Enemies: A History of the FBI (18 page)

The FBI knew there were Nazis to be hunted. But it did not know where to hunt, or how.

“The volume of intelligence information from each Agent was in the beginning and for some time thereafter quite small and of little real value,” the secret SIS history says. “The Agents were, of course, more or less completely unfamiliar with the countries in which they were trying to operate and usually very deficient with regard to the use of the language thereof. The chance of worthwhile accomplishment in the way of local orientation and the establishment of worthwhile informants and sources of information naturally required considerable time. Meanwhile, of course, the Agent, who was usually alone in the particular country to which he had been assigned,
was possessed of a very poor pretext for clandestine operations.… The Bureau learned through very difficult experience that virtually any information referred to a diplomatic officer of the State Department, the Army or the Navy … would invariably result in denunciation of the information as well as its source.”

Hoover sensed a failure in the making. On March 15, 1941, he tried to get rid of the Special Intelligence Service.

Hoover told Attorney General Jackson that the SIS should be handed over to army or navy intelligence. But Hoover had no takers for the job of policing the Americas. The army and the navy had their hands full trying to decipher the intentions and the capabilities of the Germans in Europe and the Atlantic and the Japanese in Asia and the Pacific. He repeated his recommendation three weeks later, saying that “
the Bureau is marking time in so far as any extension of its coverage in the Latin Americas is concerned.”

The spread of Soviet communism in the United States remained Hoover’s greatest concern. Among the ever-growing list of his responsibilities was the wiretapping of the Russian diplomatic posts in the United States, including Amtorg, the Soviet economic and commercial office in New York, which spent millions of dollars buying American technology.

In April 1941, the FBI opened an espionage investigation into Amtorg, spurred by a British intelligence alert. A twenty-nine-year-old American, a Princeton dropout named Tyler Kent, had served for six years as a clerk at the American embassies in Moscow and London. The British, on the trail of a suspected Nazi agent, had followed the suspect to Kent’s London flat. When they broke into the room and searched it, they found copies of 1,500 American diplomatic cables, codes, and ciphers. Kent had spent his career pilfering encoded communiqués and handing them over to Soviet and Axis agents; thanks to his work, Moscow and Berlin could read the American diplomatic code used for secret communications between London and Washington.

Among Kent’s stolen documents was a British intelligence report on Soviet agents working for the chief of Amtorg’s New York office, Gaik Baladovich Ovakimian, a forty-two-year-old chemical engineer. On May 5, 1941, the FBI arrested Ovakimian on a charge of violating the Foreign Agents Registration Act, which required people spreading foreign propaganda in the United States to register with the Justice Department. But before the FBI had a chance to interrogate him, he was released on $25,000 bail into the custody of the Soviet consul general in New York. Ten weeks later, after
Hitler invaded the Soviet Union, the State Department ordered the charges dropped as a diplomatic gesture toward Moscow. Ovakimian left New York, never to return.

Back in Moscow, he became the chief of Soviet intelligence operations against the United States.

A successful interrogation and prosecution of Ovakimian would have changed history. Not until the end of the decade did the FBI understand that he had served as the Soviet spy chief in New York and a leader of Soviet intelligence in North America since 1933
;
that he had established American espionage networks of safe houses, recruiters, and couriers; that his rings ran throughout the United States, Mexico, and Canada. Though Stalin’s purges had torn Soviet intelligence apart in the 1930s, Ovakimian had endured.

Nor was this the only lost chance to trace and trap the leaders of Soviet espionage in America. Shortly before his arrest, the FBI had trailed Ovakimian to a meeting with Jacob Golos, a middle-aged travel agent who promoted trips to Russia in the 1930s. Golos had been convicted of passport fraud and a foreign-registration act violation only fourteen months before; he had received a $500 fine and a suspended sentence. The FBI did not know, and would not know for years, that Golos was among the highest-ranking members of the Communist Party in America and a linchpin connecting Soviet intelligence to the American Communist underground.

