The Taking of K-129

by Josh Dean

  • • •

  Several weeks after the CIA had agreed to recruit Hughes, Parangosky came back to Crooke with a problem. He couldn’t find a route to the man that didn’t go through Robert Maheu, the longtime boss of Hughes’s Las Vegas operations who had become radioactive to the Agency for numerous reasons, including his involvement with alleged attempted bribes of former presidents and a failed CIA plot to have the mafia assassinate Fidel Castro. Hughes had a long history with the government through his many-tentacled operations, and in fact numerous functions within the Agency had worked with his companies at one point or another, but none of these paths were clean enough for Parangosky to consider them viable.

  Crooke had a solution. Wendell Williams, one of Global’s main salesmen in Houston, was close personal friends with James Lesch, a Hughes Tool vice president. Parangosky quickly cleared Williams into the program, and he went to see Lesch, who agreed to take the idea to Raymond Holliday, the president of Hughes Tool and one of the few people who could get a message directly to the reclusive billionaire.

  Whether or not Hughes himself actually heard the proposal wasn’t clear to anyone. It was a mystery of the program that lived on to the end—that lives on to this day, in fact. At no point did any of the principals ever see Hughes himself. Crooke suspects he was nearby once, on the other side of a wall on the penthouse floor of LA’s Century Plaza Hotel, when the key individuals from the Agency, Global Marine, and Hughes Tool were meeting to finalize details. In certain critical moments, a phone in the room would ring and Chester Davis, Hughes’s lawyer, would answer it, listen, then leave the room, returning a few minutes later with a question that could only have come from Hughes. He was either listening through the wall or via a device that piped audio to a nearby room where someone was relaying messages to him. Whatever the method, no one in that room ever saw the mogul’s face or heard his voice.

  Howard’s trio of lieutenants—Chester Davis, Raymond Holliday, and Bill Gay, often referred to as the mogul’s Mormon Mafia—claimed to speak for their boss and reported back that he was happy to provide Azorian’s critical cover. Hughes was honored to do this service for his country, and so were they.

  The arrangement was to be very simple. The CIA and Hughes Tool would sign a classified black contract signifying that Hughes would serve as the Agency’s secret proxy for the operation. Once the contract was signed, Hughes Tool would hire contractors chosen by the CIA using white contracts stating that they were doing work for hire on a deep-sea-mining operation. The first and most important of those contracts would be with Global Marine.

  Parangosky sent a memo to Henry Kissinger summarizing the proposed structure for Azorian. “From the outset it has been recognized that there could be no overt U.S. Government involvement in AZORIAN without attracting close Soviet scrutiny, and possible realization of the actual purpose for the program,” he wrote. “The alternative was to structure the program as a commercial venture.” Deep-ocean mining, specifically, had been chosen, he reported. The industry was “in its infancy,” commercially viable, and so new that no one knew what an ocean-mining machine even looked like, giving them plenty of room to engineer freely. Furthermore, Parangosky noted, the Hughes Tool Company’s (later Summa Corporation’s) “participation as the sponsor and sole source of funding” could not be more perfect. “Mr. Howard Hughes is the only stockholder; he is recognized as a pioneering entrepreneur with a wide variety of business interests; he has the necessary financial resources; he habitually operates in secrecy; and, his personal eccentricities are such that news media reporting and speculation about his activities frequently range from the truth to utter fiction.”

  Parangosky got his first go-ahead. On December 13, 1970, Global CEO A. J. Field, Hughes Tool’s Raymond Holliday, and Parangosky’s contracting officer, George Kucera, signed and executed classified Government Contract No. S-HU-0900, which legally established the parameters for Project Azorian’s cover structure. The three key parties were Global Marine Inc., referred to as the “Contractor”; Hughes Tool Company, the “Agent”; and the US government, called the “Sponsor.” The specific agency of the government was not named, but the contract stated that Hughes was uniquely positioned to be the agent, to be a believable front for the project’s true purpose. “WHEREAS due to necessity for cover purposes to operate the mission under the guise of an overt commercial deep sea mining project the Sponsor desires to enter into a contract with the Agent who shall represent and act in the stead of the Sponsor who shall at all times remain an unidentified principal.”

  This was the so-called black contract, which laid out each party’s responsibility in the operation: “Whereas the Agent”—Hughes Tool—“acting on the behalf of the Sponsor”—the CIA—“shall enter into an overt commercial contract with the Contractor”—Global Marine—“for the design, fabrication, delivery and subsequent operation of the aforesaid overt deep sea mining Project. The Hughes Tool Company shall act as the undisclosed Agent for the Sponsor. The Agent shall represent itself to be the owner and operator of the Deep Sea Mining Project and as directed by the Sponsor enter into an overt commercial contract with Global Marine Inc.” This would be the white contract, the one that would be shown to Global’s investors, the media, and the Securities and Exchange Commission, should they wish to see it.

  The black contract laid out very clear terms. Global Marine was “responsible for technical direction of design, fabrication and delivery” of the actual “mining” system, while the Agency was responsible for security and funding. Because other contractors were going to be necessary, Global Marine would hire and pay them and serve as the primary engineering contractor, overseeing design and handling systems integration.

