Part 9 : Wedge..HOW THE SECRET WAR BETWEEN THE FBI AND CIA HAS ENDANGERED NATIONAL SECURITY...THE LAST BUCCANEERS

WEDGE FROM PEARL HARBOR TO 9/11 

HOW THE SECRET WAR BETWEEN THE FBI AND CIA 

HAS ENDANGERED NATIONAL SECURITY 

MARK RIEBLING

CHAPTER SEVENTEEN 

THE LAST BUCCANEERS 

IN MANY WAYS, William Casey was the second coming of Wild Bill Donovan. The parallels were striking; it was almost as if the old OSS director had been cloned. Both were blue-eyed, white-haired, husky-framed, sloppily dressed, Irish Catholic lawyers from the state of New York; both were disorganized, Republican, workaholic millionaires and anti-bureaucratic idea men; and both disliked J. Edgar Hoover and distrusted his FBI. Casey had served in OSS, then gone on to work alongside William Colby at Donovan’s New York law firm; he did not return to intelligence until decades later, but Wild Bill had been one of the great influences in his life. The moral tenor of Casey’s command at CIA, and the cause of much consequent conflict with the Bureau, was perhaps best expressed by Clair George, who for three years ran Casey’s clandestine operations. “William Casey, ” George would say, “was the last great buccaneer from OSS.” 

Like his operational philosophy, the new director’s antipathy to the FBI went all the way back to World War II. As chief of OSS Special Branch in the European Theater of Operations, Casey had seen firsthand how Hoover tried “to walk off with a slice of [Donovan’s] franchise, ” and felt that his mentor had spent “an inordinate amount of time fighting a legal and bureaucratic war for survival.” Casey also believed that Hoover’s withholding of the Dusko Popov questionnaire from Donovan had caused the disaster at Pearl Harbor. Casey had, moreover, been a friend of Andreé Dewavrin, whose 1945 nomination for the U.S. Distinguished Service Cross had been staunchly fought by Hoover. And while spending several weeks on a 1946 committee advising Truman about peacetime intelligence, Casey had been depressed by Hoover’s attempts to stunt CIA at birth. Even twenty-five years later, when Casey was named to head the Securities and Exchange Commission, Hoover was making life difficult for him—unearthing a plagiarism suit over a tax-code manual Casey had prepared, which almost kept him from assuming the SEC post. 

That Hoover was no longer around did not keep the Bureau from causing problems for the new director. He had not been at Langley long before Webster launched a criminal investigation into Casey himself, in the so-called Debategate scandal. White House Chief of Staff James Baker alleged that Casey had provided him, before a campaign debate, with Carter’s briefing papers. Casey denied this. The FBI questioned Casey on three occasions, rifled Republican files, and turned up a memo suggesting a Reagan mole inside Carter’s camp. Although no “smoking gun” was found to implicate Casey, the episode could not have warmed him toward the FBI. 

But if Casey would always see law enforcement as a threat to his secret projects, he still had to get along with Webster. The hard-driving Irishman and the more genteel Webster were not a natural match, but they were not going to go through any Mongoose and Cobra routines, either. They did some things together. Casey took Webster on a trip to New Zealand, probably for a meeting of the CAZAB, a semiannual conference of Western CI executives begun by James Angleton in 1967. The Bureau’s CI Club felt that Casey was more sensitive to its counterespionage needs than Turner had been. It seemed that relations might not necessarily worsen with Turner’s departure, as Aldhizer initially fretted. It would be several years before the Bureau learned that Casey was hiding things from them, even breaking the law behind their backs. 

For the moment, there was a drawing-together. The Bureau’s CI Club took solace in the retirements of George Kalaris and especially the anti-Angletonian Leonard McCoy. New CIA counterintelligence chief David Blee was not overtly hostile to traditional CI, and that helped close the “mind-set” gap. On the Agency side, there was some brief concern when FBI Assistant Director Cregar retired in 1981; the new Intelligence Division chief, Ed O’Malley, had few previous contacts with the Agency, and was by nature so reserved that Agency people complained to Aldhizer, “Ed won’t talk to me.” But the new relationships were helped along when Aldhizer scheduled a few interagency softball games, pitting the Bureau’s Intelligence Division against CIA’s Counterintelligence Staff. CIA won the first contest, the FBI took the second, then swept an abbreviated doubleheader—which Aldhizer would good-naturedly cite as evidence that “there were better athletes in the Bureau than in CIA.” There were also some interagency poker games, and O’Malley was seen as “one of us” by CIA’s Office of Security after he cleaned their clocks. 

Above all, however, O’Malley came to be admired at Langley for pulling good pranks. After Casey’s first DDO, Max Hugel, resigned for alleged securities violations in summer 1981, O’Malley asked the Bureau’s crime lab to white him out of a group photo taken at an interagency luncheon. That especially tickled CIA officers, because Hugel, a Casey business partner who had no intelligence experience, was widely resented as a bad choice for the job. Agency techs were in turn inspired to airbrush the head of Casey’s number-two man, Admiral Bobby Ray Inman, onto a Playgirl magazine centerfold. The finished product became an instant classic at the Bureau, where Inman, because of his resistance to loosening FBI domestic-collection rules, was not especially liked. 

But the Bureau did not take kindly, either, to the relaxing of restraints on CIA’s domestic work. On one occasion, Casey gathered various agencies over at Langley to talk about CI, in the imperious tone of: This is what we’re going to do. “That was not the way to go about it with guys like Jim Nolan, ” Aldhizer recalled. “It was a definite move by the Agency to get involved in FBI turf. And man, there was some fur flying.” 

In fact, Casey wanted to remove all the post-Angleton restraints on CIA. He got Attorney General Ed Meese to back him. When Meese made the case at a White House intelligence round-table on January 26, 1981, the first Monday of the new administration, Webster immediately spoke up to disagree. Perhaps the Turner-Carter school had put too great a premium on civil liberties, but there were good reasons to be cautious about what CIA could do within the country. Webster’s own Bureau, which had sole jurisdiction in such matters, did not feel especially hindered by legal restrictions. He could use more resources, and he would not mind having a formal charter to spell out what the FBI could do, in positive terms, rather than simply saying what it could not. Otherwise, however, he was in favor of preserving the status quo. 

Casey did not argue the point, but CIA’s legal staff soon redrafted Carter’s executive order on intelligence in a way that would let the Agency run operations and conduct electronic surveillance within the U.S. Casey initialed his approval. The draft order was then promptly leaked to the press—Perhaps by the FBI, or perhaps by Inman. “Intelligence Groups Seek Power to Gain Data on U.S. Citizens, ” warned The New York Times’ front-page headline on March 10, 1981. The American Civil Liberties Union was prepared for a full counteroffensive, and the draft order was quickly watered down. 

Still, Reagan’s Executive Order 12333, issued on December 4, 1981, did give the Agency greater domestic powers. Carter had only allowed CIA a “coordinating” role domestically, but Reagan now permitted the Agency to “conduct counterintelligence activities within the United States, in coordination with the Bureau, as required by procedures agreed upon by the Director of Central Intelligence and the Attorney General.” On that foundation Casey created a Senior Interagency Group— Intelligence (SIG—I), chaired by himself, to “resolve interagency differences concerning the implementation of counterintelligence policy.” The SIG began hashing out arrangements, some of them designed to blur traditional foreign-domestic distinctions. Casey was allowed to request the FBI to collect foreign intelligence. Agency personnel, upon approval of the Agency’s Foreign Resources Division Chief, were permitted “to use [U.S.] athletic, entertainment, or cultural facilities that are open to members of the general public … for the purpose of maintaining cover or to develop sources.” That meant Nolan’s agent-handlers could meet their moles in Bangkok or Beirut, and CIA officers could hit on diplomats at the Kennedy Center, or debrief tourists returning from Nicaragua. This went well beyond the arrangement Papich had brokered in 1966, which had let CIA work at home but had not allowed the FBI to follow cases abroad. 

But if the SIG could help keep fieldwork on track, it could not resolve differences of philosophy. When Casey wanted to expand the use of random polygraphs on persons in national-security work, Webster expressed uneasiness over the reliability and intrusiveness of that technique. When the FBI pushed to reduce the number of Soviet diplomats in the U.S., Casey could not help thinking of Hoover’s opposition to Donovan’s proposed OSS-NKVD exchange, and warned the president that the Soviets would retaliate by cutting the number of U.S. intelligence agents allowed under diplomatic cover in Moscow. (Indeed, when acting Soviet military attaché Yevgeniy Barmyantsev was expelled after receiving bogus “classified documents” from an FBI double agent in 1982, the Soviets kicked out of Moscow Richard W. Osborne, a first secretary at the U.S. Embassy, and Lewis C. Thomas, an attaché and electronics expert.) And when a longtime CIA asset, Nassar Haro, was named chief of the Mexico City police elite DFS intelligence division in 1982, the FBI created an embarrassing problem for Casey by refusing to halt their investigation of Haro’s connections to a California car-theft ring. Casey had to lobby Justice directly to scuttle the case, arguing—over cables of protest from the Bureau’s legal attaché—that Haro was an “essential contact” who helped track suspected terrorists, as well as communist agents and diplomats. 

To some within the administration, such episodes proved that the new executive order had done enough to break down bureaucratic barriers between FBI and CIA. There were even rumblings for creating a new counterintelligence superagency, which would combine foreign and domestic CI. The movement was launched by a conservative “firespitter” on the Reagan transition team, Senate aide Angelo Codevilla, who had attended colloquia at which Miler and others lamented the intractability of FBI-CIA bungles. Within the new administration the superagency idea was taken up by Kenneth DeGraffenreid, a forty-one-year-old ex-Navy flier who had worked briefly at the Defense Intelligence Agency before being named senior director of intelligence programs at the National Security Council. DeGraffenreid protested eloquently at NSC meetings that Reagan’s draft order on intelligence did not offer any meaningful mechanism to harmonize interagency relations, but only such toothless prescriptions as: “all agencies and departments should seek to ensure full and free exchange of information.” DeGraffenreid urged abandonment of the arbitrary foreign-domestic split, which was not a distinction observed by the Soviets or, for that matter, any other country in the world. Counterintelligence, he argued, should be handled by an agency like Britain’s M15, which could follow its cases both at home and abroad, and be headed by a “czar” who would have all the country’s CI tools at his fingertips. 

Although the czar idea was soon squelched because of Orwellian fears for Americans’ rights, DeGraffenreid did not give up, and in January 1982 the president ordered a wide counterintelligence study into his ideas. DeGraffenreid was not happy with the forum, however, which was an interagency “task force” headed by Webster. The group was to examine the quality of CIA and FBI counterintelligence—spy-catching, double agents, and deception operations—but the examination was to be done by parties with vested interests, who could hardly be expected to offer up their empires to radical reform. The task force did set up an inter-agency group in 1983 in the attempt to forge a unified policy on background investigations and security clearances, but even that body failed to produce consensus, as events were soon to prove. 