Before he returned to Moscow, Ovakimian had been handing off control of his networks of American agents and couriers. Their names would be world-famous one day.

On May 5, 1941, the same day that the FBI arrested Ovakimian, the Japanese ambassador in Washington, Kichisaburo Nomura, an old friend of President Roosevelt’s, received a bulletin from the Foreign Ministry in Tokyo: “
It appears almost certain that the United States government is reading your code messages.”

This startling intelligence came from the Germans. For six months, the army and the navy had been deciphering and decoding Japanese diplomatic cable traffic encrypted in a system called Purple. The intelligence derived from the decryptions was code-named Magic.

On May 20, the Japanese ambassador replied that he had discovered that the United States was indeed reading “some of our codes.” But he did not know which ones. Incautiously, and inexplicably, Japan continued to use
the Purple system. The Magic decryptions went on. They made bone-chilling reading—for the very few Americans authorized to read them. Among those cleared for Magic were the president, the secretaries of war and state, and the chiefs of army and navy intelligence. Those not cleared included Rear Admiral Husband J. Kimmel, the commander of the Pacific Fleet; Lieutenant General Walter J. Short, the army commander in Hawaii; and J. Edgar Hoover.

The failure to analyze Magic and turn its secret information into a plan of action would prove fatal. Collecting intelligence was one thing. Coordinating it—connecting the dots—was quite another. The army did not tell the navy what it knew. The navy did not tell the army. Neither told Hoover.

FDR had said that he wanted the field of intelligence divided. It was, and so it would remain for many years.

By May 1941, Magic had revealed that the Japanese had started to create an elaborate intelligence network in the Western Hemisphere in anticipation of a global war. Orders from Tokyo to Washington commanded a nationwide effort to gather political, economic, and military intelligence using “U.S. citizens of foreign extraction (other than Japanese), aliens (other than Japanese), communists, Negroes, labor union members, and anti-Semites” with access to American government, scientific, manufacturing, and transportation centers.

“In the event of U.S. participation in the war, our intelligence set-up will be moved to Mexico, making that country the nerve center of our intelligence net,” the orders continued. “In anticipation of such an eventuality, set up facilities for a U.S.-Mexico international intelligence net … which will cover Brazil, Argentina, Chile, and Peru.” Reports flowing back to Tokyo from Japanese spies and secret agents in America during May 1941 covered the movement of American ships and planes over the Pacific, plans to infiltrate military manufacturing plants, and attempts to make spies out of second-generation Japanese Americans who served in the United States Army. By summer’s end, Tokyo was seeking intelligence on the correlation of American forces in the Pacific, including the location of American warships and aircraft carriers based at Pearl Harbor.

The FBI, the army, and the navy each possessed bits and pieces of this intelligence puzzle. No one put the pieces together. None of them foresaw an attack against American bases in the Pacific. Their eyes were fixed in the opposite direction.

On May 27, 1941, President Roosevelt declared an “unlimited national emergency,” based in great part on the threat of a Nazi attack on the Americas. He spoke from the White House, surrounded by ambassadors and ministers from throughout the Western Hemisphere.

“What we face is cold, hard fact,” the president said.

“The first and fundamental fact is that what started as a European war has developed, as the Nazis always intended it should develop, into a world war for world domination,” FDR continued. “It is unmistakably apparent to all of us that, unless the advance of Hitlerism is forcibly checked now, the Western Hemisphere will be within range of the Nazi weapons of destruction.” Nazi torpedoes were sinking merchant ships throughout the Atlantic Ocean. “Control or occupation by Nazi forces of any of the islands of the Atlantic,” FDR said, threatened “the ultimate safety of the continental United States itself.”

The president warned that Hitler could soon control “the island outposts of the New World—the Azores and Cape Verde Islands.” The Cape Verde islands were “seven hours’ distance from Brazil by bomber or troop-carrying planes,” and they lay along key shipping routes across the South Atlantic. “The war is approaching the brink of the Western Hemisphere itself,” he said. “It is coming very close to home.… The safety of American homes even in the center of this our own country has a very definite relationship to the continued safety of homes in Nova Scotia or Trinidad or Brazil.”