  Most important, there could be no direct link between the US government and Global Marine, so in addition to providing cover, Hughes Tool would be the pipeline for moving money from the CIA to Global Marine to pay for its own work and for hiring the contractors. Not even Global Marine’s accountants knew the true nature of the relationship. Like everyone else, they thought the work was really going to be done for Hughes.

  18

  Building a Bulletproof Lie

  Every con needs an artist. And Parangosky had the perfect man: his old friend Walt Lloyd. Lloyd had run security on the S&T’s three most important programs to date: the U-2, the A-12, and the Corona satellite. In that capacity, he had all but created the model for compartmentalized security programs and protocols. A sharp, good-natured sort, Lloyd was specialized in solving unusual problems in creative ways. And this was going to be one hell of a problem.

  Lloyd grew up poor, the oldest of five sons whose father worked in a General Motors factory for twenty-five years and died of leukemia at sixty-five. All five boys joined the military. Walt chose the Coast Guard, enlisting at the tail end of World War II only to be told he had a red-green color deficiency. Upon discharge, he washed cars for a while in Detroit, then in 1948 enrolled in a basic college program at Michigan State to pursue criminal justice. In 1951, CIA recruiters visited the program in search of investigators and hired eight of the twelve criminal justice graduates in his class, Lloyd included, to do background investigations on Agency hires, a job formerly done by the FBI, until J. Edgar Hoover decided that his men were too busy.

  Lloyd was initially based out of those old Navy barracks on the National Mall, in a Quonset hut filled with mice, and after a period of doing general investigations, he was put on the special operations desk, which was for cases that had extra sensitivity—such as the investigation of safe houses, covert locations, or other potential security department hires. The Agency wasn’t looking for spotless records, because nobody is truly pure. Lloyd’s father had given him some advice when he was a teenager. “You don’t have to be absolutely perfect,” he said. “But be prepared to not do anything you would be embarrassed to tell me about.” And that became Walt’s basic standard at the Agency, too. He could forgive m
any things as long as the person was honest, but lies were unforgivable—and nearly always caught.

  When Parangosky first reached out about the “boat project,” Lloyd had just returned from a stint in Taiwan, where he’d been in command of one of the CIA’s most closely guarded secrets: Detachment H. This was a squadron of U-2s sold to the Chinese nationalists on Taiwan, nicknamed the Black Cats, and used for overflights of mainland China. Taiwanese pilots flew the U-2 missions, but the CIA ran the base and its operations, while Lockheed provided the ground crew.

  Upon his return, Lloyd was assigned to the S&T’s Special Projects Staff, the incubator for black programs. Specifically, he was told to report to Parangosky, who was very quietly building up a mysterious new program at an unremarkable office park in Tysons Corner.

  As he’d done with Oxcart and Corona before, Parangosky built out an autonomous division that had all the essential components of the larger CIA. The Azorian program office had its engineering section, obviously, as well as a security staff, a communications department, a finance officer, and a small but efficient administrative group. As the project began to transition from a theoretical operation to one that would actually hire contractors and build things, however, Parangosky needed someone very clever to run the so-called Commercial Operations Division—which maintained the cover story—and he wanted Walt Lloyd to be that man.

  Lloyd arrived for his meeting with Parangosky in the afternoon. He looked at the address given to him by his assigning officer, which matched the numbers on the building that he had just parked in front of. Lloyd went inside and up the stairs, where he entered a door with no sign. The receptionist recognized this visitor’s name and took Lloyd past a warren of desks—many occupied by men he knew, who smiled and greeted their old security boss—and into Parangosky’s office.

  “Good to see you, Walt,” he said. He shook Lloyd’s hand, nodded at a chair, and asked his assistant to get them some coffee.

  For the first half hour, the two men talked and laughed and reminisced about “the U-bird” years until finally Parangosky asked his old friend why he’d come back to headquarters.

  “I think I’m bored,” Lloyd answered.

  “Well, I don’t think you’re going to be bored here,” Parangosky replied. “I’m going to put you in a position as a director in my office. Let me tell you what the program is.”

  And he did, starting with the fate of the Soviet submarine, and running through the chronology of events that led to him sitting there, ready to offer Lloyd one of the most unusual jobs in Agency history. Lloyd sat there, expressionless, as only a man who’d helped launch two experimental planes and the world’s first spy satellite could be under the circumstances.

  “What do you want me to do?” he asked, when Parangosky finished.

  “I want you to explain it publicly.”

  The “germ” of the plan was already in place, Parangosky explained. Howard Hughes—under the umbrella of the Hughes Tool Company—had agreed to provide the cover. What he needed Lloyd to do was to make the world believe that story, from now until the moment the Soviet submarine was in an American hangar being picked apart. Your job, he said, “is to develop a socially acceptable public explanation.”

  Azorian’s success required two giant and complex operations to succeed perfectly. First, engineers had to build and integrate all the novel components into a machine that could actually reach and retrieve the submarine. And Walt Lloyd had to convince the world that all the parts, and the mission, were just Howard Hughes’s latest outlandish lark.