STILL, ONE OF THE STANDARD OBJECTIONS to DeGraffenreid’s ideas was that, in joint operations like Courtship, the two agencies were already working as a single unit. Indeed, Reagan had not been in power long before Courtship made its first two recruitments in the KGB’s Washington residency. The first to be landed was Valery Martynov, an officer of the “Line X” or scientific espionage section, who had seemed to CIA’s psychologists to be a good target because he was enamored of Western life and eager to please Americans. That assessment proved correct, and, beginning in fall 1982, Martynov met at least once weekly with CIA and FBI men to trade secrets for cash. He provided KGB “shopping lists, ” detailing the technological secrets Moscow most desperately wanted to steal, and explained some of the Soviets’ own espionage gadgetry. He said, for instance, that the KGB supplied its agents with communications devices that propelled themselves underwater for several miles before surfacing to send coded bursts to Soviet satellites, thus concealing the agent’s location from any Western interceptors. 

Only a few months after recruiting Martynov, Courtship struck success again, with Sergei Motorin, a political-intelligence officer who was “persuaded” to help the West after the FBI photographed him trading a case of Russian vodka for a Japanese stereo system. The take from Motorin included insight into Soviet disinformation techniques, and echoed some of what Golitsyn had given over twenty years before. Motorin related how Moscow Center periodically tasked each KGB officer to mention the same bit of information to every American he met; the data might relate to Soviet missile strength, Kremlin power struggles, or Yuri Andropov’s image as a jazz loving “reformer” who had given up hope for communist world-conquest. “So you had a hundred guys saying the same sentence.” Motorin told his stunned handlers. “Everyone agrees it must be true. In fact, it’s a lie.” 

To make sure the agents themselves were telling the truth, the FBI shared their take with the counterintelligence officer in CIA’s Soviet Europe Division, Aldrich Hazen Ames. Better known to his colleagues as Rick, Ames was a “legacy”: his father, a career CIA officer, had been an analyst on Angleton’s staff. Except for his mustache, Rick Ames actually looked a bit like the legendary CI chief—thin, graying, nondescript, unassuming, withdrawn. But even if he was not very gregarious, FBI agents found him “a nice guy, ” and considered him an expert on Soviet intelligence. He vetted Martynov’s and Motorin’s information against what CIA already knew, and pronounced both agents to be bona fide sources. 

The FBI retained the lead role in running Martynov and Motorin, but O’Malley did not object to parallel attempts at penetration by CIA. Courtship, he thought, could be a good umbrella for both agencies’ work. Beginning in March 1984, he even approved Ames’ visiting Soviet diplomatic sites in Washington, to size up and “pitch” potential recruits. All O’Malley asked was that Ames keep the Bureau posted on his contacts. Ames gave his word. 

WHILE FBI AND CIA teamed to penetrate the Soviet Embassy in Washington, considerably less cooperation was marshaled against Soviet attempts to penetrate the U.S. Embassy in Moscow. When French intelligence warned in late 1983 that a Soviet bug had been found in a coding machine at the French Embassy, the State Department asked a team of FBI security experts to determine whether the Soviets might also have bugged communications at the U.S. Embassy. The Bureau had some predication in the probe because the embassy was technically “U.S. soil.” After sweeping the outpost— including the top three floors, which were occupied by CIA—the FBI agents returned with a devastating critique of security weaknesses. Their findings were presented to the president and his advisers in a slide show by the FBI’s David Major. Whereas the Soviet Embassy in Washington perched atop Mount Alto, the District’s second highest location and an ideal site for intercepting government communications, the U.S. Embassy in Moscow had been built on low, swampy ground by the Mosvka River, which made it an ideal target for Soviet interception efforts. That inequality, a product of political considerations during the William Colby years, had been compounded by the decision to allow a Soviet émigré to serve as design engineer for the U.S. embassy. The building had been honeycombed by bugs in its walls and chimneys. The émigré eventually returned to the Soviet Union and was promoted by the KGB. Finally, Major reported, an FBI team, in a test, had been able to infiltrate communications rooms on CIA’s three “secure” floors, without being detected by guards or alarm systems. Conceivably, then, the KGB could do the same. 

After Major’s startling allegations, CIA was put in charge of a committee to examine the problems, and concluded that some of them did not exist. For instance, the Agency questioned whether it was really possible to break into the communications room, as Major said the FBI team had proved. To impugn the Bureau’s methodology, CIA pointed to Operation Gunman, an FBI-NSA follow-up investigation which discovered Soviet bugs in seventeen embassy typewriters in spring 1984. Since some of the typewriter bugs were battery-powered, the Bureau concluded that the KGB must have had a way of getting into secure areas of the embassy to replace those batteries. It was suggested that chimney flues had been enlarged so that trained midgets or children could climb up into the CIA station, or that a Soviet spider-man was scaling the embassy wall at night, squeezing through a tiny window and making his way to the code room. But a CIA—State Department study pronounced that the flues had not been enlarged, and also claimed that the “spiderman” window was nailed shut, with years of Russian bird droppings on the seal. The FBI maintained that such findings did not invalidate its earlier conclusions, and called for a congressionally approved study of the situation that, would involve all intelligence agencies. But CIA vetoed that idea, arguing that Casey alone had the right, by law, to protect intelligence sources and methods. Such matters were debated for three years without agreement. Frustrated White House officials like DeGraffenreid worried that the embassy was a disaster waiting to happen. 

OTHER SECURITY PROBLEMS were meanwhile emerging from the case of a suspected mole in CIA. In 1973, after defecting from Czechoslovakia, Karl Koecher had obtained work in AE/SCREEN, a sensitive translation unit in CIA’s Soviet Russia Division. Koecher’s Czechborn wife, Hana, served as a courier, using her work as a diamond grader as an excuse to travel to the jewelry centers of Europe, hiding CIA documents in cigarette packs and trading them to Czech agents for cash. Karl Koecher also met handlers in the U.S., and it was probably through routine surveillance on suspected Czech agents that the FBI began developing its case against Koecher in late 1982. O’Malley immediately warned Casey, who curbed Koecher’s access to secrets. The Bureau then let the case run for more than two years, hoping that Koecher might lead them to other spies, as well as offer proof of his treason that would hold up in court. But by November 1984, the Bureau had met neither objective, and Koecher seemed to sense he was under suspicion. He scheduled a trip to Vienna, which would be an easy platform for redefection to Czechoslovakia. Kenneth M. Geide, the FBI agent in charge of the Koecher case, and Jerry G. Brown, chief of CIA’s security-analysis group, therefore decided to stake the case on a massive bluff. 

On November 15, FBI agents approached Karl Koecher in New York City and asked him to sit down for “a talk.” A few minutes later, Koecher was in a two bedroom suite on the 26th floor of the Barbizon Plaza Hotel, overlooking Central Park. “We know who you are and what you are and what you’ve done since you arrived in this country, ” Geide said. He proposed using Koecher in a double-agent game which would allow him and Hana to move to Austria—and escape prosecution—as long as he would help fill in some “blanks.” Koecher launched into an admission of his spying activities. He was then released, presumably after being given a CIA mission to perform in Austria. The FBI even offered to take the Koechers to the airport for their scheduled flight to Vienna, on November 26. But when the Koechers showed up at the Barbizon Plaza with their suitcases, they were put in handcuffs. 

When the case was forwarded the next day to Justice Department internal security chief John L. Martin, he was shocked by what appeared to be a confusion in CIA-FBI treatment of Koecher. Apparently the Agency had actually wanted to turn him into a double agent, while the Bureau had wanted to prosecute him all along. At the last moment, the Bureau had convinced CIA that Koecher should not be allowed to visit Vienna. Geide and Brown had offered him immunity from prosecution, and made other false promises, which they had no power to confer, and which the FBI had no intention of fulfilling. In short, Martin believed that the confession had been obtained improperly, and wondered if it would hold up in court. It eventually did, but largely because Koecher muffed his own defense, insulting his lawyer’s taste in clothes and making careless admissions while in jail. 

The Bureau and the Agency even disagreed in their damage assessments of the case. CIA believed that Koecher had been an important spy, an impression the Soviets seemed to confirm by agreeing to exchange dissident Anatoliy Shcharansky for the Koechers in Berlin. But O’Malley and others at the FBI were not so sure that Koecher was all CIA made him out to be. He was only a translator, after all, not a case officer or an agent-handler or an analyst. He did not work in Langley, but in one of the outbuildings in Arlington, Virginia. He claimed to have “burned” a Soviet mole in Moscow, Alexander Ogorodnikov, who was arrested by the KGB in 1977 and reportedly died in custody. But an FBI polygraph test showed that Koecher was being deceptive about what information he had given communist intelligence. Koecher himself later told journalist Ronald Kessler that he made up some of his admissions. The question had to be entertained: Was Koecher merely taking the fall for a much-higher-level penetration of CIA? Had he been briefed by his communist handlers on what to “confess to, ” to protect another agent—on promise of an eventual spy trade, and a hero’s life in Prague? Those were black thoughts, but other startling discoveries in the case—including the participation of some CIA employees in sexual orgies arranged by the Koechers—indicated potentially cancerous security problems at the Agency. Especially scandalized was Philip A. Parker, who in March 1983 replaced the retiring Nolan as O’Malley’s deputy. “As far as we in the FBI were concerned, ” Parker would say, “there was no real counterintelligence function in the Agency’s CI Staff.” 

THE ACCURACY OF Parker’s assessment was borne out on a hot, muggy morning in July 1985, on a rain-slicked road outside Moscow. A five-car convoy closed on a yellow sedan, which pulled over to the gravel median. Its driver got out. As uniformed officers approached him, he reached into his vest pocket—Presumably to show identification, but perhaps to draw a gun. There was a struggle, shouting, then chloroform. The suspect was hustled into a white van. The cars caravaned back toward Dzerzhinsky Square, blue lights flashing. The KGB had arrested Adolf G. Tolkachev, a missile-avionics expert, for passing information to CIA. 

The “burn” did not stop there. By year’s end, the Soviets had rolled up virtually all Western sources in Moscow. At least twelve Soviet citizens were caught spying for Langley, and at least six were reportedly put to death. Casey’s spies were shut down in other parts of the world, too. Panicked moles, sensing they were under suspicion, defected in Athens and London. Both Courtship recruitments, Martynov and Motorin, were recalled to Moscow and later reported shot. Just as Mikhail Gorbachev was coming to power, just as the Agency had its greatest need to know what was going on, all the Agency’s eyes had been poked out at once. As one of Casey’s confidants would later write, “It was like the beginning of a spy novel, but no one knew what to do.” 

