975.
Agee willingly passed information to the KGB, who in return gave him more material: his books Dirty Work: The CIA in Western Europe and Dirty Work: The CIA in Africa, blowing the cover of a further 2,000 agents, were supplemented by the Covert Action Information Bulletin, which was able to publish secret CIA documents.
In 1980 the US Senate Intelligence Committee, set up in the wake of the Church and Pike committees, revealed how damaging Agee had been to the CIA. This led to the Intelligence Identities Protection Act (known as the ‘anti-Agee’ bill), which made it a federal crime to intentionally reveal the identity of a covert intelligence agent. (One of those who voted against the act was Barack Obama’s vice-president, Joe Biden.) This curtailed Agee’s activities considerably.
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The general dismay within the Western intelligence world was not alleviated by the discovery of Gunther Guillaume at the heart of the West German government. The self-described ‘partisan for peace’ had become one of chancellor Willy Brandt’s most trusted aides following the 1972 election. Even though Guillaume came briefly under suspicion the following year, the charges weren’t taken seriously, particularly by Brandt, who later admitted he had overestimated his knowledge of human nature. Guillaume was able to pass over material sent to Brandt by President Nixon, as well as the many pieces of confidential NATO documentation that passed through the office. However, the West German counter-intelligence department was still suspicious, and in April 1974 Guillaume and his wife were arrested and admitted their guilt. Willy Brandt resigned the following month, something that the Stasi didn’t really expect, or want, according to its former chief Markus Wolf. It was ‘equivalent to kicking a football into our own goal’ — a simile that could have applied to many other agencies’ activities during that period.
9
REBUILDING
The late seventies would see both sides in the Cold War try to regain the ground that had been lost in the earlier part of the decade. New ideas were tried out, new agents recruited — although the KGB noted that it was much harder to gain ideological recruits during this time. The majority of agents were motivated by money.
One of the more unusual Soviet plans sought to gain intelligence on American military capabilities, but was derailed by the CIA’s Operation Silicon Valley. Unlike the KGB scheme to ruin the area as seen in the 1985 James Bond movie, A View to a Kill (in which Soviet agent Max Zorin attempted to flood Silicon Valley), this was espionage by stealth.
Described by the CIA later as ‘part of… a broad Soviet effort to acquire Western technology for military and commercial purposes’, the Soviet plan, developed in 1973, was to buy banks that were financing developments in Silicon Valley, the heartland of American technological progress, and thereby gain access to their secrets. Three banks were targeted to be approached by their intermediary, apparently wealthy Hong Kong businessman Amos Dawe: the Peninsula National Bank in Burlingame, the First National Bank of Fresno, and the Tahoe National Bank in South Lake Tahoe. At the same time, Dawe’s associate Y.T. Chou was trying to gain a half-interest in the Camino California bank in San Francisco.
The manager of the Singapore branch of the Moscow Narodny bank offered to finance Dawe’s future plans if he would travel to the States to make the purchases. The KGB hoped to eventually gain control of twenty separate institutions, each worth around $100 million. The genius of the plan was that such a takeover wasn’t illegal at the time under American law — once the sale had taken place, Dawe could appoint whosoever he wished to be his representative on the board. And, of course, that would have been a KGB agent.
A $1.8 million first down payment on the triple transaction was made before an astute agent at the CIA noticed a peculiar lending pattern by the Narodny branch: money was going from Singapore to the Pacific Atlantic Bank in Panama, to the Commerce Union Bank in Nashville, Tennessee, and, finally, by letters of credit, to Dawe in San Francisco. Rather than simply expose Dawe’s actions, the CIA set up Operation Silicon Valley; in October 1975, the Agency leaked their information to the publisher of the Hong Kong financial newsletter, Target. As soon as the story was published, the Narodny bank withdrew its funds, leaving Dawe vulnerable and broke — and then the Soviets even tried to sue him for the return of the monies already supplied. Contrary to some reports, Dawe was eventually convicted of fraud in Hong Kong, and sentenced in 1985 to five years’ imprisonment, serving only half. He disappeared after his release and his Hong Kong company was compulsorily wound up in 2009.
Similarly motivated by greed was one half of a pair of spies who would gain notoriety under their code names, the Falcon and the Snowman, particularly after a film of their exploits was made starring Timothy Hutton and Sean Penn as the eponymous KGB assets. Although the film was a fictionalized version of events, based on a book by journalist Robert Lindsey, many spy histories have treated it as a documentary.
‘The Falcon’ was Christopher John Boyce, who had taken up falconry as a hobby as a youngster; ‘the Snowman’ was Andrew Daulton Lee, whose nickname derived from his drug-dealing activities. While it was Boyce who found himself in a position to benefit the KGB, Lee was the one who walked into the Soviet embassy in Mexico City in April 1975 offering the secrets. The two had known each other since they were boys; Lee had drifted into drug-dealing while Boyce had been able to find a job working at the TRW Corporation in Redondo Beach, California. TRW had been at the forefront of development of America’s first Inter-Continental Ballistic Missiles, as well as the Pioneer spacecraft for NASA. At the time Boyce was employed there, they operated the satellites in the Defence Support Program, and Boyce worked in the ultra-secret ‘black vault’ room, which housed the coding equipment for the CIA, his job being to change the ciphers daily.
