Circle of Treason (11 page)

For thirteen years Kulak, whose CIA code name was CKKAYO, served in the United States on two separate tours. Between these tours he was assigned to Moscow, but we had no contact with him there. During the entire period of his U.S. assignments, the CIA's knowledge of his cooperation with the FBI was limited to general-interest counterintelligence reporting and some positive intelligence. With the presumed exception of Angleton, the CIA was unaware of any operational details of the case such as meeting arrangements, debriefing language, and documentary production if any.

What caused this bureaucratically polite but distant relationship between the two organizations on the Kulak case? It could be summed up in two words: bona fides. As with Polyakov, Kulak was a target of Angleton's and his cadre of Monster Plot theorists, initially simply because he was a KGB officer who volunteered within months of Polyakov's approach. As they viewed it, this could not be a coincidence; this was the hidden hand of the KGB directing the operation. Conversely, Hoover and his special agents believed that Kulak (as Polyakov) was the genuine article, and resented Angleton's, ergo the CIA's, intrusion in an FBI operation about which they knew little. The rift only widened following the defection of KGB officer Nosenko in 1964 and subsequent reporting by Kulak that supported Nosenko's legitimacy, a position Angleton never accepted.

Following the removal of Angleton as Chief of the Counterintelligence Staff in December 1974 and his subsequent retirement in 1975, the official CIA position on Kulak's bona fides began to take a 180-degree turn. Angleton was replaced by George Kalaris, who brought in career SE Division reports officer Leonard McCoy as his deputy. Earlier in his career McCoy, a renowned authority on Soviet military and political matters, had incurred the wrath of the Angletonians for his support of the bona fides of Nosenko, Polyakov, and others. He also believed that Kulak's bona fides were supported by the information the FBI had supplied to the CIA, even though it was limited in volume and scope.

At the time the CIA began to rethink its official position on Kulak, so too did the FBI. In a bizarre twist senior FBI Special Agent and counterintelligence expert James Nolan conducted a review of the Kulak case and concluded that it had been a KGB-controlled operation from inception. The FBI now believed that Hoover's premier source was a phoney.
At CIA headquarters news of the Bureau's about-face was greeted with disbelief and bewilderment. McCoy decided to challenge their findings and requested CIA access to the FBI files on the Kulak operation. In an unprecedented move, the FBI agreed. McCoy selected Cynthia Hausmann, a senior division case officer and counterintelligence specialist, and Sandy as the members of the CIA team. Issued FBI non-escort visitor badges two and three, the women spent four months reviewing the Kulak material at FBI headquarters under the watchful eye of Larry McWilliams, a crusty outspoken special agent and supporter of Nolan's theories of the case.

Cynthia and Sandy were provided with summary statements of Kulak's reporting, which included agent leads, KGB organization, and modus operandi. Repeated attempts to see meeting transcripts with verbatim source comments were met with a polite but forceful no. According to McWilliams, they would serve no useful purpose. The Bureau had accurately reflected Kulak's remarks in the summaries. After several months McWilliams acceded to the request and gave them partial transcripts of discussions of selected sensitive counterintelligence issues. However, to their chagrin they learned that many meetings had not been taped and others had either not been transcribed or the tapes were no longer available. In sum, a complete record of Kulak's reporting in his own words did not exist even at the FBI.

Early congenial discussions among the three began to disintegrate into daily lectures from McWilliams that Kulak was bad because almost every operation he described was handled contrary to standard FBI procedure. “The FBI would not do it that way,” was his comment and appeared to be a large part of the FBI's or at least McWilliams' basis for concluding that Kulak was a controlled source. Despite numerous attempts to convince him that the KGB was not the FBI and had different rules and regulations for engagement, McWilliams refused to concede the point. The KGB had fooled the FBI for years, but no longer. That McCoy sent two women to review his and Nolan's work only inflamed him more. As he often pointed out, the CIA could do what it wanted with respect to female professionals, but he was from the Hoover school and women did not belong in such ranks.

