The Spy Who Changed History

by Svetlana Lokhova

  During Cde. Zhemchuzhina’s stay in the USA, she received from us various samples of perfume and cosmetic products from the American company ‘Alco’, which were obtained by the source TALENT. Now the source has also received formulas for these 23 products from the ‘Alco’ Company, which we are sending you. The recipes were obtained free of charge. We request that as soon as you receive the package, you give these recipes to Cde. Zhemchuzhina.22

  It was Shumovsky who was given the job of aiding Zhemchuzhina in acquiring the perfume secrets. He became personal friends with the Molotovs. Some of the stolen perfumes are still manufactured and on sale in Moscow today.

  Aside from his work in perfumery, Malisoff recruited other S&T agents and sources. Among the most important in the mid-1930s was his friend Earl W. Flosdorf, codenamed OUTPOST, a biochemist (and later head of the department) at the University of Pennsylvania who worked as one of the NKVD’s best-paid American agents. The NKVD’s money seems to have gone to add to Flosdorf’s impressive collection of vintage cars; his 1895 Hurtu-Benz roadster was believed to be America’s oldest running petrol-powered automobile. Flosdorf was particularly valued by the Centre for his expertise in bacteriological warfare. He was the inventor of the first freeze-drying process for human blood serum and plasma which, as well as making possible blood transfusions, could also be used for what the Centre called ‘germ warfare’. There was also a violent side to Flosdorf’s character: in 1968, he shot his wife dead as she was leaving home, then committed suicide with the same gun. According to the local newspaper, their twelve-year-old son ‘ran screaming from the house’.23

  • • •

  The catalyst for the increased pace of activity was political. In November 1933, the United States had become the last significant power officially to establish diplomatic relations with the Soviet Union. Franklin D. Roosevelt’s willingness to do so, apparent almost from the moment he entered the White House in March, was prompted both by the hope of increasing trade with Russia during the Great Depression and by the belief that the two powers had a common strategic interest in limiting Japanese territorial expansion in Asia. Stalin shared these goals. Unlike the Americans, however, he believed that diplomatic relations would create the opportunity to boost S&T operations in the United States by making it possible to set up ‘legal’ intelligence residencies whose staff could operate with impunity protected by diplomatic or official cover. His plan to modernise the economy would receive a significant boost.

  Stalin’s fear of the Japanese attack forecast by the US ambassador to Tokyo, Joseph Grew, for the spring of 1934 helps to explain the unprecedented number of red carpets rolled out in Moscow to welcome the first US ambassador, William C. Bullitt, Jr., in December 1933. The dinner in his honour at the Kremlin, personally hosted by Stalin, was, Bullitt reported, ‘an amicable one with continual toasts’. The first toast, proposed by Stalin himself, mocked America’s most committed anti-Communist Congressman, Hamilton Fish III, founder of the Fish Committee, which specialised in rooting out Communist subversion. In a jovial mood, Stalin raised his glass to ‘President Roosevelt who, in spite of the mute growls of the Fishes, dared to recognize the Soviet Union.’ After dinner, Bullitt had a ‘long talk’, extending into the early hours, with Stalin, who told him a Japanese attack in the spring was ‘certain’. Stalin believed that the coming war with Japan made the covert Soviet collection of military S&T from the United States even more urgent than before. Though he did not tell Bullitt, he did appeal to him for immediate help in gaining approval for imports of US equipment, which would help Soviet preparations for war: ‘There is one thing that I want to ask you. The second line of our railroad to Vladivostok is not completed. To complete it quickly, we need 250,000 tons of steel rails at once. They need not be new rails. Your rails are so much heavier than ours that the tracks you discard will be good enough for us … Without the rails, we shall beat the Japanese, but if we have the rails, it will be easier.’24