Boyce accordingly had access to some of the most secret material in America, including details of the Rhyolite satellite and its planned successor, Argus, an essential part of the surveillance of both the Soviet and Communi
st Chinese. He would also see other ‘chatter’, including information regarding the CIA’s alleged role in influencing the Australian labour unions against the then-prime minister Gough Whitlam. He therefore proposed to Lee that he would copy material which Lee could then take to the Soviets and sell — although Boyce would maintain that his primary purpose for his treason was his disgust at American behaviour: ‘I have no problems with the label traitor, if you qualify what it’s to,’ he told an Australian reporter in 1982. ‘I think that eventually the United States government is going to involve the world in the next world war. And being a traitor to that, I have absolutely no problems with that whatsoever.’
Although appalled at the lack of sense demonstrated by Lee in coming direct to the highly watched embassy in Mexico, the KGB realized that they had access to prime material. Over the next eighteen months they not only provided Lee and Boyce with around $77,000 for their efforts (of which Boyce only received around $20,000), but also trained Lee in basic tradecraft. Unfortunately, Lee’s drug use increased with his available spending money, and he became more and more careless.
Boyce eventually travelled with Lee to Mexico, where their KGB handler proposed that Boyce leave TKW and go back to college, with a view to becoming a longer-term agent working for Moscow Centre. Boyce agreed to do one final job — photographing the technical drawings for TRW’s new satellite, the Pyramider. This would net a further $75,000.
Lee missed his rendezvous with the KGB on 5 January 1977, and, in total breach of all tradecraft and common sense once more, threw a package containing the negatives of the designs into the Soviet embassy grounds the next day. He was instantly arrested by the Mexican police, and the films were developed. Lee eventually admitted he was a spy, but claimed he was working on a disinformation operation for the CIA.
Boyce was arrested a few days later. The two men were tried separately; Boyce claimed that the material on Pyramider had been over-classified, since the project didn’t go ahead, and that Lee had blackmailed him into continuing with the treachery. He was found guilty and sentenced to forty years’ imprisonment. He would later escape and go on the run, allegedly planning to fly from Alaska into the Soviet Union, but he was recaptured before he could try. Lee’s lawyers maintained his story that he was part of a CIA disinformation plan, and that both he and Boyce had been abandoned by the Agency when they got into trouble. Lee was sentenced to life imprisonment.
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As in Britain, during the seventies the KGB concentrated on scientific and technical espionage against the country they regarded as ‘The Main Adversary’ — the United States. Their attempts to penetrate the inner circles of the Nixon and Ford administrations met with little success, although Secretary of State Henry Kissinger was one of many policymakers to grant favoured access to Soviet ambassador Anatoli Dobrynin, much to the annoyance of the KGB, who wanted to cultivate their own ‘back door’ to the power players in Washington. They had slightly more luck with the United Nations, with KGB agents becoming personal assistants to the secretaries-general from U Thant to Javier Pérez de Cuéllar. However they had to admit in 1974 that ‘For a number of years the Residency has not been able to create an agent network capable of fulfilling the complex requirements of our intelligence work, especially against the US.’ When Jimmy Carter became president in 1977, attempts were made to capitalize on previous friendly relationships between Soviet officers and Secretary of State, Cyrus Vance, and National Security Advisor, Zbigniew Brzezinski. Neither succeeded. Valdik Enger and Rudolf Chernyaev, two KGB agents at the UN, were arrested by the FBI in May 1978 after accepting classified information about anti-submarine warfare from a US naval officer who was actually working for the FBI and the Naval Investigative Service (the forerunner of the NCIS, as featured in the popular TV show).
The KGB were far more successful recruiting scientists. The Falcon and the Snowman weren’t the only TRW employees engaged by the KGB — a scientist, code-named Zenit, was recruited a year after Boyce’s arrest. There were agents at IBM and McDonnell Douglas, and researchers at MIT, the Argonne National Laboratory and the US Army’s Material Development and Readiness Command. Some of these agents were approached on a personal level by Soviet colleagues in the same field; others worked purely for cash.
Inevitably, some were caught. Dalibar Valoushek, a Czech border guard, had been placed under cover in Canada in 1957, and ten years later become the controller for the KGB’s most important Canadian agent, Hugh Hambleton, whose access to research projects made him an ideal spy. However a year later, Valoushek was moved to New York and ordered to infiltrate the think tank, the Hudson Institute. When this proved unfeasible, Valoushek was removed from the assignment. In 1972, he told his son Peter of his double life, and recruited him into the KGB; Peter was trained in Moscow and sent to McGill University in Montreal and later Georgetown University, looking for students whose parents had government jobs, or other likely recruits. However in May 1977, Valoushek senior was arrested and turned by the FBI.