Upon the ladies' return to CIA headquarters, Cynthia drafted a report of their findings and conclusions regarding Kulak's bona fides. Specifically,
Kulak had been a legitimate penetration of the KGB from his walk-in in New York in 1962. Of equal importance, the FBI had failed to recognize Kulak's value and importance as a source of positive intelligence, viewing him primarily from a narrow counterintelligence perspective. In early 1976 senior Agency management accepted the paper as the official CIA position on the bona fides of Kulak. The CIA and the FBI were still on opposite sides of the case.

Spring of 1976 brought a major change in the operation. Kulak, now fifty-six, was departing New York and returning to Moscow. The FBI and CIA believed that he would not be assigned abroad again because he was approaching mandatory retirement. SE Division officers Ben Pepper and Gus Hathaway, the latter scheduled for assignment to Moscow as Chief of Station, decided to take a stab at convincing the FBI to turn Kulak over to the CIA for internal handling. The FBI denied their request, claiming that Kulak had refused contact with the Agency in Moscow. The SE officers persisted and finally convinced the FBI to let Hathaway meet with Kulak and attempt to persuade him to communicate inside the Soviet Union.

Hathaway was successful. Kulak departed the United States in August 1976, trained in internal communication, equipped with a series of dead drop and signal sites, and ready to provide intelligence to the U.S. government.

Having had no operational history with Kulak and only a handful of meetings with him before his return, it was impossible for the CIA to predict whether he would communicate as promised or simply decide to destroy his package. To everyone's astonishment, on his first scheduled recontact in July 1977 he signaled that he was ready to load one of his dead drops. The package was retrieved and its contents were startling, not so much in the material passed but in what his note promised. Among the items was a list of Soviet officials in the United States working against the American scientific and technical target. The list was neatly hand printed and its detail would have taken Kulak hours to amass and prepare. Further, he stated that in the next exchange in the fall he would include the following: the identities and targets of all Soviet officials and scientists worldwide involved in the collection of U.S. scientific and technical information and the five- and ten-year operational plans of the KGB Scientific and Technical Directorate. The eccentric old scientist was prepared to provide the United States with the KGB blueprint ten years in
advance on the top priority intelligence collection requirement of the day—technology transfer. All we had to do was wait for his signal, retrieve his package, and reap the intelligence bonanza, or so we believed.

On 15 July 1977, about a week after the recovery of Kulak's package, the KGB ambushed Moscow Station officer Martha Peterson while she was trying to communicate with CIA source Aleksandr Dmitriyevich Ogorodnik, a Soviet Ministry of Foreign Affairs officer recruited in Bogota. Two weeks later without incident the station picked up a package from Polyakov filled with hundreds of pages of documents. August was calm, but the first of September brought a second compromise. Station officer Vincent Crockett was arrested servicing a dead drop for CIA source Anatoliy Nikolayevich Filatov, a GRU officer recruited and handled in-place in Algiers. Shortly thereafter CIA Director Admiral Stansfield Turner ordered a stand-down of all Moscow Station operational activity. There would be no additional embarrassments to the administration. Moscow was closed for business until further notice.

Turner's edict was met with an uproar from SE Division and others in the Directorate of Operations. He could not be serious. No one, including the director, could or would shut down the collection of high-level intelligence from the Soviet Union. But Turner stood firm, only adding to the pandemonium when he set the parameters for reconsideration of his decision. Unless or until the directorate could guarantee that there would be no further compromises, the ban would remain in effect. Did we really have a director who did not understand basic tenets of espionage activity? It always involved calculated risk and always violated the laws of the target country. The director's demands could not be met.

Kulak became the central figure in the firestorm between the director and SE Division. In another month or so, we would know the KGB's shortcomings, their strengths, their specific targets, and the identities of all who were targeted against us in the scientific and technical field. At a minimum it would save untold millions in expenditures that would otherwise be necessary to uncover and counter Soviet efforts. These arguments did not impress or dissuade Turner. We had no recourse and only one option—wait to hear from Kulak and then do nothing.

Kulak signaled his intention to fill his dead drop right on schedule. Bound by Turner's directive, Moscow Station did not respond with a sign that it was prepared to retrieve the material. Again on schedule Kulak
marked his signal site for a second time. Once more the station took no action. The CIA phase of the Kulak operation that had begun with such promise appeared to have ended in silence. The director had been obeyed, and the files were closed.

