Circle of Treason

by Sandra V. Grimes

  As part of the transformation, Gus Hathaway would now wear two hats: Associate Deputy Director for Operations for Counterintelligence, and Chief of the Counterintelligence Center. Senior DO officer Ted Price was brought in and also wore two hats: Deputy Chief of the Center, and Chief of Operations for the Center.

  Price was a Chinese-speaking officer who had served as a senior officer in Asia. No two people could have been less alike than Hathaway and Price, and they had problems co-existing. Hathaway ran his component by gathering around him a staff of people whom he liked and trusted, with little reference to organizational charts. Jeanne doubts whether he ever attended a management course, or read a book on the subject. Price, on the other hand, was the consummate modern bureaucrat who knew how the system worked and how to use it to achieve his goals. Before coming to the center, he had served as chief of the Career Management staff, a job that well suited his talents and interests.

  The new center was divided into three groups: Operations, Analysis, and Security, plus the usual support elements. Our task force was subsumed into the Security Group, which had two branches: Investigations and Technical. We formed part of the Investigations Branch. Ray Reardon came over from the Office of Security to serve as group chief. Jeanne was appointed deputy chief, and also functioned as chief of the Investigations Branch. The branch was responsible for all investigations of penetrations of the Agency, not just those emanating from the KGB. Fran Smith came with Jeanne to this branch, filling the position of chief of the Soviet Section. Dan Payne joined the center and worked in Fran’s section, with specific responsibility for continuing the investigation of the 1985 losses. Jeanne and Fran also worked on the problem, time permitting, but were often drawn away to concentrate on other matters.

  As a consequence, the investigation became somewhat diffused. It also lost some of its priority, because SE Division was running successful operations against the Soviet target. Therefore, the 1985 losses came to be regarded by some as a historical problem that no longer existed. We were still learning about cases that had been compromised, but all of them were cases that had existed prior to 1985, and some of them stretched back many years. The heaviest blow was hearing that General Polyakov, who had retired some years earlier, had been arrested in July 1986. Another sobering arrest was that of Vladimir Mikhaylovich Vasilyev, the GRU officer who had worked with us in Budapest. A third arrest was that of Vladimir Mikhaylovich Piguzov, the KGB officer who had volunteered in Jakarta in the mid-1970s and who returned to Moscow in 1979. All three of these men were, like many of their colleagues, subsequently tried and executed.

  Two other sources, although we did not know it at the time, were more lucky. Both of them served time in prison, but were eventually amnestied. One of them was Vladimir Viktorovich Potashov, a researcher at the Institute of the United States and Canada (IUSAC), a think tank in Moscow. A joint FBI-CIA asset, he was encrypted SUNDI PUNCH by the FBI and GTMEDIAN by CIA. He had volunteered in the United States in 1981 and later returned to the USSR where we lost touch with him. He was arrested in July 1986. Ames knew about this case, and presumably Hanssen and Pitts did also.

  The other was Boris Nikolayevich Yuzhin, the KGB officer in San Francisco who had been recruited by the FBI. We had not been in touch with him since 1982. Betrayed by Howard, Ames, Hanssen, and Pitts, not to mention his own carelessness, he was arrested in December 1986.

  While the CIA was rebuilding its agent stable in the second half of the 1980s, one major compromise took place. The CIA had identified a KGB illegal named Reino Gikman, who was living in Austria. Our coverage of Gikman indicated that he was in touch with a high-ranking U.S. State Department employee named Felix Bloch. We immediately informed the FBI. This notification took place on 28 April 1989. Less than two months later, on 22 June, Gikman telephoned Bloch to warn him that he was under suspicion. To a few, it was food for thought that the case had been compromised so soon after the FBI had learned about it. However, the prevailing view was that the French were to blame, because their internal security service, the DST, had surveilled Gikman, at our request, when he traveled to France to meet Bloch. As a result, while we did take this compromise into consideration during our investigation, we and the FBI perhaps did not award it sufficient attention. As we now know, Hanssen informed the KGB about this case within one month of the CIA telling the FBI about it.