According to KGB files, for the next two years, Dalibar Valoushek tried to inform Moscow Centre that he was now a double, but no one took any notice. The FBI tried to use him to put pressure on Hambleton in 1980, but the latter was confident that he could not be arrested. ‘A spy is someone who regularly gets secret material, passes it on, takes orders, and gets paid for it,’ he said at the time. ‘I have never been paid.’ The RCMP and the Canadian Ministry of Justice tried to bring charges, but found insufficient evidence. Hambleton was eventually arrested when visiting London in 1982.
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Three key KGB agents provided material throughout the seventies: two in the US, one in Europe. John Anthony Walker, Karl Koecher and George Trofimov were all busy during this period, passing classified information often in exchange for large sums of cash.
Walker had volunteered his services to the Soviets in 1967 when he was working in the communications room for the US Navy’s submarine operations in Norfolk, Virginia: ‘I’m a naval officer,’ he told staff at the Soviet embassy in Washington. ‘I’d like to make some money and I’ll give you some genuine stuff in return.’ The first item he stole was a key list for an old cryptographic machine — which, it was later suggested, led directly to the North Koreans’ desire to capture the US spy ship, the USS Pueblo, a month later — and from there on photographed multiple documents, claiming sarcastically that ‘K Mart has better security than the Navy’. Although Walker retired from the Navy in 1976, he had already recruited his friend Jerry Whitworth, and later brought in his own son and elder brother so that the work could continue.
Karl Koecher and his wife Hana, meanwhile, were actively working for the KGB from within the CIA. The pair were originally Czech StB agents sent across as illegals in 1965; they had broken off contact with the StB in 1970, but tried to build bridges with their former employers in 1974, a year after Karl had begun working in the CIA’s Soviet division. This brought them to the attention of the Soviets, who took over their case. Highly sexually active (and apparently with all the allure of Mike Myers’ spoof spy Austin Powers — ‘a terrible lover’ according to one report), Koecher was able to pass on compromising information on Washington officials, as well as classified Soviet and Czech material. Koecher went freelance in 1975 but continued to supply the KGB, passing on information that would compromise the CIA’s Moscow asset Aleksandr Ogorodnik in 1977.
George Trofimov was a retired US Army colonel based in Germany as a civilian who in 1969 became Chief of the United States Army Element at the Nuremberg Joint Interrogation Centre, giving him access to very high levels of documents. He was recruited to the KGB by his boyhood friend, Igor Vladimirovich Susemihl, a bishop in the Russian Orthodox Church. This wasn’t as unusual as it might sound: the KGB often used the church and its officials within its schemes. Throughout the seventies and eighties — and until his retirement in 1995 — Trofimov sent material to Moscow via Susemihl, who continued to rise within the Orthodox Church, eventu
ally achieving high rank as the Metropolitan of Vienna.
West Germany was a useful source of information for the Soviets. The ‘secretaries initiative’ continued to reap dividends. Margret Hîke passed on information from the office of the West German president from 1968 throughout the seventies, in exchange for 500 marks a month and expenses. Using a camera disguised as a tube of lipstick, she gave the KGB ten volumes of documents between 1968 and 1980, including mobilization plans, details on the government war bunker, and accounts of the president’s meetings with foreign diplomats.
Heidrun Hofer, a secretary in the BND, was seduced by an East German illegal who claimed to be part of a neo-Nazi group of German patriots; she continued to spy even after deducing she was working for the KGB. She was arrested in 1977 and tried to commit suicide when her unsuspecting BND fiancé broke off their engagement as a result of her confession.
Elke Falk was equipped with a camera disguised as a cigarette lighter and a fake can of hairspray to put her films in. Working initially in the West German chancellor’s office after her recruitment in 1974, she was transferred to the transport ministry in 1977 and then to the economic aid ministry two years later.
In France, the KGB’s longest-serving agent, ‘Jour’, continued to impress, singled out for a large bonus personally approved by KGB chief Andropov between 1973–75. The cipher clerk at the Foreign Ministry was recruited by the Soviets at the end of the Second World War and allowed Moscow to read French SIGINT, including their discussions with their embassies during the Cuban Missile Crisis. New teleprinters installed in the French Embassy in Moscow over the winter of 1976 were bugged thanks to his information, and he continued to assist with recruiting new agents right to the end of his thirty-seven year career as a Soviet spy.
The Italian Embassy in Moscow was one of the KGB’s key targets, and ‘swallows’ were used to honey trap key employees. Some of these, including a senior diplomat codenamed both Artur and Arlekino, were then used as spies within Italy itself. The KGB also targeted scientific personnel, with code name Uchitel (‘Teacher’) able to pass valuable intelligence on military aircraft, helicopters and guidance systems, including information on the new Tornado plane being jointly developed by Germany, Italy and Great Britain.