How had the Soviets pinpointed so many spies? By persistent tailing of their American handlers? Through bugs at the U.S. Embassy? Or by tips from a highly placed mole? 

In early August 1985, counterintelligence professionals received an easy answer to this riddle. Too easy, perhaps. But before it could be crosschecked and tested and probed, the answer, or twin halves of it, would slip between the right and left hands of Amerćian CI. Thereafter, it would have to be taken on faith. 

ON THURSDAY, August 1, 1985, KGB officer Vitaliy Yurchenko defected to CIA at the United States Embassy in Rome. He was a thickset man with a shaggy mustache and facial warts. The tips were missing from the middle and ring fingers on his right hand, caught in a winch when he had worked as a submarine repairman in the Soviet Navy. From the Navy he had transferred to the KGB, rising swiftly. Just a few months earlier, Yurchenko told his CIA handlers, he had been made deputy chief of the KGB’s First Department. That made him responsible for all KGB operations in North America. 

Cabled to Langley, that latter biographical tidbit caused considerable excitement among Casey and his deputies, who were trying to puzzle out how their networks were being blown. If Yurchenko was all he claimed to be, and if there was a mole in the Agency, Yurchenko would almost certainly know who it was. 

The next day, Yurchenko landed at Andrews Air Force Base aboard a C-5A transport jet, and was driven in an FBI motorcade to a luxury condominium five miles from Langley. Waiting there were debriefers from both the Bureau and the Agency. Representing CIA were Rick Ames, the Soviet division’s CI chief, and Colin Thompson, an agent handler. The FBI team was headed by Mike Rochford. 

“Do you know of any penetrations in CIA?” they asked Yurchenko. 

Only a former Agency trainee, the Soviet said. He did not know the man’s real name, just his cryptonym: “Robert.” This spy had been groomed and briefed for assignment to Moscow Station, but was fired because he was considered a drug addict or an alcoholic. He had visited the Soviet Embassy in Washington in 1983, then traveled to St. Anton, Austria, for a meeting with the Soviets. According to Yurchenko, it was on the basis of Robert’s information—and by the use of an invisible “spy dust” on Western diplomats who posted letters to secret agents—that the KGB had rolled up CIA’s Moscow network. 

Yurchenko’s tip created an immediate crisis for Gus Hathaway, a lanky, gray-templed clandestine services veteran who had recently become chief of CIA counterintelligence. From Yurchenko’s description, Hathaway knew that Robert could only be the thirty-four year-old former trainee Edward Lee Howard. An Army brat and altar boy before serving with the Peace Corps in rural Colombia, Howard had applied to CIA in part because of a Walter Mitty complex. “As a kid I used to see James Bond movies, ” he later said. “The guy steals; he gets away with things, like any of us would like to do.” In 1981, Howard was accepted into training at Camp Peary, and by spring of 1983 was slated to be posted to Moscow, his first overseas assignment. He was given a battery of polygraph exams, as are all CIA officers before leaving on extended foreign missions. He admitted to stealing from a woman’s purse during an airplane flight, and to using cocaine while on CIA’s payroll, but apparently was holding back even more. After the results were analyzed, Howard’s supervisor, USSR desk chief Thomas Mills, told him that the tests indicated deception, and said, “We’d like you to resign.” 

Standard procedure would have been to alert the FBI right then, in 1984, that Howard was a potential traitor, a man who might bear watching. But CIA had decided not to share the case. Why the Bureau should not be told about Howard would later become a matter of much speculation. The generally accepted view was that the Agency was simply embarrassed, and wanted to keep its own failures in-house. Nor was there, as yet, any evidence that Howard had broken the law. 

But the Howard case, and CIA’s withholding of it, had not ended there. A few days after being cut loose, Howard called a secret number at Moscow Station and left a message for the station chief, apparently as some sort of joke. The Agency was troubled by this bizarre behavior, but again it was decided not to brief the FBI. Instead, CIA sent Howard to a psychiatrist, to whom he confessed that he had contemplated selling details of CIA operational methods in Moscow. Howard said he had even loitered outside the Soviet Embassy in Washington, but had not gone in. For a third time, CIA officials wondered whether to inform the FBI of Howard, and for a third time decided not to. 

But now that Yurchenko had tipped the joint FBI-CIA debriefing team about “Robert, ” the Howard matter was coming to a head. CIA could not stall forever; at some stage the Bureau must be informed. This would not be pleasant. To admit to the FBI that Roberts identity was already known to CIA would mean admitting to a pattern of deceit and incompetence lasting more than two years. 

In the old days, CIA officials could have rationalized that it was difficult to discern when a mere “security breach” became a more serious counterespionage case worth bringing to the Bureau. But Reagan’s executive order precluded that kind of waffling. “In any case involving serious or continuing breeches of security, ” Reagan had spelled out, CI must “recommend to the Attorney General that the case be referred to the FBI for further investigation.” CIA’s deception of the FBI in the Howard case was not only monumentally stupid; it was also illegal. 

Yet if the Agency had held out for two years, it could do so for a few days more. Thus, when Parker entered the office of O’Malley’s successor, James Geer, on Monday, August 5, 1985, and announced, “CIA has a problem, ” the FBI still did not know any more than what Yurchenko had said. Parker told Geer that two special agents from the Washington Field Office were already out at Langley, trying to help the Agency figure out who Robert might be. Until the Agency told the FBI who he was, there was nothing anyone could do. 

Monday passed. Tuesday. No word from Langley. They were checking their files, Aldhizer reported. As soon as they knew anything, the Bureau would hear. It did not occur to Parker that CIA might be up to something. He felt he had always played it straight with the Agency, and assumed they would always play it pretty straight with him. When CIA finally told him, on Wednesday, August 7, that Robert was unquestionably one Edward Lee Howard, Parker had no reason to suspect that the five-day lag was due to anything other than CIA’s painstaking analysis of its files. 

But by late August, the truth began filtering back to Parker from the Washington Field Office. He realized that “from the moment the news came in [from Yurchenko] they knew exactly who it was.” His best guess as to why CIA had held off those extra five days: “Maybe it took that long to figure out how the hell they were going to tell us.” 

The concealment was costly. On August 6, as the Bureau patiently awaited word about Robert’s identity, Howard had taken a plane to Vienna, where he had almost certainly met his Soviet controllers. If the Agency had let on right away that Robert was Howard, and if he had been under surveillance during the meeting in Vienna, the FBI could have had enough evidence to make an arrest. As it was, he had returned to the U.S. before the Bureau even knew he was gone. CIA’s dishonesty had probably caused them their best chance to nail a spy. 

“That was the low point of my work as a liaison officer, ” Jay Aldhizer admitted. “We were playing softball with these guys who were supposed to tell us.” 

The Agency’s duplicity continued even after the Bureau was told about Howard. As the FBI began surveilling him and placed a tap on his phone, CIA failed to disclose that another of its former officers, William Bosch, had been Howard’s best friend at Langley, and that the two still saw each other frequently. Bosch was potentially a source for some very good leads, but the Bureau found him only by rooting through Howard’s long-distance phone calls one at a time and crosschecking each number against a computer base of names. 

CIA had a reason for holding back about Bosch: it was feared that he might tip Howard to the Bureau’s inquiries. In fact, Howard did learn that the FBI was on to him, although it is unclear whether he was originally warned by Bosch, or by someone else—a mole in CIA?—earlier on. Certainly, the timing of Howard’s August visit to Vienna, just days after Yurchenko came over but before the FBI knew about him, suggested a leak in Langley. In any case, if Howard had not hatched an escape plan with his Soviet handlers on August 6, in Vienna, he did so in September, after a phone call from Bosch. 

The success of Howard’s scheme would hinge on the quality of the counter surveillance training he had received from FBI agents guest lecturing at CIA. As part of the cross-pollination arranged by Aldhizer, Howard and many other Agency trainees had absorbed all the Bureau could teach about eluding watchers and pursuers. Now Howard would use that knowledge, which came of interagency cooperation, to pull off an action that would drive the agencies further apart. 

At four-thirty on the afternoon of September 21, Howard and his wife, Mary, left their home in Santa Fe, New Mexico, and drove to a restaurant nestled between art galleries. At about seven o’clock, they paid the check and his wife took the wheel. She turned through a number of residential side streets. On one of them, as they turned a sharp corner at fifteen miles per hour, Howard opened his door and rolled out onto a well-tended lawn. He landed hard on one arm and almost broke it, but scrambled into bushes by a high fence. In the car, a Styrofoam dummy popped up in his place, complete with wig and clothes. It was still daylight as his wife pulled into their garage at home with the fake Howard beside her on the front seat. A Bureau surveillance team duly noted that the pair had returned from their date. Howard’s disappearance was not detected until late the following evening; by then he was already on his way to Moscow. Instead of a life in jail, and a confession which would help CIA assess the damage he had done, he would have a long, thorough debriefing by the KGB, and occasional dinners with Kim Philby. 

THE AGENCY WAS ALMOST hysterically upset with the Bureau for blowing the Howard stakeout. Not since Hoover’s ham-handed surveillance of the Tairovas, twenty-eight years before, had the FBI performed so poorly on an important target. Casey wanted to know how Howard had managed to drive off in broad daylight. Webster lamely explained that the lookout man was a rookie agent who had been watching a video monitor. There were problems with reflection and glare, because the sun was strong in the desert. CIA officials acidly suggested that the Bureau might want to use some of its counterintelligence budget to invest in sunglasses. The rookie FBI agent was disciplined and soon resigned. 

CIA’s outrage was somewhat hypocritical, however. The Bureau’s botched surveillance was an end-play only made possible by the Agency’s own withholding in the case. It had been Langley’s five-day delay, after all, that caused the FBI to miss evidence which would have allowed an immediate arrest. 

While the two agencies pointed fingers over Howard’s loss, tensions surged over the handling of the source who had sparked the suspicions against Howard in the first place. After their initial joint debriefing of Vitaliy Yurchenko, the two agencies had alternated days, and the defector soon spent much of his time with his Bureau interrogator, Mike Rochford, complaining about alleged maltreatment by CIA. His Agency handler, Colin Thompson, was taciturn and, according to Yurchenko, generally not nice. The Agency sent guards to sleep in Yurchenko’s room, and would not allow him to visit Russian-language bookstores. The Bureau, by contrast, had bought him golf clubs and seemed to show some genuine concern for his well-being. The net result was a good-cop/bad-cop effect, but Rochford and other FBI agents didn’t see the need for such a Manichean approach. After all, the man had risked his life to help the West. He should be treated not as a prisoner but as a hero. 