In 1983, while writing
The Agency: The Rise and Decline of the CIA
, author John Ranelagh interviewed Turner, who is quoted as stating: “My feeling with the DDO was to tell them I wanted to know when they were planning to take a risk above a certain threshold. And when they did, I'd ask what was the percentage risk of them or their agent getting caught. I wouldn't say ‘use a different technique.' I didn't know techniques. But I would say I was willing or unwilling to take the risk.”
¹
On 11 December 1985, Turner wrote to Ranelagh as follows: “You suggest I was cautious about taking risks in the clandestine collection process. In four years there was only one risk the espionage branch asked me to take that I did not approve—sometimes we debated and refined the operation—but the spooks got all the support they asked for. The problem was they didn't have enough risky proposals.”
²

In his own book,
Secrecy and Democracy: The CIA in Transition
, published one year later, Turner stated, “the question, though, was which of the more sensitive operations I should personally control. Espionage operations came in such different forms, often of a kind that I found it almost impossible to write specific rules. I was able, however, to define certain categories of actions to be cleared with me. These included payments to agents when they exceed certain dollar amounts; recruitments of foreign agents at Cabinet level or above; dispensing any lethal material, such as explosives or poison requested by an agent who might feel he would be tortured if caught; any operation where the risks were high and exposure could seriously embarrass the United States.”
³

It was apparent to those involved in the Kulak operation that “exposure” was the operative word to Turner when he shut down Moscow Station activities. He had no problem with the earlier and successful Kulak and Polyakov dead drop retrievals in July, but after the Peterson and Crockett arrests the collection of intelligence in Moscow had become too risky.

In March 1978 Turner did an about-face and temporarily lifted his ban on Moscow Station to conduct the most daring and dangerous of
operational acts—an attempt to establish personal contact with an asset and exfiltrate him from the Soviet Union. Kulak was that agent.

Distrust and dislike of Turner's decisions had reached such a level that many in SE Division were surprised at his sudden reversal of policy. However, in what may be a sanitized reference to Kulak, the rationale for his blessing of the impending operation can be found in his book: “The most daring exploit I witnessed in my four years as DCI was a successful effort by the Agency to protect the life of an agent who thought he was about to be arrested. In part this is a moral obligation; in part, it is a pragmatic matter, because it assures future agents that they will be taken care of if at all possible.”
⁴

In early 1978 Edward Jay Epstein published
Legend: The Secret World of Lee Harvey Oswald
. In the book Epstein described FBI source FEDORA in sufficient detail that KGB counterintelligence would be able to put him on a short list of suspected American spies. Among the facts Epstein presented were the following: FEDORA was a KGB First Chief Directorate officer; he specialized in scientific and technical intelligence collection against the United States; he was assigned to a cover position at the United Nations in New York; he volunteered to the FBI in March 1962; for more than six years he provided the FBI with information about Soviet espionage activities; in 1971 he told the FBI that Daniel Ellsberg's Pentagon Papers had been provided to Soviet intelligence; and at the time of Colby's removal of Angleton and McCoy's appointment to the CI staff (1974–75) FEDORA was still providing the FBI with information.
⁵

News of Epstein's book stunned SE Division. It was incomprehensible that the existence of, let alone details about, a valued penetration of the KGB would appear in the public domain. While the investigation of such a leak was an FBI responsibility, an agent's life was potentially in grave danger and the CIA had to act immediately.

The operational plan called for Hathaway to “get black,” that is, evade KGB surveillance and call Kulak at his home, hoping that he was there and that he would answer the phone. Hathaway would then briefly describe the situation and offer Kulak safe exit from the Soviet Union and asylum in the United States. Assuming Kulak's acceptance of the proposal, the actual exfiltration would begin. Everyone involved knew that under the circumstances the odds for success were not in our and our agent's favor. Such operations required months of detailed preparation and even then luck
played an important role in any success. Moreover, Moscow Station had never attempted an exfiltration. Kulak would be the first.