While things were changing in Moscow, it was still too early for the CIA, and SE Division specifically, to alter its priorities. Work against Soviet and East European targets was being carried out as usual. At this point, we were feeling very proud of ourselves. Over the years we had built up our stable of reporting sources and had uncovered many of the USSR’s major secrets. We had been so successful against the KGB and the GRU that it was no exaggeration to say that we knew more about these organizations than any individual officer in them. We had no idea that we were headed for disaster.
The first intimation that something might be wrong occurred in late May. (Throughout the following narrative, we have tried to make a distinction between when an event occurred, and when we learned about it. This is an important differentiation because the KGB was trying to conceal what was going on from us, and sometimes succeeded. Therefore, a person could be arrested in 1985 and we might not hear about it until more than a year had passed.) Sergey Ivanovich Bokhan, the GRU officer who had been working for us in Athens, told us that he had been recalled to Moscow to take care of a problem involving his son. We suspected that he might be under suspicion and advised him to defect, which he did.
The next month our unease was appreciably heightened. On 13 June Moscow Station CIA officer Paul Stombaugh was arrested by the KGB on the street as he was attempting to meet with Adolf Tolkachev, who had volunteered to the CIA in Moscow in 1977 and had provided reams of highly important information. Although we did not know it at the time, he had been arrested on the 9th.
The next noteworthy event was the defection of Vitaliy Sergeyevich Yurchenko, a senior KGB CI officer, in Rome on 1 August. He was immediately brought to the United States and was considered an especially valuable defector, because he had previously served in the KGB residency in Washington, DC. Among the important reporting he provided was some information about a former CIA officer who had volunteered to the KGB after being dismissed from the Agency. He had been debriefed by the KGB at length in Vienna in the fall of 1984. Although Yurchenko did not know the man’s name, it was almost immediately evident that he was describing Edward Lee Howard. Howard had worked in SE Division’s branch responsible for operations inside the Soviet Union until May 1983, when he was unceremoniously dismissed because a polygraph examination indicated extensive drug use, alcohol abuse, and petty theft.1
According to Yurchenko, Howard had told the KGB everything he had learned while assigned to the internal Soviet operations component. This included an imprecise lead to an “angry colonel” in Budapest who was working for the CIA. Based on Howard’s reporting, we realized that he was describing the case of GRU officer Vladimir Vasilyev.
Another KGB CI investigation related to us by Yurchenko involved a spy camera that the KGB had found in a recreation room in the Soviet consulate in San Francisco a few years previously. An extensive inquiry was undertaken, later bolstered by some vague reporting from Howard. Eventually the field of suspects had been narrowed to a very few. One of those was Boris Nikolayevich Yuzhin, a KGB officer under TASS cover. This was disturbing news. Yuzhin had been recruited by the FBI in the 1970s. The CIA had supplied the spy camera, which indeed Yuzhin had lost in the Soviet consulate. Yuzhin had returned to Moscow in 1982. His FBI handlers did not want the CIA to run him in the Soviet Union, and he had not been issued any means of internal communication. Luckily for him as it turned out, there was no damning evidence that a KGB investigation could uncover.
While Howard’s treason was a terrible blow, in one way it was a comfort. It explained the operational demise of Tolkachev, because Howard had been slated for a Moscow assignment. One of his duties there would have been to handle Tolkachev, and he had read Tolkachev’s file. It also more or less explained the possibility that Bokhan was under suspicion when he defected. He had been working for the CIA for many years, since 1975. Therefore Howard could have learned about his case at some point. Further, it explained the anomalies discovered in GTTAW. GTTAW was a technical operation involving a tap into Soviet classified landlines. To service the tap, a Moscow Station officer had to “get black” and then go down a manhole to the tap’s location to retrieve the tapes. Howard had been trained to undertake this duty and knew all the details.2
Another tidbit from Yurchenko concerned Oleg Antonovich Gordievsky, a senior KGB officer who had been the deputy resident in London. According to Yurchenko, Gordievsky had been recalled in May 1985 because of some suspicions. He had been interrogated but had not confessed and had not been arrested. This was an interesting piece of news. The British, who had recruited Gordievsky in Copenhagen in the mid-1970s, had shared some of his production with the CIA and FBI, but had not identified their source. We, however, had figured out that Gordievsky must have been the person who was supplying the information to the British and encrypted him GTTICKLE. That he had been recalled in May did not, however, unduly concern us because this was not our case and it was, again, an operation that had been running for many years. As some readers may know, the British exfiltrated Gordievsky shortly before Yurchenko’s defection. They did not inform us of their noteworthy coup until some time after the event. Today he lives in Great Britain and has made a new life for himself as a successful author and lecturer.
