The Spy in Moscow Station

by Eric Haseltine

  The Moscow Station chief was also not nearly as risk averse as his ultimate boss, Admiral Turner.

  The previous month, when a soon-to-be-released book by Ed Epstein provided enough details about an American asset in Moscow named Aleksey Isidorovich Kulak (codenamed Fedora), CIA feared for the asset’s safety. After several attempts to evade surveillance, Hathaway dressed up as his secretary and was able to securely phone Kulak to warn him.23

  Before that, during the suspicious embassy fire the previous August, Hathaway had disobeyed direct orders from Ambassador Toon to evacuate and had planted himself outside CIA’s seventh-floor offices to discourage KGB officers, who were masquerading as firefighters, from entering his sanctum sanctorum.24

  Hathaway’s bravery that night earned him the prestigious Intelligence Star medal along with the undying admiration of his colleagues in the DO.25

  Some things, Hathaway had shown, were worth taking extreme risks to achieve.

  And one of those things had definitely presented itself early the previous year—and could turn into an immense intelligence gold mine, if only Hathaway could persuade risk-averse Turner to turn HUMINT operations back on in Moscow.

  The potential gold mine was a mysterious Soviet citizen who had approached Robert Fulton, Hathaway’s predecessor as Moscow Station chief, while he was getting gas in January 1977. The citizen asked Fulton if he were an American, then, after the chief said yes, dropped a note on the seat of Fulton’s car. The note, written in Russian, suggested a meeting to discuss “confidential matters” with “the appropriate American official.” The note also included suggestions for a place where a secret follow-up meeting could take place.26

  Although Fulton was intrigued, he did not respond to the volunteer’s first overture, because the KGB was notorious for offering up “dangles” and double agents who professed to have access to juicy secrets, but whose real objective was to feed CIA false information or to learn the types of intelligence needs CIA had at the top of its list when CIA asked the dangle to collect a particular piece of intelligence.

  In the convoluted logic of intelligence, using dangles and doubles to get a clear picture of what an adversary such as CIA didn’t know but wanted to know was incredibly useful for two reasons.

  First, if an enemy such as America desperately wanted to learn the capabilities of a particular Soviet weapon, it meant that the enemy didn’t know what the weapon could do. So if a war with America or its allies ever broke out, Soviet military planners might be able to surprise the American military with the capabilities of that weapon, such as the weapon’s operating range or lethality.

  Second, if CIA did not ask a double agent or dangle for a particular piece of information, say, about a Soviet weapon system, this lack of curiosity suggested that the Americans already knew what they needed to know about it … which in turn hinted that CIA had a Soviet asset who was feeding them that information. Thus, when CIA chose not to ask a dangle for specific information, the KGB would sometimes launch a counterintelligence investigation to explore the reasons for CIA’s lack of curiosity. Or, if the KGB already suspected that classified information was leaking out of some sensitive Soviet operation, such as their strategic rocket forces, they might create a dangle purporting to work in that operation in order to learn if CIA were curiously uncurious about what was going on in the suspect organization.

  Fulton also knew that Soviet dangles and doubles helped the KGB learn more about American espionage tradecraft. If CIA should take the bait and accept a KGB-inspired “walk-in” as genuine, they would train that volunteer in covert communication, use of special equipment, countersurveillance techniques, photography, and so forth, thereby showing the KGB how CIA assets operated, helping the KGB spot and apprehend real CIA assets.

  In addition, CIA case officers in Moscow were aware that fake walk-ins could unmask which Americans at the Moscow embassy were actually CIA officers, should CIA decide to accept the dangle. Equipped with this information, the Soviets could surveil that officer in order to unravel his connections to any Soviet “traitors” he had recruited. Entrapping a CIA case officer with a dangle also allowed the Soviets to score propaganda points by arresting and expelling the officer, while publicizing that imperialist spies were constantly trying to undermine the socialist revolution.