CIA officers, however, thought it wrong to believe that a more “popular” handler was necessarily a better one. It was a cardinal mistake to let defectors obtain an exaggerated sense of their own worth. Remembering names and dates and other details from years past was grueling, exasperating work, and defectors, like other sources, should be made to understand that their treatment would be pegged to performance. CIA, moreover, had the difficult job of establishing a defector’s bona fides, of analyzing his information against everything else that was known, whereas the FBI had the easier and more fun job of pumping him for information and running down leads. Finally, as the saying went, kids were always great when they were someone else’s. Since CIA had formal responsibility for defector resettlement, the Bureau didn’t have to deal with the frustrations that came from having to care for and feed these exiles for the rest of their lives, didn’t have to deal with their infantile behavior and adult needs, didn’t have to find them jobs and sex and happiness. 

In an attempt to revive Yurchenko’s apparently sputtering spirits, the two agencies did agree that Thompson and Rochford could take him on a two-week tour of the American Southwest. But because of interagency differences, the trip was a disaster. After several days of scenic driving through dramatic gorges of rust-colored prehistoric rock, they arrived in Las Vegas. When Yurchenko expressed a strong desire for female companionship, Thompson, the CIA man, suggested that Yurchenko be allowed to hire a prostitute. But Rochford, the FBI man, refused. The Bureau was a publicly respected law-enforcement agency, and would not get involved with things like that. To Thompson, that typified the cop mentality that had for so long prejudiced CIA officers against the Bureau. Here was a man who had come thousands of miles, betrayed his own country to help the United States—and Uncle Sam couldn’t even get him laid? 

But even if FBI puritanism contributed to Yurchenko’s apparent unhappiness, it was CIA that would receive most of the blame for the unprecedented scenario that then began to unfold. Back in Washington, on November 2, Yurchenko was allowed to go to dinner at a Georgetown bistro, accompanied by only one Agency security guard. The Russian calmly ordered bisque, lobster, and a carafe of white wine, then suddenly dashed out of the restaurant and disappeared among the dark streets. A fifty-man search team of FBI and CIA officials descended on the neighborhood, keeping in touch by walkie-talkies and car radios. By 5 a.m., when they regrouped at the Bureau’s Washington Field Office, it was clear that Yurchenko had slipped the net. 

Not until two days later did the agencies learn where he had gone. A press conference was called at the Soviet Embassy complex at Mount Alto, in Northwest Washington. “I was forcibly abducted [by CIA] in Rome, ” Yurchenko announced. He claimed not to have betrayed any real secrets, but to have instead used the debriefing sessions to learn about U.S. defector- interrogation methods. Then he boarded an Aeroflot plane at Dulles Airport, gave a thumbs-up to news cameramen, and was gone. 

What had happened? Was Yurchenko a bona-fide defector who had simply got homesick and cut a deal with his former employers? Had the KGB offered him leniency in exchange for assistance in embarrassing the United States? Or was Yurchenko’s original “defection” to CIA some elaborate ruse? Had he been dispatched to sacrifice the used-up Howard and protect a higher-level mole? If so, why would the KGB have put the game at risk by having him re-defect? 

Officially and publicly, both CIA and FBI claimed Yurchenko had been bona fide, but each blamed the other for causing his redefection. FBI agents told journalists that Yurchenko had gone back because the Agency was mean to him. The Agency countered that it had offered Yurchenko $1 million for his information and then taken him on a two-week vacation, which was hardly treating him as a prisoner. Yurchenko had more likely been upset because he had requested that his defection not be publicized, yet FBI agents repeatedly showed him news clips about it. “That is when he began thinking maybe he’d made a big mistake, ” one anonymous CIA official told The New York Times. 

Privately, an even more serious dispute was raging. In a virtual replay of the Nosenko case, the two agencies disagreed as to whether Yurchenko had been a bona-fide defector. Though the Bureau had absorbed some of Angleton’s skepticism after Hoover’s death, it was now nudging back toward the old face-value approach. The shift had begun with the retirement of Cregar, gained momentum with the 1983 departure of Nolan, and was sealed by the retirement of O’Malley, on the very day Yurchenko arrived. O’Malley’s successor as FBI intelligence chief, James Geer, was a dedicated golfer who had previously run the Bureau’s forensic crime lab. His sardonic attitude toward CI was evident in a plaque on his office wall, engraved with a passage from Eric Ambler’s spy thriller Light of Day: “I think if I were asked to single out one specific group of men, one category as being the most suspicious, unbelieving, unreasonable, petty, inhuman, sadistic, double-crossing set of bastards in any language, I would say without hesitation the people who run counterespionage departments.” Geer preferred simple, obvious explanations to unprovable and complex ones, arrests over double-agent games, action over theory. Whereas Nolan had declared the FBI’s old KGB informant Fedora bogus, Geer’s team reversed the Bureau to its original position—an assessment seemingly confirmed by Yurchenko’s claim that there had “never been anything but genuine defectors.” To Geer, as to Yurchenko’s FBI handler, Rochford, there was no question that Yurchenko was legitimate. It was unthinkable that the KGB would have given over good live leads like Pelton and Howard for any reason, and least of all to establish the bona fides of an agent who would later redefect. 

“Bullshit!” the FBI men soon heard their Agency counterparts saying. Ames stood by Yurchenko, but most of his colleagues thought Yurchenko had been a false defector. This determination was reached despite Angleton’s legacy, rather than because of it. Hathaway thought that Angleton’s obsession with moles and false defectors paralyzed the Agency; Thompson had served briefly on Angleton’s CI Staff and was bored. But neither could believe in Yurchenko. The man himself now said he had been a loyal KGB man all along. Why not believe him? Both of the agents he had exposed, Howard and Pelton, had lost access to U.S. secrets, and therefore would have been perfect “chicken feed.” They were live cases from the FBI’s prosecutorial point of view, but dead to the KGB—just as Nosenko’s leads had been. 

There were other parallels with Nosenko. Both defectors claimed that priceless CIA assets in Moscow had been compromised by spy dust, not by Soviet moles. Both made claims about KGB recruitments of U.S. journalists in Moscow which were admitted by the FBI to be without substance (Nosenko had implicated ABC’s Sam Jaffe, Yurchenko the Washington Post’s Dusko Doder). Both claimed not to know things they should know, if they really were who they said they were. (Yurchenko, though supposedly running all KGB agents in North America, knew of no illegals, and could report on no approaches made to the Soviets by “dangled” U.S. agents.) Indeed, Yurchenko seemed to follow the Nosenko script so closely that CI staffers had found themselves referring to records on that earlier case for clues as to what the Soviets might be up to with Yurchenko. Particularly suggestive was a February 1964 memo by then Soviet Division chief David Murphy, suggesting that Nosenko’s defection was part of “a massive propaganda assault on CIA in which Subject, most probably as a ‘re-defected CIA agent,’ will play a major but not necessarily the sole role.” [Emphasis added.] But whereas Murphy had once argued for Nosenko’s incarceration, in part to prevent that prediction from being fulfilled, CIA had decided on the opposite approach, perhaps to see whether Yurchenko would follow the script that Murphy had outlined. 

Thus had they sent Yurchenko to a restaurant a few blocks from the Soviet Embassy on November 2, with a single unarmed guard, and waited to see what he would do. Yurchenko had then done what Murphy predicted in 1964, right down to the “propaganda assault.” If it was difficult for the FBI to comprehend why the Soviets would deliberately impugn Yurchenko’s bona fides by engineering his return to the USSR, it was equally difficult for CIA to fathom why, if Yurchenko was a truly disloyal KGB officer, he had not been executed or imprisoned, but was attending parties and had reportedly been promoted. One possibility was that the KGB had not originally planned to reel in Yurchenko, but had done so after learning, perhaps from a CIA mole, that Yurchenko was under suspicion of being bogus. That way, the KGB would at least keep him from cracking under CIA interrogation, and could confuse and demoralize American intelligence in the bargain. In any case, with so many questions about Yurchenko, CIA certainly questioned his basic “message, ” which seemed to be: No false defectors, no moles—relax, there’s nothing to worry about. 

That the United States nevertheless had much to worry about became clear in the weeks after Yurchenko’s re-defection. At least four more CIA agents were burned, and a third FBI source in the Washington embassy was hustled back to Moscow and executed. These sources had all been recruited after Howard left CIA, and Hathaway began to doubt whether Howard had been in a position to blow any of the cases that had been going bad. But if Howard hadn’t burned those operations, how had they been compromised? Was there another traitor still roaming the halls at Langley? The possibility that Howard and Yurchenko had been tipped to the suspicions against them certainly suggested as much. 

On the hunch that Yurchenko had been sent to deflect suspicion from a still-active mole in CIA, Hathaway found himself doing just what Angleton had done in 1967. He recommended to Clair George, Casey’s chief of operations, that a number of officers in the Soviet Europe Division be quietly transferred to less sensitive posts. That not only cut off their access to some of CIA’s most precious secrets, but also gave CIA’s Office of Security a convenient excuse for “routinely” polygraphing them on their way to foreign assignments. All the SE officers passed their polygraphs, but Thomas Mills and Colin Thompson took the hint and retired. Ames stayed with the Agency, in Rome. 

WHILE AMERICAN secret agents were being caught overseas, a number of foreign spies were also being uncovered in the U.S. Twenty-six American citizens were arrested for espionage by the end of 1985, the so-called “Year of the Spy.” In some of these cases, FBI and CIA worked together well. For example, when a polygraph test showed signs of deception, Sharon Scranage, a CIA operations-support assistant in Ghana, confessed to turning over classified information to her Ghanaian lover. Scranage’s treason had already led to the arrest of eight CIA agents in Ghana, and some of her information was also apparently passed by Ghanaian intelligence to the KGB. Scranage cooperated in a joint operation by the FBI and CIA’s Office of Security to trap her lover, who was arrested in Virginia. He was then Exchanged for CIA’s imprisoned sources and their families, who settled in the U.S. Scranage was sentenced to two years in jail. 

Too often, however, the agencies muffed. In one case, after a mole in Chinese intelligence tipped the Agency that a spy in CIA had traveled to China for a banquet, FBI agents pored over airline-passenger lists and came across a customs declaration signed by a retired CIA analyst, Larry Wu-Tai Chin. Chin confessed to being a Chinesecommunist mole for more than thirty years. He had retired from CIA in 1981, and was under investigation by the FBI after February 1983, but in 1984 CIA had asked him to come back to work full-time as a consultant. Reportedly this was because they were oblivious to the Bureau’s suspicions, although it seems possible that CIA had been told about Chin and was using him for deception or bait. 