Yurchenko also told us about a secret trip that Viktor Ivanovich Cherkashin, the KGB CI chief in Washington, had made in the spring of 1985. He had eluded FBI coverage and left the United States without their knowledge. Once he got to Moscow he had an interview with the top KGB leadership. Yurchenko did not know the reason for this trip, although he believed it must have been of considerable significance. We in the CIA speculated about this incident. One explanation that seemed plausible at the time was that he had been called to Moscow to discuss the future handling of Howard, who at the time was living in Santa Fe, New Mexico.
In October we learned of another major compromise. KGB CI officer Leonid Georgiyevich Poleshchuk had been arrested when he tried to pick up a dead drop we had put down for him in Moscow. Yet another unsettling event took place that same month. GRU officer Gennadiy Aleksandrovich Smetanin, who had volunteered to the CIA in Lisbon in late 1983, did not return from a scheduled home leave. We never had contact with him again and did not know what had become of him until sometime in the next year. What was especially perturbing about this case was that Howard could not have known about it. It started after he had left the Agency.
In the meantime, the Howard case came to a boil. On 19 September 1985, the FBI interviewed him based on Yurchenko’s reporting. He refused to cooperate until he could consult a lawyer. Two days later, he tricked FBI surveillance and fled the country. He is believed to have crossed over into the Soviet Union shortly thereafter, thus making himself available for intensive and extensive KGB debriefings.
In the meantime, Yurchenko re-defected. He left for Moscow in a hail of publicity on 6 November, protesting that the CIA had drugged and kidnapped him. Especially pertinent to the present narrative is that one of the KGB officers assigned to escort him back to the USSR was Valeriy Fedorovich Martynov, who had been recruited by the FBI in early 1982, and was subsequently handled as a joint FBI/CIA asset. He did not return to Washington after his escort duties were finished. The word was out that an old knee injury had flared up and he might need surgery.
The last asset to disappear from our screen in 1985 was KGB Illegals Support specialist Gennadiy Grigoryevich Varenik. Varenik, stationed in Bonn, had volunteered to the CIA in March of that year. He missed a meeting that he was supposed to have had with us in mid-November and we never had contact with him again. Dismayingly, this was a case that had been tightly held and had lasted only a few months.
There was only one reassuring entry in this escalating catalog of disappearances. On 11 December Vladimir Mikhaylovich Vasilyev, the GRU “angry colonel” we had run in Budapest and who had later been reassigned to Moscow, successfully dead-dropped a package to us. The contents were such that no one involved in the operation believed that
this could have been a KGB ploy.
Before the year closed, Director Casey was briefed on what we knew to that point about what seemed to be wrong in a broad array of our Soviet cases. He directed John Stein to conduct a study on the subject. Stein was a logical choice because he had served as deputy chief of SE Division, as deputy director for operations, and as inspector general. Furthermore, he was available, marking time until taking up his next assignment as chief in Seoul.
Soviet and East European Division chief Burton Gerber wrote a memorandum to Stein, outlining the problem and listing the cases that he should review. In early 1986, Stein prepared his report. Some recall he concluded that there was no overarching connection between the compromised cases known to us at this time. Each one contained the seeds of its own destruction. Stein himself remembers that he came to the tentative conclusion that a compromise of our communications was the most likely explanation. Unfortunately, despite repeated searches, no copy of this report has ever been found. Thus, what Stein actually said remains a mystery. However, Stein’s reference to a compromise of our communications is not surprising because the Walker case was very much on everyone’s mind at the time.