  For all these reasons, Fulton ignored three more attempts by the volunteer, who refused to identify himself for many months out of fear of exposure.27

  However, in December 1977, the enigmatic volunteer included two typewritten pages of highly classified technical information about Soviet airborne radar systems, so the newly arrived chief of station, Gus Hathaway, asked CIA headquarters for permission to engage the anonymous Soviet.

  Despite the promising nature of the technical material the Russian had provided with his last request to meet, CIA headquarters ultimately denied Hathaway permission to proceed further with the potential asset, on grounds that the stranger’s overture could be a deliberate KGB “provocation.” Also, Admiral Turner’s order to halt all HUMINT operations in Russia was still in force.

  But Hathaway got a break when the air attaché at the embassy pointed out the importance of this kind of information for the U.S. Department of Defense, which eventually made CIA headquarters consider engaging the anonymous Soviet walk-in.28

  Here is the declassified CIA account of what happened next:

  On 16 February 1978, the volunteer approached Hathaway and his wife at their car on the street after work and passed another note containing additional intelligence information. He wrote that he seemed to be caught in a vicious circle: “I’m afraid for security reasons to put down on paper much about myself, and, without this information, for security reasons you are afraid to contact me, fearing a provocation.” He then suggested a secure way to pass key identifying data on himself. In his note, he provided all but two of the digits in his phone number. He instructed the recipient of the note that at a certain time at a certain bus stop he would be standing in line holding two pieces of plywood, each with a single number on it. These would be the last two digits in his phone number. At the indicated time, Hathaway’s wife drove past the bus stop in question, recognized the volunteer holding the two pieces of plywood, and recorded the numbers.

  Hathaway immediately sent a cable to CIA headquarters pushing for a positive response to the volunteer. This time, headquarters concurred. On 26 February, after careful planning, John Guilsher, a case officer fluent in Russian, conducted a lengthy surveillance-detection run to determine that he was free of any Soviet surveillance and then called the volunteer’s home phone from a public phone booth. The volunteer’s wife answered the call, however, forcing Guilsher to break off the conversation. Guilsher repeated this exercise on 28 February, with the same lack of success.

  On 1 March 1978, [the volunteer] again approached Hathaway and his wife on the street after work. This time, he passed 11 pages of handwritten materials, the bulk of which was detailed intelligence on Soviet R&D efforts in the military aircraft field. In this note, [the volunteer] finally identified himself fully, providing his name, address, exact employment, and a great deal of personal background information. He noted that he had spent “hours and hours roaming the streets in search of [U.S.] diplomatic cars,” and, having found one, had returned “tens of times” without passing anything, because of unfavorable conditions. He said that he was now almost desperate for a positive response to his efforts, and, if he did not get one this time, he would give up.29

  The walk-in had identified himself as Adolf Tolkachev, senior engineer at a Ministry of Defense R&D organization called Phazotron, where advanced Soviet airborne radars were designed. It later emerged that Tolkachev had become bitter about the Soviet system, partly due to the arrest and execution of his wife’s parents under Stalin’s purges in the late 1930s, and had resolved to help take down the Communist regime that he served.30

  Despite CIA headquarters’ new openness to the possibility of workin
g with Tolkachev, whose access to highly coveted intelligence seemed phenomenal, Hathaway knew that Admiral Turner had not formally lifted his ban on HUMINT operations and might still allow the Tolkachev opportunity to slip through Hathaway’s fingers.

  It was essential that Turner’s confidence in Moscow Station’s ability to operate without leaks be restored and formal approval for the Tolkachev operation be given as soon as possible. Otherwise, in Tolkachev’s own words, he would “give up.”

  But this urgent imperative put Hathaway in a tough spot.

  Tightening up security at the embassy was the most likely way to plug the leaks that had compromised other assets over the past year, but CIA’s own technical security experts at the embassy, along with those from the State Department who had formal authority over embassy security, couldn’t tell Hathaway how embassy security might have been breached … by the mysterious microwave bombardment, for example.