In another well-publicized episode, Berkeley graduate student Clifford Stoll tried to warn U.S. intelligence that someone was trying to “hack into” sensitive data banks at Lawrence Livermore Laboratory, but CIA and FBI each disclaimed responsibility in electronic espionage. East German agents continued downloading data for months until Stoll, frustrated by the bureaucratic run-around, baited a trap for the hackers and cracked the case himself. 

Reviewing the litany of CI failures in September 1986, a Senate Intelligence Committee report isolated one overarching problem: “constant risk of fragmentation and conflict among organizations with different methods and priorities.” In an apparent allusion to the Yurchenko affair, the Committee noted that “Disputes over the bona fides of defectors have plagued the U.S. intelligence community…. Such differences are unavoidable, but they should not disrupt interagency cooperation.” Above all, there was a “need for earlier involvement of the FBI … in cases of suspected espionage.” In a pointed reference to the Howard case, the Committee recommended that “The decision as to whether the circumstances justify investigation in varying degrees should be made by the FBI, in light of its counterintelligence experience, not by the employing agency…. When offices or agencies have held back from bringing in the FBI, events have often gotten out of control.” 

With such high-level attention to the unique problems of American CI, it seemed for a time that increased awareness might translate into actual reform. The Agency and the Bureau signed a “memorandum of understanding, ” intended to bolster cooperation on CIA espionage cases within the United States, and there was wide support for creation of a central CI “brain center.” James Angleton had been building such a capacity for twenty years, with as much FBI input as Papich could arrange, until Bill Colby’s people torched 95 percent of the product. But in 1987, at a CI colloquium, Leonard McCoy and George Kalaris declared themselves in favor of recentralization. “The department and geographic CI boundaries that the United States has established are not honored by the primary opposition services, which use them to defeat us, ” the retired officers observed. “Opposition services recruit in one area and run the case in another. Further, they move agents and operations officers about the map at will. This engenders among U.S. counterintelligence agencies a cumbersome, lumbering process that seldom catches up with opposition actions…. The United States must eliminate the opposition’s advantage in this area by bringing its … primary CI bodies together at the sources of [American] vulnerability.” Naturally, there was debate about whether CIA or FBI should have the main CI coordinating job. A former White House official added that it mattered less who was in charge than that someone be in charge. 

A single boss seemed especially needed in the ongoing hunt for a Soviet mole in CIA. Counterintelligence officials on both sides had suspected treason since Yurchenko’s redefection, but separate CIA and FBI probes were languishing, riven by competition and bickering. Despite suspicions on Hathaway’s CI staff, Casey’s top managers played down the possibility of a mole, and blocked independent FBI scrutiny of CIA’s failed operations. When the Bureau raised objections, Casey’s executives argued that they could take care of their own security problems, thank you. 

In the end, little was done to end the infighting. There was no true recentralization of CI, no radical reorientation. When Reagan tried to get a handle on KGB espionage by ordering eighty Soviet officials to leave the country, as Webster recommended, CIA officials blamed “counterintelligence drum beaters” at the FBI for jeopardizing U.S. diplomatic slots in Moscow. When the Senior Interagency Group willfully disregarded most of the Senate’s ninety-five recommendations for fixing CI, a distracted Reagan did nothing. Ken DeGraffenreid, still observing from the National Security Council, lamented “the bureaucratics involved, the turf considerations [that] simply prevented the movement to action, ” while “interest and attention … flagged in some quarters of the Executive branch.” 

Unsolved, meanwhile, were the “mole mysteries” that had seemed to swirl around the Howard and Yurchenko affairs, fueling FBI distrust of CIA. If Geer, Parker, and others at the Bureau did not believe that Yurchenko had been sent to deflect fears of Soviet penetration of the Agency, they nevertheless did not have difficulty believing that CIA might be riddled with moles. In the wake of the Howard and Yurchenko episodes, there was what Parker called “a healthy paranoia about CIA personnel security—a natural concern, especially where sensitive information and sources had to be shared.” 

What Parker and DeGraffenreid had learned was that Casey was not really a CI man. Despite Republican rhetoric about the Carter-Turner CIA being soft on Soviet spies, Casey himself wasn’t much tougher. Here again, Casey had been influenced, and probably blinkered, by the OSS-Donovan legacy. Wild Bill had always thought the best defense was a good offense; the way to do counterintelligence was to get out there and hit the enemy. So did his protégé, who chose to emphasize positive collection and covert action. When ex-DCI William Colby, another OSS veteran, had personally counseled the incoming Casey to aggressively develop human penetrations in Moscow—even if it meant getting burned by bogus agents—Casey had bought the logic. Casey himself, it was said, tried to set the example by personally bugging the office of a friendly foreign-intelligence chief during an official visit. The new DCI had issued a call for heroes, and the operational mode of CIA was to be one of bold risk-taking, not orchid-growing patience and caution. 

A MORE MEANINGFUL REFORM was effected by Casey in the sphere of counterterrorism (CT), an area Aldhizer considered “ripe for Agency-Bureau problems.” In part, the increased threat of terrorism was a necessary risk of renewed commitment overseas. Reagan had promised not to let “a single inch of earth” go communist on his watch, and in March 1981 Casey wrote a fateful memo outlining a covert plan, later known as the Reagan Doctrine, to “roll back” communism by aiding “resistance” forces around the world. Yet the implementation of that vision would require being in places like Lebanon, El Salvador, and Grenada, and retaliating against Soviet proxies like Libya. If terrorism had been a problem for Carter, who was disengaging from overseas commitments, what would it mean for Reagan, who now went where Carter had feared to tread? 

The answer came on April 18, 1983, when an explosion shook all of West Beirut, spewing glass and metal, melting traffic lights, and turning the U.S. Embassy to smoking ruins. Sixty-seven people were left dead, including a half-dozen CIA officers. At the moment of the explosion, Casey’s Middle East expert, Robert C. Ames, had been chairing a first-floor conference on terrorism. There was suspicion that news of Ames’ visit had leaked, and that the attack had been timed to kill him. 

Casey wanted to draw on the Bureau’s forensic expertise, and had immediately requested that special agents get involved. Aldhizer arranged that. But after only a few days, the FBI team came back in a state of extreme agitation, claiming that a team of CIA officers, who flew from Langley to Beirut to pursue their own bombing inquiries, had not fully cooperated. Just as the Agency wanted to investigate its own men when they got into security trouble, so it now wanted to bury its heroes and find their killers. That brief was given the CIA crew by the new Beirut station chief. William Buckley was usually a quiet, reserved person, passionate only about collecting toy soldiers, but he was distraught over the loss of his colleagues, and took it out on the meddling G-men—or so they had been made to feel. Apparently there had been some yelling and even some shoving in the hotel rooms that had to serve as embassy offices. “Man alive, it was a bad scene ” Aldhizer recalled. He tried to explain to the FBI agents: “If you turn that thing around, and a bomb went off in the New York Field Office and killed a bunch of your friends, and you were working your tails off to find out who did it, and all of a sudden CIA butts into the investigation—how would you feel?” 

But the Bureau’s Criminal Division still bore a grudge about its treatment overseas, and fallout from the Beirut episode contaminated the routine exchange of information in other fields. In one case, an Agency source provided a tip, relayed to the Bureau, that caused Webster to send agents from several field divisions out into the Florida Everglades at night, but all for nothing; the lead was false. Bureau tempers were already short, because of the Beirut snub, and a letter came down from Floyd Clark, assistant director of the Bureau’s Criminal Division, which Aldhizer was ordered to carry to Langley. It contained language like, “You had our agents out in the middle of the night, chopping through swamps, all because you didn’t handle this source correctly.” Clair George, Casey’s chief of operations, replied with what bureaucrats called “a screamer.” Its essence was, Don’t you tell us about your guys’ having to work overnight in the swamps when we just had x number of guys killed in a bombing in Beirut. Don’t tell me about sacrifice! Aldhizer was concerned by the Clark-George exchange, because a lot of people underneath saw it, and ill will radiated down. He tried to arrange a meeting between George and Clark, two guys that needed to get along, but never was able to pull it off. 

Aldhizer was able to convene a conference at Langley on the Beirut-embassy situation, however. The session devolved into a shouting, name-calling match between Buckley and several representatives of the Bureau’s Criminal Division. But the exchange was apparently cathartic. After presenting Buckley with an FBI-logo cap as a peace gift, the Bureau team went back to Beirut and did what Buckley considered a “bang-up” investigation, tracing a piece of axle from the truck used in the bombing to a factory in Iran, and eventually pinning the act on the Popular Front for the Liberation of Palestine, an Iranian backed group. 

But by the time the FBI reached that conclusion, Buckley himself had been kidnapped by Iranian sponsored terrorists, in April 1984. An FBI team specializing in kidnapping cases was brought in to help hunt for him. Things went more smoothly this time, but “that kind of teamwork aspect was extremely sensitive, ” as Aldhizer would say. “It all boils down, a lot of times, to nothing more than turf.” 

To pool U.S. efforts in such cases, Reagan approved creation of a Restricted Interagency Group for Terrorism (RIG-T). The DCI held the chair, but the working group was run by one representative each from CIA, FBI, and the NSC. Casey selected all three reps for their gung-ho, risk-taking styles. Duane C. “Dewey” Clarridge, from CIA, was one of Casey’s favorite “shooters, ” a suave hawk who had until recently been running Casey’s contra war in Nicaragua. Oliver “Buck” Revell, the FBI’s assistant director for criminal investigations, was dissatisfied with the Bureau’s tendency to conduct CT “on a case-by-case basis rather than correlating the information to have a more thorough knowledge of the overall threat, ” and welcomed a more activist CIA counterterrorism. But above all Casey was impressed by the NSC’s man on the RIG, an imaginative, gutsy Marine lieutenant-colonel, Oliver North. Casey hoped that “Ollie, ” as he affectionately termed him, just might be able to pool FBI and CIA resources to get Buckley back. 

North’s first plan was to ransom Buckley before he could be tortured into revealing CIA secrets. He made contact with some DEA informants, heroin traffickers in the Middle East, who claimed to be in touch with Buckley’s captors. But the Agency would not put up any money unless it got proof that North’s sources were telling the truth. The Bureau meanwhile worried that use of its funds to pay drug dealers might violate U.S. law. North therefore went around both agencies, appealing to Texas superpatriot and billionaire gadfly Ross Perot, who in 1980 had financed a successful private rescue attempt of U.S. citizens from Iran. With $100,000 down and the promise of $2 million to follow, North proposed to bankroll a joint CIA-FBI operation, which would ideally culminate on a yacht off Cyprus, where Buckley would be swapped for cash. Clarridge was in favor of using the Perot money, but Revell initially expressed his disapproval; the plan seemed like a violation of American policy, which was not to deal with hostage takers. Revell discussed the idea with Webster, who similarly disliked it. Because the operation was going to take place outside the U.S, and under the auspices of a private donor, the FBI, after expressing disapproval, did not try to stop it. But before the project could get under way, good coordination between CIA and FBI proved that North was being snookered. After North’s informant visited Beirut and returned with a newspaper on which Buckley’s initials were allegedly scrawled, CIA submitted the handwriting to FBI lab for analysis. Their conclusion: the handwriting was not the station chief’s. 