  To help out, Bullitt promised to facilitate the rapid sale of US steel rails to the Soviet Union. The importance that Stalin attached to US technological assistance – both overt and covert – to defeat Japan was reflected in his response. His manner became more effusive than it had ever been before when he was talking to a Western diplomat. He told Bullitt: ‘I want you to understand that, if you want to see me at any time, day or night, you have only to let me know, and I will see you at once.’ As Bullitt informed the State Department: ‘This was a somewhat extraordinary gesture since he has hitherto refused to see any Ambassador at any time.’ Bullitt held out his hand to shake Stalin’s. But, as the astonished ambassador wrote privately to Roosevelt, Stalin brushed his ambassador’s hand aside, and instead took Bullitt’s head in his hands and kissed it. ‘I swallowed my astonishment,’ said Bullitt, ‘and when he turned up his face for a return kiss, I delivered it.’25

  Bullitt planned to build on the Lenin Hills a grand embassy in the style of Thomas Jefferson’s Virginian mansion at Monticello. Over the entrance, to please his Soviet hosts, he thought of inscribing Jefferson’s dictum, ‘God forbid that we should live for twenty years without a revolution.’ He even obtained an appropriation of $1.2 million to build this new Russian Monticello from a reluctant Congress, which was led to expect ‘Red trade offers’ in return. It never occurred to either Congress or Bullitt that Stalin confidently expected the new embassy to become a primary source of Soviet intelligence. An extraordinary haemorrhage of classified documents from the US embassy in Moscow would continue for the next thirty years.

  When the embassy opened, it had virtually no security and initially no ciphers either. The future US ambassador in Moscow, George Kennan, one of the original members of Bullitt’s staff, later recalled, ‘Communications with our government went through the regular telegraphic office and lay on the table for the Soviet government to see.’ Stalin must have found it difficult to believe his luck. The US Marines supposed to guard the embassy were quickly provided with attentive girlfriends (some of them ballerinas) by the NKVD. ‘Chip’ Bohlen, a future ambassador, was sitting in the lobby of the Savoy Hotel one day when a heavily made-up Russian woman walked up to the reception desk and said she wished to go up to Marine Sergeant O’Dean’s room. ‘I,’ she announced, ‘am his Russian teacher.’26 With the assistance of other ‘Russian teachers’, at least one of the first group of cipher clerks posted to the embassy, Tyler Kent, was recruited as a Soviet agent.

  The FBI made no attempt to penetrate the new Soviet Embassy on 16th Street in Washington, a few blocks from the White House. In Moscow, by contrast, Bullitt’s closest Russian friend, though he failed to realise it, was an NKVD undercover agent codenamed BALKANSKY.27 Head of the NKVD Genrikh Yagoda sent Stalin a report from BALKANSKY dated 8 March 1934, describing a visit to Bullitt’s new personal residence. At the time, the ambassador’s residence was also used as the diplomatic chancery while negotiations on a new US embassy continued:

  Upon getting out of his railway carriage, Bullitt noticed me first and greeted me warmly, before greeting other representatives of the Embassy who were meeting him. After a short conversation, he invited me to go to his house for breakfast. Over breakfast, he introduced me to his top employees, and he told everyone that I was his best friend in Moscow and that they can contact me with all their requests and be assured that I will do everything possible to help them in their work.28

  As soon as they were alone, Bullitt told BALKANSKY: ‘I can assure you in the Soviet Union that you are worrying in vain about a possible war with Japan. There will be no war. From the US side, we have been doing everything possible to prevent it.’ Roosevelt had agreed ‘every last word’ of speeches Bullitt made on relations with Japan. Though Stalin and his advisors believed that the threat from Japan remained, the Japanese attack, which Stalin had told Bullitt would take place in the spring of 1934, never came.29

  Bullitt was at his most reassuring when he briefed BALKANSKY about US embassy personnel:

 
The President gave me carte blanche in choosing staff for the Embassy. I have been guided only by the interests of our countries and accepted people unconditionally and openly sympathetic to the Soviet Union and to what is happening here. For example, the military attaché [Philip R.] Faymonville, at the time of the [US] intervention in Siberia [during the Civil War] was openly on the side of the Reds and was repeatedly subjected to attacks by the [US] War Department and the press for this. My advisor John Wiley for many years was the special observer from Berlin and Warsaw of the situation in the USSR and, as you know, his chief informant was [the pro-Soviet New York Times correspondent] Walter Duranty, with whom he is intimate friends … You have to help me personally on how to see the country and familiarize me with the new life and construction, as well as introduce me to Soviet public opinion, leaders, etc.30