  It should be emphasized that, while some in management placed their main focus on other problems, not everyone took this relaxed view. Burton Gerber, Gus Hathaway, Paul Redmond, Sandy, Jeanne, Fran, Dan, and a few others still were determined to get to the bottom of the 1985 problem even if they were forced to spend part of their time following other threads, some of them justifiably awarded a higher priority.

  An example is the 1989 Philip Agee “false flag” approach in Latin America. Agee, a former CIA officer who had left the Agency in 1968 and who had been working for the Cubans since 1973, approached a junior officer in our station. He identified himself as a CIA officer attached to the Inspector General’s office and showed her a U.S. diplomatic passport, with his photograph, in an assumed name. He also showed her a letter, ostensibly from CIA Director William Webster, asking for her cooperation in an important investigation. Agee explained to our officer that he was looking into the misuse of Agency official pouches to bring narcotics into the United States. According to his fabricated story, it was possible that someone in our Latin American office was involved in this illegal activity, which is why he needed our officer’s help. He added that she was to tell no one about his investigation because the perpetrator could be anyone in the office from the chief on down.

  Agee looked the part of a senior Agency official and played his role with considerable skill. At first the junior officer had no reason to disbelieve his story, with its supporting evidence of a diplomatic passport and a letter from the director. He told her that he would be back in town in a few weeks to continue his investigation. During the pause in contact, the young officer began having doubts about his story. For instance, the letter from the director looked as if it had been typed on a typewriter, not a word processor. In general, it did not have the polished appearance that a communication from the director’s office should have.

  When Agee returned to town, he pushed his luck too far. He asked the junior officer to provide him with a list of all the office’s clandestine sources, explaining that it was possible that one of these sources had ties to the world of narcotics and could have suborned his case officer. The young officer now decided that she had to report Agee’s approach, which she did. When shown a photograph of Agee, she recognized him as the man with whom she had been dealing.

  When this case broke, it caused a frenzy of activity. David Edger, a senior Latin America Division officer, and Jeanne were immediately dispatched to Latin America, where they interviewed all our personnel in an attempt to learn as much as possible about what had happened. Among the questions we asked ourselves were: Because Agee’s approach was so smooth, was it possible that this was not his first attempt to play this role? Also, was it possible that he might strike again some day using a different scenario? And, were the Cubans, or the KGB, or both, orchestrating this plot? (Thanks to the FBI, we were eventually able to identify a Cuban hand in this approach. Agee had given our officer an address in New York to write to if she needed to get in touch with him. The FBI was able to connect this address with a Cuban intelligence officer.)

  Given these unpleasant possibilities, it was decided to conduct CI compulsory awareness sessions for all Agency employees. Jeanne, who had the best grasp of the events in Latin America, participated in these sessions on many occasions for the next few years. This was necessary and inevitable, because it involved a counterintelligence problem legitimately being handled by Jeanne’s component, but it took time away from the 1985 investigation.

  A second digression taking up Jeanne’s time is less justifiable in hindsight. A defector from the anti-government insurgency in El S
alvador made some allegations about the behavior of our personnel assigned there. The defector had not made these accusations immediately upon escaping from El Salvador, but only after some months of being interviewed by various groups with their own political biases.

  The accusations became a cause célèbre, and Jeanne was asked to conduct an investigation, presumably because senior management had been pleased with the way she had handled the Agee case. Looking back, it is clear that this was not a counterintelligence problem and that Jeanne had no special background to handle it. However, she saluted and did her best to look into it. This involved a somewhat nerve-wracking trip to El Salvador, because it took place shortly after insurgents had advanced close to the capital. The investigation cleared our personnel, at least to Jeanne’s satisfaction. However, it was a detour and one less justifiable than the Agee case.