John Anthony Walker Jr., a communications specialist in the U.S. Navy, volunteered to the KGB in December 1967. For almost twenty years he provided cryptographic materials to the KGB, eventually involving his brother, his son, and his best friend, Jerry Whitworth. He was arrested in May 1985 by the FBI based on a tip from his wife. This was an extremely damaging case and, despite NSA’s assurances to the contrary, many in the CIA were concerned that the KGB might have been able to compromise CIA’s secure electronic communications.3
This is perhaps a good juncture to describe the makeup of the components that were to be involved in the search for the solution to what had gone wrong in 1985, and to sketch the key players. The Soviet and East European Division had been headed by Burton Gerber since June 1984, when he succeeded Dave Forden. Gerber, a tall, black-haired craggy Midwesterner, knew he was in a serious business and took it seriously. He had a razor-sharp memory, followed all the events on his watch with a close eye, and, although he tried conscientiously, found it difficult to delegate authority. An SE professional, he had served as chief in Sofia, Bulgaria, and Moscow. Wolves were his avocation, and pictures and artifacts of them decorated his office.
Ken Wesolik was Burton’s first deputy. A seasoned SE hand, he was slated for the Chief of Station, Moscow, position but had to bow out for health reasons and moved on to become head of the Directorate’s Information Management staff. He was replaced by Milt Bearden in July 1985. Milt, though well liked at the time, was an outsider from Africa Division with no tours in the USSR or Eastern Europe. He was perhaps more suited to Third World derring-do than to trying to outwit the wily and experienced KGB. In any event, he stayed in the job only ten months, departing for Islamabad to take over the CIA’s Afghan program in May 1986.
Paul Redmond was chief of the CI Group in SE Division. A Boston Irishman, Harvard graduate, and catalytic rather than analytic, he was full of energy, always eager to forge ahead, although not foolhardy. He was also dogged and impatient at the same time. Like most of his peers, he had served in Eastern Europe—in his case, as chief in Zagreb. Later, Redmond moved up to become deputy chief of SE.
The role of SE Division was to run operations against the Soviet and East European target, as earlier described. The counterintelligence component of the division ran selected operations involving Soviet intelligence officers, performed CI analysis of the division’s operations, and produced CI reporting. The Division did not have any responsibility for investigating penetrations of the Agency, a function that was carried out by the CI staff and the Office of Security.
In 1985 the chief of the CI staff was David Blee. A Near East specialist, he had served for a term as chief of SE Division, and as associate deputy director for Operations. In the spring of 1985, Blee retired and was replaced by Gardner “Gus” Hathaway, who remained a central player for several years in the search for what had gone wrong. A courtly Virginia gentleman and a World War II combat veteran, having marched up from the south of France as part of the pincer movement in support of the 1944 D-day invasion, Hathaway was another SE professional. Like Gerber after him, he had served as chief of station, Moscow and as chief of SE Division. Hathaway, Gerber, and Redmond are the three senior officers who were closest to the hunt for the mole, and who cared most about catching him. Redmond has received proper recognition for his contribution but, sadly, Hathaway and Gerber have been overlooked.
The Office of Security also did its part. While we in the CI staff primarily took an analytical approach, Security carried out investigations, commencing with people who had served in Moscow. Ray Reardon, who had a broader outlook than many of his colleagues in Security and who later became deputy chief of that component, was in charge of this effort. Among the officers who worked for Reardon was a young man named Dan Payne, who will play a major role in this story.