FDR could not have been more blunt: “I merely repeat what is already in the Nazi book of world conquest. They plan to treat the Latin American nations as they are now treating the Balkans. They plan then to strangle the United States of America.”

Hoover knew that a Nazi network was alive and well somewhere in Latin America, and that it could penetrate the United States unless the SIS succeeded in its mission. The need for intelligence on the Axis in the Western Hemisphere had never been more urgent. But success seemed unlikely for the men of the SIS.

Hoover’s agents abroad reported little except “rumors, etc.,” the secret history recounts. Those rumors came from “professional informants” who “could earn money by furnishing information of an intelligence nature. Their information was never investigated or checked for accuracy.” The con artists found the SIS men easy pickings: “Ordinarily they were shrewd
enough to realize quite early in the game that they could increase their earnings and the sale price of their information, the more startling its nature.”

They became “so enthusiastic with regard to the money to be made from this sort of thing that they engaged in seeking out Americans and British on a somewhat wholesale basis, always striving to enlist new clients and new customers for their thriving trade.” It took months, sometimes years, to sort out fact from fiction, for “the information furnished by the sources was, of course, not always fictitious,” the secret history explains with the wisdom of hindsight. “As a matter of fact, the information was frequently based upon considerable truth. It was also upon occasion manufactured out of whole cloth and all kinds of forgeries, fraudulent enemy codes, etc., were being foisted off not only on Bureau representatives, but also on United States Military Attachés, United States Naval Attachés and other allied intelligence representatives in Latin America, including the British, in return for substantial payments of money.”

“I’
LL WIRE MY RESIGNATION TONIGHT
”

A similar scam heralded the arrival of William J. “Wild Bill” Donovan as America’s new intelligence majordomo.

They didn’t call him Wild Bill for nothing. Donovan had a hundred ideas a day, of which ten might be brilliant. The president liked his derring-do. Like Roosevelt, he was an aficionado of foreign intelligence, enamored by espionage. He had wandered into the field of spying after a failed career in politics, and he was largely self-taught. But he thought himself an expert, and by American standards, he was.

He had been pushing the president hard to establish his own spy service. On June 10, 1941, Donovan had proposed that he take charge of a “
central enemy intelligence organization” overseeing the FBI, army intelligence, and navy intelligence. He would mesh the machinery of American intelligence, get it humming, unify its work, synthesize its secrets, and report the results directly to the president.

FDR had sent him twice to London as an emissary. He had met with Prime Minister Churchill, British intelligence chief Stuart Menzies, and the British navy’s intelligence director, Rear Admiral John Godfrey. The British enthralled him (and they paid for his second trip). He sent a four-page report
to his close friend and fellow Republican warhorse, the new secretary of the navy, Frank Knox, describing the British intelligence system, much as Hoover had done one month before, but in far more glowing words. Hoover had his own relationships with the British intelligence service, but he kept them at arm’s length. Donovan, by contrast, was being recruited by experts.

Donovan had reworked his intelligence plans at his home in New York, with strong and constant encouragement from William Stephenson, the British intelligence officer who ran American operations from an office in Rockefeller Center. Two British acquaintances looked over Donovan’s shoulder, making helpful suggestions: Admiral Godfrey and his aide, Commander Ian Fleming, later the creator of the most famous fictional spy of his generation, James Bond.

Donovan’s ambitions had the unusual effect of uniting the FBI, army intelligence, and navy intelligence: Hoover and his military counterparts stood foursquare against him. They signed a formal statement to the War Department calling Donovan’s idea a serious detriment to national security. They said “
the resultant super-Intelligence Agency would be far too cumbersome and complicated.”

On July 5, 1941, Hoover’s rage over Donovan’s rise was recorded in a telephone conversation with Vincent Astor. Astor was still playing his role as “coordinator of intelligence” in New York and underwriting the undercover work of the SIS. He had criticized Hoover’s work in Latin America, having heard the scuttlebutt from South America.