  During this period SE Division’s “back room” continued to handle an ever-expanding stable of sensitive Soviet and select East European intelligence sources. Always mindful that one of these sources might have the answer or hold a clue to the unsolved mystery of our 1985–86 compromises, Sandy and Diana worked closely with Jeanne as she pursued her formal investigation of the losses. The three were often in daily contact on issues, raw reporting was shared, and requirements for the sources on these sensitive CI matters were coordinated and frequently co-authored.

  Due to the increase in new assets, the back room added personnel, each hand-picked by Sandy and Redmond. In addition to Worthen, two more luminaries were brought in—Sue Eckstein, a retired senior division officer on contract, and Myrna Fitzgerald, a superstar intelligence officer and Sandy’s alter ego from their days in the Africa Branch. The office space itself was a vault within a vault, consisting of a maze of several small rooms in a far corner of the basement of the new headquarters building. The door was usually closed and only the senior leadership of the division and Jeanne were authorized entry to the space without the permission of a member of the group. It became an unspoken and inviolate rule that all other persons knocked on the door and then waited to enter until all papers and files were turned over or covered. Only one individual ever ignored the practice. That exception was Rick Ames, who one morning several months after his return from Rome simply opened the door and sauntered into the office to chitchat with Diana.

  Fortunately for members of the unit, great progress had been made in computerization. We now had equipment that encrypted and decrypted electronic traffic quickly and without error, and the back room remained the only location where clear-text field and headquarters correspondence on the sensitive sources came together and source files resided.

  That the back room handled the division’s most important assets was not a secret within the corridors, but this fact did become a source of disquiet and resentment among a number of division employees. They came to recognize that correspondence concerning any significant Soviet volunteer in their geographic area of responsibility would immediately disappear into the bowels of the back room and that they would never hear of the case again, much less have any say in its handling. Although many of these employees were aware of the 1985–86 disasters and therefore the need for such severe security measures, they and others understandably took the division’s policy on the handling of its crown jewels as a statement that they were less than trustworthy. Nevertheless, despite the rumblings in the hallways and the number of years that had passed since our spate of losses, the division was steadfast that the back room would continue to exist and carry out its charter.

  The GTPROLOGUE case, which was to cause so much heartburn to Sandy and Jeanne, started in June 1988.1 Aleksandr Vasilyevich Zhomov, a KGB internal CI officer, discreetly approached Jack Downing, at the time COS Moscow, on a Leningrad-bound train. Zhomov did not identify himself, but passed Downing an envelope and then disappeared. The contents of the envelope were internal KGB documents, plus a note explaining that the writer was from the department of the KGB’s Second Chief Directorate, which was responsible for working against the CIA Station and outlining a plan by which he and Downing could communicate securely in the future. He said that he wanted to leave the USSR but would work for us until the time was ripe.

  Among the documents was one of special significance to the investigation of the 1985 losses. It was a rundown of the activities of our Moscow Station in the 1984–86 period, and it indicated that those losses that had taken place in Moscow were the result of our poor tradecraft. Again—a benign explanation of what had gone wrong! This was enough to raise Sandy’s and Jeanne’s CI antennae.

  Before too long, Jeanne wrote a memorandum to chief, SE Division, suggesting that GTPROLOGUE could be the son of Mister X—in other words, someone sent to deceive us on the subject of the 1985–86 compromises. Sandy also wrote a memorandum with very specific requirements to be covered with Zhomov when he and Downing were next in contact. His responses to the questions would establish whether he was a plant or a legitimate penetration of the Second Chief Directorate.

  After reading Sandy’s memorandum Jeanne telephoned the SE Division office directly responsible for running the case. She made a special plea that Sandy’s requirements be an important order of business, because they could prove whether the case was good or bad. The reply was extremely disheartening. The SE front office had decided that “we don’t want to make him mad.” Therefore the new source would not be asked questions to determine his bona fides. In Jeanne and Sandy’s opinion, this flew in the face of logic. When someone volunteered, it was up to that volunteer to provide evidence of his honesty, credibility, and value. Yet we were ignoring this normal and sensible procedure.