FIRST ATTEMPTS
NOW THAT MOST OF THOSE who were privy to the information about the lost cases were convinced that, whatever its nature, something was seriously wrong, the question was: What should we do about it? Defensively, the answer was to institute, in Redmond’s phrase, draconian compartmentation. This was the inception of what became known as the “back room.” It was necessitated by the appearance of a new Soviet source in January 1986 and Gerber’s personal crusade that this one be kept alive. Because one of the theories was that we had a mole in our midst, knowledge of the new asset’s existence was limited to a select few. Another prominent theory was that our communications had been compromised, so the decision was made to handle him without recourse to any of our electronic links. Dick C, an experienced SE officer who, like many others who appear in this story, had served in Moscow and spoke Russian, traveled indirectly from Washington to the new source’s location, transiting several countries en route and using various methods of transportation. Dick never appeared at the local U.S. embassy and any required field support was handled by a single officer from the CIA station in that country, who met him briefly in some secure location. After meetings with the asset in a safe house, Dick returned to his hotel room, where he transferred his written notes to a laptop computer and then encrypted them. Following completion of each meeting schedule, Dick returned to Washington, where the reporting was decrypted.
Offensively, it was decided to undertake two probes. In the first, Milt Bearden went to Nairobi and proudly reported back through our communications channels that he had recruited a specific KGB officer. Actually, he had done nothing of the kind. The reporting was a test of the security of our communications, the thought being that if the KGB was reading them, the KGB officer would be sent home in short order. Nothing of that nature happened. He remained in Nairobi for another year or two.
A similar probe of our communications involved Moscow. Barry Royden, deputy chief of the CI staff, went to Moscow to brief COS Murat N that he would be getting a cable to the effect that we had recruited a named KGB officer in Bangkok. The cable duly arrived in Moscow Station after Royden’s trip. Again the information was not true. The outcome was the same as the Nairobi probe. The KGB officer remained in place for a substantial period.
In mid-January 1986 a seeming breakthrough occurred. A self-declared KGB officer volunteered to CIA via a letter to one of our officers in Bonn. This volunteer, who never had a formal CIA cryptonym but who was referred to as Mister X, told us that we had a mole in our communications component, which was located outside the Washington area. He further conveyed the news that Gennadiy Grigoryevich Varenik had been caught because his father found his spy gear. Through the summer of 1986 Mister X sent us a total of six letters, four of which repeated the theme that we should be looking to our communications component for the source of our compromises. In response to his request we dead-dropped considerable sums of money to him in East Germany.
This case was handl
ed like the other 1986 European volunteer case. When the first cable came in announcing this supposed breakthrough, Redmond got on a plane, flew to Europe, and then, in the interests of speed, took a long-distance—and highly expensive—taxi ride. He wanted to prevent any possible follow-up electronic communications. From then on the case was handled without cable traffic and was subject to further compartmentation.
Eventually it was concluded that Mister X did not exist, and that the letters had been a KGB attempt to deceive us. If so, the answer to our problems was not to be found in our separately located communications component, but we were no closer to determining where it might be.
While Mister X was peddling his bogus reporting, we continued to learn of the compromise of our operations. In late January 1986, a GTABSORB shipment was opened by customs officials in the USSR. GTABSORB was a clever CIA technical operation involving the shipment of containers shaped as flowerpots on the Trans-Siberian railroad. Concealed in the containers were sensors that allowed us to monitor nuclear activity.
On 10 March 1986, Moscow Station officer Mike Sellers was ambushed trying to meet Sergey Vorontsov. Vorontsov, an officer in the KGB’s Moscow City Directorate, had volunteered to us in 1984.
Two months later, on 7 May, Moscow Station officer Erik Sites was ambushed trying to meet with GTEASTBOUND, an engineer from Novosibirsk. At the time, we considered that GTEASTBOUND was a bona fide case, and we included it in our analysis. Later, however, we came to the conclusion that it had been a dangle to our station and never valid at all.
Meanwhile, on 4 April, Sergey Mikhaylovich Motorin, the KGB covert action specialist who had been assigned to Washington, DC, until January 1985, called his girlfriend at the Soviet embassy. This indicated to us that he was not compromised. It was a rare piece of good news. In October, however, we learned that both Motorin and Valeriy Fedorovich Martynov, the KGB scientific and technical officer who was being run jointly with the FBI, had been arrested some months before. Motorin’s calls to his girlfriend were presumably made under KGB duress to mislead us.
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