  Worse, those same State and CIA security officers argued that their frequent bug sweeps and inspections guaranteed that there was no security problem at the embassy.

  An illogical assertion considering that State and CIA security officers admitted they didn’t really know the purpose of the microwave bombardment or the false chimney.

  Based upon Hathaway’s entreaties to turn HUMINT back on in Moscow and to let him run Tolkachev, Turner planned to send Rusty Williams, “a Navy man he trusted,” to Moscow to assess and report back on the security situation there. It was vital, Hathaway believed, that Williams give Moscow Station a passing grade so that Turner would let him operate Tolkachev.31

  What Hathaway needed in the worst possible way, before Williams arrived to do his assessment, was a technical expert who did have a good idea how the Soviets might have breached embassy security, and Hathaway knew of such a person.

  For the last decade, an NSA engineer named Charles Gandy had been making the rounds at CIA, FBI, and other intelligence agencies, trying to raise awareness about the potent and dangerous threat posed by advanced KGB surveillance tradecraft.

  Some at CIA regarded Gandy as a quixotic figure, who persisted year after year in presenting a long, highly technical, highly classified slideshow describing how, for example, microwave bombardment could allow the KGB to breach otherwise tight security.

  Several CIA officers told Gandy to his face that his technologies were just a modern form of snake oil, and he acquired the moniker “snake oil salesman” at CIA’s DS&T.

  Still others at Langley headquarters wondered if Gandy—a career NSAer, after all—was purposely feeding CIA bogus information in order to sucker them into ill-considered operations that would damage CIA’s reputation and elevate NSA’s own stature in the intelligence world.

  But because CIA’s and the State Department’s relatively primitive countermeasure equipment at the time could detect no evidence of Russian snooping, most at CIA—based on the evidence of their equipment—regarded Gandy’s warnings as simply Chicken Little stuff. Pure science fiction. There was no way, CIA believed, the technologically backward Russians had a prayer of conducting the kinds of ultrasophisticated attacks that Gandy warned of.

  In his memoir of his tenure as CIA director, Secrecy and Democracy, Admiral Turner summarized the CIA’s view of security experts such as Gandy this way:

  The experts tend to see a bug under every table. Given their way, they would prescribe defensive measures that would make it impossible to carry on the business of Government.32

  But Hathaway had sat in on one of Gandy’s talks a few years earlier and had found his fellow Southerner to be persuasive and credible. If anyone could get to the bottom of possible leaks at the embassy, Gandy could.

  True, Gandy worked for NSA, and yes, Hathaway’s buddies at the DO and CIA leadership on the seventh floor of CIA headquarters wouldn’t like bringing in an outsider to solve an ultrasensitive HUMINT operational problem.

  But the tantalizing Tolkachev opportunity, and all future HUMINT operations in Russia, hung in the balance, including the lives of future Russian assets.

  In a one-on-one meeting with Ambassador Toon earlier that day, in a secure room enclosed in Plexiglas on the ninth floor, Hathaway had learned that Toon shared his belief that extraordinary measures were called for and approved bringing in an NSA man, even though the State Department mistrusted and disliked NSA more than CIA did … if that were possible.

  Making his decision, Hathaway took out a paper and pencil and authored a cable to CIA headquarters requesting permission to engage NSA and asking them to request one Charles Gandy get on a plane to Moscow with all possible dispatch.

  2. The Counterspy

  NSA Friendship Annex, Linthicum, Maryland, March 1978

  Gandy hung up the gray-line phone in his office—the telephone line only used for highly classified conversations—and smiled inwardly.

  NSA director Admiral Bobby Inman had just instructed him to pack his bags for a trip to Russia. The admiral hadn’t supplied a lot of details, only that a number of “strange things” were going on at the embassy and that CIA had asked for him by name to help identify and patch possible security holes in the Moscow embassy.