  The case went on and on, and both Sandy and Jeanne freely expressed, both orally and in writing, the opinion that we were being taken in. And during this period we benefited from the reporting of defector Sergey Papushin who, like Zhomov, was an officer from the KGB’s Second Chief Directorate and indeed was acquainted with him. Although the differences were not major, what Papushin said about Zhomov did not jibe with what Zhomov had told us about himself. For instance, Papushin told us that Zhomov was happily married and doted on his daughter. Zhomov said that his marriage was on the rocks, and this was one of the reasons he wanted to defect.

  Eventually Zhomov was asked some of the questions that Sandy had compiled, but his answers were vague or improbable and did nothing to allay our doubts. Jeanne even wrote a second memorandum stating that after watching the case for more than a year she was still convinced that it was not valid. Sandy continued to insert the test questions in each cable to the field for presentation to Zhomov, only to have them deleted by the front office before transmission. Bearden was reported to have commented that these requirements were nonsense. He would soon learn how wrong he had been.

  All of our efforts went for naught. In the end the CIA paid Zhomov a good deal of money, which served to sweeten the KGB’s coffers, revealed to him our procedures for clandestinely exfiltrating our assets from the Soviet Union, provided him with a valid U.S. passport, and generally made fools of ourselves. He of course never went through with the exfiltration, claiming that our plan was too dangerous and that he would have to break contact. His message did not ring true, and finally the powers-that-be, including an unwilling Bearden, came to the conclusion that we had been duped all along.

  Sandy and Jeanne, who had put their opinions on record long before, were in the position of being able to say, “I told you so,” but that was scant comfort. The KGB must have had many a laugh at the CIA’s expense, and this did not sit well with us. The only good that resulted from this mess was that it caused Sandy to abandon SE Division and its “new-think” flight from reality, and join in the revitalized hunt for the meaning of the 1985 disasters.

  BEGINNING OF THE FOCUS ON AMES

  ONE MORNING IN EARLY NOVEMBER 1989 a breakthrough occurred, although we did not realize its full significance at the time. Diana Worthen approached Sandy Grimes in her office, obviously distressed a
nd worried by the story she was about to recount. Worthen had been stationed in Mexico City during the same period as Rick Ames and had worked for him in the Soviet section. She and Rick became friends and this friendship was soon extended to Rosario Casas Dupuy, cultural attaché at the Colombian embassy. Rick and Rosario had started an affair, although Rick was still married to his first wife, Nan. He was a geographic bachelor because Nan had a good job in New York and refused to accompany him to Mexico.

  Diana’s friendship with Rick and Rosario continued over the years after they all had left Mexico. Rick divorced Nan and married Rosario in 1985. In 1986 they left for a three-year tour in Rome. While they were there, Diana sent Rosario a few small items in response to her requests for things not readily available in Rome. These included pantyhose and pregnancy vitamins. In return, Rosario sent Diana some expensive gifts, including a Gucci scarf worth at least two hundred dollars. Rosario’s gifts to Diana were out of proportion with the small sums that Diana had expended.

  When Rick and Rosario returned to Washington, Diana noticed a substantial change in their lifestyle. Before going to Rome they had lived in a rented apartment in a modest development in northern Virginia and Rick drove an ancient Volvo. Now they were the owners of a large house in a posh section of North Arlington. Diana was astounded when Rosario told her that they had paid the asking price of $540,000 without trying to bargain. She was even more astounded when she learned that they were remodeling the kitchen, contracting for extensive landscaping, and ordering window treatments for every window, all at the same time. Additionally, Rick had purchased a new Jaguar for himself and a new Honda Accord for Rosario.

  Diana could see that these expenditures amounted to a very large sum and she wondered where the money had come from. Neither Rick nor Rosario offered any explanation. In her musings, Diana was aware of a fact that most people did not know. When they were all in Mexico, Rosario had no extra money and lived from paycheck to paycheck.