North’s next plan was to kidnap Imad Mugniyeh, a Lebanese Shiite cleric who headed the Islamic Jihad, the organization that was holding Buckley, then trade hostage for hostage. Mugniyeh was to visit France in the fall of 1985, and though the French weren’t likely to cooperate in such a controversial operation, North wanted to strike without French consent. Clarridge took the idea to Casey, who liked it. But the idea was fiercely resisted by Webster, who believed the risk of exposure was too great. He also predicted that, if the United States undertook the kidnapping, the French would never again cooperate with the United States on other fronts. Reluctantly Casey agreed, and North shelved the idea. 

Discord similarly plagued CT policy during a rash of hijackings in late 1985. On one occasion, FBI experts at Quantico wanted to come up with a capability for putting special silencers on pistols. The problem they presented was: How can we shoot a hijacker on one end of a plane, without letting a hijacker on the other end know that we’ve done his buddy in? Could the Bureau’s liaison officer find out if the Agency had such silencers, and if they’d let the Bureau have some? Aldhizer put Quantico in touch with some of his Agency contacts, and an arrangement was made to fly the silencers in from somewhere in the United States. But it turned out that CIA had “coordinated” with the wrong set of people; the silencers belonged to someone else in the Agency. “You can’t have them, ” Aldhizer was told. He went back to Quantico with the bad news. 

OUT OF SUCH FRUSTRATIONS was born a new strategy. On January 16, 1986, Reagan authorized Casey to create a new interagency Counterterrorism Center (CTC). Headed by Dewey Clarridge, with a support staff of two hundred CIA officers and ten people on loan from other agencies, the Center was soon a mechanism for unprecedented cross-pollination. CIA even assisted the Bureau in a study to collect and analyze “positive” domestic intelligence, in counterterrorism and other fields. There was some concern about this in the Agency’s National Collection Division, which performed that same function by debriefing U.S. citizens. At best, the Bureau would be a competitor, and at worst, it could take NCD’s job away. But Aldhizer regarded the move as a real liaison breakthrough. 

Operational liaison was a more delicate matter, though, for it raised legal issues that Webster found troubling. Casey had consulted him before creating CTC, and Webster had appreciated that, but he worried that CTC’s “pro-active” stance might involve the U.S. in assassinating terrorists, which was banned by executive order. And CTC had not been in existence for more than a month when Webster opposed a CIA plan that would have had the FBI help abduct the suspected hijackers of TWA Flight 847 and fly them to trial in America. Webster had reservations not only because of the possibility of failure and embarrassment, but because such operations could violate international and even U.S. law. 

On the latter point, Webster was probably right. Reagan’s January finding allowed CIA to seize terrorists overseas, but the FBI lacked jurisdiction until April, when Congress authorized the Bureau to arrest suspects overseas. Even so, Webster had to submit to a lecture from Representative Don Edwards (D-California), himself a former G-man, about the dangers of jurisdiction expansionism—proving how right Webster’s initial instincts had been. “That is something that we are not very enthusiastic about in this country, to have the FBI operating overseas and the CIA operating within the confines of the United States, ” Edwards said. “It is a slippery slope that one must watch very carefully.” 

But letting CIA and FBI cross geographical lines did allow otherwise impossible working partnerships. One was a scheme to nail Mohammed Hussein Rashid, a genius bomb-maker who beat airport X-ray machines by wiring explosives into Sony Walkmen. Since 1982, the Agency had been monitoring Rashid’s actions through a penetration agent code-named “MJ/HOLIDAY, ” a Palestinian businessman who served as one of Rashid’s bomb couriers in Europe. Still, there was dissension when CTC decided to try to kidnap Rashid and bring him to America for trial. Initially CIA had opposed the operation, because Rashid was sponsored by Iraq, and Casey was trying to woo Saddam Hussein away from the Soviet camp. Baghdad was therefore off-limits to CTC. “We were told in no uncertain terms, ” said a senior FBI official, “that the indictments were not to interfere with our larger policy toward Iraq.” When CIA finally did consent to move against Rashid, it wanted to gather intelligence in a way that would not jeopardize its sources. “The FBI wasn’t used to investigating abroad, and the CIA didn’t want to share any secrets, particularly with lawyers, ” a Justice Department official recalled. 

Webster later acknowledged a problem in “the interface between law enforcement needs and intelligence responsibilities, ” but he also knew it had to be overcome. “There is never an excuse to say: Well, we’re in the intelligence business, and you’re in the law enforcement business. Because when dealing with intelligence with terrorism, both sides of the equation are very, very important…. So, they [CIA] have to look for switching mechanisms where they can get information to the law enforcement community.” 

Webster hoped CTC would be such a “switching mechanism, ” but it had been intended for operational, not prosecutorial coordination. Frustrated FBI officials soon took their complaints to the press. Officials from other agencies had been stymied in trying to get information from CTC and, in some cases, had been “unable to get the CIA to accept their intelligence.” A task force headed by Vice-President Bush proposed complementing CTC with an “intelligence-fusion center, ” to collect, analyze, and distribute intelligence data throughout the government, but no such center emerged. 

Nor did CTC seem to be enjoying the operational success Casey had hoped for. FBI and CIA thought they had cornered Rashid in the Sudan, but he escaped through some kind of bungle that no one at either agency will talk about. When terrorists bombed a TWA jet, and then a Berlin discotheque, killing U.S. servicemen; CTC was of little use. A special CTC team was created to recover Buckley, but failed. It later developed that he had died after fourteen months in captivity, apparently having been tortured into revealing all he knew about CIA operations in the Middle East. 

ALTHOUGH CTC WAS SLOW to prove its worth, the granting of FBI counter terrorist jurisdiction overseas was a landmark shift, with operational consequences that soon were felt. In 1986, the FBI expended approximately eighteen street-agent work-years in cases involving “extraterritorial jurisdiction, ” creating considerable problems for Jay Aldhizer. “The thing that would go offtrack more than anything else, ” he said, “was operating in the other guy’s yard, which had to be coordinated on both sides. The Bureau’s attitude toward CIA was, ‘We just want to make sure that you know that we’re not going to impact on anything you do.’ But sometimes we did impact on what they did.” 

Indeed, the FBI’s foreign work could even derail what Casey was doing behind the Bureau’s back, in places like Nicaragua. As Webster later realized, the North-Clarridge-Casey nexus produced “circumstances [that] helped create the Iran-contra affair.” It started, Webster would recall, “when people at the White House became impatient with the efforts of the intelligence services and others to locate the hostages, and then began to try to form sort of think-tank groups to see if they could come up with new and more imaginative ways of dealing with it. And as they started to do this, these think tanks became operational, and North was an operative person on it.” But also born of White House impatience was the FBI’s foreign-CT role, which would put the Bureau on to CIA’s illegal partnership with North. That partnership was a pure expression of Casey’s freebooting, OSS style, and FBI exposure of the project’s assets was the final confirmation of an old OSS prejudice—that the interests of law enforcement posed a direct threat to the extralegal imperatives of covert action. Casey lived to see his anti-FBI fears confirmed, but died before it became clear that Hoover’s revenge on the ghost of Donovan would cause the worst political scandal since Watergate. 

TO MOST CIA OFFICERS, Oliver North seemed a reckless, irresponsible, incorrigibly romantic man. Hearing, for instance, that Cubans were deathly afraid of snakes, North proposed strafing Havana with planeloads of vipers. But to Casey, whose idol Donovan had once considered dropping bats over Tokyo, North was an ideal choice for carrying on the contra war. A decorated Vietnam veteran, North wanted to redress perceptions that America was an unreliable ally. For those who had been gullible enough to take America at its word, there had been only disaster, whether at the Bay of Pigs, in Vietnam, or, most recently, in Central America. At a news conference on July 25, 1979, six days after the Sandinistas triumphed, Carter had said, “I do not attribute at all the change in Nicaragua to Cuba, ” but the first contingent of Cuban “advisers had been arriving in Managua that very day. Carter was quick to realize his error, and in 1980 authorized Stansfield Turner to funnel $1 million to anti-Sandinista politicians in Nicaragua. Two years later, Casey had turned Carter’s contras into a paramilitary force, modeled after OSSbacked anti-Nazi partisans whose work, according to Casey, pointed up “the potential for dissident action against the control centers and lines of communication of a totalitarian power.” 

But the contras only seemed to drive the Sandinistas further left, much as CIA’s abortive invasion of Cuba had caused Castro to ask for direct Soviet assistance. On April 18, 1983, the day that the U.S. Embassy was bombed in Beirut, Sandinista Defense Minister Humberto Ortega even raised the specter of a “Nicaraguan Missile Crisis, ” saying that his country would consider stationing Soviet nuclear weapons. Top Secret CIA memoranda warned: “The Soviets and Cubans are turning Nicaragua into an armed camp, with military forces far beyond its defensive needs and in a position to intimidate and coerce its neighbors.” 

By late 1983, the Agency’s secret warriors had begun to harass the perimeter of this “armed camp” with daring OSS-style raids. Scuba-diving saboteurs in motorized rubber rafts moved in on Nicaragua’s oil reserves at the port of Corinto, under cover of night, and blew them up. But Casey had approved this operation without consulting Congress, and his punishment was an April 1984 measure, sponsored by Representative Edward Boland, which would suspend CIA assistance to the contras in October of that year. In lieu of direct CIA assistance after that date, North was asked to keep his mentor’s contras together, as North would say, “body and soul.” 

The result was a Panama-registered, privatized anticommunist network. In many ways it resembled the Wisner-Donovan apparat that had been born in 1948, when Casey, Hunt, and other ex—OSS officers had set up Operation Bloodstone. Slush funds were disbursed through “shell” corporations such as Udall Research in Panama City, established by retired General Richard Secord, whose “private” planes would make supply drops. A loop of conspirators was formed, with each insulated from the others by a common go-between, former State Department official Robert Owen. A typical Owen mission involved giving to the contras $10,000 in “humanitarian assistance, ” via former Agency asset John Hull, a rugged, rich old rancher whose border properties were a contra sanctuary. Owen also met with CIA Costa Rican Station Chief Fernandez to discuss the logistics of aerial resupply. The Creoles and the Miskito Indians along the Caribbean were rising up against the Sandinistas; they could be reached by filling fifty-five gallon drums with weapons, sealing them watertight, then affixing Chemlites—plastic tubes containing chemicals that, when crushed, interacted to create glowing cylinders. After these drums were kicked out of a plane and hit water, they would glow iridescent green as they floated along the coast, and the waiting Indians would row out in canoes and retrieve them. 