  • • •

  Work had been under way for nearly a year at this point, and Lloyd tried to get up to speed as quickly as he could. He studied the engineering plans, met with key contractors, and went deep diving into the minutiae of ocean mining.

  There were already a few Navy men attached to the program office as consultants, and Lloyd sat in on a meeting with the ranking officer, a captain who was going over John Graham’s ship design with some of his operational guys, including a few divers.

  “Walt, you’re just the guy I’m looking for,” the captain said.

  “What can I do for you?” Lloyd replied.

  The captain gestured at a set of drawings on the table, pointing specifically at the ship’s cavernous moon pool. He had concerns about its size and possible effect on stability.

  “Well now, Captain, that’s not for me to decide,” Lloyd replied. “Let the engineers decide what the hell the goddamn thing looks like and I’ll figure out a way to explain it. I don’t give a shit whether it floats or not. I’ll explain it.”

  Lloyd wasn’t being flip. He knew that his job, as creator of the Big Lie, had to be subordinate to the job of the engineers, and he wanted them all to know it. There was no way the designers could possibly build a tool as outlandish as the one needed for Azorian—an enormous ship that deploys an enormous claw at the end of an enormous string of pipe to steal a submarine from three miles under the ocean, ten times deeper than any previous salvage operation in history—if they had to stop and ask themselves how to explain this thing to the public. He also knew that the Navy captain wasn’t enthusiastic about the operation in the first place, and wasn’t going to make it easy on the engineers.

  Besides, Lloyd said, the explanations were obvious. The mining machine was huge and novel and the ship was configured in a specific way to accommodate it. Any specific questions were deflected by one simple answer: Because that’s the way it needs be done.

  As Curtis Crooke would explain, years later in a deposition, offshore mining was the perfect cover. “Because there was no expert on what an offshore mining rig looks like, I daresay I can take anybody and convince them either way, because there’s no background. Nothing’s been established.”

  • • •

  Lloyd was given a staff of four and for weeks they met, day after day, to look at every piece of the mission’s equipment and timeline and figure out how to explain it publicly.

  He liked to imagine himself watching the operation from above, observing it from a distance in an effort to anticipate and work around potential flaws in the cover. But he knew he couldn’t possibly see everything, especially not from the inside. The Agency had long drawn from a loose network of academics and experts who could be consulted when necessary, unofficially. Lloyd went to see one of them, a professor of ocean science at a university he has never named. When Lloyd arrived, the man seemed relieved. He’d been worried, he said, when a mysterious man showed up and was clearly checking up on him. “You’re the son of a bitch who started that,” he said.

  Lloyd apologized for the security precautions. “I don’t want you to be involved,” he said. “I just want you to watch us from a distance. If we’re goofing somewhere, tell me.”

  A fundamental tenet, from the outset, was that Paul Reeve should be the public face of the project. The tall, polite, soft-spoken Texan had been hand-selected from the Hughes organization to be the ostensible head of Hughes’s ocean-mining project, and once the project was publicly announced, Lloyd wanted Reeve to be the only person who addressed the media or represented the operation whenever public appearances were required—especially at industry conferences and confabs. Reeve was a mining engineer already, and though he wasn’t an expert in manganese at the outset, he quickly became one.

  Lloyd assigned a single man from his group to Reeve—known to history only as Tom—to be his point of contact should he require research or expertise, and asked everyone else to avoid contact wherever possible. Parangosky, obviously, could speak with him, and so could Global Marine and all the Agency engineers embedded inside the Program Office, but Reeve’s job was to go out and look like a man thrilled to his soul to be launching the world’s first ocean-mining ship, funded by Howard Hughes.

  And then there was Lloyd’s logistics man, John. John’s job was to plot the cover story, to fit the various lies o
ver the top of the actual things that were happening in the wild, so that every step of the operation made sense in the context of the con. Lloyd understood that the engineering work must not be interrupted. It was not his job to tell the engineers working for Parangosky, or at any of the contractors, what to do. Instead, if something they were doing looked fishy, he was supposed to find a way to cover for it. John became his milestone tracker, the guy assigned to talk to Lloyd’s various sources who told him what should be happening when—for instance, this is when you should announce the involvement of a certain subcontractor, or this is a conference you should not miss, in which case Tom would call Paul Reeve and tell him to register.

  A big part of Lloyd’s job was to worry. And the increasingly loud chatter over what the United Nations was calling the Law of the Sea—in particular, laws related to mining the ocean—worried him a lot. He wanted to get as close as possible to the conversation inside the UN without actually putting someone there. So he identified an analyst inside the Directorate of Intelligence who was already assigned to watching the UN, and went to see him at his office in Langley. This analyst wasn’t cleared into Azorian, and there was no reason he should be.

  Lloyd explained to him, in the vaguest terms possible, what he wanted to know. The science and technology group, he said, was very active in the ocean, and “that Law of the Sea could kick us in the ass.” For the next three years, that analyst was Lloyd’s eyes and ears in the UN, without ever knowing why he was actually reporting information.

  19

  The Big Con