  Gandy was pleased, although more than a little surprised that CIA had asked for his help. Since joining NSA in 1954 as an air force lieutenant, Gandy had worked many times with the “folks across the river,” as CIA was called at NSA, and the interactions were not always harmonious.

  Every now and then, such as with his frequent visits to Vietnam during the war that ended three years earlier, his relationships with CIA officers were cordial and mutually productive. CIA operatives valued Gandy’s ability to locate adversary intelligence officers and assets, sometimes taking Gandy along on dangerous counterintelligence missions. Taking Gandy along on such adventures was a show of respect, of sorts, but one that Gandy could have lived without.

  But more often, relations with CIA were strained. For instance, on numerous occasions, Gandy had shared new technologies NSA had developed for collecting intelligence with officers from CIA’s DS&T only to have CIA tell him that the technologies didn’t work or were impractical. Frequently, though, six months later, CIA would field those exact NSA-invented technologies using their own outside contractors. Gandy supposed DS&T officers were doing this to get credit with their superiors for innovating, but it didn’t stop him from continuing to share new advancements.

  When NSA colleagues asked, “Charlie, why do you keep doing that? CIA keeps screwing you.”

  Gandy’s answer was always the same: “Yes, but they’ve done it so many times, I’m starting to enjoy it.”

  Gandy didn’t care much who got the credit for new inventions, as long as the new technology advanced U.S. intelligence interests. He was an old-school patriot who tried to keep the main objective—countering the Soviet threat—in mind. Gandy had also, by 1978, risen to a very high position at NSA, attaining a civilian rank that was the military equivalent of major general. In that capacity, he sat atop an organization called R9, which many viewed as the most prestigious and glamorous at NSA. Gandy had no ambitions to grab all the credit for a new technical advancement in order to move up the ladder further. He wanted to stay right where he was, regarding every day as a new “Christmas present,” a new opportunity to solve a cool technical problem.

  But what Gandy did object to was that the innovations he and R9 shared with CIA often ended up leaking to the Soviets—probably, Gandy believed, through a mole somewhere at CIA. Gandy harbored particularly deep suspicions about CIA’s notorious chief of counterintelligence, James Jesus Angleton, who had crippled CIA’s clandestine operations for over a decade by conducting one paralyzing mole hunt after another. It was simply too coincidental, Gandy thought, that intelligence sources that R9 had opened up with some new invention would dry up shortly after he shared the technical advancement with Angleton, suggesting that the Russians were using leaked knowledge of NSA technology to devise countermeasures that nullified the technology’s effective
ness.

  Gandy had voiced suspicions about Angleton to FBI, who themselves wondered if Angleton’s zealotry at rooting out CIA moles covered up Angleton’s own role as a mole. But no concrete evidence ever emerged implicating the counterintelligence chief in the leaks. Because of his debilitating mole hunts throughout the 1960s and early 1970s, however, Angleton did have a number of powerful detractors at CIA, including Director William Colby, who ultimately fired him in 1975.

  Another ongoing difficulty for Gandy with CIA was that they were skeptical about his oft-stated concerns about the deep sophistication of Soviet technical tradecraft. Ever since the Vietnam War, he’d been briefing CIA about the gravity of the Soviet technical threat to U.S. intelligence, military, and diplomatic facilities, but usually CIA ignored or dismissed his concerns. “The Soviets are simply too backward to be that good” was a phrase he often heard from CIA officers at his briefings. Gandy found such reactions both frustrating and baffling. Putting aside the KGB’s stellar track record of inventing new attacks on their own, such as the famous microwave-stimulated Thing discovered in the ’50s, the KGB had to be aware of several of R9’s own innovations due to the numerous leaks over the past few years. What made CIA think that the KGB hadn’t done what CIA itself had done so often and simply reproduced R9’s technologies?

  Given CIA’s recent skepticism about the Soviet’s capabilities, it was puzzling that they had specifically asked for his help.