Reaching the landlocked contras deeper inside Nicaragua would be somewhat more challenging, but it could be done. Fernandez helped Owen scout for an emergency airstrip in friendly territory, in case mechanical problems or anti-aircraft fire forced down a plane. They decided on a remote site in northwestern Costa Rica. Owen and the CIA man helicoptered up there in August 1985, and Owen returned to Washington with photos and maps. 

But Owen home also carried a warning. John Hull and other Enterprise assets were in serious danger of being exposed by Sandinista agents, including some moles who had worked within the contra movement. The “cancer” seemed to have begun with Eden Pastora, a former Sandinista guerrilla hero who had earned the nom-de guerre “Commander Zero” during a raid on Nicaragua’s National Palace. Pastora had served as the Sandinistas’ number-two man for internal security, just as Rolando Cubela had for Castro; like his Cuban counterpart, he soon established contact with CIA and claimed disillusionment. Pastora was every bit as mercurial and unpredictable as Cubela had been, but Casey thought he could give the counterrevolution a romantic and democratic face. By 1982, Commander Zero was operating a small contra force out of Costa Rica, along Nicaragua’s southern border. Doubts persisted, however, about his ultimate loyalties. He and his intelligence chief, Julio Bigote, had spent a “lost” year in Cuba before working for CIA. His ranks were “rife with double agents, ” as one of his colleagues later said. His camp mistress, Marieles Serrano, redefected to Managua in late April 1984 and admitted to being a Sandinista spy. His closest adviser, Carlos Coronel, was judged by CIA to be a Sandinista agent. Pastora himself was believed conceivably disloyal. In spring 1985, a CIA counterintelligence task force descended on the contras’ southern front with polygraphs, purging all who failed, such as Arturo Cruz, Jr., and all who refused them, including Pastora. 

But this created a “disposal problem.” Pastora and his former lieutenants were perfectly positioned to blow details of North’s network in Costa Rica. They knew all about Owen and Hull. They knew some of the network’s Miami-Cuban mercenaries, and had been privy to the secret logistics of the CIA weapons pipelines. They were in touch with two left-wing expatriate journalists, Martha Honey and her husband, Tony Avirgan—a couple of “commie disinformation experts, ” Owen warned North, who were “after me and you.” These journalists were the kind of people, Owen believed, who might even be getting some of their leads from the Soviet listening post at Lourdes, Cuba, which monitored U.S. telephone traffic. Even if some of their allegations were ludicrous, such as a contra-backed plot against the U.S. ambassador to Costa Rica, they were nevertheless likely to attract the attention of the FBI. “The biggest concern, ” Owen therefore told North, “is how long the operation will remain covert.” 

Deniability was a problem at Langley, too. Although nominally run by North at the NSC, contra resupply remained as much a CIA initiative as the “privatized” Mafia plots to kill Castro had been, if not more so. Not only Casey and Fernandez, but CIA officers Clair George, Allen Fiers, Duane Clarridge, and Jay Gruner would all help North’s network in various ways. Langley provided flight vectors to Fernandez, who relayed them to Secord’s pilots. Clarridge gave North information on arms dealers, and Fiers handed him maps and other intelligence on the Sandinista positions. But since CIA assistance to North’s network was palpably illegal, Casey needed to hide it not only from the Sandinistas and the media, but from Congress, the FBI, and even from most officers at Langley. Fiers, chief of the Agency’s Central American Task Force, was thus directed by Casey to serve as a “buffer” within the Agency, to keep his colleagues “on the other side of the line.” That was similar to what William Harvey and Richard Helms had done in CIA’s attempts to kill Castro. But just like Harvey and Helms, Casey failed to consider that no buffer in the world could keep the Federal Bureau of Investigation on the other side of the line. 

• • • 

THE BUREAU BEGAN investigating the contras and their U.S. backers in earnest on July 22, 1985, when Kevin Currier, in the FBI’s anti-terrorist unit in Miami, noticed a front-page article in the Miami Herald. In what seemed a major scoop, free-lance journalist Martha Honey described a pipeline of contra arms shipments from Florida to Nicaraguan rebels based in Costa Rica. According to Honey, arms were being flown into the jungle Costa Rican border with Nicaragua, where most of the land was controlled by a “wealthy American rancher.” This rancher, Honey intimated, had plotted an April 1984 bombing at the jungle camp of independent minded contra leader Eden Pastora, who was splitting the movement by refusing to align with the other contras. It was unclear from Honey’s report whether the operations were carried out with or without U.S. government assistance; either way, they were probably illegal. If there was no government support, the shipments violated the Neutrality Act, which forbade private citizens’ participation in foreign conflicts. If there was government support, the shipments violated the Boland Amendment, which banned CIA and other U.S. agencies from giving military aid to the anti-Sandinistas. 

Currier opened a Neutrality case and soon teamed with fellow agent George Kiszynski, who specialized in investigating bombings by right-wing Cuban terrorists. Interviews with informants developed no evidence of any bombing plot, but did produce a shortlist of names that kept coming up in connection with contra support: John Hull, Robert Owen, Oliver North. 

Alleged CIA links to those men were brought to the Bureau’s attention when Jack Terrell, a disillusioned former mercenary, contacted the FBI in early 1986 and fleshed out Honey’s allegations. Terrell claimed that despite the Boland Amendment, the Agency was still coordinating the contra war, using North, Owen (“who says he is CIA”), and a “CIA contract man, ” John Hull. He additionally claimed to have heard of a right-wing plot to kill Lewis Tambs, U.S. ambassador to Costa Rica, and blame it on the Sandinistas. When pressed for proof, however, Terrell admitted that most, and perhaps all, of his information came from Martha Honey. 

Terrell’s credibility slipped even further when NSA wiretaps on the Nicaraguan Embassy in Washington revealed him to be in regular touch with Sandinista intelligence. His contact was Manuel Martin Cordero Cuadra, who was posted under diplomatic cover in Washington. In fact, as Terrell later acknowledged, he was working with Cuadra to “attract the attention of Federal law enforcement agencies” to illegal contra resupply. Terrell was taken under the wing of the Center for Development Policy, an IPS spinoff and Rubin-funded group, where, as Terrell would say, “employees had direct access to Cuban and Nicaraguan officials.” Terrell was even “given a list of 40 names and a brief biography of each that told of their role with the Contras, ” including data on Oliver North, to be “released to the press or anyone else who might have an interest in it.” 

But even if their motives were open to question, at least some of the information fed to the Bureau by Terrell and Honey checked out, and had to be run down further. Although the alleged plot against the U.S. Ambassador to Costa Rica proved to be nonexistent, reports of gunrunning to that country seemed to be grounded in fact. So in March 1986, the agents flew to San Jose, Costa Rica with Jeffrey Feldman, an assistant U.S. attorney, and met with Ambassador Lewis Tambs at the American Embassy. Feldman took out a diagram showing John Hull’s name, and on top of it Robert Owen’s, and above that Oliver North’s. Feldman hypothesized that North was pumping funds through Owen to Hull, who, in turn, was distributing them to various contra leaders. He believed that these individuals had somehow transported weapons from South Florida to Hull’s property near the Nicaraguan border. 

The ambassador turned white. The only thing he said was, “Get Fernandez in here.” The FBI agents guessed, correctly, that Fernandez was the CIA station chief. Feldman went over the diagram again, saying that he and the FBI agents were looking at “the big picture, ” meaning not only possible violations of the Neutrality Act, but unauthorized use of Government funds. 

The CIA man’s reaction, as Feldman recalled, was to “rip the credibility of the various people who were making the allegations.” Martha Honey and her husband, Tony Avirgan, were a couple of real left-wingers. Feldman started taking notes: “Honey and Avirgan are Sandinista agents or have ties to Sandinistas.” It was alleged that the couple had visited North Vietnam in 1970 and fled the U.S. in 1973, when Avirgan allegedly came under suspicion for some antiwar bombings. After living in several Soviet-bloc countries, the couple had settled in Costa Rica as stringers for international news agencies, specializing in critical coverage of the contra war. They spent Christmases in Nicaragua. By one report, Honey met almost weekly with Valentin P. Chekanov of the Soviet Embassy, whose KGB status was an open secret in San Jose. During the summer of 1985, Avirgan traveled with unusual frequency to Managua, and he stayed in the Sandinista power center for periods of twelve, six, and four days; he later said he was doing research. His wife, meanwhile, was interviewing former contra commander Eden Pastora and his top people, recently purged by CIA as suspected Sandinista agents. These were the kinds of people who were going after the rancher John Hull, who was not a criminal but a patriotic man. 

Feldman asked if Hull worked for CIA. 

Fernandez smiled. Hull had helped the Agency coordinate weapons deliveries to the contras prior to the Boland Amendment. Since then, however, he had not been “militarily involved.” As a private citizen, Hull had been providing only medical and humanitarian assistance to guerrillas who retreated onto his land. As far as Fernandez knew, the money for that came from Hull’s own deep pockets. 

“Do you know if John Hull knows Oliver North?” Feldman pressed. 

“Certainly, ” Fernandez said. “I can tell you for a fact that John Hull knows both Rob Owen and Oliver North.” But Hull’s role was only to coordinate “humanitarian” assistance, Fernandez repeated. Any reports to the contrary were “a hill of beans.” Nevertheless, the meeting ended with Fernandez specifically requesting that the Bureau contact him if they planned to “take action against John Hull.” 

The FBI agents left the meeting feeling that the CIA station chief was bothered by their inquiries. When they saw Fernandez in the embassy after that, he wouldn’t even say hello. Feldman decided not to speak in his hotel room, because he felt perhaps that he and the FBI agents were being watched or listened to by CIA. Embassy security officer James Nagel followed the agents wherever they went. After Currier and Kiszysnki interviewed some imprisoned mercenaries, who described weapons flights to Hull’s ranch, Nagel warned them: “There are other agencies that have their operational requirements, and you should not interfere with the work of those agencies.” The security officer paused, then added in a low voice: “John Hull is a friend of Ronald Reagan, if you know what I mean.” The G-men concluded that because CIA was trying to protect Hull, it would not be possible to interview him, and they quit trying.

Returning to Miami on April 4, the FBI delegation tried to sift through what they had learned. “We all thought we were on to something, ” Currier recalled. Weapons were probably flown to Hull’s ranch. Owen had often visited Hull, and also secretly worked for North. North was reportedly close with CIA Director Casey. But no one could figure out what kind of criminal provisions were specified by Boland, or whether the Bureau had developed enough evidence to empanel a grand jury. On such matters they would defer to FBI headquarters. 