  Stalin’s annotations on Bullitt’s intercepted telegrams to Washington show that he read them attentively, keeping some in his personal archive. Among the passages he underlined in red in a telegram of 18 September 1934 was a complaint by Bullitt about Russian failure to respect US patents: ‘I personally know of some American inventions in the field of machinery, machine parts and so on, which are being used by Soviet industry.’ So far as is known, the State Department took no action. Despite the poor 1934 harvest in some parts of the Soviet Union, Bullitt was relatively optimistic about Soviet food supply. Stalin underlined Bullitt’s comment that ‘Reports of widespread hunger are greatly exaggerated … We can say that the starvation of the population, under normal conditions, is already a thing of the past,’ and the claim that ‘Many [Communist] party members are dissatisfied that the Soviet government has gone too far regarding concessions to the capitalist countries.’ He cannot have been pleased to read in another of Bullitt’s intercepted telegrams in 1934 the disparaging comments by the Japanese ambassador to Bullitt on the inferior quality of Russian spies sent to Japan – who, it was reported, ‘become careless once they have achieved their goal. They drink and womanize, and we have been able to detain them before they have had time to leave.’31 Stalin marked this passage, and, no doubt, demanded prompt action from the NKVD.

  • • •

  Back in the US, Ovakimian’s skills as an agent recruiter were well illustrated in his handling of the eccentric pro-Communist industrial chemist Thomas ‘Tasso’ Black, rather obviously codenamed CHERNY (‘black’ in Russian). According to acquaintances of Black who were belatedly interviewed by the FBI in 1950, he was ‘very shabby in appearance and dress, carefree and good-hearted but very eccentric’. The menagerie of pets he kept at home included a crow, rats, mice and snakes; in 1938, he spent twenty weeks in hospital after inadvertently causing an ether explosion at his laboratory. Black first approached Ovakimian at AMTORG, probably soon after his arrival in New York, unaware that he was an intelligence officer as well as an engineer, in the hope of obtaining a job as a chemist in Russia. Ovakimian began by asking Black to get the latest information on the US manufacture of various industrial chemicals, which he pretended would strengthen his chances of employment in the Soviet Union. Having been persuaded to steal information from his current employer, Black was gradually converted by Ovakimian into a ‘full-fledged industrial spy’.32

  Black also worked as courier, recruiter and agent-handler. His best-known recruit was Harry Gold (initially codenamed GOOSE), an industrial chemist born of Russian parents, who later became the courier for the British atom spy Klaus Fuchs after he moved to the United States in 1944.33 Gold was involved in attempts to run Shumovsky’s recruit Ben Smilg. It was Gold who brought Shumovsky to the attention of the FBI in 1949.

  By the middle of 1934, having discovered the lie of the land in America, Ovakimian began dividing up the workload. The number-one priority was a task for Shumovsky, aircraft construction at Curtiss-Wright, followed by the production of aircraft armament. Stan’s recruit DAVIS would be utilised to acquire ‘special military technology’ from Sperry Corporation, while GENNADY would focus on chemistry from DuPont. Another role was organising the acquisition of American passports for use as cover by illegals in Europe.

  Reinforcements were required on the illegal line following the mysterious death of its head, Valentin Markin, in a New York bar. The new head, Akhmerov, arrived in January 1934 on an illegal passport acquired by GENNADY and was immediately enrolled in courses at Columbia University to improve his English. He described in detail the experience of becoming Americanised at university:

  The transition from being a foreign student to being an American in a large city like NY, with its population of millions, was not particularly challenging, as it turned out. At Columbia University, I was known well only to the English language instructor and nine or ten students – most of them foreigners – almost all of whom intended to return to their countries after graduation. It was also unlikely that I would be remembered from university registration, which was typically done by thousands of people. Therefore, the only people who could have known me well were one of the instructors and the landlord at whose apartment I was then living, a Jew by nationality. Thus, there was no particular risk involved. If I had subsequently run into these people by chance, we could have done little more than saying ‘hello’ and ‘goodbye’ to each other. I, therefore, thought that I was not risking much by switching to new identity papers. Because I knew that I would have to change to new identity papers, I had made a point of not expanding my circle of acquaintances, and when I began living under American identity papers, I did not restrict myself when establishing connections. After adopting local identity papers, I kept my previous cover for a period of time: I attended classes, where lectures were given on economic, cultural, and socio-political sciences. I was not involved in any other work and therefore had free time at my disposal to learn the language well, study up on socio-political sciences, read magazines, go to libraries, etc.34

  By the end of 1934 the infrastructure was in place for the greatest successes of Stalin’s intelligence service. From 1935 the Soviets began to acquire what one American described as his country’s secret weapon – its production know-how.35

  9

  WHISTLE STOP INSPECTIONS

  A unique black and white photograph dating from the summer of 1935 captures a party of Russian tourists standing by a white picket fence at the side of an American road.1 The picture, which could have been taken anywhere in middle America, shows a smartly dressed four-strong party, a husband and wife and their companions. The couple is the aircraft designer Andrey Tupolev and his wife, Julia. Tupolev stands with his deputy, the high-speed bomber designer Alexander Arkhangelsky; the fourth man, their guide, is the unmistakable figure of Stanislav Shumovsky, Tupolev’s star pupil.

  No mere tour guide, Shumovsky was not only the NKVD’s aviation expert in the US, but was now TsAGI’s main contact in America. The MIT student was a senior and influential figure on the way up in both TsAGI and the NKVD. Having already spent three productive years at MIT, not only had he assimilated himself into the American way of life, gaining an excellent degree on the way, but he had also helped close the gap in aircraft design between the fledgling USSR and the world leaders, the US. He had fed back to TsAGI every item of information that came into his hands on modern methods of aircraft design. Moreover, he had contributed to the annual report compiled on the state of US aviation that was used as a benchmark for Soviet industry, a copy of which was placed on Stalin’s desk to be covered in notes.2 The Soviets wanted to fly their own planes as fast, as far and as high as the best in the world:

  The victories in aviation, achieved by the Soviet Union, are of fundamental importance. They are the result of practicing the Leninist policy of industrialization which ensures that the USSR will be technically and economically independent of the capitalist world. They demonstrated the preponderance of the socialist economic system, its ability to liquidate the technical backwardness within the shortest possible time. They convincingly showed the sweep of the scientific and cultura
l revolution in the Soviet Union. They are a testimony to the incessant care by the Party and the nation to strengthen the defense potential of the country.3

  Shumovsky now had a new challenge, providing a solution to the USSR’s yawning technology gap. He was one of the few let into the secret that Soviet factories were incapable of mass-producing planes that measured up to the world standard for quality and reliability. On the trip, Tupolev had met with Henry Ford, the guru of mass production and an unlikely Soviet hero. It was clear that the ‘Ford solution’ was not open to Tupolev because the Soviet Union required more than one type of aeroplane. The Soviets needed fighters, bombers, transport and passenger planes, so buying one model factory was out of the question. However, he wanted to adopt the assembly line approach.

  The photograph was taken as the party rested after a long drive to an aviation factory for a tour, one of many organised for their trip. While travelling in America previously, the restless scientist Tupolev had taken to driving fast around bends to test the car’s handling and occasionally sliding off the road. Unimpressed by her husband’s love of speed and reckless cornering, Julia had insisted others drive. The three-month, 10,000-mile odyssey took in manufacturing centres on both the East and West Coasts, with a few stops in the middle. The party crisscrossed the country from New York to Seattle, down to California and back. Tupolev is pictured clutching in his right hand one of his array of movie cameras. He had a collection for different purposes including one for filming aircraft in flight. On his previous trip, he had used the camera to shoot attractive women, but with his wife in tow, this time was restricted to recording the conditions inside each factory. His goal during this latest journey was to discover the secrets of mass-producing high-quality aircraft. Later he would use his extensive home movie collection to illustrate and try to enforce the same standards and methods in the factories of the Soviet Union.