In Washington, the agent’s reports were read with interest by the Bureau’s number-three man, Buck Revell. He began to suspect that CIA, through North, might be secretly resupplying the contras. But each time the FBI had a pending Neutrality case, they went to CIA and were told there was “no connection.”

 JUST AFTER THE FBI AGENTS left their March 31 meeting with the CIA station chief in Costa Rica, Joe Fernandez placed an encrypted call to Oliver North. After hearing about the FBI mission in general terms, North dispatched his courier, Robert Owen, to San Jose for a full “damage control” assessment. In a memo summarizing his trip, Owen warned that Feldman and the FBI had North’s name, and Owen’s own, on its conspiracy chart. Given the risk of public exposure, North’s network would have to suspend operations. As Owen saw it, suspected hostile agents (Honey, Avirgan, Pastora, Terrell) had caused one arm of the U.S. intelligence community to accuse the other, and had thus neutralized CIA’s privatized resupply. Perhaps the pipeline could be opened up again, once things cooled down, but for the moment North and Owen could only devote their energies to denial. “If and when I am contacted by the FBI I will not answer any questions without an attorney present, ” Owen promised. “Even then, I will not answer any questions. It is the only way I can see to stem the tide.” 

In a desperate attempt to deflect suspicion from his operatives, North now tried to turn the Bureau against the sources of its leads. Shortly after the FBI agents returned from Costa Rica, North asked the Bureau’s Washington Field Office to investigate Terrell, Honey, and Avirgan, to see if they might be involved in a communist “active measures” (political-warfare) campaign against U.S. policy in Central America. In mid-June, North was informed by the Bureau that, although there was evidence of such a campaign, the Bureau was “unable to resolve the identity of the originator of these active measures. Further, [the FBI] has no predication into this investigation.” 

Within a few weeks, however, the FBI did have grounds to investigate those who threatened North and Casey’s work. On July 12, the Bureau received information, from NSA wiretaps on the Nicaraguan Embassy, that Jack Terrell might be contemplating an assassination of President Reagan. 

THE FBI DISSEMINATED that news to CIA, and the two agencies began jointly looking into Terrell. The Bureau concluded that he was a “paid agent of Sandinista intelligence, ” especially after he was observed on July 17 accepting a bag of money from a Nicaraguan diplomat at a Washington Metro station. A few days later, Terrell traveled to Miami at the same time Reagan did, lending apparent credence to the idea that he might indeed be a Lee Harvey Oswald type. He was closely watched in Miami by special agents Floyd H. Plummer and Gerald D. Perlata, Jr. When Terrell left his room at the Marriott Hotel on July 26 carrying a brown suitcase and small black overnight bag, FBI agents in the lobby advised Plummer by radio that Terrell was checking out and boarding a courtesy bus to the airport. Plummer then entered Terrell’s room and searched the trash receptacles. In addition to the various gum wrappers, cigarette butts, and empty cigarette packs, Plummer found a copy of the Miami Herald; an article had been torn out, quoting White House statements that North’s relationship with the contras did not violate the Boland Amendment. Terrell was then apprehended by the FBI and polygraphed extensively. Although he was eliminated as a threat to the president—Terrell later said he “concocted” the story to “keep [the FBI] interested” in him—the examiner concluded that he was deceptive about his relations with the Nicaraguan government. 

But the FBI also concluded that CIA was being deceptive. In the process of investigating Terrell, the FBI began to sense that Duane Clarridge was seeking to protect former CIA employees who had been associated with Terrell in “private” efforts to assist the contras. At the FBI’s request, Clarridge gave investigators a heavily deleted file on Terrell’s former associates in a group called Civilian Military Assistance, saying that he had provided all available materials. But CIA employees tipped the Justice Department that “another file existed which was the real thing.” Armed with the file number, FBI agents returned to Langley and asked to see the material. CIA refused, replying, “We’ll see you in court.” FBI officials felt Clarridge was withholding the files on Casey’s orders. 

Still, there was no firm proof of CIA wrongdoing, and a consensus had developed in Washington that FBI agents Currier and Kiszynski were being used by hostile intelligence. The Justice Department ordered that no action to be taken in the case. Throughout the summer of 1986, Leon Kellner, Feldman’s boss at Justice, simply refused to reply to the FBI agents’ many requests for a grand jury. Currier and Kiszynski felt that something “fishy” was going on, but there was nothing they could do. 

BY SEPTEMBER word came down to Costa Rica from Langley that it would be okay to resume supply drops. Apparently it was felt that the Bureau’s investigation had been contained by pressure on Justice in Washington. But because the FBI’s curiosity had caused a three-month crimp in the pipeline, the Agency had to make up for lost time, and took previously unnecessary risks. Instead of flying at night, along the Pacific Coast, then cutting inland along the Costa Rican border and drifting over Nicaragua, Secord’s mercenaries flew in daylight, directly over Nicaragua, with a full payload. They did that six times in a row, always following the same route, right over Sandinista radar and missile batteries. Their defense against state-of-the-art Soviet technology was a “fuzz buster” bought at Radio Shack. On their seventh flight, on October 5, one of Secord’s C-123 planes was shot down by a SAM-7 missile. The only survivor, American cargo kicker Eugene Hasenfus, was captured. He said at a press conference that he had been hired by CIA. Documents aboard the plane showed that it was owned by Southern Air Transport, a former CIA “proprietary” or front. 

The Hasenfus affair lent sudden credibility to the Bureau’s contra case. Hours after the crash, Kellner told Feldman that he felt there was “really something there, ” and decided to go with it. FBI agents interviewed Southern Air employees, and as the investigation expanded, it threatened to expose the contra venture’s covert twin: an initiative to free hostages by selling missile parts to Ayatollah Khomeini’s Iran and, as CIA’s Allen Fiers would put it, “kicking dollars into the contras’ pot.” 

THREE DAYS AFTER Hasenfus was downed, Oliver North telephoned Buck Revell, warning that a probe of Southern Air Transport might disrupt “Presidentially authorized activity that you are privy to.” They were on an open line, so North was talking cryptically, but Revell understood that he meant some kind of Iran initiative. 

Revell already knew that North and CIA were up to something in Iran. At a July meeting, North had advised that the president had authorized contact with an Iranian government faction headed by the speaker of the parliament, Hashemi Rafsanjani. Then North had “put in the kicker, ” as Revell later said. In order to show good faith, the American emissaries had been authorized to arrange the shipment of a small number of anti-tank missiles and other spare parts. In return, the Iranian group had agreed to use their influence in attempting to obtain release of William Buckley and other hostages held by radical Shiites in Lebanon. Clarridge, who also attended the session, seemed unsurprised by the revelation, and Revell thought to himself: Sonofabitch, the Agency already knows. This whole Iran thing is probably Casey’s baby. Revell had immediately briefed Webster, who was aghast that CIA—and the White House—would so flagrantly flout America’s stated policy of not negotiating with terrorists. There were also rumors, denied by CIA, that the hostage operation was somehow linked to the contras. But because no laws seemed to have been broken, the Bureau had not pushed further into CIA’s Iranian enterprise. 

North’s October 8 call to Revell now changed everything. Revell deduced that if subpoena of Southern Air records could compromise the hostage-negotiation process—if exposure of one operation could reveal the other—the two were probably linked. That meant that the hostage operations, like the Hasenfus flight, might violate the Boland Amendment. 

On the chance that a hostage’s life might indeed be in danger, the FBI agreed to temporarily suspend its southern Air investigation, on grounds that it would “most likely trip over legal but very sensitive covert CIA operations not related to Nicaragua.” But the Agency lost all credibility after November 21, when Casey testified to Congress that he did not know who arranged the sale of two thousand TOW missiles to Iran. Revell knew from his terrorism work that the Agency had, in fact, been actively involved in that scheme. There was a concern, as Revell warned Webster, about whether CIA was giving Congress “right information.” If it deliberately wasn’t, it was obstructing justice. 

CASEY WAS HOSPITALIZED for a brain tumor in early December, lapsed into semi-consciousness, and died on May 9, 1987, before the Bureau could interrogate him. But by then, Iran-contra revelations had made clear not only to the FBI but to the country at large just how thoroughly the former OSS swashbuckler had considered intelligence work to be above the law. At his funeral, with President Reagan and former President Nixon sitting in a front pew, a Roman Catholic bishop lamented that Casey’s anticommunism kept him from understanding “the ethical questions raised” by his church. 

The hammer came down hard on Casey’s co-conspirators at CIA. After Justice Department investigators uncovered a memo describing diversion of Iranian arms-sales profits to the contras, North was fired, and Attorney General Meese turned the FBI loose. On Casey’s advice, North had burned a diary detailing his contacts with CIA; North’s secretary, Fawn Hall, had slipped past FBI agents with documents hidden in her undergarments, and shredded so many other memos that the machine jammed; but a team of six FBI agents wearing rubber gloves retrieved other material implicating CIA. A disk found in Hall’s office computer held a presidential intelligence “finding” signed by Reagan, retroactively authorizing CIA participation in an earlier Israeli weapons transfer to Iran. Another North memo asked CIA to charge the Iranians an inflated price for a thousand TOW missiles, with the difference being diverted to the contras. A February 1985 document stated flatly, “CIA will provide the advice and information needed by the F.D.N. [a contra group] on the shipping, traffic, and all necessary intelligence on the movement of these aircraft.” 

Armed with what seemed clear proof of illegal CIA assistance to the contras, FBI agents eventually converged on Langley with search warrants. It was a historically unprecedented moment, with agents opening even the office safe of CIA’s deputy director for operations, Clair George. Inside was a document later determined to have prints from both of George’s ring fingers, apparently proving that he had misled Congress about CIA support for the contras. George was eventually indicted on ten counts of obstructing congressional and FBI investigations. Station Chief Fernandez was recalled from Costa Rica and placed on administrative leave because the Bureau was closing in. Two other station chiefs were disciplined for helping North. Duane Clarridge, Fiers’ predecessor as chief of CIA’s Central American Task Force, was indicted on seven counts of perjury and making false statements to FBI agents during the Iran-contra investigation. Even Deputy Director Robert Gates, nominated by Reagan to replace Casey in February 1987, had to withdraw his name because Congress kept grilling him on his knowledge of North’s network. 

After losing on Gates, and still trying to live down Casey’s misdeeds. President Reagan knew that his next nominee must be a man of unquestioned integrity. The list of possible candidates was fairly short, but one of them offered an intriguing prospect. He might be just the man to bring the Agency “under control, ” and even to end the long-running Bureau-Agency feud. Thus was the Agency’s directorship about to pass from Wild Bill Donovan’s last buccaneer to one of Hoover’s successors at the FBI.

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HERE COMES THE JUDGE

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